The Build-A-Bear Workshop covers the "bear" necessities and much more. Located mainly in malls, the company's stores allow kids to design their own teddy bears and other stuffed animals complete with clothing (formal wear to western wear), shoes (including Skechers), and a barrage of accessories (eyewear, cell phones, and the like). Customers can build bears online, too. The chain offers an in-store Build-A-Party and an interactive online community, as well as online games and e-cards. Build-A-Bear, founded by CEO Maxine Clark in 1997, boasts about 345 stores in the US, Puerto Rico, Canada, the UK, and Ireland, and franchises others in Europe, Asia, Australia, and Africa.
In addition to its retail shops, Build-A-Bear operates Bearville.com, a virtual world website (launched in 2007) where bears bought in the company's stores can adopt an online persona. Taking a page from rival Webkinz, which provides a plush toy coupled with a rich online experience, Bearville.com's online offerings include games, an online book club, blogs, videos, and more. (It even has an iPhone app.)
Build-A-Bear's retail presence in the US, Canada, and beyond is growing. Outside of North America the chain operates nearly 60 company-owned stores in the UK and Ireland. About 80 additional locations are run by franchisees. Germany, Australia, and Japan are home to about half of those stores.
Build-A-Bear's total sales fell nearly 2% in 2011 vs. the prior year, while net income and cash flow also declined. Sales at Build-A-Bear stores open more than a year (known in the business as same-store sales and generally considered to be the best indicator of a retailer's overall health) have declined every year since 2008 and the retailer has failed to turn a profit in two of the past three years. Build-A-Bear has struggled to grow in the aftermath of the deep recession, which brought the fast-growing company's growth spurt to a halt. Indeed, the $394 million the chain rang up in 2011 was 17% less than in 2007. The prolonged decline suggests that the company's problem may be more fundamental than just a drop in mall traffic and lack of consumer confidence. Indeed, the appeal of the build-your-own-bear retail concept may be waning.
Build-A-Bear's growth strategy includes adding new stores in the US and abroad as the economy improves. Indeed, the retailer feels there's room for as many as 325 locations across North America and 70 shops in the UK and Ireland. After adding stores at non-traditional retail locations, including zoos, hospitals, and major league ball parks, the company is looking to new avenues for growth. In 2012 it teamed up with Home Meridian, parent company to the upscale Pulanski furniture business. Build-A-Bear is partnering with Pulanski to develop a collection of youth furniture under the Build-A-Bear Workshop HOME name. Since rolling out the line, the furniture maker has expanded its juvenile furniture offerings with a 633 Beariffic Bedroom Collection that features interchangeable drawer pulls and different sets of hardware. Prior to the Pulanski partnership, the company hadn't had much success expanding beyond its core Build-A-Bear business. The last of its Friends 2B make-your-own doll concept locations closed in 2010. Also, the company wrote off its minority investment in Ridemarkerz, an interactive retail concept that allowed users to build and customize their own model cars. To reverse the decline in its business, Build-A-Bear is also focusing on product innovation and looking to larger, limited-edition animals that launch about once a month to drive traffic to its stores and boost sales.
BML Investment Partners, controlled by director Braden Leonard, is Build-A-Bear's largest shockholder with about 13% of its shares. CEO Clark owns nearly 12% of the company. – less
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