Q2 2025 Build-A-Bear Workshop Inc Earnings Call

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.

It is now my pleasure to introduce your host Gary Shneur O build a bear Investor relations. Thank you Sir you may begin.

Thank you good morning, everyone and welcome to build a better second quarter 2025 earnings conference call with US today are Sharon 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 risks.

And uncertainties actual results could differ materially please refer to our forms 10-K, and 10-Q, including the risk factors section, we undertake no obligation to update any forward looking statements.

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.

Speaker #2: Please be patient.

Speaker #3: Greetings, and welcome to the Build-A-BEAR Workshop second quarter, 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

And now I'll turn the call over to Sharon.

Thank you Gary.

Morning, and thanks for joining us for build a bear second quarter fiscal 2025 earnings call.

Speaker #3: 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.

Today, we are pleased to report the best second quarter, and first half results and build a bear's history, achieving record revenue, while simultaneously expanding pre tax margin and earnings per share.

Speaker #3: It is now my pleasure to introduce your host, Gary Schnierow, Build-A-BEAR Investor Relations. Thank you, sir. You may begin.

This unprecedented start to the year is largely a result of a long term focus on monetizing build a bear's unique position in the marketplace.

Speaker #4: Thank you. Good morning, everyone, and welcome to Build-A-BEAR's second quarter, 2025 earnings conference call. With us today are Sharon John, Build-A-BEAR's Chief Executive Officer, Chris Hurt, Chief Operating Officer, and Voin Todorovic, Chief Financial Officer.

Operator: Thank you. Good morning, everyone, and welcome to Build-A-Bear Workshop Inc.'s Second Quarter 2025 Earnings Conference Call. With us today are Sharon Price John, Build-A-Bear Workshop Inc.'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 uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the Risk Factors section. We undertake no obligation to update any forward-looking statement. 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. Now, I'll turn the call over to Sharon.

Multi generational appeal and exceptional brand recognition to scale the business with innovative initiatives across three strategic pillars.

Speaker #4: During this call, we'll 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 risk factors section.

For example, the use of our unique capital light partner operated retail model to accelerate our global expansion strategy.

Our focused effort on developing social media initiatives to drive Omnichannel sales with a broadened consumer base as a part of our digital transformation strategy and the introduction of new concepts like our many Bains collection as a representation of our strategy to invest in leveraging our powerful brand equity too.

Speaker #4: We undertake no obligation to update any forward-looking statement. During this call, we will present both gap and non-gap financial measures, a reconciliation of non-gap to gap measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website.

We evolved beyond our traditional retail and product space.

Speaker #4: And now, I'll turn the call over to Sharon.

Speaker #5: Thank you, Gary. Good morning, and thanks for joining us for Build-A-BEAR's second quarter fiscal 2025 earnings call. Today, we are pleased to report the best second quarter and first half results in Build-A-BEAR's history.

Simply put we are building on the iconic status of the brand to introduce it to more people in more places with more types of product for more purposes.

Sharon Price John: Thank you, Gary. Good morning, and thanks for joining us for Build-A-Bear Workshop Inc.'s Second Quarter Fiscal 2025 Earnings Call. Today, we are pleased to report the best second quarter and first half result in Build-A-Bear Workshop Inc.'s history, achieving record revenue while simultaneously expanding pre-tax margin and earnings per share. This unprecedented start to the year is largely a result of a long-term focus on monetizing Build-A-Bear Workshop Inc.'s unique position in the marketplace, multigenerational appeal, and exceptional brand recognition to scale the business with innovative initiatives across three strategic pillars.

All with a strategic vision to drive profitable growth.

Speaker #5: Achieving record revenue while simultaneously expanding pre-tax margin and earnings per share, this unprecedented start to the year is largely a result of a long-term focus on monetizing Build-A-Bear's unique position in the marketplace.

Before I provide more information regarding these ongoing initiatives, let's review some financial highlights from the second quarter and first half of 2025, all of which set new records for the company.

Specifically in the second quarter revenues grew 11% to over $124 million.

Speaker #5: Multi-generational appeal and exceptional brand recognition to scale the business with innovative initiatives across three strategic pillars. For example, the use of our unique capital-light partner-operated retail model to accelerate our global expansion strategy, the focused effort on developing social media initiatives to drive omnichannel sales with a broadened consumer base as a part of our digital transformation strategy, and the introduction of new concepts like our mini-beans collection as a representation of our strategy to invest in leveraging our powerful brand equity to evolve beyond our traditional retail and product space.

Pre tax income increased by 33% to over $15 million and EPS rose by 47% to 94.

Sharon Price John: For example, the use of our unique capital-light partner-operated retail model to accelerate our global expansion strategy, the focused effort on developing social media initiatives to drive omnichannel sales with a broadened consumer base as a part of our digital transformation strategy, and the introduction of new concepts like our Mini Beans collection as a representation of our strategy to invest in leveraging our powerful brand equity to evolve beyond our traditional retail and products base. Simply put, we are building on the iconic status of the brand to introduce it to more people in more places with more types of product for more purposes, all with a strategic vision to drive profitable growth. Before I provide more information regarding these ongoing initiatives, let's review some financial highlights from the second quarter and first half of 2025, all of which set new records for the company.

For the first half revenues grew more than 11% to over $252 million pre.

Pre tax income increased over 31% to almost $35 million and EPS rose approximately 45% to $2 11.

Additionally, during the first half of the fiscal year, we returned more than $13 million in capital to shareholders.

After posting multiple quarters of record results over the past four and a half years build a bear's. Most recent performance clearly supports the benefits of our very purposefully evolved and diversified business model and execution disciplined.

Speaker #5: Simply put, we are building on the iconic status of the brand to introduce it to more people, in more places, with more types of product, for more purposes.

Speaker #5: All with a strategic vision to drive profitable growth. Before I provide more information regarding these ongoing initiatives, let's review some financial highlights from the second quarter and first half of 2025.

As an example of our progress from a profitability perspective, our first half EBITDA margin rate of nearly 17% more than tripled versus the first half of 2019, the last pre COVID-19 year, driven by annual store contribution margins of over 25% combined with the growth of our <unk>.

Speaker #5: All of which set new records for the company. Specifically, in the second quarter, revenues grew 11% to over $124 million. Pre-tax income increased by 33% to over $15 million, and EPS rose by 47% to $0.94.

Sharon Price John: Specifically, in the second quarter, revenues grew 11% to over $124 million, pre-tax income increased by 33% to over $15 million, and EPS rose by 47% to $0.94. For the first half, revenues grew more than 11% to over $252 million, pre-tax income increased over 31% to almost $35 million, and EPS rose approximately 45% to $2.11. Additionally, during the first half of the fiscal year, we returned more than $13 million in capital to shareholders. After posting multiple quarters of record results over the past four and a half years, Build-A-Bear Workshop Inc.'s most recent performance clearly supports the benefits of our very purposefully evolved and diversified business model and executional discipline.

Higher margin commercial segment.

When considering these results were achieved in a wide variety of economic challenges in geopolitical shifts they serve as a valuable source of confidence in our team our brand our plans and the company's future.

Speaker #5: For the first half, revenues grew more than 11% to over $252 million, pre-tax income increased over 31% to almost $35 million, and EPS rose approximately 45% to $2.11.

With that in mind, while we understand a meaningful portion of the year remains and acknowledge the potential for some economic uncertainty ahead. We also believe it is appropriate to increase our 2025 guidance at this juncture.

Speaker #5: Additionally, during the first half of the fiscal year, we returned more than $13 million in capital. To shareholders. After posting multiple quarters of record results over the past four and a half years, Build-A-BEAR's most recent performance clearly supports the benefits of our very purposefully evolved and diversified business model and executional discipline.

Specifically, we shared in todays press release, our increased revenue and pre tax income guidance based on the current tariff rates as well as higher expectations for net new unit growth.

Therefore, when considering our business momentum historical ability to respond to shifting marketing conditions.

Solid balance sheet strong cash flow and a focus on controlling the controllable we remain confident in our continued efforts to drive our three.

Speaker #5: As an example of our progress from a profitability perspective, our first half EBITDA margin rate of nearly 17%, more than tripled versus the first half of 2019, the last pre-COVID VID year.

Sharon Price John: As an example of our progress from a profitability perspective, our first half EBITDA margin rate of nearly 17% more than tripled versus the first half of 2019, the last pre-COVID year, driven by annual store contribution margins of over 25% combined with the growth of our higher margin commercial segment. When considering these results were achieved amid a wide variety of economic challenges and geopolitical shifts, they serve as a valuable source of confidence in our team, our brand, our plans, and the company's future. With that in mind, while we understand a meaningful portion of the year remains and acknowledge the potential for some economic uncertainty ahead, we also believe it is appropriate to increase our 2025 guidance at this juncture.

Strategic pillars of.

One the expansion and evolution of our experiential retail footprint.

Speaker #5: Driven by annual store contribution margins of over 25%, combined with the growth of our higher-margin commercial segment, these results were achieved amid a wide variety of economic challenges and geopolitical shifts. They serve as a valuable source of confidence in our team, our brand, our plans, and the company's future.

Two the advancement of our comprehensive digital transformation and three the continued investment to leverage the powerful equity of the build a bear brand while simultaneously returning capital to shareholders.

Now Chris hurt build a bear's chief operations Officer will provide some additional information about our first strategic pillar the expansion of our retail footprint Chris.

Speaker #5: With that in mind, while we understanding meaningful portion of the year remains and acknowledge the potential for some economic uncertainty ahead, we also believe it is appropriate to increase our 2025 guidance at this juncture.

Thanks, Sharon we are committed to bringing our signature workshop experience the cornerstone of the build of our brands to new markets through three retail business model.

Speaker #5: Specifically, we shared in today's press release our increased revenue and pre-tax income guidance, based on the current tariff rates, as well as higher expectations for net new unit growth.

Sharon Price John: Specifically, we shared in today's press release our increased revenue and pre-tax income guidance based on the current tariff rates, as well as higher expectations for net new unit growth. Therefore, when considering our business momentum, historical ability to respond to shifting marketing conditions, solid balance sheet, strong cash flow, and a focus on controlling the controllable, we remain confident in our continued effort to drive our three strategic pillars of: one, the expansion and evolution of our experiential retail footprint; two, the advancement of our comprehensive digital transformation; and three, the continued investment to leverage the powerful equity of the Build-A-Bear brand while simultaneously returning capital to shareholders. Now, Chris Hurt, Build-A-Bear's Chief Operating Officer, will provide some additional information about our first strategic pillar, the expansion of our retail footprint. Chris?

Corporately managed partner operated and franchise.

During the quarter 14, net new experienced locations were open of which 86% were international expanding the brand experienced a 32 countries across North America, South America, Europe, Australia, Asia and Africa.

Speaker #5: Therefore, when considering our business momentum, historical ability to respond to shifting market conditions, solid balance sheet, strong cash flow, and a focus on controlling the controllables, we remain confident in our continued efforts to drive our three strategic pillars of: 1.

A testament to the enthusiasm for the brand specifically, our domestic partners continue to expand their build a bear prevalence as girl Scouts introduced two new locations, bringing their total to 33 and great Wolf Lodge opened a workshop in their new Connecticut location, which brings our experience to all 22 of their U S logic.

Speaker #5: The expansion and evolution of our experiential retail footprint. 2. The advancement of our comprehensive digital transformation. And 3. The continued investment to leverage the powerful equity of the Build-A-BEAR brand while simultaneously returning capital to shareholders.

Our international partners and franchisees also continued to experience by entering two new countries, Georgia, and inspect experience and opening locations in Colombia, Mexico, Australia, Fiji, Denmark, Qatar, Kuwait and the UAE.

Speaker #5: Now, Chris Hurt, Build-A-BEAR's Chief Operations Officer, will provide some additional information about our first strategic pillar, the expansion of our retail footprint. Chris?

We are also thrilled to announce that the build a bear brand will be returning to Germany in the third quarter operated by one of our current partners inner stores.

Speaker #6: Thanks, Sharon. We are committed to bringing our signature workshop experience, the cornerstone of the Build-A-Bear brand, to new markets through three retail business models.

Chris hurt: Thanks, Sharon. We are committed to bringing our signature workshop experience, the cornerstone of the Build-A-Bear brand, to new markets through three retail business models: corporately managed, partner-operated, and franchised. In the quarter, 14 net new experience locations were opened, of which 86% were international, expanding the brand experience to 32 countries across North America, South America, Europe, Australia, Asia, and Africa. As a testament to the enthusiasm for the brand, specifically, our domestic partners continue to expand their Build-A-Bear presence as Girl Scouts introduced two new locations, bringing their total to 33, and Great Wolf Lodge opened a workshop in their new Connecticut location, which brings our experience to all 22 of their U.S. lodges. Our international partners and franchisees also continue to expand by entering two new countries, Georgia and Uzbekistan, and opening locations in Colombia, Mexico, Australia, Fiji, Denmark, Qatar, Kuwait, and the UAE.

Additionally, we have both continued to grow and have plans for future evolution over corporately operated footprint ranging from more traditional formats and select mall based locations.

Speaker #6: Corporately managed, partner-operated, and franchised. In the quarter 14 net new experience locations were opened, of which 86% were international, expanding the brand experience to 32 countries, across North America, South America, Europe, Australia, Asia, and Africa.

<unk> focus workshops innovative concepts like November successful debut of our Hello, Kitty incidents workshop.

The remodel and significant expansion of our powerhouse Apio Schwartz location in Rockefeller Plaza, and the recently announced plans for a multi level one of a kind of build a bear workshop at icon Park in Orlando, Florida, which is scheduled to open in the second half of 2025. We are pleased to say we kicked off this remarkable.

Speaker #6: As a testament to the enthusiasm for the brand, specifically, our domestic partners continue to expand their Build-A-Bear presence. The Girl Scouts introduced two new locations, bringing their total to 33.

Speaker #6: And Great Wolf Lodge opened a workshop in their new Connecticut location, which brings our experience to all 22 of their US lodges. Our international partners and franchisees also continue to expand by entering two new countries, Georgia and Uzbekistan, and opening locations in Colombia, Mexico, Australia, Fiji, Denmark, Qatar, Kuwait, and the UAE.

Adventure with a groundbreaking ceremony last month.

As noted given that our 2025 expansion plans are exceeding expectations. We are increasing our net new unit growth guidance for the year to at least 60 locations from the previous 50, we continue to expect the majority of the new unit growth to be driven by our partner operated model mainly with.

With International Partners. In fact, we ended the quarter with 157 partner operated units now totaling 25% of our total location count.

Speaker #6: We are also thrilled to announce that the Build-A-BEAR brand will be returning to Germany in the third quarter. Operated by one of our current partners, InnerSource.

Chris hurt: We are also thrilled to announce that the Build-A-Bear brand will be returning to Germany in the third quarter, operated by one of our current partners, InnerSource. Additionally, we have both continued to grow and have plans for future evolution of our corporately operated footprint, ranging from more traditional formats and select mall-based locations, tourist-focused workshops, innovative concepts like November's successful debut of our Hello Kitty and Friends Workshop, the remodel and significant expansion of our powerhouse FAO Schwarz location in Rockefeller Plaza, and the recently announced plans for a multilevel, one-of-a-kind Build-A-Bear Workshop at Icon Park in Orlando, Florida, which is scheduled to open in the second half of 2026. We are pleased to say we kicked off this remarkable adventure with a groundbreaking ceremony last month.

Speaker #6: Additionally, we have both continued to grow and have plans for future evolution of our corporately operated footprint, ranging from more traditional formats and select small-based locations, tourist-focused workshops, innovative concepts like November's successful debut of our Hello Kitty and Friends workshop, the remodel and significant expansion of our powerhouse, FAO Schwartz location, in Rockefeller Plaza, and the recently announced plans for a multi-level, one-of-a-kind Build-A-BEAR workshop at ICON Park in Orlando, Florida, which is scheduled to open in the second half of 2026.

As these new experienced locations continue to open around the globe. There is no question that we are adding a little more hard to live in more places and for more people.

Now I will turn the call back over to Sharon. Thank.

Thank you Chris our experienced locations are truly the crux of our brand essence.

For our second strategic pillar as noted our own going digital transformation includes the advancement and social media initiatives across platforms like Instagram tick Tock, Facebook and Youtube as well as the amplification of an impressive amount of user generated content for the brand.

Speaker #6: We are pleased to say we kicked off this remarkable adventure with a groundbreaking ceremony last month. As noted, given that our 2025 expansion plans are exceeding expectations, we are increasing our net new unit growth guidance for the year to at least 60 locations from the previous 50.

With social media, having an increasingly critical role in the broader media landscape. It is now a key element in the way, we showcase products till brand stories and spark trends for our teen and adult consumers now often referred to as Kidults.

Chris hurt: As noted, given that our 2025 expansion plans are exceeding expectations, we are increasing our net new unit growth guidance for the year to at least 60 locations from the previous 50. We continue to expect the majority of the new unit growth to be driven by our partner-operated model, mainly with international partners. In fact, we ended the quarter with 157 partner-operated units, now totaling 25% of our total location count. As these new experience locations continue to open around the globe, there's no question that we are adding a little more heart to life in more places and for more people. Now, I will turn the call back over to Sharon.

As an example, our expect effective marketing campaign to support this summer's fruit stand assortment created a fully integrated launch of a non holiday non licensed collection that drove triple digit growth in media impressions and was a significant contributor to our second quarter success.

Speaker #6: We continue to expect the majority of the new unit growth to be driven by our partner-operated model, mainly with international partners. In fact, we ended the quarter with 157 partner-operated units, which now total 25% of our total location count.

Speaker #6: As these new experience locations continue to open around the globe, there is no question that we are adding a little more heart to life in more places and for more people.

We efficiently generated awareness in sales for the entire offering including our make your own watermelon frog Dragon fruit Dragon and pineapple Axolotl, we further enhanced the fruit stand with many veins, including fan phase Kiwi Koala, which contributed to the 80% year on year revenue increase for the many themes collection.

Speaker #6: Now, I will turn the call back over to Sharon.

Speaker #5: Thank you, Chris. Our experience locations are truly the crux of our brand essence. For our second strategic pillar, as noted, our ongoing digital transformation includes the advancement of social media initiatives across platforms like Instagram, TikTok, Facebook, and YouTube, as well as the amplification of an impressive amount of user-generated content for the brand.

Sharon Price John: Thank you, Chris. Our experience locations are truly the crux of our brand essence. For our second strategic pillar, as noted, our ongoing digital transformation includes the advancement of social media initiatives across platforms like Instagram, TikTok, Facebook, and YouTube, as well as the amplification of an impressive amount of user-generated content for the brand. With social media having an increasingly critical role in the broader media landscape, it is now a key element in the way we showcase products, tell brand stories, and spark trends for our teen and adult consumers, now often referred to as kidults. As an example, our effective marketing campaign to support this summer's Fruit Stand assortment created a fully integrated launch of a non-holiday, non-licensed collection that drove triple-digit growth in media impressions and was a significant contributor to our second quarter success.

Importantly, we see the continued investment in social listening tools Super fan research.

Influencers algorithms and trend watching to inform and create comprehensive dialed in product stories supported by engaging shareable content, especially for the growing <unk> market.

Speaker #5: With social media having an increasingly critical role in the broader media landscape, it is now a key element in the way we showcase products, tell brand stories, and spark trends for our team and adult consumers, now often referred to as kid-ults.

Often tend to be higher value collectors gift givers and viral product purchasers.

The third pillar is to invest in ideas and opportunities to leverage our brand power to drive incremental growth.

Speaker #5: As an example, our effective marketing campaign to support this summer's fruit stand assortment created a fully integrated launch of a non-holiday, non-licensed collection that drove triple-digit growth in media impressions and was a significant contributor to our second quarter success.

Notably because of our more sustainable and more consistent revenue and cash flow.

Build a bear has been able to make concerted effort and longer term initiatives over the past few years, including.

The scalable reinterpretation of the build a bear workshop experience with meaningful license partners like our successful Hello, Kitty and friends Los Angeles location.

Speaker #5: We efficiently generated awareness and sales for the entire offering, including our make-your-own watermelon frog, dragon fruit dragon, and pineapple oxolotl. We further enhanced the fruit stand with mini-beans, including the fan-favorite kiwi koala, which contributed to the 80% year-on-year revenue increase for the mini-beans collection.

Sharon Price John: We efficiently generated awareness and sales for the entire offering, including our make-your-own Watermelon Frog, Dragon Fruit Dragon, and Pineapple Axolotl. We further enhanced the Fruit Stand with Mini Beans, including fan-favorite Kiwi Koala, which contributed to the 80% year-on-year revenue increase for the Mini Beans collection. Importantly, we see the continued investment in social listening tools, superfan research, AI, influencers, algorithms, and trend watching to inform and create comprehensive dialed-in product stories supported by engaging, shareable content, especially for the growing kidults market, who often tend to be higher value collectors, gift givers, and viral product purchasers. The third pillar is to invest in ideas and opportunities to leverage our brand power to drive incremental growth. Notably, because of our more sustainable and more consistent revenue and cash flow, Build-A-Bear Workshop Inc.

The multichannel expansion of the brand into potentially thousands of additional points of sale across geographies through a wholesale business model leveraging new product types like many veins and the evolution of our organizational structure and the elevation of talent to enable these and other strategic growth initiatives.

Speaker #5: Importantly, we see the continued investment in social listening tools, super fan research, AI, influencers, algorithms, and trend-watching to inform and create comprehensive dialed-in product stories supported by engaging, shareable content, especially for the growing kid-ult market.

You may recall that during our third quarter 2024 earnings call. We noted that we enjoyed the best Halloween performance in our history.

Today, we are pleased to announce positive comparisons for Halloween 2025 and quarter to date sales as our Q2 momentum continues.

Speaker #5: To often tend to be higher-value collectors, gift-givers, and viral product purchasers. The third pillar is to invest in ideas and opportunities to leverage our brand-powered drive incremental growth.

Key contributors. Thus far include the return of vault favorite pumpkin Kitty the scary acute zombie actual auto.

Speaker #5: Notably, because of our more sustainable and more consistent revenue and cash flow, Build-A-Bear has been able to make concerted efforts in longer-term initiatives over the past few years, including the scalable reinterpretation of the Build-A-Bear Workshop experience with meaningful licensed partners, like our successful Hello Kitty and Friends Los Angeles location; the multi-channel expansion of the brand into potentially thousands of additional points of sale across geographies through a wholesale business model leveraging new product types like mini-beans; and the evolution of our organizational structure and the elevation of talent.

And our new on trend poses bat, which currently looks like it may be a surprise early sell out and yes. We also expanded the collection with fun Halloween themed mini veins, including a candy corn longhorn.

Sharon Price John: has been able to make concerted efforts in longer-term initiatives over the past few years, including the scalable reinterpretation of the Build-A-Bear Workshop experience with meaningful licensed partners like our successful Hello Kitty and Friends Workshop Los Angeles location, the multichannel expansion of the brand into potentially thousands of additional points of sale across geographies through a wholesale business model leveraging new product types like Mini Beans, and the evolution of our organizational structure and the elevation of talent to enable these and other strategic growth initiatives. You may recall that during our third quarter 2024 earnings call, we noted that we enjoyed the best Halloween performance in our history. Today, we are pleased to announce positive comparisons for Halloween 2025 and quarter-to-date sales, as our Q2 momentum continues.

Looking ahead, we believe we have a robust pipeline for the remainder of 2025 kicking off with special plans for National Teddy Bear day on September 9th.

In October launch tied to the upcoming sequel for last year's blockbuster Wicked for good and of course, a strong holiday lineup, including the 10th anniversary version of our famous listen the magical snow Dear.

In closing to reiterate for the full year, assuming tariffs hold at current levels and the economic environment remains relatively stable. Our updated guidance reflects increased expectations for fiscal 2025, and we anticipate record results for the fifth consecutive year.

Speaker #5: To enable these and other strategic growth initiatives, you may recall that during our third quarter 2024 earnings call, we noted that we enjoyed the best Halloween performance in our history.

Speaker #5: Today, we are pleased to announce positive comparisons for Halloween 2025 and quarter-to-date sales, as our Q2 momentum continues. Key contributors thus far include the return of vault-favorite Pumpkin Kitty, the scary cute Zombie Axolotl, and our new on-trend posable Bat, which currently looks like it may be a surprise early sellout.

<unk> will provide more details in his remarks.

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 a record first half for fiscal 2025, as we strive to continue delivering on our corporate mission of adding a little more heart to life.

Sharon Price John: Key contributors thus far include the return of vault favorite Pumpkin Kitty, the scary cute zombie axolotl, and our new on-trend posable bat, which currently looks like it may be a surprise early sell-out. Yes, we also expanded the collection with fun Halloween-themed Mini Beans, including a candy corn longhorn. Looking ahead, we believe we have a robust pipeline for the remainder of 2025, kicking off with special plans for National Teddy Bear Day on September 9th, an October launch tied to the upcoming sequel for last year's blockbuster, Wicked for Good, and of course, a strong holiday lineup, including the 10th anniversary version of our famous Glisten, The Magical Snow Deer.

Speaker #5: And yes, we also expanded the collection with fun, Halloween-themed mini-beans, including a candy corn longhorn. Looking ahead, we believe we have a robust pipeline for the remainder of 2025, kicking off with special plans for a National Teddy Bear Day on September 9th, and an October launch tied to the upcoming sequel for last year's blockbuster, Wicked, for Good.

<unk>.

Thank you Sharon and good morning, everyone.

I'll discuss the quarterly results and then share more about our updated full year outlook.

This was the most profitable second quarter and first half in the company's history.

For the first half both our retail and commercial segments grew double digits, 11% and 22% respectively.

Speaker #5: And of course, a strong holiday lineup, including the 10th anniversary version of our famous Glyphon, the magical snow deer. In closing, to reiterate, for the full year, assuming tariffs hold at current levels and the economic environment remains relatively stable, our updated guidance reflects increased expectations for fiscal 2025, and we anticipate record results for the fifth consecutive year.

Both segments delivered improved gross profit margins and with disciplined expense management, we achieved higher pretax income margins.

Sharon Price John: In closing, to reiterate, for the full year, assuming tariffs hold at current levels and the economic environment remains relatively stable, our updated guidance reflects increased expectations for fiscal 2025, and we anticipate record results for the fifth consecutive year. Voin will provide more details in his remarks. 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 a record first half for fiscal 2025 as we strive to continue delivering on our corporate mission of adding a little more heart to life. Voin.

These results underscore the effectiveness of our strategic initiatives implemented over the past several years.

We remain committed to returning capital to shareholders during the quarter, we returned $6 million through dividends and share repurchases, bringing our year to date total to $13 1 million.

Speaker #5: Voin will provide more details in his remarks. 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 a record first half for fiscal 2025.

We also maintained significant flexibility with about $80 million remaining under our board approved the purchase authorization.

Moving to a more detailed review of our second quarter results.

Speaker #5: As we strive to continue delivering on our corporate mission of adding a little more heart to life, Voin,

Revenues were $124 2 million.

An increase of 11, 1%.

Net retail sales were $114 6 million and.

Speaker #6: Thank you, Sharon. 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 second quarter and first half in the company's history.

Gary Schnierow: Thank you, Sharon, 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 second quarter and first half in the company's history. For the first half, both our retail and commercial segments grew double digits, 11% and 22% respectively. Both segments delivered improved gross profit margins, and with disciplined expense management, we achieved higher pre-tax income margins. These results underscore the effectiveness of our strategic initiatives implemented over the past several years. We remain committed to returning capital to shareholders. During the quarter, we returned $6 million through dividends and share repurchases, bringing our year-to-date total to $13.1 million. We also maintained significant flexibility with about $80 million remaining under our board-approved purchase authorization. Moving to a more detailed review of our second quarter results, total revenues were $124.2 million, an increase of 11.1%.

An increase of 10, 8%.

Our stores delivered a strong performance in the quarter with transaction growth driven by continued positive traffic prep.

Speaker #6: For the first half, both our retail and commercial segments grew double digits, 11% and 22% respectively. Both segments delivered improved gross profit margins, and with disciplined expense management, we achieved higher pre-tax income margins.

Domestic store traffic grows 3% significantly outperforming the national benchmark, which saw a 3% decline.

Dollars per transaction were up supported by higher average unit retail, mostly benefiting from reduced promotional activity and selective price increases partially offset by a decline in units per transaction.

Speaker #6: These results underscore the effectiveness of our strategic initiatives, implemented over the past several years. We remain committed to returning capital to shareholders. During the quarter, we returned $6 million through dividends and share repurchases, bringing our year-to-date total to $13.1 million.

E Commerce demand increased 15, 1% driven by strong consumer response to key product launches the.

The timing of these launches was more favorable compared to last year when similar releases occurred at the beginning of the third quarter.

Speaker #6: We also maintained significant flexibility with about $80 million remaining under our board-approved and purchase authorization. Moving to a more detailed review of our second quarter results, total revenues were $124.2 million, an increase of 11.1%.

Allowing us to capture demand earlier and contribute meaningfully to second quarter performance.

Commercial revenue, which primarily represents wholesale sales to our partner operators.

<unk> to be the fastest growing segment of our business with 18, 3% growth in the quarter.

Speaker #6: Net retail sales were $114.6 million, an increase of 10.8%. Our stores delivered strong performance in the quarter, with transaction growth driven by continued positive traffic trends.

Gary Schnierow: Net retail sales were $114.6 million, an increase of 10.8%. Our stores delivered strong performance in the quarter, with transaction growth driven by continued positive traffic trends. Domestic store traffic rose 3%, significantly outperforming the national benchmark, which showed a 3% decline. Dollars per transaction were up, supported by higher average unit retail, mostly benefiting from reduced promotional activity and selective price increases, partially offset by a decline in units per transaction. E-commerce demand increased 15.1%, driven by a strong consumer response to key product launches. The timing of these launches was more favorable compared to last year, when similar releases occurred at the beginning of the third quarter, allowing us to capture demand earlier and contribute meaningfully to second quarter performance. Commercial revenue, which primarily represents wholesale sales to our partner operators, continues to be the fastest growing segment of our business, with 18.3% growth in the quarter.

Gross margin was 57, 6% an improvement of 340 basis points compared to last year, reflecting margin strength across both retail and commercial segments.

Speaker #6: Domestic store traffic rose 3%, significantly outperforming the national benchmark which showed a 3% decline. Dollars per transaction were up, supported by higher average unit retail, mostly benefiting from reduced promotional activity and selective price increases, partially offset by a decline in units per transaction.

Our retail gross margin expansion was primarily driven by improved merchandise margin supported by reduced promotional activity and selective price increases.

As well as the fact that we saw significant leverage of our fixed costs with strong revenue growth.

While tariffs started to impact our cost of goods sold during the quarter last year, a strategic decision to pull forward inventory reduced our tariff exposure to about $1 million.

Speaker #6: E-commerce demand increased 15.1%, driven by strong consumer response to key product launches. The timing of these launches was more favorable compared to last year, when similar releases occurred at the beginning of Q3.

SG&A expenses were $56 4 million or 45, 4% of total revenues compared to 44% last year.

Speaker #6: Allowing us to capture demand earlier and contribute meaningfully to second quarter performance. Commercial revenue, which primarily represents wholesale sales to our partner operators, continues to be the fastest growing segment of our business with 18.3% growth in the quarter.

Higher store level compensation corporate costs, and general inflationary pressures, partially offset by the timing of marketing expenses contributed to the 140 basis point increase.

Pretax income grew 32, 7% with second quarter record of $15 3 million and 12, 3% of total revenues.

Speaker #6: Gross margin was $57.6%, an improvement of 340 basis points compared to last year, reflecting margin strength across both retail and commercial segments. Retail gross margin expansion was primarily driven by improved merchandise margin, supported by reduced promotional activity, and selective price increases, as well as the fact that we saw significant leverage of our fixed cost with strong revenue growth.

Gary Schnierow: Gross margin was 57.6%, an improvement of 340 basis points compared to last year, reflecting margin strength across both retail and commercial segments. Retail gross margin expansion was primarily driven by improved merchandise margin, supported by reduced promotional activity and selective price increases, as well as the fact that we saw significant leverage of our fixed costs with strong revenue growth. While tariffs started to impact our cost of goods sold during the quarter, last year's strategic decision to pull forward inventory reduced our tariff exposure to about $1 million. SG&A expenses were $56.4 million, or 45.4% of total revenues, compared to 44% last year. Higher store level compensation, corporate costs, and general inflationary pressures, partially offset by the timing of marketing expenses, contributed to the 140 basis point increase. Pre-tax income grew 32.7% to a second quarter record of $15.3 million and 12.3% of total revenues.

EPS was <unk> 94.

An increase of 46, 9%, reflecting higher pretax income lower income tax rate and a reduced share count.

The lower income tax rate in the quarter reflects the benefit of discrete items.

Our EPS for the first half of the year was $2 and the 11th.

Up 44, 5% year over year.

Speaker #6: While tariffs started to impact our cost of goods sold during the quarter, last year's strategic decision to pull forward inventory reduced our tariff exposure to about $1 million.

Turning to the balance sheet at second quarter end.

Cash and cash equivalents totaled $39 1 million, an increase of 55, 4% compared to the same period last year.

Speaker #6: SG&A expenses were $56.4 million or 45.4% of total revenues. Compared to 44% last year, higher store-level compensation, corporate costs, and general inflationary pressures partially offset by the timing of marketing expenses, contributed to the $140 basis point increase.

This was after returning $31 million to shareholders over the past 12 months.

The company finished the quarter with no borrowings under its revolving credit facility.

Inventory at quarter end was $81 8 million.

An increase of 14 8 million.

About half of the dollar increase is attributable to tariffs.

Speaker #6: Pre-tax income grew 32.7% to its second quarter record of $15.3 million, representing 12.3% of total revenues. EPS was $0.94, an increase of 46.9%, reflecting higher pre-tax income, a lower income tax rate, and a reduced share count.

The remainder is driven by accelerated purchase of our core products and investments to support elevated commercial segment sales in line with our expectations.

We remain comfortable in both the level and composition of our inventory, which positions us well to meet demand and execute our growth strategy for the balance of the year.

Gary Schnierow: EPS was $0.94, an increase of 46.9%, reflecting higher pre-tax income, a lower income tax rate, and a reduced share count. The lower income tax rate in the quarter reflects the benefit of discrete items. Our EPS for the first half of the year was $2.11, up 44.5% year over year. Turning to the balance sheet, at second quarter end, cash and cash equivalents totaled $39.1 million, an increase of 55.4% compared to the same period last year. This was after returning $31 million to shareholders over the past 12 months. The company finished the quarter with no borrowing under its revolving credit facility. Inventory at quarter end was $81.8 million, an increase of $14.8 million. About half of the dollar increase is attributable to tariffs, with the remainder driven by accelerated purchase of our core products and investments to support elevated commercial segment sales, in line with our expectations.

Speaker #6: The lower income tax rate in the quarter reflects the benefit of discrete items. Our EPS for the first half of the year was $2.11 up 44.5% year over year.

Turning to the outlook.

We have increased our revenue and pre tax income guidance and we raised our net new unit growth expectations.

Specifically following double digit first half growth and a solid start to the third quarter. We have increased our guidance for revenue growth to be in the range of mid single to high single digits.

Speaker #6: Turning to the balance sheet, at second quarter end, cash and cash equivalents totaled $39.1 million, an increase of 55.4% compared to the same period last year.

However, as a reminder, we have more challenging comparisons for the second half of the year.

Speaker #6: This was after returning $31 million to shareholders over the past 12 months. The company finished the quarter with no borrowings under its revolving credit facility.

Also we have increased the pre tax income guidance to be in the range of $62 million to $70 million.

Which assumes the current tariff rates to be in effect for the rest of our fiscal year.

Speaker #6: Inventory at quarter end was $81.8 million, an increase of 14.8 million. About half of the dollar increase is attributable to tariffs. With the remainder driven by accelerated purchase of our core products and investments to support elevated commercial segment sales, in line with our expectations.

Let me add some more commentary on tariffs as they relate to build a bear.

While the current U S tariff policy is impacting our north American business, the tariffs should not directly affect the cost of products sold outside of North America.

Also please note that our retail cost of goods include merchandise around warehousing and distribution expenses. However, the merchandise portion is the only cost directly impacted by tariffs.

Speaker #6: We remain comfortable in both the level and composition of our inventory, which positions us well to meet demand and execute our growth strategy for the balance of the year.

Gary Schnierow: We remain comfortable in both the level and composition of our inventory, which positions us well to meet demand and execute our growth strategy for the balance of the year. Turning to the outlook, we have increased our revenue and pre-tax income guidance, and we raised our net new unit growth expectations. Specifically, following double-digit first half growth and a solid start to the third quarter, we have increased our guidance for revenue growth to be in the range of mid-single to high single digits. However, as a reminder, we have more challenging comparisons for the second half of the year. Also, we have increased the pre-tax income guidance to be in the range of $62 to $70 million, which assumes the current tariff rates to be in effect for the rest of our fiscal year.

Speaker #6: Turning to the outlook, we have increased our revenue and pre-tax income guidance and raised our net new unit growth expectations. Specifically, following double-digit first half growth and a solid start to the third quarter, we have increased our guidance for revenue growth to be in the range of mid-single to high-single digits.

As a reminder, the current 30% U S tariffs on Chinese imports was in place at the time of our Q1 'twenty five call.

It was recently extended to November 10th.

Since the first quarter call the tariff on the Vietnamese imports.

Have increased to 20% doubling the rate that have taken effect on April 5th.

Speaker #6: However, as a reminder, we have more challenging comparisons for the second half of the year. Also, we have increased the pre-tax income guidance to be in the range of $62 million to $70 million, which assumes the current tariff rates to be in effect for the rest of our fiscal year.

Because we had already expanded our sourcing capabilities to include both Vietnam and China. Many of our products are dual source, providing production and global distribution flexibility.

Accordingly, we now expect tariffs and the associated cost impact on our fiscal 'twenty 25 income statement net of mitigation to be less than the $11 million or which about $1 million was reflected in our Q2 results result, as previously noted.

Speaker #6: Let me add some more commentary on tariffs as they relate to Build-A-Bear. While the current U.S. tariff policy is impacting our North American business, the tariffs should not directly affect the cost of products sold outside of North America.

Gary Schnierow: Let me add some more commentary on tariffs as they relate to Build-A-Bear Workshop Inc. While the current U.S. tariff policy is impacting our North American business, the tariffs should not directly affect the cost of products sold outside of North America. Also, please note that our retail cost of goods includes merchandise, rent, warehousing, and distribution expenses. However, the merchandise portion is the only cost directly impacted by tariffs. As a reminder, the current 30% U.S. tariff on Chinese imports was in place at the time of our Q1 2025 call. It was recently extended through November 10th. Since the first quarter call, the tariff on Vietnamese imports has increased to 20%, doubling the rate that had taken effect on April 5th. Because we had already expanded our sourcing capabilities to include both Vietnam and China, many of our products are dual sourced, providing production and global distribution flexibility.

Also our pre tax guidance continues to include approximately $5 million of additional medical and labor costs.

Speaker #6: Also, please note that our retail cost of goods includes merchandise, rent, warehousing, and distribution expenses. However, the merchandise portion is the only cost directly impacted by tariffs.

Previously mentioned on our last call.

Of note that these cost collectively create a headwind of almost $16 million for the year.

Speaker #6: As a reminder, the current 30% U.S. tariff on Chinese imports was in place at the time of our Q1 '25 call. It was recently extended through November 10th.

In closing.

We are pleased with our strong performance on a year to date basis.

As we look ahead, our focus remains on executing our strategy expanding our global footprint accelerating our digital transformation and investing in high return capital projects, while delivering consistent value to shareholders through disciplined capital allocation.

Speaker #6: Since the first quarter call, the tariff on Vietnamese imports has increased to 20%, doubling the rate that had taken effect on April 5th. Because we had already expanded our sourcing capabilities to include both Vietnam and China, many of our products are dual sourced.

Finally, I want to extend my sincere thanks to our store and warehouse associates corporate team members and valued partners around the world.

Speaker #6: Providing production and global distribution flexibility. Accordingly, we now expect tariffs and the associated costs impact on our fiscal 2025 income statement, net of mitigation, to be less than $11 million, of which about $1 million was reflected in our Q2 results, as previously noted.

Gary Schnierow: Accordingly, we now expect tariffs and the associated cost impact on our fiscal 2025 income statement net of mitigation to be less than $11 million, of which about $1 million was reflected in our Q2 results, as previously noted. Also, our pre-tax guidance continues to include approximately $5 million of additional medical and labor costs, as previously mentioned on our last call. Of note, these costs collectively create a headwind of almost $16 million for the year. In closing, we are pleased with our strong performance on a year-to-date basis. As we look ahead, our focus remains on executing our strategy, expanding our global footprint, accelerating our digital transformation, and investing in high-return capital projects while delivering consistent value to shareholders through disciplined capital allocation. Finally, I want to extend my sincere thanks to our store and warehouse associates, corporate team members, and valued partners around the world.

<unk> dedication and collaboration brew instrumental in delivering a record first half results and they continue to be the driving force behind our success.

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

Thank you.

Speaker #6: Also, our pre-tax guidance continues to include approximately $5 million of additional medical and labor costs. As previously mentioned on our last call, of note, these costs collectively create a headwind of almost $16 million for the year.

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.

A 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 Macquarie.

So 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 #6: In closing, we are pleased with our strong performance on a year-to-date basis. As we look ahead, our focus remains on executing our strategy, expanding our global footprint, accelerating our digital transformation, and investing in high-return capital projects.

Okay.

Thank you. Our first question comes from the line of Eric Theater with FCC Research. Please proceed with your question.

Speaker #6: While delivering consistent value to shareholders through disciplined capital allocation, I want to extend my sincere thanks to our store and warehouse associates, corporate team members, and valued partners around the world.

Good morning, congratulations on the quarter and the guidance.

Thanks, Eric.

Can you talk a little bit I know you.

You would have number of different ways to handle the issues with tariffs could you talk a little bit about kind of the response when you raise prices too.

Speaker #6: Their dedication and collaboration were instrumental in delivering record first-half results, and they continue to be the driving force behind our success. This concludes our prepared remarks.

Gary Schnierow: Their dedication and collaboration were instrumental in delivering record first half results, and they continue to be the driving force behind our success. This concludes our prepared remarks. We will now turn the call back over to the operator for questions. Operator?

What youre seeing from the consumer when they do that.

Thank you.

Thanks, Eric.

<unk> mentioned in his remarks, our price increases that we have taken very selective very strategic.

Speaker #6: We will now turn the call back over to the operator for questions. Operator?

Something that we've done for many years.

Speaker #1: 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.

Sharon Price John: 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. A 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. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Eric Beder with SCC Research. Please proceed with your question.

And.

Our objective with that is to find the right price value for the consumer and what we tend to do when we do choose to.

Speaker #1: A confirmation phone 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.

Increased those prices selectively it's related to when we reset the.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

The stores.

<unk> on our seasonal reset for products that arent directly comparative.

We might.

Rates slightly versus what would have been sort of the slot equivalent of the previous season.

Speaker #1: Thank you. Our first question comes from the line of Eric Beater with SCC Research. Please proceed with your question.

And that provides a little more.

Speaker #7: Good morning. Congratulations on the quarter and the guidance.

Eric Beder: Good morning. Congratulations on the quarter and the guidance.

The latitude in the way, we think about it.

Speaker #8: Thanks, Eric.

But the key to what we're doing is always managing both the entry level price point with our birthday treat bear so that still four as a reminder for those on the call that might not know we provide a product that is.

Speaker #6: Thanks, Eric.

Sharon Price John: Thanks, Eric.

Eric Beder: Thanks, Eric.

Speaker #7: Could you talk a little bit? I know you have a number of different ways to handle the issues with tariffs. Could you talk a little bit about the response when you've raised prices to what you're seeing from the consumer when they do that?

Sharon Price John: Thank you, Eric.

Eric Beder: Could you talk a little bit? I know you've had a number of different ways to handle the issues with tariffs. Could you talk a little bit about the response when you raise prices to what you're seeing from the consumer when they do that, when you do that?

It's called the Count your candles program, where you can come in in the month of your birthday.

Speaker #7: Can you do that?

Speaker #8: Thanks, Eric. well, as Voin mentioned in his remarks, our price increases that we have taken very selective, very strategic. Something that we've done for many years.

Hey, your age that Youre about to become and we use that as a very valuable tool for us to acquire new consumers.

Sharon Price John: Thanks, Eric. As Voin mentioned in his remarks, our price increases that we have taken are very selective, very strategic, something that we've done for many years. Our objective with that is to find the right price value for the consumer. What we tend to do when we do choose to increase those prices selectively, it's related to when we reset the stores. On a seasonal reset for products that aren't directly comparative, we might raise slightly versus what would have been sort of the slot equivalent of the previous season. That provides a little more latitude in the way we think about it. The key to what we're doing is always managing both the entry-level price point, like with our birthday treat there.

Necessary for you to be in the loyalty program to get that discount so that levels out some of the what might be considered.

Speaker #8: And, you know, our objective with that is to find the right price value for the consumer. What we tend to do when we choose to increase those prices selectively is related to when we reset the stores.

Price increases for an average consumer has a broad array of different prices that they can participate in we're very focused on maintaining our core animals and there is some pricing changes on some of our core animal but not to the degree that you might expect given what we would intend.

Speaker #8: So on a seasonal reset, for products that aren't directly comparative. we might e raise slightly versus what would have been sort of the slot equivalent, of the previous season.

We believe some of this tariff impact that's going to be over time that we want those to be attainable for our consumers.

And where you might see some of the larger price increases is generally where we have greater latitude with the consumers like our collectors for example, our some of our.

Speaker #8: and that provides a little more, latitude in the way we think about it. but the key to what we're doing is always managing both the entry-level price point, like with our birthday treat there, so that's still for as a reminder for those on the call that might not know, we provide a product that is, the it's called the count your candles program, where you can come in on the month of your birthday, and pay your age that you're about to become.

More select licensed product partnerships.

Where that makes sense I'm going to add one little piece to here is that we have been in the business of telling stories not just selling items.

Sharon Price John: As a reminder for those on the call that might not know, we provide a product that is called the Count Your Candles program, where you can come in on the month of your birthday and pay your age that you're about to become. We use that as a very valuable tool for us to acquire new consumers. It's necessary for you to be in the loyalty program to get that discount. That levels out some of what might be considered price increases for an average consumer who has a broad array of different prices that they can participate in. We're very focused on maintaining our core animals. There are some pricing changes on some of our core animals, but not to the degree that you might expect, given what we would believe some of this tariff impact is going to be over time.

So we drive our dollars per transaction on more than just the unit cost and that's an important change in our entire strategy of the way. We are building our business <unk> may want to add some color on that yes. It is.

Speaker #8: We use that as a very valuable tool for us to acquire new consumers. It's necessary for you to be in the loyalty program to get that discount.

Speaker #8: So that levels out some of the what might be considered, price increases for an average consumer has a broad array of different prices that they can participate in.

As I mentioned in my remarks also our transactions were up driven by traffic least significantly outperformed national.

Traffic numbers that sort of down 3%, we were up 3% store traffic.

Speaker #8: We're very focused on maintaining our core animals, and there are some pricing changes on some of our core animals, but not to the degree that you might expect, considering what we believe some of this tariff impact is going to be over time.

Traffic to our stores and transactions were up our conversion numbers were slightly up for US was last year in the quarter or two so we really haven't seen negative impact of some of the selective price changes.

Sharon talked about but again as we are selling these more comprehensive stories in our marketing activities are working and we are driving more traffic to stores, we have been able to capture.

Speaker #8: But we want those to be attainable for our consumers. Where you might see some of the larger price increases is generally where we have greater latitude with the consumers, like our collectors, for example, or some of our more select licensed product partnerships.

Sharon Price John: We want those to be attainable for our consumers. Where you might see some of the larger price increases is generally where we have greater latitude with the consumers, like our collectors, for example, or some of our more select licensed product partnerships, where that makes sense. I'm going to add one little piece here is that we have been in the business of telling stories, not just selling items. We drive our dollars per transaction on more than just the unit cost. That's an important change in our entire strategy of the way we're building our business. Voin may want to add some color on that.

Some of that traffic effectively and really drive.

Additional business.

This also is a testament to some of the new product launches.

Speaker #8: Where that makes sense, I'm going to add one little piece to here: we have been in the business of telling stories, not just selling items.

Collections like many beans to be introduced as we drive more people to our stores it drives.

Higher ticket price in general I can we have those at relatively low price points because they are selling is about $10 a piece.

Speaker #8: So we drive our dollars per transaction on more than just the unit cost. And that's an important change in our entire strategy of the way we're building our business.

Yes.

That's very true and you'll also have gone the other way with the Super large joint product also.

Speaker #8: Voin may want to add some color on that.

Third party.

Speaker #6: Yes, and you know, as I mentioned in, my remarks, you know, also our transactions were up, driven by traffic. We significantly outperformed national, traffic numbers that were down 3%.

Gary Schnierow: Yes. As I mentioned in my remarks, our transactions were up, driven by traffic. We significantly outperformed national traffic numbers that were down 3%. We were up 3%. Our traffic to our stores and transactions were up. Our conversion numbers were slightly up versus last year in Q2. We really haven't seen a negative impact of some of the selective price changes that Sharon talked about. As we are telling these more comprehensive stories and our marketing activities are working and we are driving more traffic to stores, we have been able to capture some of that traffic effectively and really drive additional business. This also is a testament to some of the new product launches and collections like Mini Beans that we introduced. As we drive more people to our stores, it drives a higher ticket price.

Should we be thinking about how these mature I know that last year the.

Third party stores went up by about 40 plus.

This year Theyre going to go up by 50 60, how long does it I know this initial round and then how long do what's kind of how should we thinking about the maturity of those and how they can provide even.

Speaker #6: We were up 3%. So our traffic to our stores and transactions were up. Our conversion numbers were slightly up versus last year in a quarter too.

How they will end up impacting you. Thank you.

Speaker #6: So we really haven't seen negative impacts from some of the selective price changes that Sharon talked about. But again, as we are telling these more comprehensive stories and our marketing activities are working, we are driving more traffic to stores. We have been able to capture some of that traffic effectively and really drive additional business.

I'll start and I'll hand, it over to Chris.

That's his area, so, but I just want to clarify Eric I know, we used to call that third party, we now refer to that as partner operated cell.

Just for to be specific about what that's referring to.

Speaker #6: And you know, this also is a testament to some of the new product launches and collections like Mini-Beans that we introduced as we drive more people to our stores.

Yes, our partner operated is a big focus of our three pronged strategy for store evolution and expansion.

For our experienced location footprint and its been very successful for us and.

Speaker #6: It drives higher ticket price. And you know, like, and we have those at relatively low price points because they are selling at about $10.

Gary Schnierow: We have those at relatively low price points because they are selling at about $10 apiece.

We are starting to see it accelerate.

As we've gotten more focused on that and this capital light model has proven to be incredibly successful approach for us to expand the brand outside particularly outside North America and the UK Christy.

Speaker #7: You You know, that's very true. And you also gone the other way with the super large giant product also. Third party, how should we be thinking about how these mature?

Eric Beder: That's very true. You also have gone the other way with a super large, giant product also. Third party, how should we be thinking about how these mature? I know that last year, you know the third-party stores went up by about 40%. This year, they're going to go up by 50%, 60%. How long does it, you know, I know there's an initial ramp, and then how long did, how, what's kind of, how should we be thinking about the maturity of those and how they can provide even, you know, more, how they will end up impacting you? Thank you.

Speaker #7: I know that last year, you know, the third-party stores went up by about 40 plus. This year, they're going to go up by 50, 60.

Chris do you want to add some color on that yes. Thanks, Sharon Thanks, Eric.

As these stores start to mature.

We've seen very great response from our partners as they are adding more locations there is an.

Speaker #7: How long does it, you know, I know there's an initial ramp, and then how long did, how, what's kind of, how should we be thinking about the maturity of those and how they can provide even, you know, more, how they will end up impacting you?

An incredible amount of runway in all of our international areas and with our partners as we continue to add countries. As we continue to add partners going forward. The expansion of these locations as you remember a lot of these are shop in shops. There is there are many more toy store locations and the rest of the world versus the United.

Speaker #7: Thank you.

Speaker #8: I'll start, and I'll hand it over to Chris. That's his area. But I just want to clarify, Eric, I know we used to call that "third party."

Sharon Price John: I'll start and I'll hand it over to Chris. That's his area. I just want to clarify, Eric, I know we used to call that third party. We now refer to that as partner-operated. Just to be specific about what that's referring to, yes, our partner-operated is a big focus of our three-prong strategy for store evolution and expansion for our experiential retail footprint. It's been very successful for us. We are starting to see it accelerate as we've gotten more focused on that. This capital-light model has proven to be an incredibly successful approach for us to expand the brand, particularly outside North America and the UK. Chris, do you want to add some color on that?

Speaker #8: We now refer to that as partner-operated. So, just to be specific about what that's referring to, yes, our partner-operated is a big focus of our three-pronged strategy for store evolution and expansion.

Where the build a bear brand can go in as.

As a work as a shop in shop location fully branded so the opportunity for our partners to go into actually toy stores that they already own and operate and build a bear is incredibly additive brand experience.

Speaker #8: For our experienced location footprint, and it's been very successful for us. We are starting to see it accelerate, as we've gotten more focused on that. This cap-light model has proven to be an incredibly successful approach for us to expand the brand, particularly outside North America and the UK.

They recognize that build a bear is the.

Our originator of retail experiential and they want that and their locations. So this is an excellent opportunity for them to expand and we're seeing that as these stores.

Comp upon themselves.

Yes, we've seen it all yes. Thank you.

Good luck with Halloween and it looks great.

Speaker #8: Chris, do you want to add some color on that?

Speaker #6: Yeah, thanks, Sharon. Thanks, Eric. As these stores start to mature, we've seen a very great response from our partners as they are adding more locations.

Chris hurt: Yeah, thanks, Sharon. Thanks, Eric. As these stores start to mature, we've seen very great response from our partners as they are adding more locations. There is an incredible amount of runway in all of our international areas and with our partners. As we continue to add countries and as we continue to add partners going forward, the expansion of these locations, as you remember, a lot of these are shop-in-shops. There are many more toy store locations in the rest of the world versus the United States, where the Build-A-Bear brand can go in as a shop-in-shop location fully branded. The opportunity for our partners to go into actually toy stores that they already own and operate in Build-A-Bear is an incredibly additive brand experience. They recognize that Build-A-Bear is the originator of retail experiential, and they want that in their locations.

Thanks.

Our next question comes from the line of Greg gave us with Northland Securities. Please proceed with your question.

Speaker #6: There is, you know, an incredible amount of runway in all of our international areas and with our partners as we continue to add countries and as we continue to add partners going forward.

Great Good morning, Sharon Bowen and Chris Thanks for taking the question congrats on the results.

As it relates to many beans wondering if we could get kind of an update there in terms of maybe how sales compared year over year anything else you can share in terms of metrics like units sold in.

Speaker #6: The expansion of these locations, as you remember, a lot of these are shop and shops. There's, there are many more toy store locations in the rest of the world versus the United States, where the Build-A-BEAR brand can go in as a as a work as a shop and shop location fully branded.

Along those lines too how is maybe progress trended on opportunities to get broader wholesale distribution of many beans.

Our discussions with retailers going.

Yes, so great question appreciate it well many beans collection first of all as in is it a little bit of a background on that we launched that in February of 2024.

Speaker #6: So the opportunity for our partners to go into actually toy stores that they already own and operate, and Build-A-Bear, is an incredibly additive brand experience.

Speaker #6: You know, they recognize that Build-A-Bear is the, you know, originator of retail experiential, and they want that in their locations. So, this is an excellent opportunity for them to expand.

And.

We provide waves of collectible assortments.

We are driving the collectability of <unk> people are seeking them out the different styles.

Chris hurt: This is an excellent opportunity for them to expand. We're seeing that as these stores comp upon themselves.

Speaker #6: And we're seeing that as these stores comp upon themselves.

A lot of our guest.

Engagement on this particular line.

Speaker #7: Yeah, we've seen it also.

Eric Beder: Yeah, we've seen it also.

Speaker #6: Yeah, thank you. And good luck with Halloween. It looks great.

Some of them are take downs as we would say of our most.

Chris hurt: Thank you.

Eric Beder: Good luck with Halloween. It looks great.

<unk> characters and a lot of them are unique to themselves. So.

Speaker #8: Thanks.

Sharon Price John: Thanks. Our next question comes from the line of Greg Gibas with Northland Securities. Please proceed with your question.

Speaker #1: Our next question comes from a line of Greg, give us with Northland Securities. Please proceed with your question.

They are priced around 10 buses.

<unk> said.

But we as I mentioned in my remarks, we've seen an 80% increase in many beams on a year on year basis, and we are seeing some continued.

Speaker #7: Great. Good morning, Sharon, Voin, and Chris. Thanks for taking the questions. Congrats on the results. As it relates to, you know, mini-beans, I was wondering if we could get kind of an update there in terms of maybe how sales compared year over year, anything else you can share in terms of metrics or like units sold.

Eric Beder: Great. Good morning, Sharon, Voin, and Chris. Thanks for taking the questions. Congrats on the results. As it relates to, you know, Mini Beans, wondering if we could get kind of an update there in terms of maybe how sales compared year over year. Anything else you can share in terms of metrics or like units sold? Along those lines too, you know, how has maybe progress trended on opportunities to get, you know, broader wholesale distribution of Mini Beans? How are discussions with retailers going?

I mean, the momentum is continuing and it's very exciting, particularly as we are now launching them in conjunction with big stories that are part of our overarching workshop story like I mentioned fruit stand or with our holidays.

Speaker #7: And, you know, along those lines too, you know, how is maybe progress trended on opportunities to to get, you know, broader wholesale distribution of mini-beans, you know, how are discussions with retailers going?

So with all of those opportunities ahead of US we do expect to continue to see that growth. We have had many discussions and we are having success with selling many veins and wholesale channel.

Speaker #8: Yeah, so great question. Appreciate it. Well, the mini-beans collection, first of all, as a little bit of background on that, we launched that in February of 2024.

Sharon Price John: Yeah, great question. Appreciate it. Mini Beans collection, first of all, as a little bit of a background on that, we launched that in February of 2024. We provide waves of collectible assortments. We're trying, we are driving the collectibility of Mini Beans. People are seeking them out, the different styles, and a lot of guest engagement on this particular line. Some of them are takedowns, as we would say, of our most beloved characters, and a lot of them are unique to themselves. They are priced around $10, as Voin said. As I mentioned in my remarks, we've seen an 80% increase of Mini Beans on a year-on-year basis. We are seeing some continued ramp. The momentum is continuing.

Speaker #8: And if we provide waves of collectible assortments, we're trying to drive the collectibility of mini-beans. People are seeking them out, the different styles.

We had mentioned on our previous call that that happening already outside the United States with some of the partners that Chris alluded to who have toy stories of their own where they are then putting build a bear inside of the toy stores. So.

Speaker #8: ...and a lot of guest engagement on this particular line. Some of them are takedowns, as we would say, of our most loved characters, and a lot of them are unique to themselves.

So they are selling nodes in their toy store not necessarily associated what they are associated with build a bear but did not but inside the build a bear experience. So that's very positive for us and we also have already placed many veins in a number of locations and are in some very robust conversations with other wholesalers.

Speaker #8: So, and they, you know, are priced around 10 bucks as, as Voin said. but we as I mentioned in my remarks, we've seen an 80% increase of mini-beans on a year-on-year basis.

Another exciting Chris do you want to mention some of those wholesalers Apple Green, Yes, that's exactly we've had a relationship with Hudson that are in our airport locations they've started to.

Speaker #8: And we are seeing some continued ramp— I mean, the momentum is continuing, and it's very exciting, particularly as we are now launching them in conjunction with big stories that are part of our overarching workshop story, like I mentioned: Fruit Stand, or with our holidays.

<unk> there are many being collections in those locations, we mentioned Apple green as a convenience.

Sharon Price John: It's very exciting, particularly as we are now launching them in conjunction with big stories that are a part of our overarching Workshop story, like I mentioned, Fruit Stand, or with our holidays. With all of those as opportunities ahead of us, we do expect to continue to see that growth. We have had many discussions, and we are having success with selling Mini Beans in wholesale channels. We had mentioned on our previous call that that's happening already outside the United States with some of the partners that Chris alluded to, who have toy stores of their own, where they are then putting Build-A-Bear inside of the toy stores. They're selling those in their toy store, not necessarily associated, they are associated with Build-A-Bear, but not inside the Build-A-Bear experience. That's very positive for us.

And upscale convenience type of store that we have over 50 locations, where many beans have been placed and as Sharon mentioned, our international partners. They have stored toy stores, where they don't have a build a bear workshop shop in shop, yet and they are able to do many beans in those locations. So we're starting to see expansion inter.

Speaker #8: So, with all of those opportunities ahead of us, we do expect to continue to see that growth. We have had many discussions, and we are having success with selling mini-beans and wholesale channels.

Nationally.

Our many beans.

Speaker #8: We had mentioned on our previous call that that's happening already outside the United States, with some of the partners that Chris alluded to, who have Toy Stories of their own, where they are then putting Build-A-Bear inside of the toy stores.

Collection on a wholesale basis.

Yes.

Very helpful.

Go ahead.

Well, we just wanted to add that many big news is that we are now.

We'll be enter actually are introducing.

Speaker #8: So they’re selling those in their Toy Store, not necessarily associated well; they are associated with Build-A-Bear, but not inside the Build-A-Bear experience. So that’s very positive for us.

Our first license version of many veins with any many banks in rio's launch.

Great and really nice to hear Thats impressive growth out of that unit I.

Speaker #8: And we also have already placed mini-beans in a number of locations and are in some very robust conversations with other wholesalers. Another exciting update, Chris, do you want to mention some of those wholesalers, such as Apple Green?

Sharon Price John: We also have already placed Mini Beans in a number of locations and are in some very robust conversations with other wholesalers. Another exciting, Chris, do you want to mention some of those wholesalers? Applegreen?

I appreciate that and I guess I would just noting kind of the improved e-commerce demand or that's certainly accelerated kind of.

After over quarter anything worth calling out there in terms of the success Youre seeing with any particular drivers of the strong growth within that channel.

Speaker #6: Yeah, that's exactly. You know, we've had a relationship with Hudson that are in our airport locations. They've started to expand their mini-bean collections in those locations.

Chris hurt: Yeah, that's exactly, you know, we've had a relationship with Hudson that are in our airport locations. They've started to expand their Mini Beans collections in those locations. We mentioned Applegreen is a convenience, an upscale convenience type of store that we have over 50 locations where Mini Beans have been placed. As Sharon mentioned, our international partners, they have stores, toy stores where they don't have a Build-A-Bear Workshop shop-in-shop yet, and they're able to do Mini Beans in those locations. We're starting to see expansion internationally of our Mini Beans collection on a wholesale basis. Yeah, and we're also.

Well as I mentioned, Greg in my remarks, we saw.

Speaker #6: We mentioned Apple Green is a convenience. an upscale convenience, type of store that we have over 50 locations where mini-beans have been placed. And as Sharon mentioned, our international partners, they have stores Toy Stores where they don't have a Build-A-BEAR workshop shop in shop yet, and they're able to do mini-beans in those locations.

Over 15% strong demand in the quarter. There was some softer comps with last year as product launches year over year. There was some shift between Q2 and Q3, but nonetheless, we are seeing an improvement in this portion of our business. We are focused on.

On the.

Improving and growing this business.

Speaker #6: So we're starting to see expansion internationally of our mini-beans collection on a wholesale basis. Yeah, and we're also.

As well as similar to what we have seen in our brick and mortar locations online our discounts have been lower.

Speaker #7: That's very helpful. And yep, sorry, go ahead.

Like our promotional cadence has been changing we still continued to be very optimistic about our future plans and gifting initiatives that are going to be associated with our website. We continue to.

Eric Beder: That's very helpful. Yep, sorry, go ahead.

Speaker #8: Oh, well, we just wanted to add that some mini-bean news is that we are now, or actually will be introducing, our first licensed version of mini-beans with a new mini-bean Sanrio launch.

Sharon Price John: We just wanted to add that some Mini Beans news is that we are now, actually are introducing our first licensed version of Mini Beans with a new Mini Beans Sanrio launch.

Bold in this area of the business, we are making some talent acquisitions really to help us.

Speaker #7: Great! And yeah, really, really nice to hear. That's impressive growth out of that unit; appreciate that. And, you know, I guess I would just note kind of the improved e-commerce demand, or that has certainly accelerated quarter over quarter.

Eric Beder: Great. That's impressive growth out of that unit. Appreciate that. I guess I would just, noting kind of the improved e-commerce demand or that certainly accelerated quarter over quarter. Anything worth calling out there in terms of the success you're seeing with that? Any particular drivers of the strong growth within that channel?

Create a new chapter in this particular portion of our business.

I think with some of the stuff that we have seen they are still in the short run there may be some choppiness, but to know, but our longer haul we feel good about the wholesale business and what we are trying to do.

Speaker #7: Is there anything worth calling out in terms of the success you're seeing? Are there any particular drivers of the strong growth within that channel?

Again, as we said.

Many times in the past, we are agnostic of how consumers choose to shop in our stores or online, but we would love to see positive growth in all of our segments. I think it's also really critical to understand that we see our web business as a big piece and in strategic.

Speaker #6: Well, as I mentioned, Greg, in my remarks, we saw over 15% strong demand in the quarter. You know, there were some softer comps with last year as product launches, year over year. There was some shift between Q2 and Q3.

Gary Schnierow: As I mentioned, Greg, in my remarks, we saw over 15% strong demand in a quarter. There were some softer comps with last year as product launches year over year. There was some shift between Q2 and Q3. Nonetheless, we are seeing an improvement in this portion of our business. We are focused on improving and growing this business, as well as similar to what we have seen in our brick-and-mortar locations. Online, our discounts have been lower, and our promotional cadence has been changing. We still continue to be very optimistic about our future plans and gifting initiatives that are going to be associated with our website. We continue to evolve in this area of the business. We are making some talent acquisitions to help us create a new chapter in this particular portion of our business.

Speaker #6: But nonetheless, you know, we are seeing an improvement in this, portion of our business. We are focused, on, improving and growing this business. as well as similar to what we have seen in our, brick-and-mortar locations, online our discounts have been lower.

A pillar.

The digital transformation, but also more importantly, as a critical element in our omni channel approach to business.

While build a bear dot com does drive sales and it also as you know drive some of those sales through the store through our stores as these many warehouses, which is great for our for our sales associates and that at the at that level.

Speaker #6: And you know, like our promotional cadence has been changing. We still continue to be very optimistic about our future plans and gifting initiatives that are going to be associated with our website.

Speaker #6: We continue to evolve in this area of the business. We are making some talent acquisitions really to help us create a new chapter in this particular portion of our business.

For us to distribute in that for the last mile. But it's important that you recognize that it also serves as an important communication and information tools for our guests.

Most of our guests from what we can tell.

Speaker #6: And I think, with some of the stuff that we have seen, there is still, in the short run, you know, there may be some choppiness. But over the longer haul, we feel good about our wholesale business, which is what we are trying to do.

Gary Schnierow: I think with some of the stuff that we have seen, still in the short run, there may be some choppiness, but over a longer haul, we feel good about the wholesale business and what we are trying to do. As we said many times in the past, we are agnostic to how consumers choose to shop in our stores or online. We would love to see positive growth in all of our segments.

Hard to know.

Directional information they have a tendency to go online first.

Our final store plan a visit plan a party web pages are our largest visited web pages. So we know that the guests are using our build a bear dot com as a source of information and planning for their store visits and we'd love to see that engagement across both.

Speaker #6: And again, as we said many times in the past, we are agnostic to how consumers choose to shop in our stores or online. But, you know, we would love to see positive growth in all of our segments.

Speaker #8: I think it's also really critical to understand that we see our web business as a big piece and a strategic pillar, and as the digital transformation, but also, more importantly, as a critical element in our omnichannel approach to business.

Sharon Price John: I think it's also really critical to understand that we see our web business as a big piece and a strategic pillar in the digital transformation, but also, more importantly, as a critical element in our omnichannel approach to business. While BuildABear.com does drive sales, it also, as you know, drives some of those sales through our stores as these mini warehouses, which is great for our sales associates at that level for us to distribute for the last mile. It's important that you recognize that it also serves as an important communication and information tool for our guests. Most of our guests, from what we can tell, have a tendency to go online first. Our Find the Store, Plan a Visit, Plan a Party web pages are our largest visited web pages.

Of our key channels of in store and online.

And that's the big ecosystem that we're working on towards the Omnichannel solution.

That makes sense, thanks very much.

Speaker #8: while Build-A-BEAR.com does drive sales, and it also as you know, drives some of those sales through the store through our stores as these mini warehouses, which is great for our, for our sales associates, and that at the at that level.

Our next question comes from the line of Keegan talks with D. A Davidson. Please proceed with your question.

Good morning.

That's on a great quarter.

Thank you.

My question is on the implied second half guidance, just kind of pulling it together and looking at the midpoint calls for a slowdown.

Speaker #8: For us to distribute in for the last mile. But it's important that you recognize that it also serves as an important communication and information tool for our guests.

Does that imply weaker margins in the back half and if so why.

Speaker #8: Most of our guests, from what we can tell, it's hard to say this, you know, they have a tendency to go online first for directional information.

So thanks for the question Keegan first to know.

I wanted to mention that our previous revenue guidance was in mix mid single digits.

Speaker #8: Our "Find a Store," "Plan a Visit," and "Plan a Party" web pages are our largest visited web pages. So, we know that the guests are using our Build-A-Bear.com as a source of information and planning for their store visits, and we love to see that engagement across both of our key channels of in-store and online. That's the big ecosystem that we're working on toward the omnichannel solution.

That we initiated several months ago, we raised our guidance now and expanded the higher end of the range to high single digits.

Sharon Price John: We know that the guests are using our BuildABear.com as a source of information and planning for their store visits. We'd love to see that engagement across both of our key channels of in-store and online. That's the big ecosystem that we're working on toward the omnichannel solution.

We've had a strong first half results.

11% or so that we saw in total revenue growth.

But as we mentioned last year second half, we had some really strong results, especially driven by best ever Halloween. So we had some so as we are going to have some tougher comps that was implied in our initial guidance you know that.

Speaker #7: That makes sense. Thanks very much.

Eric Beder: That makes sense. Thanks very much.

The year is going to be at that level. Now we are excited about the progress that we're making.

Speaker #1: Our next question comes from a line of Keegan Cox with DA Davidson. Please proceed with your question.

Sharon Price John: Our next question comes from the line of Keegan Cox with D.A. Davidson. Please proceed with your question.

Clearly there are some macro economic uncertainties that we are facing like every other company.

Speaker #9: Good morning, and congrats on the great quarter.

Eric Beder: Good morning, and congrats on a great quarter.

Speaker #6: Thank you.

That are related to.

Chris hurt: Thank you.

Speaker #9: My question is on the implied second half guidance. Just kind of throwing it together and looking at the midpoint calls for a slowdown. Does that imply weaker margins in the back half? And if so, why?

In particular to tariffs and I'll cover that in a second to talk a little bit about challenges on the <unk>.

Eric Beder: My question is on the implied second half guidance. Just kind of throwing it together and looking at the midpoint calls for a slowdown. Does that imply weaker margins in the back half? If so, why?

Stability side of the guidance, but as we think about revenue of it some of the things that we have put in place. We believe we have inventory. We have believed that we have momentum that is currently taking us through our first month of.

Speaker #6: So thanks for the question, Keegan. First, I want to mention that our previous revenue guidance was in the mid-single digits, which we initiated several months ago. We have now raised that guidance and expanded the higher end of the range to high single digits.

Gary Schnierow: Thanks for the question, Keegan. First, I want to mention that our previous revenue guidance was in mid-single digits that we initiated several months ago. We raised that guidance now and expanded the higher end of the range to high single digits. We had a strong first half result, plus 11% or so that we saw in total revenue growth. As we mentioned, last year's second half, we had some really strong results, especially driven by Best Ever Halloween. We are going to have some tougher comps, that was implied in our initial guidance, that the year is going to be at that level. We are excited about the progress that we are making. Clearly, there are some macroeconomic uncertainties that we are facing, like every other company, that are related in particular to tariffs.

Third quarter, and we are going to stay focused on things that are within our control we have manage our promotional cadence we have managed.

Excellent customer service, our conversion numbers as I mentioned earlier are up so we are doing things that that's within our control now that a lot of things that are outside of our controls one of those things are tariffs tariffs are real costs that we are facing.

Speaker #6: You know, we had a strong first half result, plus 11% or so that we saw in total revenue growth. But as we mentioned, last year in the second half, you know, we had some really strong results, especially driven by the best ever Halloween.

Even though we are expecting to see additional negative impact of tariffs as I mentioned, the Vietnamese tariffs have gone have doubled from 10% to 20% that's going to impact us even more in the second half of the year.

Speaker #6: So we had some time, so as we are going to have some tougher comps, that was implied in our initial guidance. You know, that the year is going to be at that level.

Speaker #6: Now, we are excited about the progress that we are making. Clearly, there are some macroeconomic uncertainties that we are facing, like every other company.

When you think about $11 million or.

We will be less than $11 million impact negative impact of tariffs plus additional $5 million that we called out.

Speaker #6: That are related to, in particular, tariffs. I'll cover that in a second to talk a little bit about challenges on the profitability side of the guidance.

For medical and minimum wage labor cost at the beginning of the year, we have nearly $16 million that we are overcoming of headwinds. So when you look at our guidance and you know like even like if you think about mid to high end of that guidance.

Gary Schnierow: I'll cover that in a second to talk a little bit about challenges on the profitability side of the guidance. As we think about revenue with some of the things that we have put in place, we believe we have inventory. We believe that we have momentum that's currently taking us through the first month of the third quarter. We are going to stay focused on things that are within our control. We have managed our promotional cadence. We have managed excellent customer service. Our conversion numbers, as I mentioned earlier, are up. We are doing things that's within our control. There are a lot of things that are outside of our control. One of those things is tariffs. Tariffs are a real cost that we are facing.

Speaker #6: But as we think about revenue with some of the things that we have put in place, we believe we have inventory and we believe that we have momentum that's currently taking us through the first month of the third quarter.

We are still.

Close or slightly beating out of last year full year profitability, despite the $16 million headwind.

Speaker #6: And, you know, we are going to stay focused on things that are within our control. We have managed our promotional cadence; we have managed excellent customer service. Our conversion numbers, as I mentioned earlier, are up.

Got it that's helpful.

Then my next question is on the partner operated locations I know you mentioned earlier.

Speaker #6: So, you know, we are doing things that are within our control. Now, there are a lot of things that are outside of our control.

The existing partners keep adding new stores and I know you mentioned a.

New partner in Germany, I was just wondering how much momentum you're seeing with those new partners and within your partner stores do you find that your customer is different than maybe your corporate stores in America.

Speaker #6: One of those things is tariffs. Tariffs are a real cost that we are facing. Even though we are expecting to see additional negative impacts from tariffs, as I mentioned, the Vietnamese tariffs have doubled from 10% to 20%.

Gary Schnierow: Even though we are expecting to see additional negative impact of tariffs, as I mentioned, the Vietnamese tariffs have doubled from 10% to 20%. That's going to impact us even more in the second half of the year.

Yes. Thank you.

We've been talking to you that just one clarification.

Speaker #6: That's going to impact us even more in the second half of the year. And, you know, when you think about an impact of just a little bit less than $11 million due to tariffs, plus an additional $5 million that we called out from medical and minimum wage labor costs at the beginning of the year.

Our partner that will be opening our German locations is in our source, which is a current partner that has opened stores in the nordics. So we're excited for them to be able to open those locations in Germany.

Voin Todorovic: About $11 million or just a little bit less than $11 million impact, negative impact of tariffs, plus additional $5 million that we called out from medical and minimum wage labor cost at the beginning of the year. We have nearly $16 million that we are overcoming of headwind. When you look at our guidance and, you know, like even like if you think about mid to high end of that guidance, we are still, you know, close or slightly beating our last year full year profitability despite this $16 million headwind.

Recently in this quarter also opened a standalone store in Copenhagen, which was very successful. So they are really seeing the great thing that we always said that a teddy bear hug is understood in every language and that is totally true the guests really recognize the brand the power of the brand has really grown globally.

Speaker #6: We have nearly 16 million dollars that we are overcoming, of headwinds. So when you look at our guidance and, you know, like even like if you think about mid to high end of that guidance, we are still, you know, closed or slightly beating our last year full year profitability despite the 16 million dollar headwind.

Through our franchise model originally and through our corporate model in the UK and specifically in Regent Street families, where we've seen in clinical success, where we expanded that location along with our social media reach of our partners our own social media in our marketing of our of our brand.

Speaker #9: Got it. That's helpful. And then my next question is on the partner-operated locations. I know you mentioned earlier that the existing partners keep adding new stores, and I know you mentioned a new partner in Germany.

Sharon Price John: Got it. That's helpful. My next question is on the partner-operated locations. I know you mentioned earlier that the existing partners keep adding new stores, and I know you mentioned a new partner in Germany. I'm just wondering how much momentum you're seeing with those new partners and within your partner stores. Do you find that your customer is different than maybe your corporate stores in America?

Our experienced and our stories are then delivered to our partners through them with their own country specific.

Takes on those social media outreach is the other part of this that has really been incredible is that our guests are the ones that are driving this as well our user generated content is just incredible when guests themselves are coming into the stores and they have such an incredible experience around the world that they want to showcase that experience.

Gary Schnierow: Yeah, thanks. In talking through that, just one clarification. Our partner that will be opening our German locations is InnerSource, which is a current partner that has opened stores in the Nordic. We're excited for them to be able to open those locations in Germany. They recently, in this quarter, also opened a standalone store in Copenhagen, which was very successful. They are really seeing the great thing that we always say, that a teddy bear hug is understood in every language, and that is totally true. The guests really recognize the brand. The power of the brand has really grown globally through our franchise model originally and through our corporate models in the UK and specifically in Regent Street Hamleys, where we've seen incredible success, where we expanded that location along with our social media reach of our partners.

To all of their friends and followers. So this just combination of all these things happen and that's incredible momentum with the brand based on the experience and that's really the key part of this this unique build a bear experience that we're able to replicate and all of these locations and we look at partners that we bill.

Please and no and.

Determined that they can deliver this experience has allowed them to grow and be able to have this momentum.

Thank you.

Okay.

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

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

Gary Schnierow: Our own social media and our marketing of our brand, our experience, and our stories are then delivered to our partners who then put their own country-specific takes on those social media outreaches. The other part of this that has really been incredible is that our guests are the ones that are driving this as well. Our user-generated content is just incredible. When guests themselves are coming into the stores and they have such an incredible experience around the world that they want to showcase that experience to all of their friends and followers. This combination of all these things happens in this incredible momentum with the brand based on the experience. That's really the key part of this, this unique Build-A-Bear experience that we're able to replicate in all of these locations.

Thanks, operator, and thanks for taking my question and congratulations on the results as well.

My question is I guess, given the fact that the balance sheet remains in great shape, even with the tariff considerations and the company already.

Initiating a dividend policy in returning capital to shareholders through buybacks.

Even though the company is navigating multiple challenges across the global economy.

If the global dynamics remain on the stable side I'm curious as to how that might play into any decision to expand company operated stores outside the U S. During a time where partners are aggressively expanding the brand across multiple markets.

So.

Gary Schnierow: We look at partners that we believe and know and determine that they can deliver this experience, which has allowed them to grow and be able to have this momentum.

Thank you for the question.

It's an interesting.

Question as it relates to capital location and our investments in growth on a global basis.

We are definitely.

Sharon Price John: Thank you.

And then considering you know operating stores, we are operating stores in Canada and UK in different international markets.

Operator: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question.

There are some challenges with some of those things are setting up teams in the accounting implications, but at the end of the day, we want to have the highest ROI for the company and if there are some opportunities down the road really to have different type of relationships with our partners in those respective markets to accelerate growth.

Chris hurt: Thanks, operator, and thanks for taking my question and congratulations on the result as well. My question is, I guess, given the fact that the balance sheet remains in great shape, even with the tariff considerations and the company already initiating a dividend policy and returning capital to shareholders through buybacks, even though the company is navigating multiple challenges across the global economy, if the global dynamics remain on the stable side, curious as to how that might play into any decision to expand company-operated stores outside the U.S., during a time where partners are aggressively expanding the brand across multiple markets.

<unk> or to make additional investments.

Property, a time, especially as you mentioned with a solid balance sheet and healthy cash flows. We may consider some of those options, but we are still in early stages and as Chris mentioned, we are in 32 countries. There are plenty of countries around the world.

We are still not present. So this is a big opportunity and we will definitely be looking at ways to help our partners accelerate but if there are some things to continue to make investments in markets that we are not currently present outside of.

Voin Todorovic: Thank you for the question. It's an interesting question as it relates to capital location and our investments and growth on a global basis. We are definitely open in considering, you know, operating stores. We are operating stores in Canada, in the UK, in different international markets. There are some challenges with some of those things, you know, setting up teams and the accounting implications. At the end of the day, you know, we want to have the highest ROI for our company. If there are some opportunities down the road, really, to have different types of relationships with our partners in those respective markets to accelerate growth or to make additional investments at the appropriate time, especially as you mentioned, with a solid balance sheet and healthy cash flows, we may consider some of those options. We are still in early stages.

U S.

It would be on a case by case decision that would be made just add to that that is well within the realm.

Normal net of U S. Based company operates in countries that tend to where the market tends to act like the U S.

So we're in Canada, and the UK, which is a very typical approach for a U S based organization and while we may have opportunities as <unk> said.

We've completed we've talked about this many times to.

To make some strategic investments in some of those partners I would stop short of saying that we would want to be the unique and the unique operator in that country. Because it's important. The reason you have partners is because they know the market better than you. They know the mall operators better than you are the tourist locations better than you.

And and they also know the marketplace and the consumer insights better than you and most of the cases and the partners that we're operating with right now in fact, they already are big operators in that space and as Chris alluded to they have stores. There many times their toy stores that we then automatically and cabinet that in quotations are.

Voin Todorovic: As Chris mentioned, we are in 32 countries. There are plenty of countries around the world that we are still not present in. This is a big opportunity. We will definitely be looking at ways to help our partners accelerate. If there are some things to continue to make investments in markets that we are not currently present outside of the U.S., it would be on a case-by-case decision that would be made.

<unk> to be put in the toy stores. So they have their four walls that allows us to get up and running quickly and then they look at independent build a bear workshop locations as another growth engine for their companies. So it's a working model right now and.

Eric Beder: I would just add to that that it is well within the realm of normal that a U.S.-based company operates in countries that tend to, where the market tends to act like the U.S. We're in Canada and the UK, which is a very typical approach for a U.S.-based organization. While we may have opportunities, as Voin said, and we've talked about this many times, to make some strategic investment in some of those partners, I would stop short of saying that we would want to be the unique operator in said countries because it's important. The reason you have partners is because they know the market better than you. They know the mall operators better than you or the tourist locations better than you, and they also know the marketplace and the consumer insights better than you.

And I expect that we have a lot of runway in front of us on that working model.

But as partnerships evolve absolutely.

There may be a different type of relationship that we want to consider but that we have the foreseeable future in the asset.

Great. Thanks, so much for the extra color.

We have no further questions at this time Ms. John I'd like to turn the floor back over to you for closing comments well. Thank.

Thank you so much and we appreciate everyone joining us today to hear more details regarding our breaking record breaking fiscal second quarter 2025 results and look forward to the third quarter call have a wonderful day and a great labor day weekend.

Eric Beder: In most of the cases of the partners that we're operating with right now, in fact, they already are big operators in that space. As Chris alluded to, they have stores there. Many times they're toy stores that we then automatically, and I put that in quotations, are considered to be put in those toy stores. They have their four walls that allow us to get up and running quickly, and then they look at independent Build-A-Bear Workshop locations as another growth engine for their companies. It's a working model right now, and I expect that we have a lot of runway in front of us on that working model. As partnerships evolve, absolutely, there may be a different type of relationship that we want to consider. We have a foreseeable future, in the as is.

Yeah.

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.

Build-A-Bear Workshop locations as another growth engine for their companies. So it's it's a working model right now and um and I expect that, you know, we have a lot of runway in front of us on that working model. Um, but as Partnerships evolve absolutely, um, there may be a different type of relationship that we want to consider but um but we have a foreseeable future, um, in the Asus

Chris hurt: Great. Thanks so much for the extra color.

Great, thank you so much for the extra caller.

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

Sharon Price John: Thank you so much. We appreciate everyone joining us today to hear more details regarding our record-breaking fiscal second quarter 2025 results and look forward to the third quarter call. Have a wonderful day and a great Labor Day weekend.

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

Well, thank you so much, and we appreciate everyone joining us today to hear more details regarding our record-breaking fiscal second quarter 2025 results. We look forward to the third quarter call. Have a wonderful day and a great Labor Day weekend.

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.

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