Q4 2024 Build-A-Bear Workshop Inc Earnings Call
Speaker Change: Greetings and welcome to the Build-A-Bear Workshop 4th quarter 2024 earnings call. At this time, we'll participate in Sony Listen Only Mode. If anyone would require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question, queued any time by pressing star one on your telephone keypad.
Speaker Change: Good morning, and thanks for joining us for build a bear is fourth quarter and fiscal 2024 earnings call.
Speaker Change: Before we get started today I'd like to welcome New Board Director <expletive> Johnson.
Speaker Change: Normally the chair and CEO of foot locker brings a wealth of global retailing operations experience and we are delighted to have him as part of the build a bear family.
Speaker Change: Now today, we're pleased to share that the systematic execution of our strategy based on the market monetization of the power of the build a bear brand has enabled us to report record results, which exceeded our most recent guidance for the year.
Speaker Change: Given our solid corporate comparative store performance and continued expansion of our retail footprint on a global basis 'twenty 'twenty four is now in the books. It's the most successful year in the history of the company from both a total revenue and pre tax income perspective.
Speaker Change: All while continuing to return value directly to our shareholders and best in the future and maintain a solid balance sheet.
Speaker Change: Additionally, our most valued asset the build a bear brand proved to be as strong as ever as we successfully expanded our consumer segment.
Speaker Change: Categories channels and countries.
Speaker Change: This further supports our belief in the stretch ability of the memorable impact in subsequent halo effect created by build a bear's unique experiential retail model and the premise that as Teddy bear hug is understood in every language.
Speaker Change: In fact fiscal 'twenty 'twenty, four and marks the fourth consecutive year of record results for build a bear.
Speaker Change: We currently expect to harness that momentum to deliver a fifth straight year of record breaking revenue in fiscal 2025, Although we are cautiously optimistic on pre tax income results largely due to tariff concerns as we highlighted in this morning's press release.
Speaker Change: Colin will provide additional details in his remarks.
Speaker Change: Before I review, our strategic initiatives. Please note the full year fiscal 2024 results showed both revenue and profit expansion inclusive of the additional week in 2023.
Speaker Change: However, the following results have been adjusted to exclude the 53rd week for comparative purposes.
Speaker Change: Revenues increased three 6% to more than $496 million pretax income grew five 1% to more than $67 million and we also returned $42 million in capital to shareholders.
Speaker Change: We attribute build a bear's record revenue and meaningful margin expansion over the past several years to the dedication and successful execution of our multiyear strategy, which includes the diversification of our business model that in many ways is summarized by focusing on and making investments in opportunities to drive repeat purchase and.
Extend the brand's reach to more people in more places with more types of products for more purposes.
Speaker Change: This consistency despite various economic and geopolitical headwinds over the years stems mainly from the company's commitment to three key initiatives aimed at driving long term profitable growth.
Speaker Change: One the evolution and expansion of our experiential retail footprint to the advancement of our comprehensive digital transformation and three continued incremental investments to leverage the strength of the brand across multiple fronts, while returning capital to shareholders.
Speaker Change: The first strategic initiative is to evolve and expand globally to build a bear's three experienced location model court.
Speaker Change: Corporately operated partner operated in franchising.
Speaker Change: It is important to note that the significant improvements in profitability and cash flow from our retail businesses were not achieved overnight.
Speaker Change: But it has been through a disciplined approach and relentless focus that began over a decade ago that has enabled us to enhance our corporately operated store contribution margins to at least 25% a best in class rate, which we have maintained for four consecutive years with a fleet that is essentially one.
Speaker Change: <unk> per cent profitable.
Speaker Change: The combined effort across all three store model has extended build a bear's global footprint by over 100 additional locations in the past two years.
Speaker Change: Most of which our partner operated.
Speaker Change: To review the strategic initiatives in more detail I would like to turn the call over to Chris hurt our Chief operations Officer, Chris It's been an exceptional executive for the company since 2015 and has been instrumental in driving store fleet profitability and growth by evolving the retail footprint format leased.
Speaker Change: Still service model and operations as well as overseeing multiple improvements through the years, including the important implementation of our warehouse management system and recent point of sale upgrades.
Speaker Change: Spearhead our partner operated and franchise portions of our three pronged retail model even as his responsibilities have expanded to now include merchandising product and marketing.
Speaker Change: Therefore, while Chris will touch on our total new location expansion. He will focus on the partner operated and franchise grows which is largely international.
Speaker Change: Plus you will note some exciting news you may have already seen in the press. This morning that it's been in the works for multiple years Chris.
Chris hurt: Thanks, Sharon I'd like to begin by highlighting some of the next nine new Corporately operated stores that we added in 2024, starting with the first of its kind Hello, Kitty and friends of build a bear workshop, we opened late in the year and the popular century City mall in Los Angeles to tremendous fanfare, we all.
Chris hurt: So open three tourist destinations in England during the year, including a workshop in Windsor right across from the famed Windsor Castle, featuring a unique assortment of tourist inspired products a location in Stratford, England and the highly trafficked Stradford Westfield mall adjacent to Olympic Park, and the West Ham football.
Chris hurt: Radio plus and Oxford Street store in the heart of one of the busiest shopping areas in Europe, and the city center of London.
Chris hurt: In the U S. We opened key tourist destinations in Chicago and our famous originally building on Michigan Avenue in Irvine, California, and the popular Irvine spectrum in the famous tourist destination of Hershey, Pennsylvania. All of these new locations represent our continued focus on places where our guests go for fun and entertainment.
Regarding our partner operated asset light model, we added a total of 30, new locations internationally, representing 10 new countries.
Chris hurt: Our largest unit expansion occurred in Italy, where we now have 13 partner operated locations, Mexico, Norway, and Columbia opened four units each and a new build a bear workshop also opened at Copenhagen Airport in Denmark.
Our franchise model units expanded as well with new stores, and Fiji, Kuwait and the UAE.
Chris hurt: Summary, we believe our experienced location expansion across more than 25 countries with Remodels Corporately operated partner operated and franchise operated literally demonstrates the global power of the build a bear brand.
Chris hurt: Separately, we announced in our press release this morning exciting plans to introduce a new retail experiencing icon park located in Orlando, Florida, one of the largest tourist destinations in the world.
Again, this supports our multiyear strategic evolution and expansion of our footprint, particularly in tourist and hospitality destinations.
Chris hurt: This location is designed to benefit from natural consumer traffic driven by Walt Disney World Seaworld Universal Studios and the highly anticipated opening this summer of Universal's New theme Park epic universe with very close proximity to icon Park.
Chris hurt: Plans include a new creative interpretation of build a bear's famous make your own Teddy bear retail concept.
Chris hurt: Wind up to be a must visit attraction for a wide array of fairs, we look forward to continuing to create memorable moments for our guests and that's what about calling location, which we expect to open in the first half of 2026.
Chris hurt: In summary, I'd like to thank all the teams our partners across the globe that helped to bring our 24 net new locations this year to fruition.
Chris hurt: We have plans for the continued expansion of our experienced locations in 2025 with an expectation to open at least 15, new net locations during the fiscal year with the majority being partner operated as we continue to bring our brand to more places and more people with that I want to.
Turn the call back over to Sharon.
Thank you Chris.
Sharon: Our second initiative is our multi year comprehensive digital transformation across the entire company, including the omni channel focus of unlocking value with new capabilities to drive incremental opportunities like same day delivery gifting and personalization programs.
Sharon: We have discussed our progress on this initiative for several quarters last quarter, highlighting build a bear's new Chief revenue Officer, Dave Henderson, who leads our first time Cross company Omni channel consolidation effort.
Sharon: This is designed to integrate and scale, our corporately operated retail model and our digital E Commerce model.
Sharon: I am pleased to report that we have taken yet another important step in the company's omnichannel evolution with significantly more inventory visibility across the warehouses and stores.
Sharon: This allows order fulfillment to be faster and more accurate.
Sharon: Tension of order cut off windows, and the provision of even more flexibility for our growing on buy online ship from store or pick up from store capabilities.
Sharon: Oh positively enhancing the guest experience.
Sharon: For example, this improved omni channel capability has extended our cutoff windows, allowing guests more time to shop at build a bear dotcom before holidays, such as Christmas and Valentines day.
It also was a key enabler to successfully execute a same day shipping initiative with Uber, increasing same day shipping shipped orders over the past few months 10 fold versus the entirety of 2024.
Sharon: While admittedly a small base its a directionally positive indicator at this potential demand.
Sharon: Finally, we successfully simplified and digitize our on line record your voice offering to be completed right from our E. Commerce site. So the personalised audible message can be executed during the online checkout process.
Sharon: The need for a call back.
Sharon: While this may seem like a minor change build a bear's unique record your voice offering is a big part of our promise to guess as it allows consumers to add their very own special message to any furry friend turning them already special guest into a timeless keepsake.
Sharon: Because the record your voice element when placed in a build a bear plush is used to capture countless special moments from the sweep voices of young children, sending happy mother's day wishes to our heartfelt requests that will you marry me to announcing a new baby by sharing the insights actual ultrasound heartbeat with the family it's easy.
Sharon: To understand how this is build a bear's number one selling SKU in unit volume across the company.
Sharon: Since the online digital Digitization makes it much easier for the consumer to order. This change has already driven record your voice online sales up digital debit.
Sharon: Double digits.
Sharon: The third initiative is our increased investment to drive profitable growth.
Sharon: While continuing to return value to our shareholders.
Build a bear has improved and more consistent cash flow has allowed us to make longer term investments and products infrastructure content and people.
Sharon: Regarding products, we are expanding our audience with new offerings as we continue to broaden and build a bear's consumer base by taking advantage of our significant multi generational quote unquote Kidult thing appeal, representing 40% of sales through collectible trends licensing and gifting.
Sharon: What was new plush segment.
Sharon: One example from this Valentine's season was the Cougar bear, which was launched as a part of our popular after dark collection and available only through our age gated microsite bear K Dot com, which drove over 1 billion media impressions, including a hit on T. M D.
Sharon: Regarding concepts designed to go beyond our classic make your own plush offerings is a highly successful build a bear many Danes collection that was introduced just one year ago, many things, which have now sold over 1.25 million units to date.
Sharon: Under $10 and released and collectible ways.
Sharon: While they are currently primarily offered in our own stores given their success, we plan to extend them into other retail locations on a wholesale basis.
Sharon: In 2025.
In summary, we are pleased with our continued success and the delivery of yet another record setting year.
Looking ahead, while we acknowledge some uncertainty we believe we have the plans in place to again deliver record revenue and solid profit for the coming year, even as we work through the current geopolitical and economic environment, particularly related to tariffs.
Sharon: I would also note that over the past several years, we have honed and proven our ability to navigate difficult external impacts, including the retail Apocalypse Brexit and COVID-19.
Sharon: And understand that uncertainty has now become more of a norm than an anomaly.
That said, we are encouraged by our quarter to date results with a positive Valentine's as our store traffic continues to outpace national levels.
Sharon: While we are also making progress on our website.
Sharon: Separately, we enjoyed impactful social media engagement, which has driven sales in conjunction with our multi year NFL licensed relationship, culminating with our retail activation of build a bear workshop inside the NFL Super Bowl experience for the seventh time.
This time in New Orleans, we.
Sharon: We have also experienced a positive early reaction to our spring and Easter offerings, including the return of build a bear surprise Golden egg, which sold out last year.
Sharon: Finally licenses such as Blue and the new versions of popular Pokemon and Sanrio Hello, Kitty characters have been delivering enhanced by our new Hello, Kitty build a bear story that Chris mentioned, which we are also pleased to share is now one of our top performing locations since its launch.
Sharon: In closing I'd like to mention that build a bear's founder Maxine Clark recently received a well deserved induction to the toy industry Hall of Fame for her undeniable, an indelible contributions to both the retail and toy industry.
Her entrepreneurial spirit and balanced energy inspired her at envision and launched a concept in 1997 that has now become a multi generational icon and unforgettable memories for more than 250 million people around the world.
And we're still going strong.
Sharon: With that not only would I like to extend my thanks to vaccine, but also to the entire build a bear family are hundreds of partners and millions of amazing guests as we strive to continue to deliver on our corporate mission to add a little more heart to life.
Sharon: Boring.
Sharon: Thank you Sharon and good morning, everyone.
Sharon: It's good to speak with you again today and share our fiscal fourth quarter and full year 'twenty 'twenty four results.
Before I touch on our financials come to past year I want to recap a few highlights first we are pleased that we exceeded our guidance and delivered our fourth consecutive year of record results.
Sharon: We grew across all segments expanded gross profit margin and increased pretax income compared to last year.
Sharon: We also continued to return capital to shareholders for the year, we returned $42 million through our quarterly dividends and share repurchases.
Sharon: Of note, we repurchased 1 million shares which is over 6% of our outstanding share count.
Sharon: Over the past four years, we have returned over $130 million to shareholders.
Sharon: To put this in perspective.
Sharon: This return of capital to shareholders represents more than 100% of our market cap from four years ago.
Sharon: Additionally, yesterday, our board of directors increased our quarterly dividend by 10% to 22 cents per share.
Sharon: Quarter to date, we have used nearly $4 million to repurchase shares with $85 million remaining under our stock repurchase program.
Sharon: Now moving to a more detailed review of our financial results as you may recall 'twenty 'twenty four fourth quarter included an extra week the generated approximately $7 million in total revenues with an estimated 35% flow through to EBITDA.
Sharon: I will provide growth rates on a 13 week comparable basis.
Sharon: For the fourth quarter.
Sharon: Total revenues were $154 million and increased five 7%.
Sharon: Net retail sales, but $139 $5 million and increased four 7%.
Sharon: Stores delivered a strong performance offsetting an anticipated slowdown in e-commerce demand.
Sharon: Our store traffic was up 3%.
Sharon: Our country outpacing U S national traffic, which declined almost 1%.
Sharon: We also had a positive contribution from dollars per transaction.
Sharon: Commercial revenue, which primarily represents wholesale sales to our partner operators and international trade changes revenue rose a combined 25% versus the prior year.
Sharon: Gross margin was 56, 6% an improvement of 20 basis points compared to last year.
Sharon: Gross margin was driven by a slight expansion of our retail gross margin plus expansion of our commercial gross margin.
Sharon: SG&A expenses were 57 $8 million or 38, 4% of total revenues compared to 39, 2% of total revenues in 2023 fourth quarter more efficient marketing spend and leverage of corporate level costs drove the 80 basis point improve.
Sharon: Uh huh.
Sharon: Our pretax income of 27 $5 million was 18, 3% of total revenues.
Sharon: Presenting growth of 15, 8% year over year.
Sharon: Adjusted EPS was $1.59 an increase of 18, 7%.
Sharon: Reflecting higher pretax income.
A lower tax rate and a reduced share count.
Sharon: Now moving to select full year results on a 52 week comparable basis.
Sharon: 'twenty 'twenty four was a record year with $496 $4 million in total revenues, which increased three 6%.
Sharon: Pre tax income of $67 $1 billion Wausau was also a record and grew five 1% year over year.
Sharon: Finally, adjusted EPS was $3.77 and grew 10, 2% for the year.
With respect to the balance sheet at year end, we had cash and cash equivalents of $27.8 million, a decrease of $16 $6 million compared to year end 2023.
Sharon: Again, this was after spending $42 million between dividends and share repurchases during the year.
Sharon: I'd like to call out two other drivers of this change in cash and increase in accounts receivable and a decline in accrued expenses. Both for uses of cash in 'twenty 'twenty four and we expect them to be sources of cash this year.
Sharon: The change in cash balance was also driven by higher inventory investment, reflecting an increase of almost 10% from the end of last year.
The inventory increase was due to an accelerated purchase of 2025 core products to help mitigate potential tariff impact.
Sharon: Turning to the outlook.
Sharon: The full details of our guidance are included in our press release, but I will highlight a few key metrics.
Sharon: Currently expect.
Sharon: Total revenue to grow on a mid single digit basis.
Sharon: This growth is partially driven by the addition of at least 50 net new experience locations.
The majority of which are expected to be international partner operated.
We expect our commercial segment revenue to grow at least 20% for the year, which will be significantly back half weighted.
Sharon: We expect pretax income to range from a low single digit decline to low single digit growth.
Sharon: Pretax income growth is expected to lag revenue growth due to inflationary pressures largely from tariffs, but also clothing medical cost minimum wage increases and investments for future growth.
Sharon: We expect the combination of these pressures to negatively impact results by upwards of $10 million in expenses for the year.
Sharon: Yeah.
Sharon: We are estimating that about one half of this headwind will be related to expected sales of inventory that will be impacted by the current level of tariffs and believe our guidance is appropriately measure based on the most recent announcements.
Sharon: For context regarding the announced tariffs.
Sharon: International trade is critically important to us and we have made significant strides to diversify our supply chain over the past several years.
Sharon: In 2018, we sourced nearly all of our products from China.
Sharon: We have seen reduced our dependency and we expect China to be the source of less than 50% of our inventory shipped to North America in 2025.
Sharon: Yeah.
Sharon: Even with these macro challenges.
Sharon: During fiscal 'twenty 25, our objective is to stay focused on our strategy to grow the number of global locations continue our digital transformation and invest in our company to drive another year of record revenues and deliver solid pretax income margins, while returning capital to shareholders.
Sharon: Okay.
I would like to thank all of our store and warehouse associates and corporate team members for contributing to our 'twenty 'twenty four records the results, which have positioned us for our fifth consecutive successful year. This concludes our prepared remarks, we will now turn the call back over to the operator for questions operator.
Sharon: Thank you will now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad.
Sharon: A confirmation tone will indicate your line is in the question queue.
Sharon: Press Star two if he'd like to remove your question from the queue.
Speaker Change: Once again Thats star one to be placed in the question queue. One moment. Please while we poll for questions. Our first question is coming from Michael Baker from D. A Davidson your line, there's not a lot.
Sharon: Great. Thanks.
Michael Baker: Two questions. One just your view on the overall consumer environment a lot of consumer companies are seeing a slowdown in.
Michael Baker: In early 2025, but it doesn't seem like you're seeing that at least through Valentines day, and Easter thing early Easter things seem good but what's your view for 2025, how does your business typically react in a consumer slowdown.
Michael Baker: So that's one question second question, if you could just talk a little bit more about that.
Michael Baker: The progress you're making in e-commerce.
Michael Baker: It looks like the year over year decline was well last quarter was up slightly so not as good performance at least in the short term there, but talk about the progress that you're making towards improving that business longer term. Thank you yeah.
Michael Baker: Yeah, Thanks, a lot.
Well it can start considering a excuse me a concerning your first question.
Michael Baker: We are seeing positive quarter to date results and as I noted in the remarks, our traffic is outpacing national traffic, we've been fairly pleased with those the valentines portion that actually occurs and the fiscal year 2025, which was only a couple of weeks there but even.
Michael Baker: Just the set of Easter and spring some positive results to that now the question concerning the outlook well, you're getting a sense of our outlook from a red side, we provided some guidance, but in general the toy industry seems to be over time recession risk.
Michael Baker: Yes don't I don't even want to say the recession word, but you you.
Michael Baker: You know you do have to imagine some of those scenarios and Ah we.
Michael Baker: No that you know when when a third of our business as birthdays and 40% of our sales are to collectors it bodes well for us.
For us to be you know in a good position and that speaks to the ongoing strategy of diversifying not only from a consumer perspective, but a reasons for purchase perspective, but also from globally.
Michael Baker: For us to be able to better maneuver them more macro.
Michael Baker: Excuse me more micro impacts them on the website.
Michael Baker: Totally acknowledged that we feel has a lot of opportunity, we believe and our build a bear dot com as a real driver for us from a business perspective, particularly on the collector side. The more adult drilling side are the giftable business and we've been doing a lot of work behind the scenes.
Michael Baker: <unk>, most strategically and from an implementation in different applications I'm in and.
Michael Baker: And infrastructure as well as bringing on new team members to access integrate and elevate that entire omnichannel space. The key I think to understand is that we're not just trying to drive quote unquote build up their dotcom, we're trying to build a complete integrated.
Michael Baker: Omnichannel organization, where we understand how and when the consumer shopping between the brick and mortar and the E Commerce site and that's one of the reasons why we've now brought on Dave Henderson, which I mentioned in the call to integrate that business. We had so many great partners and so many great.
Michael Baker: Applications that we've put in that we had yet to optimize them from partners with our partnerships with Salesforce to our journeys program to our email systems to putting in our entirely new P. O S system last year, which you might recall that is designed to also plug in to that in.
Michael Baker: Tire ecosystem that.
Michael Baker: We have yet to unlock truly so I like that I think that's an important point that we're acknowledging that we're.
Looking at this in a much more I think holistic way, which is the appropriate way to look at it versus I'm gonna goodness E comm versus driving the store business, we want to grow the pie not keep splitting between the Pi based on how and when we market. So it's it's a it's a.
Michael Baker: Long term initiative and I think that we're on the right road.
Michael Baker: Thank you for those detailed comments that that helps I appreciate it.
Thank you. Your next question today is coming from Eric Feder from FCC researcher why does that why.
Eric Feder: Good morning, congratulations on a great quarter.
Michael Baker: Thank you Eric.
Speaker Change: Well you know.
Michael Baker: Where should we think about.
Michael Baker: In terms of.
Michael Baker: The tariffs and your ability to continue to reduce dependence.
Michael Baker: China.
Michael Baker: So the longer term the ability to potentially have to set some of the terrorists with higher pricing.
Eric Feder: So Eric.
Eric Feder: Eric you know we have been very proactive as the organization in our thinking and in anticipation of potential tariff impact as a result, we have been.
Eric Feder: Talking on the last couple of conference calls that we are going to be pulling forward our inventory.
Eric Feder: Inventory purchases, especially about our core products to help mitigate some of those potential impacts as we have some visibility and stability what the rates may be we can manage through that challenge.
Eric Feder: As we are having multiple.
Eric Feder: Yes of different increases from the tariff perspective, it becomes increasingly more difficult in the spur of the moment tremendous manage those I firmly believe that overtime, we are going to be working with our partners with our vendors and like to become more efficient to help mitigate some of those things and you know I cannot.
Eric Feder: The last resort is really to continue to raise prices, but again, we need to have a little bit more stability understand where these things may land. So that we can really manage our business. In addition to that first time, then B 2017 18, when there was a threat of tariffs is there.
Eric Feder: I mentioned in my prepared remarks, nearly all of our production was coming out of China. I also mentioned this morning that less than 50% of our receipts into North America. This year it will be coming from China. So our teams have done tremendous job of working with our partners to mitigate cost to really dive.
Eric Feder: To supply our supply chain and to expand our factory base, both to mitigate costs, but also to help grow our business internationally as we have been focused on that aspect of the business. So I believe we have strong team in place to help manage these things, but at the same time it is very challenging to me.
Eric Feder: That's things that keep moving as we go along.
Eric Feder: I think Eric too it's important to note that we've shown a real alacrity over the years of pricing increases in a way that I think are much more scaffold and consumer conscious.
Eric Feder: We keep that accessible entry level price point for young kids to come in and have an experience to build a bear we has been incredibly prudent about appropriate price banding and testing the upper limits, where it makes sense and we also again because of this diversification.
Eric Feder: And in the collectibles gifting.
Eric Feder: Limited editions exclusive certain licenses it gives us the permission to push prices, even higher I mean, we have theres now sieracki Crystal bears that are $99. So you know it is there's the upper limits that we are still exploring as the brand continues to grow.
Eric Feder: And it's.
Eric Feder: Diversification as well as this appeal.
Eric Feder: Great.
Speaking of exploring a new things Uber Uber rollout.
Eric Feder: Obviously for holidays like Valentine's day wear.
Eric Feder: Data delivery makes a huge difference is works.
Eric Feder: It's I guess, it's expansion of being able to kind of be there anytime really your customer once you know what.
Eric Feder: Do you kind of see a future for that or are we going to see more of these kind.
Kind of Uh huh.
Eric Feder: Hey relationships and be see them expand even more to kind of expand out.
How easily it can be for someone to get there.
Eric Feder: Therefore, a friendly to get it.
Yeah, So you're right that one of the more obvious reasons to partner with Uber and same day delivery is that it extends our shipping windows. When it comes to holidays are deadlines like Valentine's day, I mean, you know I know that you probably Eric what playing way early in advance for Valentine's day.
Eric Feder: But a lot of people don't so being there for that guy.
Eric Feder: The special Teddy bear its very helpful.
Eric Feder: Definitely adding a little more heart to life.
Eric Feder: But on a broader in a broader way. That's also true for birthdays. Those are individual deadlines that happened all year long and that people want to be not late for someone's birthday, but importantly to we believe with our personalization aspect, where you can embroidery on Teddy bear.
Eric Feder: That those those newborns and it all is a really big piece of our business I mentioned in our remarks, how people do reveals a whether they are pregnant or agenda retails using build a bear a lot and we're just a part of that and one of the things that we want to do from pushing it.
Eric Feder: That particularly aspect is it it pulls forward. The first time, you've experienced the bear which are you know if managed correctly again back to this omni channel guests lifetime management question.
Eric Feder: And your lifetime value on the lower end, so there's a lot of different aspects of their sort of woven through the strategy and why we want same day delivery because it helps us unleash a number of different opportunity and it's pushing right into some of the consumer.
<unk> today, which is just straight convenience and and we want to be where the consumer goes.
Eric Feder: Great.
Eric Feder: The rest of the year.
Eric Feder: Thanks, Eric.
Speaker Change: Thank you as a reminder, that star one to be placed in the question queue.
Speaker Change: Our next question is coming from Greg <unk> from Northland Securities. Your line is that a lot.
Speaker Change: Yes.
Speaker Change: So do you agree with that I think Sharon thanks for taking my questions. Congrats on the strong Q4 wanted to you know it sounds like many beans. The product line is trending very well with sales there and you know given your kind of commentary on the expanding reach within wholesale could you maybe elaborate on kind of the plans there this year and when we might see additional to develop.
Speaker Change: Uh huh.
Sharon: Yeah. So as I mentioned, many things is so well over a million units at this point and we launched it.
Sharon: February March of last year, so almost at one one.
Sharon: You know 12 months period here and it has been very well received and one of the things we really like about many things as well as we're seeing it's not in general is not a trading down for us and we're seeing a good attachment rate to our products. It also helps us with conversion. So it's helping D. P. T U S dollar.
Sharon: Transaction unit per transaction as well as well as a conversion that has sometimes people come into just look around and think about what they want when they want to go through the entire process, but now we still have a quick purchase for them.
Sharon: On the expansion front I want to note before I give you a little more color. There. This was one of the reasons why we launched many things in the first place we wanted to see the stretch ability of the brand beyond the make your own and and see if there was this halo effect in that.
Sharon: You had mentioned that we believe certainly exist people place value on products because they carry the build a bear brand and they don't have to be in our make your own form for that to happen.
Sharon: There's affinity to the brand beyond the store concept.
Sharon: So we are talking to retailers, we were at toy fair. This year, we have a lot of opportunity and I before anything you now put in place I'm reticent to mention anything specifically, but what I can say oh for our partners outside the United States that own their own retail.
Sharon: Where we do shop in shops, they're already in the business I put as many beans in other countries in toy stores, Italy is a great example, where we partner with G. O C. P rosy and they have again independent towards stores and they also are our partners for our shop in shop and.
Sharon: To build a bear partner operated retailers in that country.
Sharon: And they're very successful there.
Sharon: Great very helpful. Sure look forwarding looking forward to getting updates there.
Sharon: For Bob I was wondering if you could maybe clarify I'm not sure I caught all of the metrics in terms of the key for revenue related metrics I think you said traffic up 3% year over year.
Sharon: Could you kind of.
Sharon: If you haven't already comment on conversion units per transaction and I think you said average transaction size was up as well.
Sharon: Yeah, So what I mentioned, the 3% was our improvement in traffic year over year.
Sharon: Compared to national traffic that was down roughly a percent and then we have seen.
Sharon: Improvements in dollars per transaction again, that's our bullets our units per transaction and AUR, but you know we had a little bit of softness in conversions, but overall positive results for the quarter.
Sharon: Great. Thanks for clarifying I guess lastly, you know as it relates to the 50 stores that you expect to add in 2025, you know it makes sense that you know you have been having an increased focus on international versus domestic in your commentary there one of the if you could maybe comment on expectations.
Sharon: A pacing or cadence level for net new unit growth this year.
Sharon: Yeah. So thanks again for the question as we think about the grow this is definitely one of the big areas of growth for us and.
Speaker Change: Like to express my appreciation to Chris and team for doing all this hard work and you know last year. This year you know last year you know in Q4, we opened 24 stores.
Sharon:
Sharon: On a full year basis, we opened 64 stores just for clarity there 64 locations. This year, we are expecting to add at least next 50 new locations.
Sharon: So.
Sharon: Most of that stuff, Greg as we think about you know there is timing with our partners. When we can open some of those things that our logistics things that we are working through.
Sharon: We set our commercial revenue was going to grow 20% on a full year basis in all of this stuff that is going to be driven by partner operated that are internationally based and it's going to be back half weighted. So again, that's the idea of you recognize the revenue at the time of shipments of product to them, so usually especially in the east.
Sharon: Growth stages, we see some choppiness in our revenue and comparability year over year, but we are very pleased with the progress. The teams are making in that part of the business and we definitely continue to see.
Sharon: Growth year after year.
Sharon: Alright, thanks for the color.
Steve Silver: Thank you next question is coming from Steve Silver from August Research. Your line is now live.
Speaker Change: Thanks, operator, and thanks for taking my questions first voyage I got a question about inventory I know you guys have mentioned that you've accelerated some of your purchases of some of the core products.
Speaker Change: Trying to get ahead of some of the tariff kind of situations and I think the prepared remarks. It also mentioned that you remain comfortable with the overall inventory levels I'm just thinking about 2025 given the.
Speaker Change: New store expansion.
Speaker Change: You guys expect should we expect inventories to stay near current levels or would we should we expect our inventory levels to rise a little bit more over the course of the year to accommodate the expansion of the footprint.
Speaker Change: So great. Thanks for the question. Good question. There are when we think about you know inventory and grow there are multiple things that may be impacting this stuff from the units that we are buying and purchasing definitely there is going to be growth as we are supporting some of the expansion, especially as we go.
Speaker Change: Talked about the international you know, we expect to grow our store count. So there is just the natural incur.
Speaker Change: Increase in buy when we think about timing year over year.
Speaker Change: Inventories going down and that you know throughout the year, but you'll see spikes, but I wouldn't think you know at least from that perspective, that's going to significantly.
Speaker Change: Grow from the unit perspective, even though we are going to be supporting our by the end of the year New businesses now there is gonna be a some of the unique things that we are talking about especially for next year as we announced earlier today that in the first half of 'twenty to 'twenty six we are going to be.
Speaker Change: Opening got Orlando.
Speaker Change: Location, and you know with some of the stuff and some of the things.
Speaker Change: You know there will be some timing of inventory receipts and flow and another piece from the total cost perspective, what we will need also to contemplate if you guys from the modeling perspective, you know there is going to be a higher cost of inventory if tariffs stay at the same level as they are currently enacted or go up.
Speaker Change: Which would make those numbers go up more.
Speaker Change: Great. Thanks for the color and one more if I may so a lot of the prepared remarks and a discussion. So far are focused on really the positive trends in the resilience of the business as traffic continues to outpace the national averages revenues per transaction are healthy.
Speaker Change: The store count 50 for the for 'twenty 'twenty five as expected, which is still very healthy gross not to mention some of the other initiatives are so those are all positives and with guidance for the year being in the mid single digit range curious to know what maybe what some of those offsets.
Speaker Change: Might be a to a more constructive outlook for revenues, whether it's just macro level kind of head wins or just anything else you're thinking about in terms of keeping revenue guidance a little bit more on the conservative side.
Speaker Change: Well, here's the thing I wouldn't consider revenue conservative or aggressive again, we are providing guidance in mid single digits to account for some of those things. So clearly if you're out of the higher end of that mid single digit range. You know the results would be better there is some of this stuff as we talked about.
Speaker Change: 20% at least 20% growth from the commercial segment driven by our.
Speaker Change: Growth of our international partner operated locations. We believe there is you know some room for improvement or not.
Speaker Change: Business our store performance has been very solid and you know that some of the trends and initiatives that we are putting in place.
Speaker Change: We feel.
Speaker Change: Strong.
Speaker Change: We've seen strong results, so far and it gives US you know a certain level of confidence how consumers are reacting to some of the new product and some of the.
Speaker Change: New stories that Sharon highlighted in her prepared remarks. So there are things that you know definitely a positive.
Speaker Change: At the same time, you know we are not immune to everything that's happening around us and what the macro environment will do and how the impact of tariffs both directly on that private costs as well as the indirectly on the overall inflationary.
Speaker Change: Syed will impact the economy and you know those things are outside of our control, but you know considering what's within our control we feel good about it the directory businesses.
Speaker Change: I'd also just note too we have been enjoying some positive macro trends.
Speaker Change: But we also don't control, which are consumers are returning to physical retail wanting to invest in experiences and memory, making and you know a lot of the the personalization as I mentioned before but also consulting which has been a rising trend in there.
Speaker Change: And the good crosshairs of all of those things. So that's part of what's helping our business that we're leaning into that with the right types of product the right types of licensing the right types of offers and some of the technology as I mentioned or even just you know being aware of the kinds of things that those what consumers are looking.
For very beneficial for us thus far we can't predict what what you know how the consumer will continue to trend in that in that regard, but but thus far are from having onsite birthday to teens coming in for trend animals and even adults.
Speaker Change: Wanting to come in to build a bear has been on the rise for us.
Great. Thanks for all the color I appreciate it and congratulations on the results and the expansion of the dividend.
Speaker Change: Thank you.
Speaker Change: Thanks, so much everyone for joining us today and we really appreciate you you you're joining us for the call and to hear some more details regarding this year's record breaking fiscal 'twenty 'twenty four result, and look forward to sharing more information with you in the first quarter of 2025 have a wonderful day.
Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.
Yeah.
Speaker Change: Yeah.
Speaker Change: Yes.