Q1 2025 Build-A-Bear Workshop Inc Earnings Call

May 29, 2025

As a brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host Gary Janeiro, Investor Relations. Thank you Sir you may begin.

Speaker Change: Thank you good morning, everyone and welcome to build a <unk> first quarter 2025 earnings conference call.

Speaker Change: With us today are John <unk>, Chief Executive Officer, Chris Hurt Chief operating Officer, and <unk> Chief Financial Officer. During this call. We will refer to forward looking statements that are subject to risks and uncertainties actual results could differ materially. Please refer to our forms 10-K and 10-Q, including the risks.

Speaker Change: Factors section.

We undertake no obligation to update any forward looking statements during.

During this call we will present, both GAAP and non-GAAP financial measures a reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website.

Pierre: And now I'll turn the call over to Pierre.

Pierre: Thank you Gary good morning, and thanks for joining us for build a bear as first quarter fiscal 2025 earnings call.

Pierre: Today, we are pleased to share that we have reported the best first quarter results and build a bear's history double digit topline growth drove record revenue margin expansion and strong performance across all segments.

Speaker Change: This represents impressive earnings per share growth of nearly 43%.

Speaker Change: The record setting start to the year is largely due to the ongoing execution of our long term strategy.

Part of this strategy is centered on leveraging the high awareness and affinity of the build a bear brand to successfully expand by first introducing new product categories. With for example, the continued success of the many billions collectibles plush line.

Extending consumer rights such as the ongoing drive to appeal to the growing over 18 conduct segment and third introducing our valued workshop experience. The building block of the build a bear brand to new markets, particularly outside the United States, which has now driven the company's.

<unk> presence into 30 countries.

Speaker Change: Let's review the quarter's highlights.

Speaker Change: All of which were Q1 records.

Speaker Change: Revenue increased 11, 9% to more than $128 million pre.

Speaker Change: Pre tax income grew 36% to nearly $20 million and EPS increased 42, 7% to $1 17.

Speaker Change: Additionally, we returned over $7 million in capital to shareholders.

Speaker Change: As a comparison point, reflecting our focus on continuous improvement over the years. The companys first quarter pre tax margin rate of 15% compares to 3% for the first quarter of 2019, the last pre COVID-19 year.

Speaker Change: Without a doubt the company's last four years of record setting results, including a 25% store contribution margin with virtually all of the company stores being profitable and mid teens pretax margin followed by this best first quarter in the company's history.

Speaker Change: Bolsters, our overall confidence in the company our team our overarching strategy and the strength of the build a bear brand.

Speaker Change: This is especially true considering those four years of positive results were achieved the mid various economic and geopolitical headwinds.

Speaker Change: With this in mind, we are reiterating our 2025 revenue guidance.

Speaker Change: However, we are updating the company's pre tax guidance inclusive of the current tariff rates.

Speaker Change: We will provide more detail in his remarks.

Speaker Change: We believe the company's strong performance over the past four years is substantially due to our historic ability to successfully perform in volatile environments.

Speaker Change: And is linked to a clean balance sheet strong cash flow a vertical flexible retail model and a relentless focus on controlling the controllable.

Speaker Change: This success validates the continued commitment to our three key strategic initiatives aimed at delivering long term profitable growth specifically, one the evolution and expansion of the Companys experiential retail footprint to the advancement of our comprehensive digital transformation and.

Speaker Change: Three the continued incremental investments to leverage build a bear's brand strength across multiple fronts.

Speaker Change: Returning capital to shareholders.

Speaker Change: For our first strategic initiative in the past few years with the benefit of the company's three retail business models, we have accelerated our location expansion across the globe ending the first quarter with over 600 locations.

Speaker Change: 30% of which are outside the United States.

Speaker Change: To provide some more information relating to the Companys store expansion and evolution initiative.

Speaker Change: I would like to turn the call over to Chris hurt build a bear's chief operations Officer, Chris. Thanks.

Speaker Change: Thanks, Sharon we are committed to expanding our brand reach through our key strategic initiatives.

Speaker Change: Evolution and expansion of our global footprint, we opened 15 net new experience locations in the first quarter highlighted by the opening of our Corporately operated Dublin, Ireland location on grass industry.

Speaker Change: Highly popular tourist destination this.

Speaker Change: This standalone store features exclusive merchandise curated for tourists of all ages.

Speaker Change: As we continue to grow the brand in more places we've added two more countries, bringing our total count to 30 as Jim noted.

Speaker Change: As a testament to the enthusiasm for the brand around the Globe current international partners and franchisees continue to add experienced locations.

Speaker Change: <unk> the expansion into two new countries I think.

Speaker Change: Finland, and talent of Estonia, where Lawrence Fo the openings stretched around the mall.

Speaker Change: Stand alone, Denmark location, and the Copenhagen Airport, one of the busiest in Europe.

Speaker Change: Of two new locations in Italy, one in Milan, and one in Venice, The Standalone workshop and the Historic District.

Speaker Change: So San Marco <unk>.

Speaker Change: Three new franchise stores in the UAE.

Speaker Change: And one opening in Australia, one of our oldest and largest franchise countries, bringing our experience location counts with 17 down under.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: Separately, our partnership with Carnival cruise lines continued as we opened on their two newest ships. We added three more girls scout locations, bringing our total to 2008. Although these are designed on a smaller footprint to serve important role in our broader growth got multi year license relationship.

Of all ages.

As we continue to grow the brand in more places we've added two more countries, bringing our total count to 30 as Jim noted.

As a testament to the enthusiasm for the brand around the Globe current international partners and franchisees continue to add experienced locations, including the expansion into two new countries, Helsinki, Finland, and talent of Estonia, where lines for their openings stretched around the mall.

Gary Schnierow: It is now my pleasure to introduce your host, Gary Schnierow, Investor Relations. Thank you, sir. You may begin. Thank you.

Speaker Change: As these new experienced locations come to fruition. There is no question that we're at.

Gary Schnierow: Good morning, everyone, and welcome to Build-A-Bear's first quarter 2025 earnings. With us today are Sharon John, Build-A-Bear's Chief Executive Officer, Chris Hurt, Chief Operating Officer, and Voin Todorovic, Chief Financial Officer. During this call, we'll refer to forward-looking statements that are subject to risks and uncertainty.

Speaker Change: Adding a little more hard to live in more places.

Speaker Change: More people around the world. This is important as we continue to diversify our revenue stream.

Speaker Change: That alone, Denmark location, and the Copenhagen Airport, one of the busiest in Europe the.

Speaker Change: As a reminder, we announced on our yearend call and we also have plans to launch a multi level, one or a time build a bear workshop and icon Park located in Orlando, Florida.

Speaker Change: The addition of two new locations in Italy, one in Milan, and one in Venice, a Standalone workshop and the historic district of Piazza San Marcos.

Gary Schnierow: Actual results could differ mater- Please refer to our forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any for During this call, we will present both GAAP and non-GAAP financial measures. Reconciliation of non-GAAP to GAAP measures is included in today's earnings presentation.

Speaker Change: Three new franchise stores in the UAE.

Speaker Change: This is scheduled to open in the summer of 2020 with a groundbreaking planned for this July.

Speaker Change: And one opening in Australia, one of our oldest and largest franchise countries, bringing our experienced location count of 17 down under.

Speaker Change: Our expansion plans remain on track for 2025 with at least 50 net new locations expected. This year. The majority of those being operated by our international partners.

Speaker Change: Separately, our partnership with Carnival cruise lines continued as we opened on their two newest ships. We added three more growth GAAP locations, bringing our total to 2008. Although these are designed on a smaller footprint. They serve an important role in our broader girl scout multi year license relationship.

Sharon John: https://www.investorrelations.com Thank you, Gary. Good morning, and thanks for joining us for Build-A-Bear's first quarter fiscal 2025 earnings call. Today, we are pleased to share that we have reported the best first quarter results in Build-A-Bear's history. Double-digit top-line growth drove record revenue, margin expansion, and strong performance across all segments. This represents impressive earnings per share growth of nearly 43%. The record-setting start to the year is largely due to the ongoing execution of our long-term strategy. Part of this strategy is centered on leveraging the high awareness and affinity of the Build-A-Bear brand to successfully expand by, first, introducing new product categories with, for example, the continued success of the Many Billions Collectibles plush line.

Speaker Change: We're excited about our continued growth, which will bring the build a bear brand to more people in more places.

Sharon: With that I'll turn the call back over to Sharon.

Sharon: Thank you, Chris and the team have been doing a fabulous job, bringing the beloved build their experience to kids and kids at heart around the world.

Speaker Change: As these new experienced locations come to fruition. There is no question that we're adding a little more hard to live in more places for more people around the world. This is important as we continue to diversify our revenue stream.

Sharon: Regarding our second initiative in digital transformation across the company as we enter the final phase of decommissioning, our legacy inventory management systems, and implementing a new more strategic system with advanced capabilities the impact on the company's digital transformation will be far reaching.

Speaker Change: As a reminder, we announced on our year end call that we also have plans to launch a multi level one of a kind build a bear workshop and icon Park located.

Sharon: While we have been making incremental changes over the past few years. The latest tools will enable better real time inventory visibility and improved data driven decision, making which are designed to further drive sales and enhance operational efficiencies.

Speaker Change: In Orlando, Florida. This is scheduled to open in the summer of 2026 with a groundbreaking planned for this July.

Speaker Change: Our expansion plans remain on track for 2025 with at least 50 net new locations expected. This year. The majority of those being operated by our international partners.

Sharon John: Second, extending consumer reach, such as the ongoing drive to appeal to the growing over-18 adult segment. And third, introducing our valued workshop experience, the building block of the Build-A-Bear brand, to new markets, particularly outside the United States, which has now driven the company's international presence into 30 countries.

Sharon: Finally, the third initiative is to leverage the power of the brand by making strategic investments across a number of fronts to drive profitable growth, while continuing to return value to shareholders.

Speaker Change: We're excited about our continued growth, which will bring the build a bear brand to more people in more places.

Sharon: With that I'll turn the call back over to Sharon.

Sharon: It's important to note that our ability to invest in longer range projects that impact the global the company's global footprint expansion digital infrastructure marketing programs content and organizational structure has largely been enabled by build a bear's improved and more consistent revenue.

Sharon: Thank you, Chris and the team have been doing a fabulous job, bringing the Milan build their experience to kids and kids at heart around the world.

Sharon John: Let's review the quarter's highlights, all of which were Q1 records. Revenue increased 11.9% to more than $128 million. Pre-tax income grew 30.6% to nearly $20 million. And EPS increased 42.7% to $1.17. Additionally, we returned over $7 million in capital to shareholders. As a comparison point reflecting our focus on continuous improvement over the years, the company's first quarter pre-tax margin rate of 15% compares to 3% for the first quarter of 2019, the last pre-COVID year. Without a doubt, the company's last four years of record-setting results, including a 25% store contribution margin, with virtually all of the company's stores being profitable, and mid-teens pre-tech margins, followed by this best first quarter in the company's history, bolsters our overall confidence in the company, our team, our overarching strategy, and the strength of the Build-A-Bear brand.

Sharon: Cash flow.

Speaker Change: An example of this from a product and marketing perspective as I. Previously noted is the successful many beans collection, which was launched in February of 2020 for many.

Speaker Change: Many beans were strategically designed to expand beyond make your own plush as well as serving as an accessible grabbing go entry level price point offering to increase conversion and create a basket builder all of which have proven to be the case.

Sharon: In addition, many gains have already been introduced in retailers outside of our workshop, which we believe represents a growth opportunity.

Sharon: It's important to note that our ability to invest in longer range projects that impact the global the company's global footprint expansion digital infrastructure marketing program content and organizational structure has largely been enabled by build a bear's improved and more consistent revenue.

Sharon: The line continued its momentum in the first quarter of 2025, expanding 30% year over year, bringing the company's total sales to nearly 2 million units to date.

Sharon: To invigorate the collectible nature of the business model 50, New styles were released in the inaugural year, some of which were a miniature replicas of build a bear's best selling classic offering.

Sharon: Cash flow.

Speaker Change: An example of this from a product and marketing perspective as I. Previously noted is the successful many beans collection, which was launched in February of 2020 for many.

Sharon John: This is especially true considering those four years of positive results were achieved amid various economic and geopolitical headwinds.

Sharon: <unk>, we've released 15, new many veins already this year, including limited edition items.

Sharon: Some additional first quarter product focal points included build a bear's traditional make your own version of a new strawberry Highland cow. The popular pokemon character Hooper and a limited edition April Fools drop of emo Ox <unk>.

Sharon: Many beans were strategically designed to expand beyond make your own plush as well as serving as an accessible grab and go entry level price point offering to increase conversion and create a basket builder all of which have proven to be the case.

Sharon John: With this in mind, we are reiterating our 2025 revenue guidance. However, we are updating the company's pre-tax guidance inclusive of the current tariff rates.

Sharon John: Voin will provide more detail in his remarks. We believe the company's strong performance over the past four years is substantially due to our historic ability to successfully perform in volatile environments, and is linked to a clean balance sheet, strong cash flow, a vertical, flexible retail model, and a relentless focus on controlling the controllable. This success validates the continued commitment to our three key strategic initiatives aimed at delivering long-term profitable growth, specifically, one, the evolution and expansion of the company's experiential retail footprint, two, the advancement of our comprehensive digital transformation, and three, the continued incremental investments to leverage Build-A-Bear's brand strength across multiple fronts while returning capital to shareholders.

Sharon: All of which appeal to the teen and adult collector, representing 40% of our business.

Sharon: In addition, many gains have already been introduced in retailers outside of our workshop, which we believe represents a growth opportunity.

Sharon: Regarding our core kids consumer we posted a strong Easter season highlighted by the popularity of build a bear's classic plush and accessories as well as the fourth edition of our Golden surprise eggs, which contain one of a variety of small plush animals tripling last year's sale of the assortment.

Sharon: The line continued its momentum in the first quarter of 2025, expanding 30% year over year, bringing the company's total sales to nearly 2 million units to date.

Sharon: Over the past several years, we have successfully navigated significant external challenges, including the retail Apocalypse, Brexit and the Covid pandemic.

Sharon: <unk>, we've released 15, new many veins already this year, including limited edition items.

Sharon: We attribute the Companys success to disciplined expense management, our strong balance sheet, the toy industry historical resilience and build a bear's position as a one of a kind destination for special education occasions.

Sharon: Some additional first quarter product focal points included build a bear's traditional make your own version of a new job Barry Highland cow. The popular pokemon character Hooper and a limited edition April Fools drop of emo oxalate level.

Sharon John: for our first strategic initiative. In the past few years, with the benefit of the company's three retail business models, we have accelerated our location expansion across the globe, ending the first quarter with over 600 locations. 30% of which are outside the United States.

Sharon: As we've noted many times not only is it Teddy bear hug understood in every language, but it is also a universal source of comfort and joy.

Sharon: All of which appeal to the teen and adult collector, representing 40% of our business.

Sharon: As a result, we believe we are well positioned to manage an environment, where uncertainty has become the norm rather than the exception.

Chris hurt: To provide some more information relating to the Company Store Expansion and Evolution Initiative, I would like to turn the call over to Chris Hurt, Build-A-Bear's Chief Operations Officer. Thanks, Sharon. We are committed to expanding our brand reach through our key strategic initiatives of the evolution and expansion of our global footprint. we opened 15 net new experience locations in the first quarter, highlighted by the opening of our corporately operated Dublin, Ireland location on graph. a highly popular tourist destination. This stand-alone store features exclusive merchandise curated for tourists of all ages. As we continue to grow the brand in more places, we've added two more countries, bringing our total count to 30, as shown in the notes.

Sharon: And we remain committed to navigating this current landscape as well.

Sharon: Overall, we have seen the company's first quarter momentum continue into second quarter.

Sharon: And we have robust plans in place for the remainder of 2025.

Sharon: <unk> build a bear's solid business fundamentals and assuming tariffs remain at current levels. We expect to report record revenue for the year.

Sharon: Over the past several years, we have successfully navigated significant external challenges, including the retail Apocalypse, Brexit and the Covid pandemic.

Sharon: And maintained strong profitability with double digit pre tax margin.

Sharon: With that I would like to thank the entire build a bear family are one hundreds of partners and millions of amazing guests for helping us achieve our record first quarter as we strive to continue to deliver on our corporate mission of adding a little more heart to life.

Sharon: As we've noted many times not only is it Teddy bear hug understood in every language, but it is also a universal source of comfort and joy.

Sharon: <unk>.

Chris hurt: As a testament to the enthusiasm for the brand around the globe, current international partners and franchisees continue to add experiential... including the expansion into two new countries, Helsinki, Finland, and Tallinn, Estonia, where lines for the opening stretched around the mall. a standalone Denmark location in the Copenhagen airport, one of the busiest in Europe. The addition of two new locations in Italy, one in Milan and one in Venice, a standalone workshop in the historic district of Piazza San Marco. three new franchise stores in the UAE, and one opening in Australia, one of our oldest and largest franchise countries, bringing our experience location count to 17 down.

Speaker Change: Thank you Sharon and good morning, everyone I will discuss the quarterly results and then share more about our updated full year outlook.

Sharon: As a result, we believe we are well positioned to manage an environment, where uncertainty has become the norm rather than the exception.

Sharon: And we remain committed to navigating this current landscape as well.

Sharon: This was the most profitable first quarter in the company's history.

Sharon: Overall, we have seen the company's first quarter momentum continue into second quarter, and we have robust plans in place for the remainder of 2025.

Sharon: We grew across all segments expanded their gross profit margin and increased pretax income to a new record.

Sharon: This reflects the work from our strategic initiatives over the past several years and the business operating at a higher level of profitability.

Sharon: <unk> build a bear's solid business fundamentals and assuming tariffs remain at current levels. We expect to report record revenue for the year.

Sharon: We also continued to return capital to shareholders.

Sharon: And maintained strong profitability with double digit pre tax margin.

Sharon: We returned $7 $1 million for the quarter through dividends and share repurchases.

Sharon: $85 million remaining on the board approved authorization.

Chris hurt: Separately, our partnership with Carnival Cruise Line continued as we opened on their two newest We added three more growth caps. Bring our total to 20. Although these are designed on a smaller footprint, they serve an important role in our broader Girl Scouts multi-year life. As these new experience locations come to fruition, there is no question that we're adding a little more heart to life in more places and for more people around the world. This is important as we continue to diversify our revenue.

Sharon: Moving to a more detailed review of our first quarter results.

Sharon: Total revenues were $128 4 million.

Sharon: <unk>.

Sharon: An increase of 11, 9%.

Sharon: Thank you Sharon and good morning, everyone.

Sharon: Net retail sales were $119 6 million an increase of 10, 9%.

Speaker Change: I will discuss the quarterly results and then share more about our updated full year outlook.

Speaker Change: This was the most profitable first quarter in the company's history.

Sharon: Stores delivered a strong performance.

Sharon: All four levers we're positive traffic conversion average unit retail and units per transaction.

Speaker Change: We grew across all segments expanded their gross profit margin and increased pretax income to a new record.

Sharon: Our domestic store traffic was up 3%.

Sharon: This reflects the work from our strategic initiatives over the past several years and the business operating at a higher level of profitability.

Chris hurt: As a reminder, we announced on our year-end call that we also have plans to launch a multi-level, one-at-a-time Build-A-Bear Workshop in ITOM Park, located in Orlando, This is scheduled to open in the summer of 2026 with a groundbreaking planned for this July. Our expansion plans remain on track for 2025, with at least 50 net new locations expected this year, the majority of those being operated by our international partners. We are excited about our continued growth, which will bring the Build-A-Bear brand to more people in more places.

Sharon: Significantly outpacing U S national traffic, which declined by 3%.

Sharon: E Commerce demand increased 5%.

Sharon: We also continued to return capital to shareholders.

Sharon: Commercial revenue, which primarily represents wholesale sales to our partner operators and continues to be the fastest growing segment of our business.

Sharon: We returned $7 1 million for the quarter through dividends and share repurchases.

Sharon: Have $85 million remaining on the board approved authorization.

Sharon: When including International franchise revenue Rose a combined 28, 3%.

Sharon: Moving to a more detailed review of our first quarter results.

Sharon: Total revenues were $128 4 million, an increase of 11, 9%.

Sharon: Gross margin was 56, 8% an improvement of 260 basis points compared to last year.

Sharon: Net retail sales were $119 6 million an increase of 10, 9%.

Sharon John: With that, I'll turn the call back over to Sharon. Thank you, Chris. You and the team have been doing a fabulous job bringing the beloved Build-A-Bear experience to kids and kids at heart around the world.

Sharon: Fitting from both retail and commercial segments.

Sharon: The leverage from improved merchandise margin, primarily driven by lower discounts as well as occupancy costs drove retail gross margin expansion.

Sharon: Stores delivered a strong performance.

Sharon: All four levers with a positive traffic conversion average unit retail and units per transaction.

Sharon John: Regarding our second initiative of digital transformation across the company, as we enter the final phase of decommissioning our legacy inventory management system and implementing a new, more strategic system with advanced capabilities, the impact on the company's digital transformation will be far-reaching. While we have been making incremental changes over the past few years, the latest tools will enable better real-time inventory visibility and improved data-driven decision making, which are designed to further drive sales and enhance operational efficiency.

Sharon: Our domestic store traffic was up 3%.

Sharon: SG&A expenses were $53 7 million or 41, 7% of total revenues compared to 41, 5% last year.

Sharon: Significantly outpacing U S national traffic, which declined by 3%.

Sharon: E Commerce demand increased 5%.

Sharon: Higher store level wage rates health care costs, and general inflationary pressures contributed to the 20 basis point increase.

Sharon: Commercial revenue, which primarily represents wholesale sales to our partner operators and continues to be the fastest growing segment of our business.

Sharon: Our first our pre tax income for the first quarter record of $19 $6 million representing growth of 36% year over year and 15, 3% of total revenues.

Sharon: When including International franchise revenue Rose a combined 28, 3%.

Sharon John: Finally, the third initiative is to leverage the power of the brand by making strategic investments across a number of fronts to drive profitable growth while continuing to return value to shareholders. It's important to note that our ability to invest in longer range projects that impact the global, the company's global footprint expansion, digital infrastructure, marketing programs, content, and organizational structure has largely been enabled by Build-A-Bear's improved and more consistent revenue and cash flow. An example of this from a product and marketing perspective, as I previously noted, is the successful Mini Beans collection, which was launched in February of 2024.

Sharon: Gross margin was 56, 8% an improvement of 260 basis points compared to last year.

Sharon: EPS was $1 17 also a first quarter record and an increase of 42, 7%, reflecting higher pretax income.

Sharon: Fitting from both retail and commercial segments.

Sharon: The leverage from improved merchandise margin, primarily driven by lower discounts as well as occupancy costs drove retail gross margin expansion.

Sharon: Whose trailer count and lower tax rate.

Sharon: Turning to the balance sheet.

Sharon: The first quarter and our cash balance was $44 3 million.

Sharon: SG&A expenses were $53 7 million or 41, 7% of total revenues compared to 41, 5% last year.

Sharon: <unk>, a $6 $1 million or 16% increase year over year.

Sharon: This was after returning $37 million to shareholders over the past 12 months.

Sharon: Higher store level wage rates health care costs, and general inflationary pressures contributed to the 20 basis point increase.

Sharon: Okay.

Sharon John: Mini Beans were strategically designed to expand beyond make-your-own plush, as well as serving as an accessible grab-and-go entry-level price point offering to increase conversion and create a basket builder, all of which have proven to be the case. In addition, many beans have already been introduced in retailers outside of our workshops, which we believe represents a growth opportunity. The line continued its momentum in the first quarter of 2025, expanding 30 percent year over year, bringing the company's total sales to nearly 2 million units to date. To invigorate the collectible nature of the business model, 50 new styles were released in the inaugural year, some of which were miniature replicas of Build-A-Bear's best-selling classic offerings.

Sharon: Inventory at quarter end was $72 3 million, an increase of $8 3 million muscle.

Sharon: Our first our pre tax income for the first quarter record of $19 $6 million.

Sharon: Much of which is related to an accelerated for FIS of core products and in line with our expectations.

Sharon: <unk> growth of 36% year over year, and 15, 3% of total revenues.

Sharon: As well as nearly $2 million of tariff costs.

Sharon: The company remains comfortable with the level and composition of its inventory.

Sharon: EPS was $1 17 also a first quarter record and an increase of 42, 7%, reflecting higher pretax income.

Sharon: Turning to the outlook.

Sharon: Following a strong first quarter and solid start to the second quarter. We have maintained our revenue guidance and we continue to expect the addition of at least 15, new experience locations most of which will be operated by our international partners.

Sharon: <unk> and lower tax rate.

Sharon: Turning to the balance sheet.

Sharon: The first quarter and our cash balance was $44 $3 million, representing a $6 $1 million or 16% increase year over year.

Sharon: We continue to expect our commercial segment revenue to grow at least 20% for the year.

Sharon John: Plus, we've released 15 new minivans already this year, including limited edition items. Some additional first-quarter product focal points included Build-A-Bear's traditional make-your-own versions of a new Strawberry Highland Cow, the popular Pokémon character Swooper, and a limited-edition April Fool's drop of Emo Axolotl. all of which appealed to the teen and adult collector representing 40% of our business. Regarding our core kids consumer, we posted a strong Easter season highlighted by the popularity of Build-A-Bear's classic plush and accessories, as well as the fourth edition of our golden surprise eggs, which contain one of a variety of small plush animals, tripling last year's sales of the assortment.

Sharon: This was after returning $37 million to shareholders over the past 12 months.

Sharon: Also we are updating our pre tax income guidance to a range of $61 million to $67 million inclusive of the current tariff rates.

Sharon: Okay.

Sharon: Inventory at quarter end was $72 3 million, an increase of $8 3 million much of which is related to an accelerated purchase of core products and in line with our expectations.

Sharon: Let me add some more commentary on tariffs as they relates to build a bear.

Sharon: First.

Sharon: Our global footprint has created an organic hedge as tariffs will not directly affect most of our international stores, whether corporate partner operated or franchise.

Sharon: As well as nearly $2 million of tariff costs.

Sharon: The company remains comfortable with the level and composition of its inventory.

Sharon: Turning to the outlook.

Sharon: Second please note that our retail cost of goods sold not only includes merchandise costs, but also ramp warehousing and distribution expenses.

Sharon: Following a strong first quarter and solid start to the second quarter. We have maintained our revenue guidance and we continue to expect the addition of a police 15 net new experienced locations most of which will be operated by our international partners.

Sharon: However, the merchandise portion is the only cost directly impacted.

Sharon: Third over the past several years build a bear has sigma has significantly reduced its reliance on China as a primary source of goods.

Sharon John: Over the past several years, we have successfully navigated significant external challenges, including the retail apocalypse, Frexit, and the COVID pandemic. We attribute the company's success to disciplined expense management, a strong balance sheet, the toy industry's historical resilience, and Build-A-Bear's position as a one-of-a-kind destination for special education As we've noted many times, not only is a teddy bear hug understood in every language, but it is also a universal source of comfort and joy. As a result, we believe we are well positioned to manage an environment where uncertainty has become the norm rather than the exception, and we remain committed to navigating this current landscape as well.

Sharon: We continue to expect our commercial segment revenue to grow at least 20% for the year.

Sharon: Also we are updating our pretax income guidance to a range of 61 million to $67 million inclusive of the current tariff rates.

Sharon: With most products now being sourced from Vietnam.

Sharon: Additionally, while not all products are dual source many are <unk>.

Sharon: And we have already exercised our ability to redirect China sourced products to our international locations.

Sharon: Let me add some more commentary on tariffs as they relates to build a bear.

Sharon: First.

Sharon: Fourth build a bear is a meaningful vertical retailer with a unique business model.

Sharon: Our global footprint has created an organic hedge as tariffs will not directly affect most of our international stores, whether corporate partner operated or franchise.

Sharon: The company's core product offerings are less seasonally dependent with these choices representing over half of our sales.

Sharon: Second please note that our retail cost of goods sold not only includes merchandise costs, but also ramp warehousing and distribution expenses.

Sharon: This enables more direct latitude over diversifying sourcing.

Sharon: Inventory timing and flow setting the retail values and managing promotional strategy compared to traditional employers.

Sharon John: Overall, we have seen the company's first-quarter momentum continue into second quarter, and we have robust plans in place for the remainder of 2025. Given Build-A-Bear's solid business fundamentals and assuming tariffs remain at current levels, we expect to report record revenue for the year and maintain strong profitability with double-digit pre-tax margins.

Sharon: However, the merchandise portion is the only cost directly impacted.

Sharon: Considering those factors, we now expect the tariffs and the associated cost impact on our fiscal 2025, P&L net of mitigation to be less than $10 million.

Sharon: Third over the past several years build a bear has sigma has significantly reduced its reliance on China as a primary source of goods.

Sharon: With most products now being sourced from Vietnam.

Sharon: Also our pre tax guidance continues to reflect approximately $5 million of additional medical and labor costs, which we mentioned on our last call.

Sharon: Additionally, while not all products are dual source many are and we have already exercised our ability to redirect China sourced products to our international locations.

Sharon John: With that, I would like to thank the entire Build-A-Bear family, our hundreds of partners, and millions of amazing guests for helping us achieve our record first quarter as we strive to continue to deliver on our corporate mission of adding a little more heart to life. Thank you.

Sharon: Given our previous inventory pull forward and current mix, we anticipate tariffs will have a relatively modest impact on our second quarter results with an expectation of a greater effect starting in the third quarter.

Sharon: Fourth build a bear is a meaningful vertical retailer with a unique business model.

Sharon: The company's core product offerings.

Sharon John: Thank you, Sharon.

Voin Todorovic: And good morning, everyone. I will discuss the quarterly results and then share more about our updated full year outlook. This was the most profitable first quarter in the company's history. We grew across all segments, expanded the gross profit margin, and increased pre-tax income to a new record. This reflects the work from our strategic initiatives over the past several years and the business operating at a higher level of profitability. We also continue to return capital to shareholders. We returned $7.1 million for the quarter through dividends and sharing purchases, and have $85 million remaining on the board-approved authorization.

Sharon: Less seasonally dependent with these choices representing over half of our sales.

Sharon: In closing we are pleased with our strong first quarter performance.

Sharon: This enables more direct latitude over diversifying sourcing.

Sharon: Looking forward 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 delivered a solid pre tax income margins, while returning capital to shareholders.

Sharon: Inventory timing and flow.

Sharon: Getting the retail values and managing promotional strategy compared to traditional employers.

Sharon: Considering those factors, we now expect the tariffs and the associated cost impact on our fiscal 2025, P&L net of mitigation to be less than $10 million.

Sharon: I want to thank all our store and warehouse associates corporate team members and partners for contributing to our record first quarter results.

Sharon: Also our pretax guidance continues to reflect approximately $5 million of additional medical and labor costs, which we mentioned on our last call.

Sharon: Finally, we look forward to sharing our progress as we move through the year and speaking with many of you at upcoming Investor conferences as mentioned in our press release. This morning, including the New York Stock Exchange virtual Investor access day on June 5th.

Voin Todorovic: Moving to a more detailed review of our first quarter results. Total revenues were $128.4 million, an increase of 11.9%. Net retail sales were $119.6 million, an increase of 10.9%. Stores deliver strong performance. All four levers were positive, traffic, conversion, average unit retail, and units per transaction. Our domestic store traffic was up 3%, significantly outpacing U.S. national traffic, which declined by 3%. ecommerce demand increased half percent Commercial revenue, which primarily represents wholesale sales to our partner operators and continues to be the fastest growing segment of our business. and when including international franchise revenue, rose a combined 28.3%.

Sharon: This concludes our prepared remarks, we will now turn the call back over to the operator for questions operator.

Sharon: Thank you.

Sharon: In closing we are pleased with our strong first quarter performance.

Sharon: We'll now be conducting a question and answer session if.

Sharon: If you would like to ask a question. Please press star one on your telephone keypad.

Sharon: Looking forward our objective is to stay focused on our strategy to grow the number of global locations continue our digital transformation.

Sharon: Please confirmation tone will indicate your line is in the question queue.

Sharon: Press Star two if you would like to remove your question from the queue.

Sharon: And invest in our company to drive another year of record revenues and delivered a solid pretax income margins.

Sharon: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Sharon: Returning capital to shareholders.

Sharon: I want to thank all our store and warehouse associates corporate team members and partners for contributing to our record first quarter results.

Speaker Change: Thank you. Our first question comes from the line of Eric Peter with SCC Research. Please proceed with your question.

Eric Peter: Good morning, congratulations on the quarter.

Speaker Change: Thanks, Eric.

Sharon: Alright.

Sharon: When we look at the we have this.

Sharon: <unk> evolution that we've been seeing with movies, obviously stitch. This weekend was a significant positive.

Voin Todorovic: Gross margin was 56.8%, an improvement of 260 basis points compared to last year, benefiting from both retail and commercial segments. The leverage from improved merchandise margin, primarily driven by lower discounts, as well as occupancy costs, drove retail gross margin expansion. SG&A expenses were $53.7 million, or 41.7% of total revenues, compared to 41.5% last year. Higher store-level wage rates, healthcare costs, and general inflationary pressures contributed to the 20-basis point increase. Our pre-taxed income for the first quarter record of $19.6 million, representing growth of 30.6% year-over-year and 15.3% of total revenue. EPS was $1.17, also a first quarter record, and an increase of 42.7%, reflecting higher pre-tax income, a reduced share count, and lower taxes.

Sharon: This concludes our prepared remarks, we will now turn the call back over to the operator for questions operator.

Sharon: Hi, no that youre no longer as dependent on this kind of.

Sharon: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: John will get us through that how should we be thinking about the ability for you to capitalize on those types of events going forward throughout the year.

Sharon: Please confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

John: We still have best in class relationships with.

John: Most of the well all of the largest creators.

Sharon: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

John: Significant family films.

John: <unk> is a great example of that with our long term relationship with Disney.

Speaker Change: Thank you. Our first question comes from the line of Eric Theater with SCC Research. Please proceed with your question.

John: She has also been not.

John: Not just focused on children and it's actually evolved as a brand and character in recent years is more of a collectible teen tween adult product and we've broadened that line to be seasonal and have all sorts of.

Eric Theater: Good morning, congratulations on the quarter.

Speaker Change: Thanks, Eric.

Speaker Change: Alright.

Eric Theater: When we look at the we have this continuing evolution that we've been seeing with movies. Obviously stitch. This weekend was a significant positive.

John: Different.

John: Yes.

John: Iterations of stitch and that that's been an interesting driver for us that beyond this concept that you're talking about films I think certainly I can't speak to the strategy of Disney, but I believe that that sort of organic popularity that emerged from stitch is the reason why there was the film versus the other way around.

Eric Theater: Hi, no that you are no longer as dependent on this kind of genre to get this through but how should we be thinking about the ability for you to capitalize on those types of events going forward throughout the year.

Voin Todorovic: Turning to the Bounce. At the first quarter end, our cash balance was $44.3 million, representing a $6.1 million or 16% increase year-over-year. This was after returning $37 million to shareholders over the past 12 months. Inventory at quarter end was $72.3 million, an increase of $8.3 million, much of which is related to an accelerated purchase of core products and in line with our expectations. as well as nearly $2 million of tariff costs. The company remains comfortable with the level and composition of its inventory.

Speaker Change: But we're glad to participate in that and happy to have those relationships. Yes. As you point is we for years that was a bit of Oh.

Sharon: We still have best in class relationships with.

Sharon: Most of the well all of the largest.

Sharon: Creators.

John: Our go to place for us from a summer we would expect one at least one big summer film and when Big holiday film in.

Sharon: Significant family films.

Speaker Change: <unk> is a great example of that with our long term relationship with Disney.

John: The post Covid World Post Covid World Writer's strike that then a little more sketchy, but when that and if that returns were perfectly prepared because.

Speaker Change: This has also been.

Sharon: Not just focused on children and it's actually evolved as a brand and character in recent years as more of a collectible teen tween adult product in <unk>.

John: That's a cross section of cultural moments in our co location in places where their theaters in malls.

Sharon: Broaden that line to be seasonal and have all sorts of differ.

John: Perfect.

Sharon: Different.

John: <unk>.

Sharon: Awesome.

John: Perfect storm for us to participate in we look at it now and though not as something that is reliant on but something that would ideally be gravy on top of the way we plan our own business and taking control of our future has been a big part of this overarching strategy.

Sharon: Iterations of stitch and that that's been an interesting driver for us that beyond this concept that you're talking about film.

Voin Todorovic: Turning to the Alps. Following a strong first quarter and a solid start to the second quarter, we have maintained our revenue guidance, and we continue to expect the addition of at least 50 net new experience locations, most of which will be operated by our international partners. We continue to expect our commercial segment revenue to grow at least 20% for the year. Also, we are updating our pre-tax income guidance to a range of $61 million to $67 million, inclusive of the current tariff rate.

Sharon: Certainly I can't speak to the strategy of Disney, but I believe that that sort of organic popularity that emerged from stitch is the reason why there was the film versus the other way around but we're glad to participate in that and happy to have those relationships. Yes. As you point is.

Speaker Change: Yes, actually I want to talk a little bit about that so.

John: You have increasingly been able to respond to take talk trends like you mentioned the Highland cow.

Sharon: For years that was a bit of.

Sharon: A go to place for us from a summer we would expect one at least one big summer film and when think holiday film in the post Covid World Post Covid World Writer's strike, that's been a little more sketchy, but when that and if that returns were perfectly prepared because.

John: The frog.

John: Hello.

Speaker Change: How is the inventory management system going to enable you to be even better at doing that.

John: How do you want you can sharpen that ability to respond when.

Adam: Adam that.

Voin Todorovic: Let me add some more commentary on tariffs as they relate to Build-A-Bear. First, our global footprint has created an organic hedge as tariffs will not directly affect most of our international stores, whether corporate, partner-operated, or franchise. Second, please note that our retail cost of goods sold not only includes merchandise costs, but also rent, warehousing, and distribution expenses. However, the merchandise portion is the only cost-directly impact. Third, over the past several years, Build-A-Bear has significantly reduced its reliance on China as a primary source of goods. with most products now being sourced from Vietnam. Additionally, while not all products are dual source, many are, and we have already exercised our ability to redirect China-sourced products to our international locations.

John: I don't know maybe was initially expected to be X now comes in it because it was on take talk is now demand is four or five times X.

Sharon: That cross section of cultural moments in our co location in places where their theaters in malls.

John: Yes.

John: Yes, we've already seen.

Sharon: Perfect.

Sharon: It is.

John: Some results of our ability to manage that much better than that even that would happen back in the.

Sharon: Perfect storm for us to participate in we look at it now and though not as something that is reliant on but something that would ideally be gravy on top of the way we plan our own business and taking control of our future has been a big part of this overarching strategy.

John: In the situations that you were expressing earlier on hot films like we would not always get that inventory right.

John: That unit count perfect for say a frozen movie.

John: And be in a chase mode. We're much more flexible now and I think that the comment that I added in the remarks about this final decommissioning of our legacy inventory system, we certainly have plans and beliefs in.

Speaker Change: Yes, actually I want to talk a little bit about that so.

Speaker Change: You have increasingly been able to respond to tick tock trends like you mentioned the Highland cow frog.

Speaker Change: How is the inventory management system going to enable you to be even better at doing that.

John: The entire intention of this multi year approach to a more visibility of inventory across our warehouse our stores that our ability to move E com inventory in our store inventory and a more like.

Speaker Change: How do you want you can sharpen that ability to respond when an item that.

Speaker Change: I don't know maybe was initially expected to be X now comes in and because it was on take talk is now demand is four or five times X. Thank you yes.

John: Fluid way, which has been at more manual painfully manual sometime.

Voin Todorovic: Fourth, Build-A-Bear is a meaningful vertical retailer with a unique business model. The company's core product offerings are less seasonally dependent, with these choices representing over half of our sales. This enables more direct latitude over diversifying sourcing, inventory timing and flow, setting retail values, and managing promotional strategy compared to traditional imports. Considering those factors, we now expect the tariff and associated cost impact on our fiscal 2025 P&L net of mitigation to be less than $10 million. Also, our pre-tax guidance continues to reflect approximately $5 million of additional medical and labor costs, which we mentioned on our last call.

John: We'll increase our confidence in even going longer on some of these things that we think are going to be hot and I just want to point out we're not always just responding to tick tock trends were often creating tictoc trends.

Speaker Change: Yes, we've already seen.

Speaker Change: Some results of our ability to manage that much better than that even that would happen back in the.

Speaker Change: In the situations that you were expressing earlier on hot films likely would not always get that inventory right.

John: Yeah.

John: Perfect. Thank you and good luck for the rest of the year.

Speaker Change: That unit count perfect for say a frozen movie.

Eric Peter: Thank you Eric.

Speaker Change: Our next question comes from the line of Keegan Cox with D. A Davidson. Please proceed with your question.

Speaker Change: And be in a chase mode. We're much more flexible now and I think that the comment that I added in the remarks about this final decommissioning of our legacy inventory system, we certainly have plans and beliefs in.

Keegan Cox: Good morning, and congrats on the quarter.

Speaker Change: I appreciate it thank you.

Speaker Change: Yes. So my question is on you guys had strong growth in all three year segments, but the one that stood out to me.

Speaker Change: The entire intention of this multi year approach to more visibility of inventory across our warehouse our stores that our ability to move E com inventory in our store inventory and a more like.

Speaker Change: The retail results were very strong.

Speaker Change: I'm just wondering if you could provide some color on how the company operated stores performed versus your expectations.

Speaker Change: Fluid way, which has been at more manual painfully manual sometime.

Speaker Change: I'll take that one so thanks for the question Keegan definitely we are very pleased with.

Voin Todorovic: Given our previous inventory pull forward and current mix, we anticipate tariffs will have a relatively modest impact on our second quarter results, with an expectation of a greater effect starting in the third quarter.

Speaker Change: We'll increase our confidence in even going longer on some of these things that we think are going to be hot and I just want to point out we're not always just responding to tick tock trends were often creating doctrine.

Speaker Change: How are stores.

Speaker Change: <unk> performed during the quarter.

Speaker Change: As I mentioned in our remarks.

Speaker Change: All four levers of our positive traffic was up about.

Voin Todorovic: In closing, we are pleased with our strong first quarter performance. Looking forward, 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 pre-taxed income margins, while returning capital to shareholders.

Speaker Change: Yes.

Speaker Change: About 3% Nash.

Speaker Change: Perfect. Thank you and good luck for the rest of the year.

Speaker Change: National traffic domestic traffic in U S. I believe that the data that we get was down 3%. So that's a big delta and on top of that with higher traffic, we were able to increase our conversion and we were also able to drive units per transaction as well as you know with lower discounts or average unit.

Speaker Change: Thank you Eric.

Speaker Change: Our next question comes from the line of Keegan Cox with D. A Davidson. Please proceed with your question.

Keegan Cox: Good morning, and congrats on the quarter.

Speaker Change: I appreciate it thank you.

Speaker Change: Yes. So my question is on you guys had strong growth in all three year segments, but the one that stood out to me.

Voin Todorovic: I want to thank all our store and warehouse associates, corporate team members, and partners for contributing to record first for the results.

Speaker Change: Retail has gone up so again all of these levers we're moving in the right direction.

Speaker Change: Please how our themes, we're able to execute in this as you know the combination of some of the things that <unk> talked about having the right product, having the right service model in our stores and really capitalizing on the traffic that our marketing and our teams are delivering so overall a very successful quarter. I'd also just note that that traffic delta.

Speaker Change: The retail results were very strong.

Speaker Change: Just wondering if you could provide some color on how the company operated stores performed versus your expectations.

Voin Todorovic: Finally, we look forward to sharing our progress as we move through the year and speaking with many of you at upcoming investor conferences, as mentioned in our press release this morning, including the New York Stock Exchange Virtual Investor Access Day on June 5th.

Eric Theater: I'll take that one so thanks for the question Keegan definitely we are very pleased with.

Speaker Change: How are stores.

Speaker Change: He is a strong support point on the fact that build a bear is a destination.

Operator: This concludes our prepared remarks. We will now turn the call back over to the operator for questions.

Speaker Change: <unk> performed during the quarter.

Speaker Change: As I mentioned in our remarks.

Operator: Operator. Thank you.

Speaker Change: All four levers of our positive traffic was up above.

Speaker Change: People plan to build a bear.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions.

Speaker Change: We did the best we can do from a research perspective is.

Speaker Change: About 3% Nash.

Speaker Change: National traffic with domestic traffic in U S. I believe that the data that we get was down 3%. So that's a big delta and on top of that with higher traffic, we were able to increase our conversion and we were also able to drive units per transaction as well as you know with lower discounts or average unit.

Speaker Change: Asking guests and making some assumptions, but our assumptions is that between 60 and 80% of trips.

Speaker Change: Need to build a bear are planned in advance and a lot of that has to do with the fact that we are associated with celebrations with moments in time Lithia families coming together, whether its birthday graduations and so they are they are making.

Speaker Change: Retail has gone up so again all of these levers we're moving in the right direction.

Operator: Thank you.

Eric Beder: Our first question comes from the line of Eric Beder with SCC Research. Pleased to see you. Good morning. Congratulations on the quarter. Thanks, Gary. Right.

Speaker Change: Special trip to come to build a bear so that bodes well in this type of environment.

Speaker Change: And then just one follow up.

Speaker Change: Just an update on your partner operated store line I was just wondering.

Sharon John: When we look at the, okay, we have this continuing evolution that we've been seeing with movies. Obviously, Stitch this weekend was a significant positive. I know that you are no longer as dependent on this kind of genre to get this through, but how should we be thinking about the ability for you to capitalize on those types of events going forward throughout? We still have best-in-class relationships with all of the largest creators of significant family films, and Stitch is a great example of that with our long-term relationship with Disney. Stitch has also been not just focused on children, it's actually evolved as a brand and character in recent years as more of a collectible, teen, tween, adult product, and we've broadened that line to be seasonal and have all sorts of different, I guess, themes.

Speaker Change: Are these partners are they kind of larger firms opening multiple stores and are you seeking any leads for partner operated stores.

Speaker Change: He is a strong support point on the fact that build a bear is a destination.

Speaker Change: They are.

Speaker Change: In in their markets and sometimes beyond well known partners GIC.

Speaker Change: People plan to build a bear.

Speaker Change: We did the best we can do from a research perspective is.

Speaker Change: As well as <unk>.

Speaker Change: We have big players in South America Nordic.

Speaker Change: Asking guests and making some assumptions that our assumptions is that between 60 and 80% of trips.

Speaker Change: And I hand, it over to Chris if you want any more color.

Speaker Change: Domestically long relationship with Great Wolf Lodge, Kalahari Carnival cruise line as I mentioned.

Speaker Change: Internationally, as Sharon mentioned, Jonathan <unk>, who.

Speaker Change: We have multiple toys for locations in a big presence in Italy, that's our partner.

Speaker Change: Special trip to come to build a bear so that bodes well in this type of environment.

Speaker Change: In our source and will these are these are distributions.

Speaker Change: Distributions distributors of toys that actually also owned stores as well that we partner with in these locations. We're very very careful to make sure that they can deliver to build a bear brand experience in these areas and lots of times most of the time they are shop in shops in toy stores.

Speaker Change: And then just one follow up.

Speaker Change: Just an update on your partner operated store line I was just wondering who are.

Speaker Change: Are these partners are they kind of larger firms opening multiple stores and are you seeking any leads from partner operated stores.

Sharon John: iterations of Stitch, and that's been an interesting driver for us that's beyond this concept that you're talking about, film. I think, certainly I can't speak to the strategy of Disney, but I believe that that sort of organic popularity that emerged from Stitch is the reason why there was the film versus the other way around, but we're glad to participate in that and happy to have those relationships.

Speaker Change: They are.

Speaker Change: In their markets and sometimes beyond well known partners GIC.

Speaker Change: Located in these countries to your second question, yes for certain markets now we are in negotiations with a number of regions and countries but.

Speaker Change: <unk> as well as <unk>.

Speaker Change: We have big players in South America Nordic.

Speaker Change: Note that we have a very high bar on our expectations from a partnership perspective and is absolutely crucial that we believe our partner operated.

Speaker Change: And I hand, it over to Chris if you want any more color.

Chris: Domestically long relationship with Great Wolf Lodge, Kalahari Carnival cruise line as I mentioned.

Sharon John: Yes, as your point is, for years, that was a bit of a go-to place for us from a summer, we'd expect at least one big summer film and one big holiday film, and in the post-COVID world, post-COVID world, Writers' Strike, that's been a little more sketchy, but when that, and if that returns, we're perfectly prepared because that cross section of cultural moments and our co-location in places where there are theaters and malls, it's a perfect storm for us to participate in. We look at it now, though, not as something that we're relying on, but something that would ideally be gravy on top of the way we plan our own business, and taking control of our future has been a big part of this overarching strategy.

Speaker Change: Group can deliver the experience.

Speaker Change: And because that is the underlying power of the build a bear brand and not everyone is capable of that kind of training and process and oversight.

Speaker Change: Internationally, as Sharon mentioned, Jonathan ROTC, who.

Speaker Change: We have multiple toys for locations in a big presence in Italy, that's our partner.

Speaker Change: Thank you.

Speaker Change: In our source and will these are these are distribution.

Speaker Change: Our next question comes from the line of Greg give us with Northland Securities. Please proceed with your question.

Greg: Great. Good morning, Sharon Bowen congrats on the record results.

Speaker Change: Thank you Brad I wanted to follow up it's great to see the continued progress with many beans.

Greg: It sounds like some new introductions. This year after the 50, new ones you had last year.

Speaker Change: Located in these countries to your second question, yes for certain markets now we are in negotiations with a number of regions in country, but.

Greg: You talked about the introduction in retailers outside of the build a bear workshop already one of the see if you could provide some color on kind of where you are placing them and plans for continued expansion there.

Speaker Change: Note that we have a very high bar on our expectations from a partnership perspective and is absolutely crucial that we believe our partner operated.

Sharon John: Yeah, actually, I want to talk a little bit about that. You have increasingly been able to respond to TikTok trends, like you mentioned, the Highland Cow, the Frog. How is the inventory management system going to enable you to be even better at doing that? And how do you want to even sharpen that ability to respond when an item that... Maybe what was initially expected to be X now comes in and because it was on TikTok is now demand is four or five times. Thank you. Yeah, well, we've already seen some results of our ability to manage that much better than that.

Speaker Change: Hi, there, we're placing them interestingly some of the partners that we noted outside the United States and their own toy stores, but we have also recently started a smaller test approach in the United States.

Speaker Change: Group can deliver the experience.

Speaker Change: And because that is the.

Speaker Change: The underlying power of the build a bear brand and not everyone is capable of that kind of training and process and oversight.

Greg: And Chris again, if you want to add some color to that feel free.

Greg: We've had a relationship with Hudson, which is inside of airports, where there is a wholesale model where rehab already stuff.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Greg give us with Northland Securities. Please proceed with your question.

Greg: For <unk> that you can do clothing and accessories in those locations and we've added many beans into several of those locations Apple Green is a travel type of location retail store and we've added many billions into 50 of those locations here domestically and as Sharon mentioned, we've also add.

Greg: Great Good morning, Sharon and <unk> congrats on the record results.

Speaker Change: Thank you Brad I wanted to follow up it's great to see the continued progress with many beans.

Speaker Change: It sounds like some new introductions. This year after the 50, new ones you had last year.

Sharon John: Even that would happen back in the in the situations that you were expressing earlier on Hot Films. Like, we would not always get that inventory right, the exact unit count perfect for, say, a frozen movie and be in a chase mode. We're much more flexible now, and I think that the comment that I added in the remarks about this final decommissioning of a legacy inventory system, we certainly have plans and beliefs. And this is the entire intention of this multi-year approach to more visibility of inventory across our warehouse, our stores, our ability to move e-com inventory, to store inventory in a more fluid way.

Speaker Change: You talked about the introduction in retailers outside of the build a bear workshop already wanted to see if you could provide some color on kind of where you are placing them and plans for continued expansion there.

Sharon: Added maybe beans into locations with our partners in Italy and in the Nordics.

Greg: Great that's good to hear.

Greg: And if I could follow up on the kind of commentary on the updated outlook.

Speaker Change: Hi, there, we're placing them interestingly some of the partners that we noted outside the United States and their own toy stores, but we've also recently started a smaller test approach in the United States.

Greg: Could you maybe dive into a little bit more of the incremental impact youre expecting from tariffs.

Speaker Change: With the updated guidance relative to your previous I think you previously said deal, but maybe a $5 million impact now it's kind of less than 10.

Chris: And Chris again, if you want to add some color to that feel free.

Greg: I guess the assumptions that go into the updated pre tax income outlook.

Speaker Change: We've had a relationship with Hudson, which is inside of airports, where there is a wholesale model where rehab already stuff.

Greg: Yes, so what we mentioned on our call like our new <unk>.

Speaker Change: For <unk> that you can do clothing and accessories in those locations and we've added many beans into several of those locations Apple Green is a travel type of location retail store and we've added many billions into 50 of those locations here domestically and as Sharon mentioned, we are also add.

Greg: Pre tax range now, 61% to 6% to $7 million. This range reflects.

Sharon John: Which has been more manual, painfully manual sometimes, will increase our confidence in even going longer on some of these things that we think are going to be hot. And I just want to point out, we're not always just responding to TikTok trends. We're often creating TikTok. Perfect.

Greg: Less than $10 million net of mitigation impact of tariffs and associated costs as.

Greg: As well as you know.

Greg: Haven't changed our expectations about the additional $5 million.

Speaker Change: Added maybe beans into locations with our partners in Italy and in the Nordics.

Greg: <unk> related cost to medical.

Eric Beder: Thank you, and good luck with the rest. Thank you, Eric.

Greg: And labor costs that we mentioned on our last call.

Greg: We are still working through a lot of these litigations.

Keegan Cox: Our next question comes from the line of Keegan Cox with D.A. Davidson. Please proceed with your question. Good morning and congrats on the quarter. Appreciate it. Thank you. Yeah, so my question is on, you guys had strong growth in all three of your segments, but the one that stood out to me was the retail results were very strong.

Speaker Change: Great Thats good to hear.

Speaker Change: And if I could follow up on the kind of commentary on the updated outlook.

Greg: There is a lot of work that teams are doing to move production to look at ways.

Speaker Change: Could you maybe dive into a little bit more of the incremental impact youre expecting from tariffs.

Greg: To mitigate some of the things from the organizational perspective supply chain perspective so.

Speaker Change: With the updated guidance relative to your previous I think you previously said <unk>, but maybe a $5 million impact now it's kind of less than 10.

Greg: There has been a lot of work in that arena and you know that successful momentum that we are seeing in our business with things that are within our control the success of our product and our marketing activities.

Speaker Change: I guess the assumptions that go into the updated pretax income outlook.

Chris hurt: I was kind of just wondering if you could provide some color on how the company operated stores performed versus your expectations. I'll take that one. So, thanks for the question, Keegan. Definitely, we are very pleased with how our stores have performed during the quarter. As I mentioned in our remarks, all four levers were positive. Traffic was up about three percent. National traffic or domestic traffic in U.S., at least with the data that we get, was down three percent. So, that's a big delta. And on top of that, with higher traffic, we were able to increase our conversion, and we were also able to drive units per transaction, as well as, you know, with lower discounts, our average unit retail has gone up.

Speaker Change: Yes, so what we mentioned on our call like our new <unk>.

Greg: Veeva confidence to confidence to reiterate our revenue guidance, but you know that some of these additional costs.

Speaker Change: Pre tax range now, 61% to 6% to $7 million. This range reflects.

Speaker Change: Less than $10 million net of mitigation impact of tariffs and associated costs as.

Greg: We lowered our pretax expectations for the year.

Speaker Change: As well as you know.

Speaker Change: Makes sense and yes, great to hear about the kind of diversification of sourcing there. Thanks again.

Speaker Change: Haven't changed our expectations about the additional $5 million.

Greg: Thank you.

Speaker Change: Of related cost to medical.

Speaker Change: As a reminder, if you would like to ask a question press star one on your telephone keypad.

Speaker Change: And labor costs that we mentioned on our last call.

Speaker Change: We are still working through a lot of these litigations.

Speaker Change: Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question.

Speaker Change: There is a lot of work that teams are doing to move production to look at ways.

Speaker Change: Thanks, operator, and I'd like to offer my congratulations as well.

Speaker Change: To mitigate some of the things from the organizational perspective supply chain perspective so.

Speaker Change: It sounds like the company is continuing to make significant progress in just.

Chris hurt: So, again, all these levers were moving in the right direction. Very pleased how our teams were able to execute. And this is, you know, the combination of some of the things that Shan talked about, having the right product, having the right service model in our stores, and really capitalizing on the traffic that our marketing and our teams are delivering. So, overall, a very successful quarter.

Speaker Change: There has been a lot of work in that arena and you know that successful momentum that we are seeing in our business with things that are within our control the success of our product and our marketing activities.

Speaker Change: The expansion of the country count outside the U S is up.

Greg: Up to 30 already I'm curious as to how the companies able to access information about how some of these launches are going in new countries and just really the decision making that goes into.

Speaker Change: Veeva confidence to confidence to reiterate our revenue guidance, but you know that some of these additional costs.

Greg: We will be expanding within a current market versus entering new markets and these partnerships just trying to get a sense as to how responsive. Some of these partners can be in terms of.

Chris hurt: I'd also just note that that traffic delta is a strong support point on the fact that Build-A-Bear is a destination. People plan their trips to Build-A-Bear. The best we can do from a research perspective is asking guests and making some assumptions, but our assumption is that between 60% and 80% of trips that are made to Build-A-Bear are planned in advance. A lot of that has to do with the fact that we are associated with celebrations, with moments in time, with families coming together, whether it's birthdays or graduations, and so they're making special trips to come to Build-A-Bear so that bodes well in this type of environment.

Speaker Change: We lowered our pretax expectations for the year.

Greg: Adding new locations in.

Speaker Change: Makes sense and yes, great to hear about the kind of diversification of sourcing there. Thanks again.

Greg: Current markets versus new ones.

Greg: Hey, Thanks, Steve I mean, one of the tenants.

Thank you.

Speaker Change: As a reminder, if you would like to ask a question press star one on your telephone keypad.

Speaker Change: Global expansion.

Speaker Change: Is often to work with experts in their own market.

Speaker Change: Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question.

Greg: Where we we expand we own and operate most of our stores in the United States with some partners that are associated with hospitality.

Thanks, operator, and I'd like to offer my congratulations as well.

Speaker Change: It sounds like the company is continuing to make significant progress in just.

Greg: That's a different kind of relationship but in looking into other countries, where neither are experts in the mall.

Speaker Change: The expansion of the country count outside the U S is up.

Speaker Change: Up to 30 already I'm curious as to how the companies able to access information about how some of these launches are going in new countries and just really the decision making that goes into.

Greg: The retail environment, we don't have those relationships. So we liked define these partners as I mentioned.

Keegan Cox: Great.

Chris hurt: And then just one follow-up, just an update on your partner-operated storyline. I was just wondering, who are these partners? Are they kind of larger firms opening multiple stores? And are you seeking any leads for partner-operated? They are, in their markets and sometimes beyond, well-known partners, GOC, Preciosi, as well as we have big players in South America, Nordic.

Greg: Very high bar.

Speaker Change: We will be expanding within a current market versus entering new markets and these partnerships I'm just trying to get a sense as to how responsive to some of these partners can be in terms of.

Greg: <unk>.

Greg: How they would operate and of course theres criteria around the relationship as well as the contracts associated with the use of the brand the growth of the brand and we as management.

Speaker Change: Adding new locations in.

Speaker Change: Current markets versus new ones.

Speaker Change: Hey, Thanks, Steve I mean, one of the tenants.

Greg: Those plans and work with those teams to build out what we believe is the <unk>.

Speaker Change: Global expansion.

Speaker Change: Is often to work with experts in their own market.

Greg: <unk> and robust.

Chris hurt: I hand it over to Chris if you want to add any more color. Yeah, you know, domestically, long relationship with Great Wolf Lodge, Kalahari, Carnival Cruise Line, as I mentioned. Internationally, as Sharon mentioned, Giazzi Pirazzi, who have multiple toy store locations and a big presence in Italy. That's our partner. Inner Source, Anvil, these are distributors of toys that actually also own toy stores as well that we partner with in these locations. We're very, very careful to make sure that they can deliver the Build-A-Bear brand experience in these areas. And lots of times, most of the time, they are shopping shops in toy stores located in these countries.

Greg: Market penetration in each one of those countries. I mean, this is pretty typical stuff whether its franchising our partner operated which happens to be two different models.

Speaker Change: Where we we expand we own and operate most of our stores in the United States with some partners that are associated with hospitality.

Greg: But.

Greg: And that's one of the reasons why we wanted to note increases comment.

Speaker Change: That's a different kind of relationship but in looking into other countries, where neither are experts in the mall.

Greg: The enthusiasm that we're seeing.

Speaker Change: Is that reflection of the success that we're having across many of these markets. I mean, clearly these are business people as well they don't have any intention of continuing to drive new locations.

Speaker Change: The retail environment, we don't have those relationships. So we liked define these partners as I mentioned, they have very high bar.

Greg: It's already opened locations are not seeing success. So we wanted to specifically call that out because it's the best.

Speaker Change: <unk>.

Speaker Change: How they would operate and of course, there's criteria around that relationship as well as the contracts associated with the use of the brand the growth of the brand and we as management approve those plans and work with those teams to build out.

Greg: Evidence of the success that we're seeing so.

Greg: Yes, we're excited about it and some of these countries like Australia, when we had the lines around the mall.

Chris hurt: To your second question, that's a yes for certain markets. Now, we are in negotiations with a number of regions and countries, but I'd note that we have a very high bar on our expectations from a partnership perspective. And it's absolutely crucial that we believe a partner-operated group can deliver the experience because that is the underlying power of the Build-A-Bear brand. And not everyone is capable of that kind of training and process and oversight.

Greg: We were more like the people.

Speaker Change: We believe is the proper and robust.

Speaker Change: <unk> and as Tony will learn.

Greg: Whole new World now of tick Tock, social media Ken.

Speaker Change: Market penetration in each one of those countries. I mean, this is pretty typical stuff whether its franchising our partner operated which happens to be two different models.

Greg: <unk> seem to know what build a bear is in Estonia, just FYI for all on the call.

Speaker Change: But.

Greg: And it is comes back to that Teddy bear hug.

Speaker Change: And that's one of the reasons why we wanted to note increases comment.

Greg: So even if you don't know and you see this line and you get in it it's still a delightful experience so.

Speaker Change: The enthusiasm that we're seeing.

Speaker Change: Is that reflection of the success that we're having across many of these market I mean, clearly these are business people as well they don't have any intention of continuing to drive new location. It said, it's already opened locations are not seeing success. So we wanted to specifically call that out because it's the best.

Keegan Cox: Thank you.

Greg: I.

Greg: Really.

Greg: Heartened by what's going on in that area of our business.

Greg Gibas: Our next question comes from the line of Greg Gibas with Northland Securities. Please proceed with your question. Great.

Greg: And on our business from beyond just that we're spreading Teddy bear Joey around the world, We will put that over here in a box.

Sharon John: Good morning, Sharon and Voin. Congrats on the record result. I wanted to follow up. It's great to see the continued progress with Mini Beans. It sounds like some new introductions this year after the 50 new ones you had last year. You talked about the introduction in retailers outside of the Build-A-Bear Workshop already. I wanted to see if you could provide some color on kind of where you're placing them and plans for continued expansion. We're placing them in, interestingly, some of the partners that we noted outside the United States in their own toy stores, but we've also recently started a smaller test approach in the United States.

Greg: That it is.

Speaker Change: And you mentioned in his remarks. The go about the continued global expansion of build a bear has been on our radar for a long time and we've had these disruptions that I mentioned painfully in my remarks.

Speaker Change: Evidence of the success that we're seeing so.

Speaker Change: We're excited about it and some of these countries like Asonia when we had the lines around the mall.

Speaker Change: We were more like did people build.

Speaker Change: And I feel like to in this particular environment that global is when you use the word hedge.

Speaker Change: Build a bear is in its Tony.

Speaker Change: A whole new world now of.

Speaker Change: Tick tock, social media can seem to know what build a bear is in Estonia, just FYI for all on the call.

Speaker Change: Is also extremely important to understand right now.

Speaker Change: And.

Speaker Change: Great. Thanks for that color and one more if I may.

Speaker Change: And it is comes back to that Teddy bear hug and so even if you don't know and you see this line and you get in it it's still a delightful experience so.

Speaker Change: The Q1 strong results in the retail channel.

Chris hurt: And Chris, again, if you want to add some color to that, feel free. Yeah, we've, we've had a relationship with Hudson, which is inside of airports where there is a wholesale model where we have already stuff for your friends that you can do clothing and accessories. And those locations, and we've added many beans into several of those locations. Apple Green is a travel type of location retail store, and we've added Mini Beans into 50 of those locations here domestically. And as Sharon mentioned, we've also added Mini Beans into locations with our partners in Italy and in the North America.

Speaker Change: Traffic seems to be holding steady in terms of the delta between the national trends, but the positive.

Speaker Change: I.

Speaker Change: Really.

Speaker Change: Heartened by what's going on in that area of our business.

Speaker Change: Read through if I guess to conversion and.

Speaker Change: And volume sales.

Speaker Change: And on our business from beyond just that we're spreading Teddy bear joy around the world will put that over here in a box.

Speaker Change: Would you attribute a lot of that to just organic demand or do you think that there was any.

Speaker Change: Consumer action, maybe just trying to get ahead of pricing.

Speaker Change: That it is.

Speaker Change: <unk> mentioned in his remarks, the gold belt.

Speaker Change: In the broader economy, just trying to get a sense as to.

Speaker Change: The continued global expansion of build a bear had been on our radar for a long time and we've had these disruptions that I mentioned painfully in my remarks.

Speaker Change: The in store trends that you might've seen in Q1.

Speaker Change: That's an interesting question.

Speaker Change: Because I know there is a lot of discussion out there about pull forward.

Speaker Change: And I feel like to in this particular environment that global is when you use the word hedge.

Speaker Change: We are of the belief that people tend not to hoard Teddy bears.

Greg Gibas: Great, that's good to hear.

Voin Todorovic: And if I could follow up on the kind of commentary on the updated outlook, you know, could you maybe dive into a little bit more of the incremental impact you're expecting from tariffs, I guess with the updated guidance relative to your previous, I think, you know, you previously said, you know, maybe a 5 million impact, now it's kind of less than 10. Just I guess the assumptions that go into the updated pre-tax income outlook. Yes, so what we mentioned on our poll, like our new pre-tax range is now $61 to $67 million. This range reflects less than $10 million net of mitigation impact of tariffs and associated costs, as well as, you know, we haven't changed our expectations about additional $5 million of related costs to medical and labor costs that we mentioned on our last call.

Speaker Change: We can have that discussion but.

Speaker Change: Is also extremely important to understand right now.

Speaker Change: Particularly.

Speaker Change: We're in the majority of our sales are about the experience.

Speaker Change: Great. Thanks for that color and one more if I may.

Speaker Change: The Q1 strong results in the retail channel.

Speaker Change: As much as the end result, the item the banner, so you cant hoard and experience.

Speaker Change: FX seems to be holding steady in terms of the delta between the national trends with the positive.

Speaker Change: And so when you think through it that way.

Speaker Change: Read through if I guess to conversion and in volume sales.

Speaker Change: Even though there may be some of that on the collector side, which is a small portion of our business.

Speaker Change: Would you attribute a lot of that to just organic demand or do you think that there was any.

Speaker Change: It's probably not material.

Speaker Change: Consumer action, maybe just trying to get ahead of pricing.

Speaker Change: Okay, great. Thanks for the additional color and congratulations again.

Speaker Change: The broader economy, just trying to get a sense as to.

Speaker Change: Thank you.

Speaker Change: The in store trends that you might've seen in Q1.

Speaker Change: We have no further questions at this time, Mr. Ron I'd like to turn the floor back over to you for closing comments.

Speaker Change: That's an interesting question because I know there is a lot of discussion out there about pull forward.

Speaker Change: Thank you so much for joining us today and we appreciate.

Speaker Change: <unk> being here to hear our record banking results for first quarter fiscal 2025, and look forward to getting back together on our second quarter call hope to see some of our investor conferences have a great day.

Voin Todorovic: You know, we are still working through a lot of these mitigations. You know, there is a lot of work that teams are doing to move production, to look at ways to mitigate some of the things from the organizational perspective, supply chain perspective. So, there's been a lot of work in that arena, and, you know, with successful momentum that we are seeing in our business, with things that are within our control, the success of our product and our marketing activities, we were confident to reiterate our revenue guidance, but, you know, with some of these additional costs, we lowered our pre-tax expectations for the year.

Speaker Change: We are of the belief that people tend not to hoard Teddy bears.

Speaker Change: We can have that discussion but.

Speaker Change: Particularly.

Speaker Change: Where the majority of our sales are about the experience.

Speaker Change: Ladies and.

Speaker Change: This does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.

Speaker Change: As much as the end result, the item the Bay area. So you cant hoard and experience.

Speaker Change: And so when you think through it that way.

Speaker Change: Even though there may be some of that on the collector side, which is a small portion of our business.

Speaker Change: It's probably not material.

Speaker Change: Okay, great. Thanks for the additional color and congratulations again.

Speaker Change: Thank you.

Speaker Change: Yes.

Operator: Big sense, and yeah, great to hear about the kind of diversification of sourcing there. Thanks again. Thank you. As a reminder, if you would like to ask a question, press star 1 on your telephone keypad.

Speaker Change: We have no further questions at this time, Mr. John I'd like to turn the floor back over to you for closing comments.

Speaker Change: Yes. Thank you so much for joining us today and we appreciate.

Speaker Change: You being here to hear our record breaking results for first quarter fiscal 2025, and look forward to getting back together on our second quarter call hope to see some of our investor conferences have a great day.

Steve Silver: Our next question comes from the line of Steve Silver with Argus Research, please proceed with your question.

Sharon John: Thanks, Operator, and I'd like to offer my congratulations as well. It sounds like the company is continuing to make significant progress in just the expansion of the country count outside the U.S. It's up to 30 already. I'm curious as to how the company is able to access information about how some of these launchers are going in new countries, and just really the decision-making that goes into really expanding within a current market versus entering new markets in these partnerships. Just trying to get a sense as to how responsive some of these partners can be in terms of adding new locations in current markets versus new ones.

Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.

Sharon John: Thanks, Steve. I mean, one of the tenets of global expansion is often to work with, you know, experts in their own markets, where we, you know, we expand, we own and operate, you know, most of our stores in the United States with some partners that are associated with hospitality, because that's a different kind of relationship. But, you know, looking into other countries, we're neither experts in the mall, the retail environment. We don't have those relationships. So, we like to find these partners, as I mentioned, which have very high bar on how they would operate. And, of course, there's criteria around the relationship, as well as the contracts associated with the use of the brand, the growth of the brand.

Speaker Change: The wireless customer you are calling is not available. Please try again later.

Speaker Change: Adrian.

Sharon John: And we, as management, approve those plans and work with those teams to build out what we believe is the proper and robust market penetration in each one of those countries. I mean, this is pretty typical stuff, you know, whether it's franchising or partner-operated, which happens to be two different models. But, you know, and that's one of the reasons why we wanted to note, in Chris's comments, the enthusiasm that we're seeing is a reflection of the success that we're having across many of these markets. I mean, clearly, these are business people as well. They don't have any intention of continuing to drive new locations if said already opened locations are not seeing success.

Sharon John: So, we wanted to specifically call that out because it's the best evidence of the success that we're seeing. So, we're excited about it. And some of these countries, like Estonia, when we had the lines around the mall, we were more like, do people know what Build-A-Bear is in Estonia? Well, we're in a whole new world now of TikTok, social media. Kids seem to know what Build-A-Bear is in Estonia, just FYI for all on the call. And it comes back to that teddy bear hug. And so, even if you don't know, and you see this line, and you get in it, it's still a delightful experience.

Sharon John: So, I'm really heartened by what's going on in that area of our business. And on a business from beyond just that we're spreading teddy bear joy around the world, we'll put that over here in a box, that it is, as Voin mentioned in his remarks, the continued global expansion of Build-A-Bear has been on our radar for a long time. And we've had these disruptions that I mentioned painfully in my remarks. And I feel like, too, in this particular environment, that global, as Voin used the word hedge, is also extremely important to understand right now.

Speaker Change: [music].

Sharon John: Great, thanks for that color. And so one more, if I may, with the Q1 strong results in the retail channel, traffic seems to be holding steady in terms of the delta between the national trends, but the positive read through, I guess, to conversion and volume sales. Would you attribute a lot of that to just organic demand or do you think that there was any consumer action, maybe just trying to get ahead of pricing in the broader economy, just trying to get a sense as to the in-store trends that you might've seen in Q1? That's an interesting question, because I know there is a lot of discussion out there about pull forward.

Sharon John: We are of the belief that people tend not to hoard teddy bears. We can have that discussion, but particularly where the majority of our sales are about the experience. as much as the end result, the item, the bear. So you can't hoard an experience. And so when you think through it that way... Even though there may be some of that on the collector's side, which is a small portion of our business, it's probably not material.

Sharon John: Okay, great.

Steve Silver: Thanks for the additional color and congratulations again.

Steve Silver: Thank you.

Operator: We have no further questions at this time.

Sharon John: Ms. John, I'd like to turn the floor back over to you for closing comments. Thank you so much for joining us today, and we appreciate you being here to hear our record-breaking results for first quarter fiscal 2025, and look forward to getting back together on our second quarter call, hope to see you at some of our investor conferences. Have a great day.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Speaker Change: Greetings and welcome to the build a bear workshop first quarter 2025 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host Gary Janeiro, Investor Relations. Thank you Sir you may begin.

Gary Janeiro: Thank you good morning, everyone and welcome to build a bear's first quarter 2025 earnings conference call with US today are chairman, John <unk>, Chief Executive Officer, Chris Hurt Chief operating Officer, and <unk> Chief Financial Officer. During this call we'll refer to forward looking statements that are subject to.

Speaker Change: Risks and uncertainties.

Speaker Change: Actual results could differ materially please refer to our forms 10-K, and 10-Q, including the risk factors section.

Speaker Change: We undertake no obligation to update any forward looking statements.

Speaker Change: During this call we will present, both GAAP and non-GAAP financial measures a reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website.

Pierre: And now I'll turn the call over to Pierre.

Pierre: Thank you Gary good morning, and thanks for joining us for build a bear's first quarter fiscal 2025 earnings call.

Pierre: Today, we are pleased to share that we have reported the best first quarter results and build a bear's history.

Speaker Change: Double digit top line growth drove record revenue margin expansion and strong performance across all segments. This represents impressive earnings per share growth of nearly 43%.

Speaker Change: The record setting start to the year is largely due to the ongoing execution of our long term strategy.

Speaker Change: Part of this strategy is centered on leveraging the high awareness and affinity of the build a bear brand to successfully expand by first introducing new product categories. With for example, the continued success of the many billions collectibles plush line second extending consumer rate such as the ongoing drive to.

Speaker Change: The appeal to the growing over 18, Kidult segment and third introducing our valued workshop experience. The building block of the build a bear brand to new markets, particularly outside the United States, which is now driven the company's international presence into 30 countries.

Speaker Change: Let's review the quarter's highlights all of which were Q1 records.

Speaker Change: Revenue increased 11, 9% to more than $128 million.

Speaker Change: Pretax income grew 36% to nearly $20 million and EPS increased 42, 7% to $1 17.

Speaker Change: Additionally, we returned over $7 million in capital to shareholders.

Speaker Change: Bolsters, our overall confidence in the company our team our overarching strategy and the strength of the build a bear brand.

Speaker Change: This is especially true considering those four years of positive result were achieved amid various economic and geopolitical headwinds.

Speaker Change: With this in mind, we are reiterating our 2025 revenue guidance.

Speaker Change: However, we are updating the company's pre tax guidance inclusive of the current tariff rates going we will provide more detail in his remarks.

Speaker Change: We believe the company's strong performance over the past four years is substantially due to our historic ability to successfully perform in volatile environment and is linked to a clean balance sheet strong cash flow a vertical flexible retail model and a relentless focus on controlling.

Speaker Change: Rolling the controllable.

Speaker Change: This success validates the continued commitment to our three key strategic initiatives aimed at delivering long term profitable growth specifically.

Speaker Change: One the evolution and expansion of the company's experiential retail footprint to the advancement of our comprehensive digital transformation and three the continued incremental investments to leverage build a bear's brand strength across multiple fronts, while returning capital to shareholders.

Speaker Change: For our first strategic initiative in the past few years with the benefit of the company three retail business model, we have accelerated our location expansion across the globe ending the first quarter with over 600 locations.

Speaker Change: 30% of which are outside the United States.

Speaker Change: To provide some more information relating to the Companys store expansion and evolution initiative I would like to turn the call over to Chris hurt build a bear's Chief operations Officer, Chris.

Chris hurt: Thanks, Sharon we are committed to expanding our brand reach through our key strategic initiatives of the evolution and expansion of our global footprint. We opened 15 net new experience locations in the first quarter highlighted by the opening of our Corporately operated Dublin, Ireland location on graph industry.

Speaker Change: Highly popular tourist destination.

Speaker Change: <unk> Standalone store features exclusive merchandise curated for tourists of all ages.

Speaker Change: As we continue to grow the brand in more places we've added two more countries, bringing our total count to 30 as Joe noted.

Speaker Change: As a testament to the enthusiasm for the brand around the Globe current international partners and franchisees continue to add experienced locations.

Speaker Change: <unk> the expansion into two new countries.

Speaker Change: Finland, and talent of Estonia, where lines for the openings stretched around the mall.

Speaker Change: Standalone, Denmark location and the Copenhagen Airport, one of the busiest in Europe.

Speaker Change: Additionally, two new locations in Italy, one in Milan, and one in Vienna, a Standalone workshop and the historic district of Piazza San Marco <unk>.

Speaker Change: Three new franchise stores in the UAE and one opening in Australia, one of our oldest and largest franchise countries, bringing our experience location count of 17 down under.

Speaker Change: <unk> our partnership with Carnival Cruise line continues as we opened on their two newest ships. We added three more girl scout locations, bringing our total to 28. Although these are designed on a smaller footprint. They serve important role in our broader girl scout multi year license relationship.

Speaker Change: As a reminder, we announced on our year end call that we also have plans to launch a multi level, one or a time build a bear workshop and icon Park located.

Speaker Change: In Orlando, Florida. This is scheduled to open in the summer of 2025th with the groundbreaking planned for this July.

Speaker Change: Our expansion plans remain on track for 2025 with at least 50 net new locations expected. This year. The majority of those being operated by our international partners.

Speaker Change: We're excited about our continued growth, which will bring the build a bear brand to more people in more places.

Sharon: With that I'll turn the call back over to Sharon.

Sharon: Thank you, Chris you and the team have been doing a fabulous job, bringing the beloved build their experience to kids and kids at heart around the world.

Sharon: It's important to note that our ability to invest in longer range projects that impact the global the company's global footprint expansion digital infrastructure marketing program content and organizational structure has largely been enabled by build a bear's improved and more consistent revenue.

Sharon: Cash flow.

Sharon: An example of this from a product and marketing perspective as I. Previously noted is the successful many beans collection, which was launched in February of 2020 for many.

Sharon: In addition, many gains have already been introduced in retailers outside of our workshop, which we believe represents a growth opportunity.

Sharon: The line continued its momentum in the first quarter of 2025, expanding 30% year over year, bringing the company's total sales to nearly 2 million units to date.

Sharon: To invigorate the collectible nature of the business model 50, New styles were released in the inaugural year, some of which were miniature replicas of build a bear's best selling classic offering.

Sharon: Plus we've released 15, new many veins already this year, including limited edition items.

Speaker Change: All of which appeal to the teen and adult collector, representing 40% of our business.

Sharon: <unk>.

Sharon: Over the past several years, we have successfully navigated significant external challenges, including the retail Apocalypse, Brexit and the Covid pandemic we.

Sharon: Well as we've noted many times not only is it Teddy bear hug understood in every language, but it is also a universal source of comfort and joy as.

Sharon: As a result, we believe we are well positioned to manage an environment, where uncertainty has become the norm rather than the exception.

Sharon: And we remain committed to navigating this current landscape as well.

Overall, we have seen the company's first quarter momentum continue into second quarter.

Sharon: And we have robust plans in place for the remainder of 2025.

Speaker Change: Kevin build a bear's solid business fundamentals and assuming tariffs remain at current levels. We expect to report record revenue for the year.

Speaker Change: And maintained strong profitability with double digit pre tax margin.

Speaker Change: With that I would like to thank the entire build a bear family are hundreds of partners of millions of amazing guests for helping us achieve our record first quarter as we strive to continue to deliver on our corporate mission of adding a little more heart to life.

Speaker Change: Good morning.

Speaker Change: Thank you Sharon and good morning, everyone I will discuss the quarterly results and then share more about our updated full year outlook.

Speaker Change: This was the most profitable first quarter in the company's history.

Speaker Change: We grew across all segments expanded their gross profit margin and increased pretax income to a new record.

Speaker Change: This reflects the work from our strategic initiatives over the past several years and the business operating at a higher level of profitability.

Speaker Change: We also continued to return capital to shareholders.

Speaker Change: We returned $7 $1 million for the quarter through dividends and share repurchases and.

Speaker Change: And have $85 million remaining on the board approved authorization.

Speaker Change: Moving to a more detailed review of our first quarter results.

Speaker Change: Total revenues were $128 4 million, an increase of 11, 9%.

Speaker Change: Net retail sales were $119 6 million an increase of 10, 9%.

Speaker Change: Stores delivered a strong performance.

Speaker Change: All four levers would have positive traffic conversion average unit retail and units per transaction.

Speaker Change: Our domestic store traffic was up 3%.

Speaker Change: Significantly outpacing U S national traffic, which declined by 3%.

Speaker Change: E Commerce demand increased 5%.

Speaker Change: Commercial revenue, which primarily represents wholesale sales to our partner operators and continues to be the fastest growing segment of our business.

Speaker Change: When including International franchise revenue Rose a combined 28, 3%.

Speaker Change: Gross margin was 56, 8% an improvement of 260 basis points compared to last year.

Speaker Change: Fitting from both retail and commercial segments.

Speaker Change: The leverage from improved merchandise margin, primarily driven by lower discounts as well as occupancy costs drove retail gross margin expansion.

Speaker Change: SG&A expenses were $53 $7 million or 41, 7% of total revenues compared to 41, 5% last year.

Speaker Change: Higher store level wage rates health care costs, and general inflationary pressures contributed to the 20 basis point increase.

Speaker Change: Our first our pre tax income for a first quarter record of $19 $6 million representing growth of 36% year over year and 15, 3% of total revenues.

Speaker Change: EPS was $1 17 also a first quarter record and an increase of 42, 7%, reflecting higher pretax income.

Speaker Change: <unk> and lower tax rate.

Speaker Change: Turning to the balance sheet.

Speaker Change: The first quarter and our cash balance was $44 $3 million, representing a six four and the $1 million or 16% increase year over year.

Speaker Change: This was after returning $37 million to shareholders over the past 12 months.

Speaker Change: Okay.

Speaker Change: Inventory at quarter end was $72 $3 million, an increase of $8 $3 million much of which is related to an accelerated purchase of core products and in line with our expectations.

Speaker Change: As well as nearly $2 million of tariff costs.

Speaker Change: The company remains comfortable with the level and composition of its inventory.

Speaker Change: Turning to the outlook.

Speaker Change: Following a strong first quarter and solid start to the second quarter. We have maintained our revenue guidance and we continue to expect the addition of at least 15 net new experienced locations most of which will be operated by our international partners.

Speaker Change: We continue to expect our commercial segment revenue to grow at least 20% for the year.

Speaker Change: Also we are updating our pretax income guidance to a range of 61 million to $67 million inclusive of the current tariff rates.

Speaker Change: Let me add some more commentary on tariffs as they relates to build a bear.

Speaker Change: First.

Speaker Change: Our global footprint has created an organic hedge as tariffs will not directly affect most of our international stores, whether corporate partner operated or franchise.

Speaker Change: Second please note that our retail cost of goods sold not only includes merchandise cost, but also ramp warehousing and distribution expenses.

Speaker Change: However, the merchandise portion is the only cost directly impacted.

Speaker Change: Third over the past several years build a bear has stigma has significantly reduced its reliance on China as a primary source of goods.

Speaker Change: With most products now being sourced from Vietnam.

Speaker Change: Additionally, while not all products are dual source many are and we have already exercised our ability to redirect China sourced products to our international locations.

Speaker Change: Fourth build a bear is a meaningful but are the cola retailer with a unique business model.

Speaker Change: The company's core product offerings.

Speaker Change: Less seasonally dependent with these choices representing over half of our sales.

Speaker Change: This enables more direct latitude over diversifying sourcing.

Speaker Change: Inventory timing and flow cell.

Speaker Change: Setting the retail values and managing promotional strategy compared to traditional importers.

Speaker Change: Considering those factors, we now expect the tariffs and the associated cost impact on our fiscal 2025, P&L net of mitigation to be less than $10 million.

Speaker Change: Also our pre tax guidance continues to reflect approximately $5 million of additional medical and labor costs, which we mentioned on our last call.

Speaker Change: Given our previous inventory pull forward and current mix, we anticipate tariffs will have a relatively modest impact on our second quarter results with an expectation of a greater effect starting in the third quarter.

Speaker Change: In closing we are pleased with our strong first quarter performance.

Speaker Change: Looking forward our objective is to stay focused on our strategy to grow the number of global locations continue our digital transformation.

Speaker Change: And invest in our company to drive another year of record revenues and delivered a solid pre tax income margins.

Speaker Change: Returning capital to shareholders.

Speaker Change: I want to thank all our store and warehouse associates corporate team members and partners for contributing to our record first quarter results.

Speaker Change: Finally, we look forward to sharing our progress as we move through the year and speaking with many of you at upcoming Investor conferences as mentioned in our press release. This morning, including the New York Stock Exchange virtual Investor access day on June 5th.

Speaker Change: This concludes our prepared remarks, we will now turn the call back over to the operator for questions operator.

Speaker Change: Thank you we will now be conducting a question and answer session.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue.

Speaker Change: Nice start to if you would like to remove your question from the queue.

Speaker Change: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Thank you. Our first question comes from the line of Eric Theater with SCC Research. Please proceed with your question.

Eric Theater: Good morning, congratulations on the quarter.

Speaker Change: Thanks, Eric.

Speaker Change: Great.

Speaker Change: When we look at the <unk>.

Speaker Change: This continuing evolution that we've been seeing with movies, obviously stitch. This weekend was a significant positive.

Speaker Change: Hi, no that you are no longer as dependent on this kind of.

Speaker Change: Our on road I get this through but how should we be thinking about the ability for you to capitalize on those types of events going forward throughout the year.

Speaker Change: We still have best in class relationships with.

Speaker Change: Most of the well all of the largest creators of.

Speaker Change: No significant family films.

Speaker Change: <unk> is a great example of that with our long term relationship with Disney that has also been a.

Speaker Change: Not just focused on children and it's actually evolved as a brand and character in recent years is more of a collectible teen tween adult product and we've broadened that line to be seasonal and have all sorts of.

Speaker Change: Different.

Speaker Change: Yeah.

Speaker Change: Iterations of stitch and that that's been an interesting driver for us that beyond this concept that you're talking about film.

Speaker Change: Certainly I can't speak to the strategy of Disney, but I believe that that sort of organic popularity that emerged from stitch is the reason why there was the film versus the other way around but we're glad to participate in that and happy to have those relationships. Yes. As you point is we for years that was a bit of.

Speaker Change: Oh, a go to place for us from a summer we'd expect one at least one big summer film and when Big holiday film and and the post Covid World Post Covid World Writer's strike that then a little more sketchy, but when that and if that returns were perfectly prepared because.

Speaker Change: That's a cross section of cultural moments and our co location in places where their theaters in mall, it's a perfect.

Speaker Change: It's a perfect storm for us to participate in we look at it now and though not as something that is we're relying on but something that would ideally be gravy on top of the way we plan our own business and taking control of our future has been a big part of this overarching strategy.

Speaker Change: Yeah.

Speaker Change: Yeah, actually I want to talk a little bit about that so.

Speaker Change: Yes.

Speaker Change: You have increasingly been able to respond to tick tock trends like you mentioned, the Highland cow frog Hao.

Speaker Change: How is the inventory management system going to enable you to be even better at doing that.

Speaker Change: How do you want you can sharpen that ability to respond when an item that.

Speaker Change: I don't know maybe was initially expected to be X now comes in it because it was on take talk is now demand is four or five times accident.

Speaker Change: Yes.

Speaker Change: Yes, we've already seen.

Speaker Change: Some results of our ability to manage that much better than that even that would happen back in the in the situations that you were expressing earlier on hot films like we would not always get that inventory right. The exact unit count are perfect for say a frozen movie.

Speaker Change: And be in a chase mode, where much more flexible now and I think that the comment that I added in the remarks about this final decommissioning of our legacy inventory system, we certainly have plans and beliefs and this is the entire intention of this multi year approach to have more visibility.

Speaker Change: City of inventory across our warehouse our stores that our ability to move E com inventory in our store inventory and a more like a <unk>.

Speaker Change: Fluid way, which has been at more manual painfully manual sometime.

Speaker Change: We'll increase our confidence in even going longer on some of these things that we think we're gonna be hot and I just want to point out we're not always just responding to tick tock trends were often creating tictoc trends.

Speaker Change: Perfect. Thank you and good luck for the rest of the year.

Eric Theater: Thank you Eric.

Speaker Change: Our next question comes from the line of Keegan Cox with D. A Davidson. Please proceed with your question.

Keegan Cox: Good morning, and congrats on the quarter.

Speaker Change: I appreciate it thank you.

Speaker Change: Yes. So my question is on you guys had strong growth in all three year segments, but the one that stood out to me was the retail results were very strong.

Speaker Change: Just wondering if you could provide some color on how the company operated stores performed versus your expectations.

Speaker Change: I'll take that one so thanks for the question Keegan definitely we are very pleased with.

Speaker Change: How are stores.

Speaker Change: <unk> performed during the quarter.

Speaker Change: As I mentioned in our remarks.

Speaker Change: All four levers of our positive traffic was up about 3%.

Speaker Change: National traffic domestic traffic in U S at least with the data that we get was down 3%. So that's a big delta and on top of that with higher traffic, we were able to increase our conversion.

Speaker Change: And we were also able to drive units per transaction as well as you know with lower discounts. Our average unit retail has gone up so again all of these levers we're moving in the right direction very pleased how our teams were able to execute in this as you know the combination of some of the things that <unk> talked about.

Speaker Change: Having the right product, having the right service model in our stores and really capitalizing on the traffic that our marketing and our teams are delivering so overall a very successful quarter. I'd also just note that that traffic Delta is a strong support point.

Speaker Change: On the fact that build a bear is a destination.

Speaker Change: People plan their attempt to build a bear.

Speaker Change: And we did the best we can do from a research perspective is.

Speaker Change: Asking guests and making some assumptions, but our assumptions is that between 60 and 80% of trips that are made to build a bear are planned in advance and a lot of that has to do with the fact that we are associated with celebrations with moments in time Lithia families coming together, whether its birthday for graduation.

Speaker Change: And so there they're making.

Speaker Change: Shall trip to come to build a bear so that bodes well in this type of environment.

Speaker Change: Great and then just one follow up.

Speaker Change: Just an update on your partner operated store line I was just wondering who are these partners are they kind of larger firms opening multiple stores and are you seeking any leads for partner operated stores.

Speaker Change: They are in.

Speaker Change: In their markets and sometimes beyond well known partners GIC print press, the OTC as well as.

Speaker Change: We have big players in South America Nordic.

Speaker Change: And I hand, it over to Chris if you want any more color.

Chris: Domestically long relationship with Great Wolf Lodge, Kalahari Carnival cruise line as I mentioned.

Speaker Change: Internationally, as Sharon mentioned geography property, who.

Speaker Change: We have multiple toys for locations in a big presence in Italy, that's our partner.

Speaker Change: Inner source Anvil. These are these are.

Speaker Change: Located in these countries to your second question, yes for certain markets now we are in negotiations with a number of regions and countries, but I'd note that we have a very high bar on our expectations from a partnership perspective and is absolutely crucial that we believe our partner operated.

Speaker Change: Group can deliver the experience and because that is the the underlying power of the build a bear brand and not everyone is capable of that kind of training and process and oversight.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Greg give us with Northland Securities. Please proceed with your question.

Greg: Great. Good morning, Sharon Bowen congrats on the record results.

Speaker Change: Thank you Brad I wanted to follow up it's great to see the continued progress with many beans it.

Speaker Change: Sounds like some new introductions this year after the 50, new ones you had last year.

Speaker Change: You talked about the introduction in retailers outside of the build a bear workshop already one of the see if you could provide some color on kind of where you are placing them and plans for continued expansion there.

Speaker Change: Hi, there, we're placing them and interestingly some of the partners that we noted outside the United States and their own toy stores, but we've also recently started a smaller test approach in the United States.

Speaker Change: Chris again, if you want to add some color to that feel free.

Speaker Change: We've had a relationship with Hudson, which is inside of airports, where there is a wholesale model where rehab already stuff.

Speaker Change: For a friend that you can do clothing and accessories in those locations and we've added many beans into several of those locations Apple Green is a travel type of location retail store and we've added many beans into 50 of those locations here domestically and as Sharon mentioned, we've also <unk>.

Speaker Change: Added maybe beans into locations with our partners in Italy and in the Nordics.

Speaker Change: Great that's good to hear.

Speaker Change: And if I could follow up on the kind of commentary on the updated outlook.

Speaker Change: Could you maybe dive into a little bit more of the incremental impact youre expecting from tariffs.

Speaker Change: With the updated guidance relative to your previous I think you previously said it all but maybe a $5 million impact now it's kind of less than 10, just I guess the assumptions that go into the updated pre tax income outlook.

Speaker Change: Yes, so what we mentioned on our call like our new <unk>.

Speaker Change: <unk> brand is now 61% to 6% to $7 million. This range reflects.

Speaker Change: Less than $10 million net of mitigation impact of tariffs and associated costs as well as you know.

Speaker Change: Haven't changed our expectations about the additional $5 million.

Speaker Change: Of related cost to medical.

Speaker Change: And labor costs that we mentioned on our last call.

Speaker Change: We are still working through a lot of these litigations.

Speaker Change: There is a lot of work that teams are doing to move production to look at ways.

Speaker Change: To mitigate some of the things from the organizational perspective supply chain perspective so.

Speaker Change: We are our confidence to continental or reiterate our revenue guidance, but with some of these additional costs.

Speaker Change: We lowered our pretax expectations for the year.

Speaker Change: Makes sense and yes, great to hear about the kind of diversification of sourcing there. Thanks again.

Speaker Change: Thank you.

Speaker Change: And as a reminder, if you would like to ask a question press star one on your telephone keypad.

Operator: Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question.

Steve Silver: Thanks, operator, and I'd like to offer my congratulations as well.

Steve Silver: It sounds like the company is continuing to make significant progress in just the expansion of the country count outside the U S. It's up to 30 already.

Steve Silver: Curious as to how the company is able to access information about how some of these launches are going in new countries and just really the decision making that goes into.

Steve Silver: Really expanding within a current market versus entering new markets and these partnerships just trying to get a sense as to how responsive. Some of these partners can be in terms of.

Steve Silver: Adding new locations in.

Steve Silver: In current markets versus new ones.

Dave: Hey, Thanks, Dave I mean, one of the tenants of global.

Steve Silver: Expansion.

Steve Silver: Is often to work with experts in their own markets.

Steve Silver: Where we we expand we own and operate most of our stores in the United States with some partners that are associated with hospitality.

Steve Silver: That's a different kind of relationship but looking into other countries, where neither are experts in the mall the retail environment. We don't have those relationships. So we liked define these partners as I mentioned, they have very high bar.

Steve Silver: <unk>.

Steve Silver: How they would operate and of course theres criteria around that relationship as well as the contracts associated with the use of the brand the growth of the brand and we as management approve those plans.

Steve Silver: And work with those teams to build out what we believe is the proper and robust.

Steve Silver: Market penetration in each one of those countries. I mean, this is pretty typical stuff you know whether its franchising our partner operated which happens to be two different model.

Steve Silver: But.

Steve Silver: And that's one of the reasons why we wanted to note increases comment.

Steve Silver: The enthusiasm that we're seeing is a reflection of the success that we're having across many of these markets. I mean, clearly these are business people as well they don't have any intention of continuing to drive new location. It said, it's already opened locations are not seeing success.

Steve Silver: So we wanted to specifically call that out because it's the best.

Steve Silver: Evidence of the success that we're seeing so.

Speaker Change: Yeah, we're excited about it and some of these countries like Asonia when we had the lines around the mall.

Speaker Change: We were more like the people you know at build a bear is and as Tony will learn a whole new world now of tick Tock social media.

Speaker Change: Kin seem to know what build a bear is in Estonia, just FYI for all on the call.

Speaker Change: And and if it is comes back to that Teddy bear hug and so even if you don't know when you see this line and you get in it it's still a delightful experience so.

Speaker Change: I I mean.

Speaker Change: Really.

Speaker Change: Heartened by what's going on in that area of our business and I and on our business from beyond just that we're spreading Teddy bear Joey around the world, We will put that over here in a box.

Speaker Change: That it is.

Speaker Change: He mentioned in his remarks at the go about the continued global expansion of build a bear had been on our radar for a long time and we've had these disruptions that I've mentioned painfully in my remarks.

Speaker Change: And I feel like to in this particular environment that global is when you use the word hedge.

Speaker Change: Is also extremely important to understand right now.

Speaker Change: Great. Thanks for that color and one more if I may.

Speaker Change: Q1 strong results in the retail channel.

Speaker Change: Traffic seems to be holding steady in terms of the delta between the national trends, but the positive.

Speaker Change: Read through if I guess to conversion and in volume sales.

Speaker Change: Would you attribute a lot of that to just organic demand or do you think that there was any.

Speaker Change: Consumer action, maybe just trying to get ahead of pricing.

Speaker Change: In the broader economy, just trying to get a sense as to.

Speaker Change: The in store trends that you might've seen in Q1.

Speaker Change: That's an interesting question.

Speaker Change: Because I know there is a lot of discussion out there about pull forward.

Speaker Change: We are of the belief that people tend not to hoard Teddy bears.

Speaker Change: We can have that discussion but.

Speaker Change: Particularly.

Speaker Change: Where the majority of our sales are about the experience.

Speaker Change: As much as the end result, the item the banner, so you cant hoard and experience.

Speaker Change:

Speaker Change: And so when you think through it that way.

Speaker Change: Even though there may be some of that on the collector side, which is a small portion of our business.

Speaker Change: It's probably not material.

Speaker Change: Okay, great. Thanks for the additional color and congratulations again.

Speaker Change: We have no further questions at this time, Mr. Ron I'd like to turn the floor back over to you for closing comments.

Speaker Change: Thank you so much for joining us today and we appreciate.

Ron: You being here to hear the a record banking results for first quarter fiscal 2025, and look forward to getting back together on our second quarter call hope to see some of our investor conferences have a great day.

Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.

Q1 2025 Build-A-Bear Workshop Inc Earnings Call

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