Q4 2023 Build-A-Bear Workshop Inc Earnings Call
Greetings and welcome to the build a bear workshop fourth quarter 2023 earnings call. At this time, all participants are in a listen only mode.
You didn't answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conflicts over to your host Gary Janeiro, Vice President of Investor Relations and corporate finance.
May begin.
Good morning, Thank you for joining US with me today are Sharon price John CEO in volume to the door of it yeah.
Today's call Sharon will begin with a discussion of our fourth quarter and full year performance and update the progress we have made on our key priorities.
After <unk> will review the financials in more detail and provide our guidance.
We will then open the call to take your questions.
Members of the media, who maybe on our call today should contact us. After this conference call with your questions.
Please note the call is being recorded and broadcast live via the Internet.
Earnings release is available on the Investor relations portion of our corporate website.
A replay of both our call and webcast will be available later today on the IR site.
I will remind everyone that forward looking statements are inherently subject to risks and uncertainties.
Actual results could differ materially from those currently anticipated.
You do a number of factors, including those set forth.
The risk factors section in the company's annual report on Form 10-K.
We undertake no obligation to revise any forward looking statements unless required by law.
Also during this call we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items, which management believes can be useful in evaluating the company's performance.
The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.
non-GAAP measures are presented you will find information regarding these non-GAAP financial measures and a reconciliation in the company's earnings release, and now I would like to turn the call over to Sharon.
Yeah.
Thank you Gary good morning, and thanks for joining us for build a bear is fourth quarter and fiscal 2023 earnings call.
We were pleased to again report record results as we continue to execute against our strategy, which is focused on the evolution of our business model to profitably leverage the power of the building their brand.
Fiscal 2023 represents the third year in a row of record results for build a bear.
In keeping with this trend and is reflected in our guidance in this morning's press release, we expect to deliver a fourth consecutive record breaking year in fiscal 2024.
Now to recap 2023.
Typically for the fourth quarter revenues increased nearly 3% to over $149 million and we delivered pretax income of more than $26 million.
While these numbers were within the previously provided guidance range, we would like to note that the results were softer than originally planned due to a combination of e-commerce disruption and some overall fourth quarter economic challenge is accentuated by severe January weather.
Boeing who will provide some more insight on that impact in his remarks.
Turning the page to full year fiscal 2023 results revenues increased nearly 4% to a record $486 million and pre tax income increased 7% to over $66 million also a record for the company.
As noted we attribute these 2023 result, as well as build a bear's meaningful expansion and profitable growth over the past few years to the ongoing successful execution of our strategy and the evolution of our business model, which I will highlight in a moment.
But first to better understand the progress we have made as a comparison fiscal 2023 $486 million in total revenue is up 44% from the $338 million generated in fiscal 2019, the last pre pandemic here.
Additionally, this revenue has delivered a significantly improved level of profitability.
The $148 million revenue increased over the past four years generated an incremental $65 million in pre tax income.
And we have driven this financial improvement across all three of our business segment.
As a reminder, our.
Our strategy is to deliver long term profitable growth and is grounded in our most valuable asset the power of the build a bear brand.
In summary, the company strategic initiatives are one the global expansion of unique experience location.
This includes the evolution of store types and business model.
The acceleration of a comprehensive digital transformation. This ranges from systems upgrades to ecommerce integration to content creation and three the continuation of investment to support initiatives that leverage build a bear's now multi generational brand to drive incremental profitable growth.
Some of the recent progress that we've made in each of these initiatives include.
First our workshops are a critical part of what creates a valuable point of difference in the marketplace.
<unk> come to build a bear workshops foreign experience in creating their own unique furry friend.
This is why up to 80% and visiting guests create plans in advance to go to their local build a bear workshop often in celebration of birthdays holidays or special occasions.
We cultivate these memorable and Shareable 121 moments with guests to our exclusive bear putting process.
After building their unique very friend guest visits conclude with US collecting first party and loyalty club data for more than 80% of our customers, which enables us to directly communicate more meaningfully with them to drive further engagement and repeat purchase whether it be.
On the build a bear website watching content, sending a gift or coming back to a store, perhaps at one of our many tourist locations during their next family vacation.
Given our store visit is the most common first step in our customers build a bear experience plus our top tier store economics, and the independent research showing a clear market opportunity for additional workshop, we focused on the expansion of our store fleet post the Covid pandemic.
You might recall on our fourth quarter 2021 earnings Conference call. We stated that we expected to add between 15 and 20, new partner operated and Corporately managed retail experience locations over the next two to three years.
Today, we are pleased to share that we opened 44 new locations in just the past two years more than doubling the previously stated expectation.
And existing international franchise partners have also started their post COVID-19 expansion, adding a net six doors in 2023.
In summary between our three global experience location business model net new unit growth was nine stores for 2022 and 37 stores for this past year.
Today, we are guiding to net new unit growth of at least 50 additional retail locations in 2024 on a global basis.
Which would bring the three year net new unit growth to nearly 100 stores by the end of this year.
Our second strategic initiative has been an ongoing comprehensive digital transformation that touches nearly every aspect of build a bear and is designed to elevate business efficiency and a great customer communications and accelerate incremental opportunities like gifting and personalization program.
The ultimate goal is to create a cohesive digital store and marketing ecosystem that expands build a bear's addressable customer base and the lifetime value of our guests in store online or otherwise.
To drive overall sales and profitability.
One of the first steps in the evolution to becoming a more integrated Omnichannel organization was to REIT platform and upgrade build a bear's ecommerce business.
This helped to drive a tripling of total ecommerce sales since 2018 inclusive of the 2023 softness.
That said as we have noted in the past we have much greater aspirations for our E Commerce business.
As we believe the build a bear brand has a unique opportunity to expand into gifting more meaningfully.
Shifting alone is a multibillion dollar category.
Therefore, after a multi year digital transformation effort ranging from our new warehouse management system to the implementation of buy online ship from store abilities. The goal is to accelerate the move to the next step of the company's digital strategy.
With that in mind, we've recently created the new role of Chief customer and digital officer with a single oversight of both website and customer marketing.
The position touches all points from digital to in store, including loyalty and CRM, plus creative and guest services.
And is designed to unleash the power of a much more integrated approach to driving the business we.
We expect this first of its kind structure for us to elevate and connect our messaging, while providing an appropriately personalized experience wherever whenever and however, our guests choose to engage with build a bear.
Our third strategic initiative is the increased investment to support profitable growth.
As corporate store operating margins remained above 25% for the third consecutive year and we have continued to shift to an asset light partner operated store model, we have meaningfully improved the company's cash flows.
Build a bear's more consistent cash flow has allowed us to make longer term marketing investments and entertainment initiatives.
Back to be evergreen.
The expansion of our annual Merry mission marketing campaign in the fourth quarter is just the latest example of that opportunity.
In conjunction with overall multifaceted holiday effort, we released build a bear's first ever animated theatrical film Glisten and the Merry mission based on the characters and storylines and the multi year top selling holiday plus collection.
And while we're excited about the film is a pure entertainment vehicle. We primarily look at is another piece of a comprehensive content strategy.
We are utilizing content and entertainment related efforts such as the movie and in this case as well as Merry mission music videos. The Merry mission gaming App. The Merry mission section if aren't roadblocks build a bear tycoon game and the transformation that build a bear workshops into temporary sandness workshops during the holiday season.
A comprehensive marketing effort to bring the company's entire customer facing communications July two characters and compelling story to drive awareness engagement affinity and ultimately sell.
With that in mind, although as we mentioned fourth quarter was lighter than expected. This marketing effort drove Merry mission product sales up more than 65% year over year.
This multiple touch point marketing model in place, we expect glisten and the Merry mission to become a part of our annual holiday tradition.
It is important to understand that none of this could happen without the power of the build a bear brand.
But what do I mean, when I say the power of the build a bear brand.
Well now that almost 250 million furry friends have been made over the past 25 years around the world. Our guests have no doubt enjoyed untold numbers, especially men a special moment.
Miles stories laughter, and fuzzy hubs with their build a bear animals.
These memories translate not just into the 93% aided brand awareness in North America that we enjoy but more importantly, antitrust affinity and preference.
Over the past quarter century, these special memories handmade build a bear and a word beloved.
In fact, just recently W. P. P brand analytics platform B, a Z recognized the build a bear for many of these attributes on their list of the 20, most influential retailers across North America left.
B E V note that strong brands have deep emotional meaning for customers.
And this is what gives our brand influence.
We are pleased that by adding a little more hard to like build a bear is recognized alongside with such iconic brands as Disney Apple and Nike.
With the continued opportunity to leverage that brand power I will turn our outlook to 2024.
Okay.
Quarter to date following softer February sales that were reflective of some of the challenges we had experienced in the fourth quarter. We entered March with a little bit of a positive change in trend.
Although we are balancing this with the reported consumer spending concerns and some toy industry reports with downward expectations for 2024.
We remain confident in providing guidance with the expectation of continued growth as we execute on the three key pillars of one store expansion with the expectation of net new unit growth of at least 50 stores globally.
Two digital transformation, including our recent actions to advance the company's e-commerce business and.
And three investment to support further growth.
Build a bear's new phase of sustainable free cash flow combined with the business model shift to more asset light partner in franchise stores has allowed us to increase investment to support growth. While also returning cash to shareholders.
Over the past three years, we have returned more than $90 million to shareholders through stock repurchases and two special dividends, while remaining debt free.
Reflecting management's and the board's confidence and build a bear's continued financial performance. We are now initiating a regular quarterly dividend of <unk> 20 per share while continuing to buyback our stock.
Overall, we remain pleased with build a bear's record breaking results in 2023 as well as the many accomplishments of this year.
We are also thoroughly excited about the opportunity it's across nearly every aspect of our business for 2024 and beyond.
Finally, one of the most exciting efforts to watch for is the rollout of a comprehensive new brand campaign.
This campaign is designed to further expand the appeal of build a bear while simultaneously connecting multiple generations to a universal message designed to put our beloved brand right in the middle of the collective conversation again.
The multi dimensional campaign will be launched across all consumer touch points and it's called the stuff you love.
Beyond the obvious double meaning of the word stuff the big idea relates to build a bear not only as one of the things that is loved but the build a bear both enabled and indeed is often woven into the memories about all the stuff we love.
Yes and partners.
We continue to work toward our mission of adding a little more heart to lie.
And now I would like to turn the call over to Juan.
Thank you Sharon and good morning, everyone.
It's good to speak with you again today to share our results for our fiscal fourth quarter and full year of 2023.
Before I touch on our financials from the past year I want to recap a few highlights.
First we are pleased that we delivered our third consecutive year of record results. As we grew across all segments expanded gross profit margin and increased pretax income versus last year.
In addition earlier today, we announced our 2024 outlook, reflecting expectations for another record year.
Also as the result of our solid business performance and strong cash flow generation over the past three years, we have paid two special dividends and repurchased more than 1 million shares of common stock.
Ah returning over $90 million to shareholders to put this in perspective. This return of capital to shareholders represent approximately 30% of our current enterprise value.
On top of this our board has approved the initiation of a 20 cent per share quarterly dividend showing confidence in the company's ability to.
To sustain profitable growth based on our long term strategic plan.
Now moving to our financial results, starting with a more detailed review of the fourth quarter that reflects one extra week compared to the prior year.
Total revenues were $149 3 million up two 9% year over year.
Net retail sales increased one 5% year over year with a positive contribution from stores due to the extra week and eight 8% decline in e-commerce demand.
Store sales were particularly impacted by a two week stretch of bad weather in January when we experienced over 250 days of store closures.
Our traffic was up but we saw a decline in dollars per transactions for the quarter.
Commercial revenue, which primarily represents wholesale sales to our partner operators and international franchise revenue Rose a combined 31, 1% versus the prior year.
Gross margin was 56, 4% an improvement of 140 basis points compared to last year.
Benefiting from merchandise margin expansion reflective of lower freight cost and leverage of distribution costs.
SG&A expenses were $58 5 million or 39, 2% of total revenues compared to 36, 9% of total revenues in the 2020 through fourth quarter.
The 230 basis point increase in SG&A was driven by an increase in marketing expenses.
Higher wages due to inflation and the addition of talent and other investments to support future growth.
Even though SG&A was higher with growth in gross profit dollars, we delivered $26 $2 million of pretax income nearly flat to last year.
EPS increased 12, 9%.
On an adjusted basis EPS decreased three 6% as our tax rate increased from 22.
Two over 27% as we remove the benefit of the release of a tax valuation allowance.
Now moving to highlight a few of our full year results.
For fiscal 2023 total revenues were four.
$186 1 million up three 9% year over year, which included the extra week in the fourth quarter.
Net retail sales increased two 2% year over year and were up close to 70 basis points, excluding the extra week.
For the year, our store traffic again outpaced reported national retail traffic.
Transaction growth was positive for the year, while dollar per transactions were down low single digits.
E Commerce demand was down five 8% for the year.
In our commercial and international revenue Rose a combined 37, 7%.
Pretax income grew seven 1% to 6% to $6 $3 million for the year.
Gross profit dollars more than offset the increase in SG&A and lead to pretax margin expansion of 40 basis points to 32 13, 6% of total revenues.
Excluding the benefit of the 50 <unk> week pretax income grew approximately 3%.
Earnings per share was $3 65 per diluted share a 15, 9% increase aided by a lower share.
Share count and a decrease in the tax rate due to the release of valuation allowance.
On an adjusted basis EPS was $3.42 an increase of eight 6%.
With respect to the balance sheet.
And we had cash and cash equivalents of $44 $3 million, an increase of $2 $1 million compared to year end 2022.
This was after returning $43 $4 million to shareholders through a special dividend payment and share repurchase during the year.
Inventory at year end was $63 $5 million declining $7 million or nine 9% from the end of the last year.
We remain comfortable with the level and composition of our inventory.
Yes.
Turning to the outlook.
The full details of our guidance are included in our press release, but I will highlight a few key metrics compared to fiscal 2023, excluding the impact of the 50 <unk> week.
We currently expect.
Total revenue to grow on the mid single digit basis.
This growth is partially driven by the addition of at least 50 net new experienced locations with the majority coming from partner operated expansion both internationally and domestically.
Our revenue growth will be back half weighted as we add locations as well as due to a more favorable fourth fourth quarter comparison.
In addition, the timing of shipments and the opening of partner operated locations may create some differences compared to last year.
We note that commercial revenue has a particularly difficult difficult first quarter comparison.
But with our expectation that partner operated stores will be the majority of new store openings. This year, we still expect strong growth in this segment on a full year basis.
Pretax income to grow in the mid single digit range on a full year basis.
But we expect to have unfavorable timing of marketing expenses in the first quarter of the year.
As we launched our new comprehensive brand campaign, the staff fuel up and continued integration and evolution of our digital transformation strategies to optimize customer lifetime value.
Our outlook also reflects <unk>.
Increased freight costs caused by conflict in the middle East and ongoing wage and inflationary pressures and increased depreciation expense.
In closing.
I would like to tank.
All our store and warehouse associates as well as well as corporate team members for contributing to our record results, which has positioned us for our fourth consecutive record breaking year in 2024.
This concludes our prepared remarks, and we will now turn the call back over to the operator for questions operator.
Thank you at this time, we will be conducting a question and answer session. If.
If you would like to ask a question. Please press star one on your telephone keypad.
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Our first question comes from the line of Eric Berg with FCC Research. Please proceed with your question.
Good morning.
Good morning.
A few quick keys here could you talk about.
What we should be thinking about inventories going forward you guys did an outstanding job of managing inventories last year.
How should we be thinking about it now is slightly rising shipping costs and some other pieces going forward here.
Thanks for the question, Eric definitely inventory management has been one of our focus areas over the last several years as we manage through COVID-19 as well as BK.
We came out of it trying to mitigate some of the challenges as it relates to increased freight costs.
Due to Covid related challenges some of those things are behind us.
From the corporate perspective, but at the same time due to the nature of some of the conflicts and impact on the shipping lanes.
Costs are starting to creep back up again, so we do expect to have some heads.
Headwinds as it relates to freight that will also impact our inventory buys.
End of the year.
Assuming those freight costs stay at that same level. In addition to that as we continue to grow our partner operated business and expand store location. There is probably going to be some additional need for working capital and some more inventory and we will continue to manage that.
So that is creating some timing as again as a reminder for everybody on the call our shipments to our partner operated locations out on a wholesale basis, so depending on the fulfillment and the opening of these stores and the replenishment to these stores. There is some timing that may be a little bit different than timing in our retail locations.
Okay.
Great and could you provide us kind of a thought process here in terms of how we should be thinking.
About the returns on these commercial and international where these partners who are going through I know.
Gross margin is a little bit lower.
What should we be thinking about in terms of the operating margin for these kind of businesses.
Related note, how do you look at the expansion into potentially new.
Areas for franchising and for commercial how should we be thinking about that beyond <unk>.
50 years, so we have here.
I mean, great question. This is one of those areas of growth for the company, we believe especially as we think on a global basis that there is more opportunities for us.
To grow our international footprint and actually yesterday, we opened our second store in Italy enrollment there'll be continue on this journey.
As part of our expectation is to continue to grow these partner operated locations.
Expand the new markets and more to come in the future as we continue to.
Work with different partners across the Globe also this particular model is one that we like from the capital perspective, but it's very asset light our partners are making the investments in stores and inventory of these helped to them on a wholesale basis as you think about the margins that we are getting this is juan.
One of the areas, where we don't get the full top line sales. So when you are thinking even about the growth that we are guiding to that's reflecting our wholesale sales to these partners, but we are getting the high margin dollars on that business and that's helping our overall profitability and we continue to leverage.
Our fixed overhead with some of the investments that we're making there. So we believe that this is going to be very accretive for us as we go into the future and as we have said in the past we expect that this to be a big opportunity for us for many U S based companies.
Comment to think that we could have as many stores outside of.
U S. As we have in our domestic market.
Great. Thank you.
Okay.
Thank you.
Our next question comes from the line of Michael Baker with D. A Davidson. Please proceed with your question.
Hi, Thank you couple just Paul I wanted to start by following up on that these 50 partner locations.
Any color on like where they are are they.
Experiential type places like vacation destinations or adjusted.
I presume a lot of them are outside of malls, just sort of wondering what kind of locations. We can think about for where those will be.
Hi.
Thanks for being on the call I am going to start and then I'll hand, it over to point for some more color.
First I just wanted to be clear, we haven't specified exactly which business model. All of these 50, new locations are and just to be clear and I know this can be a little bit confusing there can be a corporately managed store a commercial store or franchise store. We're speaking strictly in the construct of where we're going to have retail location.
And then leasing that's important is because those are three different segments of our business model and they all have different.
Different.
Economics that are associated with them.
So some of those 50 stores are going to be Corporately managed stores, which will require more capital and some of them will be partner operated in the ones that our partner operated or they can also be corporately operated.
We do actively look for tourist locations, we shared that with you guys. Some years ago. We had done at cohort analysis of when we were still about 20% of our stores were unprofitable trying to.
To triangulate, where we were successful and then one of the big insights there was that we over indexed on almost every key metric.
In an area, where we calculated that 50% or more of the sales were to people 50 or more miles away and it didn't really matter. If that was a mall if it was mall of America.
Standing location at a beach so they they have an interesting dynamic, but we have since focused on those types of locations and again, sometimes we operate those.
And sometimes they are partner operated.
But that will be our focus on areas that we think clearly hurdle easily and to some degree the metrics that we have in place to decide whether we open that location or not I think it's important to note <unk> comment about the international opportunity that we have and to reiterate some of the comments.
That I made in my script about that we did have some independent research about the concept of how many additional locations. We believe there is an opportunity an opportunity for build a bear to grow even domestically.
Yes, and as we continue to look at some of these locations clearly what we have said in the past that we over indexed in tourist locations.
As we grow.
<unk> around the world, especially as it can be a couple of these stores that we opened in continental Europe, there are going to be some more of these tourist destinations in malls.
And.
As we are working with our partners that are going to be opening majority of these locations will be one that would be in best places that are going to drive traffic and really bring.
Present, our brand and the best.
Possible way.
And 100 of these.
100% of the sales are going to be profitable for us. So we are very happy that we can do some of these things.
In an asset light model as we continue on the journey II.
Expand our.
Brian globally.
Yes, it makes sense.
Clearly a positive.
Positive ideas.
Two follow ups one.
I was just curious can you talk about.
Barricade type sales versus you know birthday parties or those types of products and then.
You had said ticket per transaction down is that do you think that's an economic issue people sort of spending a little bit less each time, they come in or just wondering if there's any color as to why ticket.
So all ticket per transaction. Thank you.
On the bare case comment we don't break down the sales of the specific areas.
Particularly on our website. So there is a micro site inside of build a bear dot com that has an age gate that's focused on the older consumer.
And as you might.
As some of you might have noticed we get a lot of press about some of the products that we offer them. Their K, we were actually on the cover of the Wall Street Journal around Valentine's day with one of our <unk>.
Devil Payors.
But they're very cute in it.
And we do a robust business and most importantly about that business. It's a consumer that's outside the core our core consumer base. These are adult purchases often adult to adult gifting and it fits right into our broader strategy of appealing to a multi generational audience.
On the birthday business, we've often shared that.
Sales associated with birthdays, whether it's the birthday treat bear all the way to a party inside of one of our stores.
About a third of our total business and we love the birthday business and we created that birthday treat bear which is there where you can come in and pay your age four are in the month of your birthday.
And we use that is our number one acquisition tool for our core consumer you.
You have to be in the loyalty program to participate in the birthday treat program.
So that really builds our.
Our first party data and allows us to communicate again as I noted in the creation of this ecosystem to drive lifetime value. It gives us that direct communication of that consumer.
And we reengage with them for other opportunities inclusive of the next birthday that their child may be.
Hopefully wanting to participate at build a bear or if they come in on the birthday treat bear we would clearly encouraged maybe a party of the next year. So it's a great acquisition tool for us and we still have although we've done a great job I think we have a tremendous opportunity to keep stretching at that lifetime value with that strong acquisition tool.
And to add a.
A little bit more color on your question about.
Changes in dollars per transaction I'll start first as I mentioned in our prepared remarks that our traffic was up on a full year basis. So we continue to execute.
On our initiatives continue to drive traffic to stores and we are very pleased that we continue to outpace national traffic quarter after quarter year after year.
As customers are coming to our stores.
There is some softness in VR, and we said that our dollar per transactions down.
There are a couple of things that are impacted definitely believe there is.
Impact debts external from the macro environment as you guys are reading about the reports from the overall toy industry and how it's been challenging enough.
Q4 in particular, our performance and some of those changes are probably.
Better and less impacted compared to the rest of the industry, but at the same time. There are a couple other internal things that are shifting and one of those things is what Sharon just talked about the birthday bear renewals like our number one acquisition.
Program and as we are getting the new guests into the program that the transaction value of those.
Color guests when they come in and interact first time with the brand it is slower than our average transaction and that has been the increasing component of our business. So that's also impacting our overall.
The decline in dollars per transaction, but we are still pleased that we continued to drive traffic that people are coming to our stores and that they are spending their money and their discretionary income in our locations and so we will continue to work on areas to create excellent experiences for them and continue to drive our topline growth.
Thank you I appreciate the color.
Thank you. Our next question comes from the line of Greg <unk>.
<unk> with Northland Securities. Please proceed with your question.
Hey, good morning, Thanks for taking the questions.
Curious how one store comp sales performed if you back out that extra week in Q4.
Well clearly what we said.
In Q4, we had 149 million in total revenue that was three 9%.
Growth year over year, the impact of the 50 <unk> week was about $7 million. So our sales were down.
Overall.
We also said that our web demand was down about eight 8% so even though we were.
Overall down.
The impact on this even though we don't talk about our same store sales but.
The retail sales.
Smaller impact than what was in there.
Web demand.
And just got clarity I just for clarity when you say owned stores you are talking about our Corporately managed stores all of that data is based on our Corporately managed stores, we're not including partner operated our franchise stores in that particular sector.
Okay perfect Thanks for clarifying and.
I'm curious what.
It kind of ex out the.
You bet.
Additional 50 stores at least.
Curious what your kind of implied.
Implied comp store sales growth is in the 2020 for outlook.
So.
We are expecting to grow as I mentioned in the remarks on if we adjust for one extra week.
To grow in mid single digit range.
Year over year.
A lot of that growth is.
It's going to be coming from these additional net 50, new locations again that may be back half weighted as we continue to add stores and our partners to open them.
So that's a portion of that growth. In addition to that we expect our E comm business to recover with the digital transformation that's in place as well as we would expect.
<unk> in our.
Base business as well.
Okay.
Fair enough.
Really nice to see the anticipation of an acceleration.
New store sales from I think it was 37 and 2023 going to at least 50.
As expected and I know you.
You previously.
Kind of a follow up you previously said you are not really specifically breaking down but curious if you could talk about maybe the rough mix.
Guess first.
Corporate versus partner operated and franchise.
Like the rough breakdown is it like 50 50 and then.
Also international versus domestic given your commentary on a lot of opportunity internationally just curious.
What maybe rough breakdown would be international versus domestic for those new stores.
So.
That's.
What we have shared that we expect majority of these locations to be partner operated of the opening so.
So theres going to be definitely more than 50% like we are not providing the specific color on some of those.
Again some of this also depends on the timing and flexibility in openings again as we are opening these locations. Some of this is outside of our direct control and there are supply chain challenges and impacts, but we feel good about the overall number that we are guiding and how thats going to open in Brisbane open.
Phil.
Works.
From the partner operated.
Perspective.
A big portion of that we would expect to be in international markets. As we continue to expand in those so again, just because of all those reasons that I highlighted a second ago I don't want to break some of those numbers in more detail, but we also expect our international franchise business will have some opportunity.
As can be we.
We are planning to expand internationally. So it's again beginning of the journey and some of those markets now that we're behind covered and we are opening as we mentioned we have first two stores in continental Europe.
In many years. So we are excited about it and they're going to continue to open throughout the year and we will be providing more context as we have more information to share.
Okay, Great I appreciate it the one thing the one thing that I would add to that is clear.
Clearly that 50 stores.
For us, it's a pretty long pipeline and so on.
And there is.
And we're planning years out beyond that as well without providing any specific detail on that but.
We have to as Juan was saying essentially and partner operated and even and Corporately managed these are leases that we're working with with other partners. Its not a unilateral decision on which store what kind of format is and even in some partner locations. Sometimes we end up running a corporately operated stores. So that's why we're here.
We're being not as crystal as we probably could be it's because it's sometimes it's down to the last portion of the negotiation on what form the store actually takes.
And yes, and we mentioned we just opened in round, but you might recall on the last earnings release, we discussed.
The excitement and the positive reaction in the Italian market. When we opened in Milan. So that opened just yesterday, but we're quite hopeful we will see the same sort of impact.
Great. That's helpful. Thank you.
Thank you. Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question.
Hi, good morning, Thanks, operator, and thanks for taking the questions and congratulations on the new dividend policy.
Underlying confidence in the business that must have helped inform that decision.
I appreciate the color on the positive impact that the Merry mission movie.
And across all the various touch points across the business.
Just curious as to whether there were any surprises or any unexpected lessons that you've learned going through that process that you expect to now be able to leverage in future content projects.
Well Theres always things that we learn.
Particularly with the new initiatives.
We that was our first as I mentioned the.
Theatrical animated feature.
And we made the decision to do that with Merry mission. Because we are already we had already enjoyed multiple years of success with these characters and the marketing and the storyline.
And already had an app and we had a real sense of.
This would be something that we would hope would resonate with with guests. Additionally, because and I mentioned it in the call. The power of the build a bear brand, we were able to secure a talent level that.
Typically I would think not be that normal for a quote unquote specialty retailer, creating a film and.
So from Chevy Chase the Jillian Michaels it was.
It's a really fun adventure for moms and kids alike. So we.
We went into this with eyes wide open in terms of looking at it like we do so much of our content creation as a primary marketing tool something to make it a center point of what we do have reason to communicate and spread it across everything that we do to create a comprehensive impact on.
The guest.
So from what we learned.
Well, we didn't expect that we would have a theatrical release.
That was not part of our thought process that we were able to create a partnership with cinemark early on for exclusive theatrical release in October and early November.
And that was an interesting we've never been a theatrical market or before so that was an interesting process for us and we were pleased.
That people are willing to come out to theaters and NCR film.
And we believe that we could actually next year, because what we're trying to create and I believe we have created is a an evergreen concept.
That we don't have to reinvent the marketing for the holidays every year. If you think about the longevity of holiday films that are targeted to kids.
We will have a Merry mission tradition marketing campaign next Christmas and.
And each year I would hope that we would learn something and improve and I expect that to be the case next year as we look through our marketing programs look through our communications lets do our content and as well as the media plan on how we can elevate not just the Merry mission program, which we shared was up.
<unk>, but to raise a lot wider level of everything that we do.
Great I appreciate the color and congratulations again.
Thank you.
Thank you. Our next question comes from the line of David.
Cayman Cayman wealth management. Please proceed with your question.
Good morning, guys. Thanks for taking my questions.
The first one is in the guide for 2020 for mid single digit growth.
What is it looks like if I back into it you're expecting same store sales to decline for the year can you give me an approximation on that or.
Please correct me, if I'm wrong, and you expect it to grow.
I just.
I think I answered that question just a minute to go.
Go again through this exercise so as we've talked about the mid single digits growth year over year in our guidance.
Thats compared on adjusted 52 week basis.
Two.
And we expect our growth to come from the store base as well as from our E Com base.
Addition to that we would expect to see growth from our base business as well, we haven't quantified that growth in that number, but we expect to grow that portion of the business as well.
Okay, and then on E Commerce, I know it was down in <unk>.
Comparisons were more difficult.
Do you expect in 2020 for e-commerce to resume growth and if so is it similar to the overall guidance of mid single digits.
We haven't specified specifically for equal, but again based on some of the chat.
Challenges, we have seen in 2023, we believe that that particular segment with all the digital transformation initiatives that we have in place should be growing at a faster pace than some of the other initiatives.
Okay. So are you thus far in 2024 have you seen the trends reverse to positive in e-commerce.
Yes, we have.
Okay, Great and then final question.
I'm not sure if this is meaningful or not but.
This new product <unk>.
Was that I know there is a law.
Lawsuit there on a claim that you have infringed upon them, but is it.
Is it a meaningful product I know it just launched was it.
A significant contributor to the quarter or it's essentially de Minimis and therefore, even if you lose that.
Not going to affect results any color you can provide there is appreciated.
Well first I'd just like to note that build a bear is.
25 here.
Upstanding intellectual property holder.
And we understand in intellectual property law and.
That.
<unk> is based.
Based on many of our pre existing animals.
And we are excited about the concept here is it.
Yes.
Two year, it's more specifically to your question clearly, we just launched it so.
Currently it would be immaterial, which is why we didnt mentioned in any of our any of our comments today.
Thanks for clarifying that good luck guys.
Thank you.
Thank you.
We have reached the end of the question and answer session I'll now turn the call over to Sharon John for closing remarks.
Thank you for your time today, and we look forward to speaking to you in our first quarter call.
A nice day.
And this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
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