BBW Build A Bear Workshop Inc

 

 

 

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

 

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share data)

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands, except share and per share data)

 

 

 See accompanying notes to condensed consolidated financial statements. 

 

 

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands) 

 

See accompanying notes to condensed consolidated financial statements.

 

 

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation

 

The condensed consolidated financial statements included herein are unaudited and have been prepared by Build-A-Bear Workshop, Inc. and its subsidiaries (collectively, the “Company”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet of the Company as of February 3, 2024 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in the opinion of management, necessary to summarize fairly the financial position of the Company and the results of the Company’s operations and cash flows for the periods presented. All of these adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. Because of the seasonal nature of the Company’s operations, results of operations of any single reporting period should not be considered as indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended February 3, 2024, which were included in the Company’s Annual Report on Form 10-K filed with the SEC on April 18, 2024. 

 

Certain prior period amounts in the notes to the condensed consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications did not affect net earnings attributable to Build-A-Bear Workshop, Inc. 

 

Significant Accounting Policies

 

The Company's significant accounting policies are summarized in Note 2 to the consolidated financial statements included in its Form 10-K for the year ended February 3, 2024. 

  

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2. Revenue

 

Currently, most of the Company’s revenue is derived from retail sales (including from its e-commerce sites) and is recognized when control of the merchandise is transferred to the customer. The Company's disaggregated revenue is fully disclosed as net sales to external customers by reporting segment and by geographic area (See Note 11 — Segment Information for additional information). The Company's direct-to-consumer reporting segment represents 94% of consolidated revenue for the first quarter of fiscal 2024. The majority of these sales transactions were single performance obligations that were recorded when control of merchandise was transferred to the customer.

 

The following is a description of principal activities from which the Company generates its revenue, by reportable segment.

 

The Company’s direct-to-consumer segment includes the operating activities of corporately-managed stores, other retail-delivered operations and e-commerce demand (orders generated online to be fulfilled from either the Company's warehouse or its stores). Direct-to-consumer revenue is recognized when control of the merchandise is transferred to the customer and for the Company's online sales, generally upon estimated delivery to the customer. Revenue is measured as the amount of consideration, including any discounts or incentives, the Company expects to receive in exchange for transferring the merchandise. Product returns have historically averaged less than one-half of one percent due to the personalized and interactive nature of its products, where consumers customize their own stuffed animal. The Company has elected to exclude from revenue all collected sales, value added, and other taxes paid by its customers.

 

For the Company’s gift cards, revenue is deferred for single transactions until redemption including any related gift card discounts. Approximately 80% of gift cards are redeemed within three years of issuance and over the last three years, approximately 65% of gift cards issued have been redeemed within the first twelve months. In addition, unredeemed gift cards or breakage revenue is recorded in proportion to the customers’ redemption pattern using an estimated breakage rate based on historical experience. Subsequent to stores reopening following shutdowns caused by COVID, the Company experienced lower redemptions of its gift cards for all periods of outstanding activated cards compared to pre-pandemic redemption patterns (fiscal year 2019 and earlier), which impacts the gift card breakage rate. The Company does not believe that the redemption pattern experienced during the pandemic reflects the pattern in the future and has adjusted the historical redemption data used to calculate the breakage rate. The Company continues to evaluate expected breakage annually and adjusts the breakage rates in the fourth quarter of each year, or at other times if significant changes in customer behavior are detected. Changes to breakage estimates impact revenue recognition prospectively. Further, given the magnitude of the Company's gift card liability, the changes in breakage rates could have a significant impact on the amount of breakage revenue recognized in future periods. As a matter of sensitivity, a hypothetical 1% change in our gift card breakage rate in fiscal 2023 would have resulted in a change in breakage revenue of $1.0 million.

 

For certain qualifying transactions, a portion of revenue transactions are deferred for the obligation related to the Company’s loyalty program or when a material right in the form of a future discount is granted. In these transactions, the transaction price is allocated to the separate performance obligations based on the relative standalone selling price. The standalone selling price for the points earned for the Company’s loyalty program is estimated using the net retail value of the merchandise purchased, adjusted for estimated breakage based on historical redemption patterns. The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired. The Company issues certificates daily to loyalty program members who have earned 100 or more points in North America and 50 points or more in the U.K. with certificates historically expiring in six months if not redeemed. The Company assesses the redemption rates of its certifications on a quarterly basis to update the rate at which loyalty program points turn into certifications and the rate that certifications are redeemed. In regard to the consolidated balance sheet, contract liabilities related to the loyalty program are classified as deferred revenue and other.

 

The Company’s commercial segment includes transactions with other businesses and is mainly comprised of licensing the Company’s intellectual properties for third-party use and wholesale sales of merchandise, including supplies and fixtures. Revenue for wholesale sales is recognized when control of the merchandise or fixtures is transferred to the customer, which generally occurs upon delivery to the customer. The license agreements provide the customer with highly interrelated rights that are not distinct in the context of the contract and therefore, have been accounted for as a single performance obligation and recognized as licensee sales occur. If the contract includes a guaranteed minimum, the minimum guarantee is recognized on a straight-line basis over the guarantee term until such time as royalties earned through licensee sales exceed the minimum guarantee. The Company classifies these guaranteed minimum contract liabilities as deferred revenue on the consolidated balance sheet.

 

The Company’s international franchising segment includes the activities with franchisees who operate store locations in certain countries and includes development fees, sales-based royalties and merchandise, including supplies and fixture sales. The Company's obligations under the franchise agreements are ongoing and include operations and product development support and training, generally concentrated around initial store openings. These obligations are highly interrelated rights that are not distinct in the context of the contract and, therefore, have been accounted for as a single performance obligation and recognized as franchisee sales occur. If the contract includes an initial, one-time nonrefundable development fee, this fee is recognized on a straight-line basis over the term of the franchise agreement, which may extend for periods up to 25 years. The Company classifies these initial, one-time nonrefundable franchise fee contract liabilities as deferred revenue on its consolidated balance sheet. Revenue from merchandise and fixture sales is recognized when control is transferred to the franchisee, which generally occurs upon delivery.

 

The Company also incurs expenses directly related to the startup of new franchises, which may include finder’s fees, legal and travel costs, expenses related to its ongoing support of the franchises and employee compensation. Accordingly, the Company’s policy is to capitalize any finder’s fee, as an incremental cost, and expense all other costs as incurred. Additionally, the Company amortizes these capitalized costs into expense in the same pattern as the development fee's recording of revenue as described previously. These capitalized costs for the thirteen weeks ended May 4, 2024 are not material to the financial statements. 

 

The Company reserves for “expected” credit losses on financial instruments and other commitments to extend credit rather than the “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions and reasonable and supportable forecasts.  For the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively, the Company had an allowance for credit losses of $6.9 million and $6.3 million.

 

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3. Leases

 

The majority of the Company's leases relate to retail stores and corporate offices. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Most new retail store leases have an original term of a five to ten-year base period and may include renewal options to extend the lease term beyond the initial base period. The extension periods are typically much shorter than the original lease term given the Company's strategic decision to maintain a high level of lease optionality. Some leases also include early termination options, which can be exercised under specific conditions. Additionally, the Company may operate stores for a period of time on a month-to-month basis after the expiration of the lease term. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, certain leases contain incentives, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property.

 

The table below presents certain information related to the lease costs for operating leases for the thirteen weeks ended May 4, 2024 and April 29, 2023 (in thousands).

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Operating lease costs		$	9,584			$	8,982
Variable lease costs (1)			2,191				2,126
Short term lease costs			26				15
Total Operating Lease costs		$	11,801			$	11,123

 

(1)

Variable lease costs consist of leases with variable rent structures, which are intended to increase flexibility in an environment with expected high sales volatility and provide a natural hedge against potential sales declines.

Other information

 

The table below presents supplemental cash flow information related to leases for the thirteen weeks ended May 4, 2024 and April 29, 2023 (in thousands).

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Operating cash flows for operating leases		$	9,814			$	9,684

 

As of May 4, 2024 and April 29, 2023, the weighted-average remaining operating lease term was 4.8 years and 4.0 years, respectively, and the weighted-average discount rate was 6.9% and 6.3%, respectively, for operating leases recognized on the Company's condensed consolidated balance sheets.

 

For the thirteen weeks ended May 4, 2024 and the thirteen weeks ended April 29, 2023 the Company incurred no impairment charges against its right-of-use operating lease assets.

 

Undiscounted cash flows

 

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the balance sheet (in thousands).

 

Operating Leases
2024		$	23,716
2025			20,758
2026			13,428
2027			9,758
2028			6,298
Thereafter			27,133
Total minimum lease payments			101,091
Less: amount of lease payments representing interest			(19,909	)
Present value of future minimum lease payments			81,182
Less: current obligations under leases			(24,276	)
Long-term lease obligations		$	56,906

 

As of May 4, 2024, the Company had additional executed leases that had not yet commenced with operating lease liabilities of $33.8 million. These leases are expected to commence in fiscal 2024 and fiscal 2025 with lease terms of two to twenty years.

 

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4. Other Assets

 

Prepaid expenses and other current assets consist of the following (in thousands):

 

		May 4,				February 3,				April 29,
		2024				2024				2023
Prepaid occupancy (1)		$	3,807			$	2,442			$	3,352
Prepaid insurance			733				1,250				526
Prepaid gift card fees			647				699				768
Prepaid royalties			265				319				449
Prepaid taxes (2)			127				199				28
Other (3)			6,468				6,468				8,380
Total		$	12,046			$	11,377			$	13,503

  

	(1)	Prepaid occupancy consists of prepaid expenses related to variable non-lease components.
	(2)	Prepaid taxes consist of prepaid federal and state income tax.
	(3)	Other consists primarily of prepaid expense related to information technology maintenance contracts and software as a service.

  

Other non-current assets consist of the following (in thousands):

 

		May 4,				February 3,				April 29,
		2024				2024				2023
Entertainment production asset (1)		$	4,736			$	4,734			$	3,500
Deferred compensation			1,057				2,121				885
Other (2)			281				311				400
Total		$	6,074			$	7,166			$	4,785

 

	(1)	Entertainment production asset includes the direct costs, production overhead and development costs in producing entertainment assets such as films or music.
	(2)	Other consists primarily of deferred financing costs related to the Company's credit facility.

 

5. Accrued Expenses

 

Accrued expenses consist of the following (in thousands):

 

		May 4,				February 3,				April 29,
		2024				2024				2023
Accrued wages, bonuses and related expenses		$	12,007			$	14,549			$	12,602
Current income taxes payable			4,891				1,602				7,524
Sales and value added taxes payable			1,617				2,447				2,148
Accrued rent and related expenses (1)			1,037				1,356				898
Accrued expense - other (2)			-				-				4,100
Total		$	19,552			$	19,954			$	27,272

 

(1)

Accrued rent and related expenses consist of accrued costs associated with non-lease components.

(2)

Accrued expense - other consists of accrued costs associated with a legal reserve accrual.

 

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6. Stock-based Compensation

 

On April 14, 2020, the Board of Directors (the “Board”) of Build-A-Bear Workshop, Inc. (the “Company”) adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. 2020 Omnibus Incentive Plan (the “2020 Incentive Plan”).  On June 11, 2020, the Company’s stockholders approved the 2020 Incentive Plan.   On April 11, 2023, the Board adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. Amended and Restated 2020 Omnibus Incentive Plan (the “Restated 2020 Incentive Plan”).  On June 8, 2023, at the Company’s 2023 Annual Meeting of Stockholders (the “Annual Meeting”), the Company’s stockholders approved the Restated 2020 Incentive Plan. The Restated 2020 Incentive Plan, which is administered by the Compensation and Development Committee of the Board, permits the grant of stock options (including both incentive and non-qualified stock options), stock appreciation rights, other stock-based awards, including restricted stock and restricted stock units, cash-based awards, and performance awards pursuant to the terms of the Restated 2020 Incentive Plan. The Restated 2020 Incentive Plan will terminate on April 11, 2033, unless earlier terminated by the Board. The total number of shares of the Company’s common stock authorized for issuance under the Restated 2020 Incentive Plan increased by 800,000 to a maximum  of 1,800,000 since its inception as the 2020 Incentive Plan, subject to customary capitalization adjustments, substitutions of acquired company awards and certain additions of acquired company plan shares, plus shares that are subject to outstanding awards made under the Build-A-Bear Workshop, Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”) that on or after April 14, 2020 may be forfeited, expire or be settled for cash.

 

For the thirteen weeks ended May 4, 2024 and April 29, 2023, selling, general and administrative expense included stock-based compensation expense of $0.4 million and $1.1 million, respectively.  As of May 4, 2024, there was $4.1 million of total unrecognized compensation expense related to unvested restricted stock awards which is expected to be recognized over a weighted-average period of 2.1 years.

 

The following table is a summary of the balances and activity for stock options for the thirteen weeks ended May 4, 2024:

 

		Options
		Shares				Weighted Average Exercise Price
Outstanding, February 3, 2024			12,375			$	17.84
Granted			-				-
Exercised			(12,375	)			17.84
Forfeited			-				-
Canceled or expired			-				-
Outstanding, May 4, 2024			-			$	-

   

The following table is a summary of the balances and activity related to time-based and performance-based restricted stock for the thirteen weeks ended May 4, 2024:

 

		Time-Based Restricted Stock								Performance-Based Restricted Stock
		Shares				Weighted Average Grant Date Fair Value				Shares				Weighted Average Grant Date Fair Value
Outstanding, February 4, 2024 (1)			122,609			$	18.02				185,082			$	17.37
Granted (1)			39,270				27.50				62,456				27.50
Vested			(59,237	)			13.89				-				-
Adjustment for performance achievement			-				-				53,095				2.78
Earned and Vested			-				-				(106,190	)			2.78
Forfeited (1)			(3,333	)			24.75				(3,333	)			24.75
Outstanding, May 4, 2024 (1)			99,309			$	24.01				191,110			$	23.09

 

(1)

Performance-based restricted stock outstanding, granted, and forfeited are presented at 100% of target.

 

The total fair value of shares vested during the thirteen weeks ended  May 4, 2024 and April 29, 2023 was $2.1 million and $1.6 million, respectively.

 

The outstanding performance shares as of May 4, 2024 consist of the following:

 

		Performance Shares
Unearned shares subject to performance-based restrictions at target:
2022 - 2024 consolidated, earnings before interest, taxes, depreciation and amortization (EBITDA) growth objectives			54,596
2022 - 2024 consolidated revenue growth objectives			18,198
2023 - 2025 consolidated pre-tax income growth objectives			36,309
2023 - 2025 consolidated revenue growth objectives			19,551
2024 - 2026 consolidated, cumulative earnings before interest, taxes, depreciation and amortization (EBITDA) objectives			40,596
2024 - 2026 consolidated, cumulative revenue objectives			21,860
Performance shares outstanding, May 4, 2024			191,110

  

7. Income Taxes

 

The Company's effective tax rate was 23.8% for the thirteen weeks ended May 4, 2024, compared to 24.5% for the thirteen weeks ended April 29, 2023.  In the first quarter of fiscal 2024, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense partially offset by the tax impact of equity awards vesting.  In the fourth quarter of fiscal 2023, the Company reversed the valuation allowance on deferred tax assets expected to be realized in the U.K.  In the first quarter of fiscal 2024, the Company remains in a full valuation in certain other foreign jurisdictions.  In the first quarter of fiscal 2023, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax.  In addition, the Company remained in a full valuation in certain foreign jurisdictions, including the UK.

 

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8. Stockholders’ Equity

 

The following table sets forth the changes in stockholders’ equity (in thousands) for the thirteen weeks ended May 4, 2024 and April 29, 2023 (in thousands):

 

		For the thirteen weeks ended May 4, 2024																				For the thirteen weeks ended April 29, 2023
		Common												Retained								Common												Retained
		stock				APIC (1)				AOCI (2)				earnings				Total				stock				APIC (1)				AOCI (2)				earnings				Total
Balance, beginning		$	142			$	66,330			$	(12,082	)		$	75,272			$	129,662			$	148			$	69,868			$	(12,274	)		$	61,375			$	119,117
Adoption of new accounting standard																																			(785	)			(785	)
Subtotal		$	142			$	66,330			$	(12,082	)		$	75,272			$	129,662			$	148			$	69,868			$	(12,274	)		$	60,590			$	118,332
Shares issued under employee stock plans			1				1,094												1,095				2				691				-				-				693
Stock-based compensation							334												334				-				389				-				-				389
Shares withheld in lieu of tax withholdings							(2,089	)											(2,089	)			-				-				-				-				-
Share Repurchase			(4	)			(1,604	)							(7,591	)			(9,199	)			(1	)			(624	)			-				(2,474	)			(3,099	)
Cash Dividends															(2,810	)			(2,810	)			-				-				-				(22,048	)			(22,048	)
Other															(40	)			(40	)			-				-				-				-				-
Other comprehensive (loss) income											(71	)							(71	)			-				-				97				-				97
Net income															11,459				11,459				-				-				-				14,608				14,608
Balance, ending		$	139			$	64,065			$	(12,153	)		$	76,290			$	128,341			$	149			$	70,324			$	(12,177	)		$	50,676			$	108,972

 

(1) Additional paid-in capital (“APIC”)

(2) Accumulated other comprehensive loss (“AOCI”)

 

During the thirteen weeks ended May 4, 2024, the Company utilized $9.2 million in cash to repurchase 343,406 shares under its $50.0 million program that was authorized by its Board of Directors on August 31, 2022.  The Company's Board of Directors also authorized a quarterly cash dividend of $0.20 per share that was paid on April 11, 2024, to all stockholders of record as of March 28, 2024.

 

For the thirteen weeks ended April 29, 2023, the Company recorded credit impairment charges of $0.8 million on trade receivables into retained earnings as a result of the adoption of ASC 326 - Credit Impairment.  During the thirteen weeks ended April 29, 2023, the Company utilized $3.1 million in cash to repurchase 132,385 shares under its $50.0 million program that was authorized by its Board of Directors on August 31, 2022.  The Company's Board of Directors also authorized a special cash dividend of $1.50 per share that was paid on April 6, 2023, to all stockholders of record as of March 23, 2023.

    

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9. Income per Share

 

The following table sets forth the computation of basic and diluted net income per share (in thousands, except share and per share data):

 

		Thirteen weeks ended
		May 4,				April 29,
		2024				2023
NUMERATOR:
Net income		$	11,459			$	14,608
DENOMINATOR:
Weighted average number of common shares outstanding - basic			13,925,957				14,457,858
Dilutive effect of share-based awards:			80,443				517,072
Weighted average number of common shares outstanding - dilutive			14,006,400				14,974,930
Basic net income per common share		$	0.82			$	1.01
Diluted net income per common share		$	0.82			$	0.98

 

In calculating the diluted income per share for the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively, there were 8,199 and 9,069 shares of common stock that were outstanding at the end of the period that were not included in the computation of diluted income per share due to their anti-dilutive effect. 

 

10. Comprehensive Income

 

The difference between comprehensive income or loss and net income or loss is the result of foreign currency translation adjustments on the balance sheets of subsidiaries whose functional currency is not the U.S. dollar. The accumulated other comprehensive loss balance on  May 4, 2024 and April 29, 2023 was comprised entirely of foreign currency translation. For the thirteen weeks ended May 4, 2024 and April 29, 2023, the Company had no reclassifications out of accumulated other comprehensive loss.

  

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11. Segment Information 

 

The Company’s operations are conducted through three operating segments consisting of direct-to-consumer (“DTC”), commercial and international franchising. The DTC segment includes the operating activities of corporately-managed locations and other retail delivery operations in the U.S., Canada, Ireland and the U.K., including the Company’s e-commerce sites and temporary stores. The commercial segment includes the Company’s transactions with other businesses, mainly comprised of licensing the Company’s intellectual properties for third-party use and wholesale activities. The international franchising segment includes the licensing activities of the Company’s franchise agreements with store locations in select countries in Asia, Australia, the Middle East, Africa, and South America. The operating segments have discrete sources of revenue, different capital structures and different cost structures. These operating segments represent the basis on which the Company’s chief operating decision maker regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities. Accordingly, the Company has determined that each of its operating segments represent a reportable segment. The three reportable segments follow the same accounting policies used for the Company’s consolidated financial statements.

 

Following is a summary of the financial information for the Company’s reportable segments (in thousands):

 

		Direct-to-								International
		Consumer				Commercial				Franchising				Total
Thirteen weeks ended May 4, 2024
Net sales to external customers		$	107,868			$	5,985			$	877			$	114,730
Income before income taxes			11,722				3,107				200				15,029
Capital expenditures			2,430				-				-				2,430
Depreciation and amortization			3,606				52				-				3,658
Thirteen weeks ended April 29, 2023
Net sales to external customers		$	112,096			$	6,688			$	1,266			$	120,050
Income before income taxes			15,955				2,890				508				19,353
Capital expenditures			3,065				-				-				3,065
Depreciation and amortization			2,973				107				-				3,080
Total Assets as of:
May 4, 2024		$	254,951			$	8,948			$	1,377			$	265,276
February 3, 2024			262,299				8,801				1,225				272,325
April 29, 2023			253,338				6,902				1,470				261,710

 

The Company’s reportable segments are primarily determined by the types of products and services that they offer. Each reportable segment may operate in many geographic areas. Revenues are recognized in the geographic areas based on the location of the customer or franchisee. The following schedule is a summary of the Company’s sales to external customers and long-lived assets by geographic area (in thousands):

 

		North
		America (1)				Europe (2)				Other (3)				Total
Thirteen weeks ended May 4, 2024
Net sales to external customers		$	99,451			$	14,449			$	830			$	114,730
Thirteen weeks ended April 29, 2023
Net sales to external customers		$	106,864			$	12,658			$	528			$	120,050

 

For purposes of this table only:

(1)  North America includes corporately-managed locations in the United States and Canada.

(2)  Europe includes corporately-managed locations in the U.K. and Ireland and sales to wholesale customers in Europe.

(3)  Other includes franchise businesses outside of North America and Europe.

 

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12. Contingencies

 

In the normal course of business, the Company is subject to legal proceedings, government inquiries and claims, and other commercial disputes. If one or more of these matters has an unfavorable resolution, it is possible that the results of operations, liquidity or financial position of the Company could be materially affected in any particular period. The Company accrues a liability for these types of contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. Gain contingencies are recorded when the underlying uncertainty has been settled.

 

Assessments made by the U.K. customs authority in 2012 were appealed by the Company, which has paid the disputed duty, strictly under protest, pending the outcome of the continuing dispute, and this is included in receivables, net in the DTC segment. The U.K. customs authority contested the Company's appeal. Rulings by the First Tier Tribunal in  November 2019 and Upper Tribunal in  March 2021 held that duty was due on some, but not all, of the products at issue. The Company petitioned the Court of Appeal for permission to appeal certain elements of the Upper Tribunal decision, and in early November 2021, a judge granted the Company's petition for permission to appeal those elements of the Upper Tribunal decision on some, but not all, of the grounds of appeal that the Company had put forward. An appeal was heard by the Court of Appeal during the first quarter of fiscal 2022, and the Court of Appeal dismissed the appeal in the third quarter of fiscal 2022. During the fourth quarter of fiscal 2022, the UK Supreme Court declined to hear the appeal. The Company is engaging with the customs authority to attempt to resolve all outstanding issues following the application of the determined principles. The case will return to the lower tribunal for a final ruling if outstanding issues cannot be resolved. The Company maintains a provision against the related receivable, based on a current evaluation of collectability, using the latest facts available in the dispute. As of May 4, 2024, the Company had a gross receivable balance of $4.8 million and a reserve of $3.7 million, leaving a net receivable of $1.1 million. The Company believes that the outcome of this dispute will not have a material adverse impact on the results of operations, liquidity, or financial position of the Company.

 

15

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Table of Contents

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Cautionary Notice Regarding Forward-Looking Statements

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties, and we undertake no obligation to update these statements except as required by the federal securities laws. Our actual results may differ materially from the results discussed in the forward-looking statements. These risks and uncertainties include, without limitation, those detailed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, as filed with the SEC, and include the following:

 

	●	any uncertainty or decline in general global economic conditions, caused by inflation, rising interest rates, geo-political conflicts, or other external factors, could lead to disproportionately reduced discretionary consumer spending and a corresponding reduction in demand for our products and have an adverse effect on our liquidity and profitability;
	●	consumer interests can change rapidly, and our success depends on the ongoing effectiveness of our marketing and online initiatives to build consumer affinity for our brand and drive consumer demand for our products and services;
	●	we depend upon the shopping malls and tourist locations in which our stores are located to attract guests. Continued or further volatility in retail consumer traffic could adversely affect our financial performance and profitability;
	●	our profitability could be adversely affected by fluctuations in petroleum products prices;
	●	our business may be adversely impacted at any time by a variety of significant competitive threats;
	●	global or regional health pandemics or epidemics could negatively impact our business, financial position and results of operations;
	●	if we are unable to generate interest in and demand for our interactive retail experience and products, including being able to identify and respond to consumer preferences in a timely manner, our sales, financial condition and profitability could be adversely affected;
	●	if we are unable to renew, renegotiate or replace our store leases or enter into leases for new stores on favorable terms, or if we violate any of the terms of our current leases, our revenue and profitability could be harmed;
	●	failure to successfully execute our omnichannel and brand expansion strategy and the cost of our investments in e-commerce and digital transformation may materially adversely affect our financial condition and profitability;
	●	we are subject to risks associated with technology and digital operations;
	●	we may not be able to evolve our store locations over time to align with market trends, successfully diversify our store formats and business models in accordance with our strategic goals or otherwise effectively manage our overall portfolio of stores which could adversely affect our ability to grow and could significantly harm our profitability;
	●	our company-owned distribution center that services the majority of our stores in North America and our third-party distribution center providers used in the western U.S. and Europe may be required to close and operations may experience disruptions or may operate inefficiently;
	●	we rely on a few global supply chain vendors to supply substantially all of our materials and merchandise, and significant price increases or any disruption in their ability to deliver materials and merchandise could harm our ability to source products and supply inventory to our stores;
	●	we may not be able to operate our international corporately-managed locations profitably;
	●	our merchandise is manufactured by foreign manufacturers and we transact business in various foreign countries, and the availability and costs of our products, as well as our product pricing, may be negatively affected by risks associated with international manufacturing and trade and foreign currency fluctuations;
	●	if we are unable to effectively manage our international partner-operated locations, attract new partners or if the laws relating to our international partners change, our growth and profitability could be adversely affected, and we could be exposed to additional liability;

	●	we are subject to a number of risks related to disruptions, failures or security breaches of our information technology infrastructure. If we improperly obtain or are unable to protect our data or violate privacy or security laws or expectations, we could be subject to liability as well as damage to our reputation;
	●	we may fail to renew, register or otherwise protect our trademarks or other intellectual property and have been sued by third parties for infringement or misappropriation of their proprietary rights, which could be costly, distract our management and personnel and result in the diminution in value of our trademarks and other important intellectual property;
	●	we may suffer negative publicity or be sued if the manufacturers of our merchandise or of Build-A-Bear branded merchandise sold by our licensees ship any products that do not meet current safety standards or production requirements or if such products are recalled or cause injuries;
	●	we may suffer negative publicity or be sued if the manufacturers of our merchandise violate labor laws or engage in practices that consumers believe are unethical;
	●	we may suffer negative publicity or a decrease in sales or profitability if the products from other companies that we sell in our stores do not meet our quality standards or fail to achieve our sales expectations;
	●	we may suffer negative publicity and damage to our reputation if we do not continue to evolve environmental, social, and governance initiatives in a timely manner;
	●	fluctuations in our quarterly results of operations could cause the price of our common stock to substantially decline;
	●	fluctuations in our operating results could reduce our cash flow, or trigger restrictions under our credit agreement, cause us to be unable to repurchase shares at all, at the times or in the amounts we desire, cause the results of our share repurchase program may not be as beneficial as we would like, or cause us to discontinue our quarterly dividend program;
	●	our relatively low market capitalization can cause the market price of our common stock to become volatile;
	●	our certificate of incorporation and bylaws and Delaware law contain provisions that may prevent or frustrate attempts to replace or remove our current management by our stockholders, even if such replacement or removal may be in our stockholders’ best interests;
	●	we may not be able to operate successfully if we lose key personnel, are unable to hire qualified additional personnel, or experience turnover of our management team;
	●	we may be unsuccessful in acquiring businesses or engaging in other strategic transactions, which may negatively affect our financial condition and profitability.

 

 

Business Overview

 

Build-A-Bear Workshop, Inc. a Delaware corporation, was formed in 1997 as a mall-based, experiential specialty retailer. Build-A-Bear has evolved to become a beloved multi-generational brand focused on its mission to “add a little more heart to life” where guests of all ages make their own “furry friends” in celebration and commemoration of life moments. Guests create their own stuffed animals by participating in the stuffing, dressing, accessorizing, and naming of their own teddy bears and other plush toys.  We believe the hands-on and interactive nature of our experience locations, our personal service model and engaging digital shopping experiences result in guests forming an emotional connection with our brand, which differentiates it in the marketplace. Over the last 27 years, Build-A-Bear has become a brand with high consumer awareness, positive affinity, and strong retail influence by leveraging our brand strength to grow our brick-and-mortar retail footprint beyond traditional malls through a range of store sizes, formats and locations including tourist destinations. We are also growing through our websites, which focus on gift-giving, collectible merchandise, and licensed products. In addition to growing our corporately-managed store and e-commerce footprint, we are also growing through third-party operated and franchised stores, particularly for our international expansion. Our ongoing digital transformation, which touches our e-commerce business, consumer loyalty program and digital marketing and content, has led to omni-channel growth over the past several years. Build-A-Bear's pop-culture appeal has played a key role in growing our total addressable market beyond children by adding teens and adults with entertainment and sports licensing, collectible and gifting offerings, as well as by introducing new products and adding categories beyond plush.

 

We primarily operate through a vertical retail channel with corporately-managed stores that feature a unique combination of experience and product in which guests can “make their own stuffed animals.” We also operate e-commerce sites that focus on gift-giving, collectible merchandise and licensed products that appeal to consumers that have an affinity for characters from a range of entertainment, sports, art, and gaming properties. Our retail stores also act as mini distribution centers that provide efficient omnichannel support for our growing digital demand. The primary consumer target for our brick-and-mortar locations is families with children, while our e-commerce sites focus on collectors and gift givers that are primarily tweens, teens and adults.  Additionally, we offer products in non-plush consumer categories via outbound licensing agreements with leading manufacturers.

 

Our strategy includes leveraging our brand strength to continue to strategically evolve our brick-and-mortar retail footprint beyond traditional malls with a versatile range of formats and locations including tourist destinations, expand into international markets primarily via our partner-operated and franchise store models, and grow our e-commerce business. By leveraging our brand strength and owned intellectual properties through the creation of engaging short-form and long-form content for kids and adults, we endeavor to develop a circle of continuous engagement to increase purchase occasions and to continue to broaden the consumer base beyond children by adding tweens, teens and adults with entertainment and sports licensing, plus collectible and gifting offerings.

 

As of May 4, 2024, we had 357 corporately-managed stores globally and 4 seasonal locations, 97 partner-operated locations operating through our "third-party retail" model in which we sell our products on a wholesale basis to other companies that execute our retail experience, and 77 international franchised stores, all under the Build-A-Bear Workshop brand. In addition to these stores, we sell products on our company-owned e-commerce sites and third-party marketplace sites, our franchisees sell products through sites that they manage as well as other third-party marketplace sites and other parties sell products on their sites under wholesale agreements.

 

We operate in three segments that share the same infrastructure, including management, systems, merchandising and marketing, and generate revenues as follows:

 

	•	Direct-to-Consumer (“DTC”) – Corporately-managed retail stores located in the U.S., Canada, the U.K., and Ireland and two e-commerce sites;
	•	Commercial – Transactions with other businesses, mainly comprised of wholesale product sales to third-party retailers and licensing our intellectual property, including entertainment properties, for third-party use; and
	•	International franchising – Royalties as well as products and fixtures sales from other international operations under franchise agreements.

 

Selected financial data attributable to each segment for the thirteen weeks ended May 4, 2024 and April 29, 2023 are set forth in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

 

Business Update

 

Build-A-Bear Workshop offers interactive entertainment experiences via both physical and e-commerce engagement, targeting a range of consumer segments and purchasing occasions through digitally-driven, diversified omnichannel capabilities. We operate a vertical retail channel with stores that feature a unique combination of experience and product in which guests can "make their own stuffed animals" by participating in the stuffing, dressing, accessorizing, and naming of their teddy bears and other stuffed animals. We also operate e-commerce sites that focus on gift-giving, collectible merchandise and licensed products that appeal to consumers that have an affinity for characters from a range of licensed properties. Over the last 26 years, Build-A-Bear has become a brand with high consumer awareness and positive affinity. We believe there are opportunities to leverage this brand strength, pop-culture status and multi-generational appeal and generate incremental revenue and profits through licensing our intellectual properties through content and entertainment development for kids and adults while also offering products at wholesale and in non-plush consumer categories through outbound licensing agreements with leading manufacturers.

 

We seek to provide outstanding guest service and experiences across all channels and touch points including our retail locations, our e-commerce sites, our mobile sites and apps as well as traditional, digital and social media. We believe the hands-on and interactive nature of our experience locations, our personal service model and engaging digital shopping experiences result in guests forming an emotional connection with our brand which has multi-generational appeal that captures today’s zeitgeist including desire for engaging experiences, personalization and “DIY” while being recognized as trusted, giving, and a part of pop culture.

 

We believe that the initiatives and investments that were put in place prior to the pandemic, and in many cases, we accelerated during the pandemic, are driving improved results, as we delivered growth in total revenues and profit in fiscal 2023. To continue to drive revenue and profit growth, we remain focused on our strategic priorities, which are centered primarily on three key areas: 

 

	•	The global expansion of our unique experience locations. During fiscal 2023, we opened a net 37 Build-A-Bear Workshop retail experience locations, through a combination of corporately-managed, third-party operated, and franchise business models. In fiscal 2024, we expect net new unit growth of at least 50 locations in North America and internationally through our three store business models. We have made a concerted effort to shift to non-traditional locations, including family-centric tourist and hospitality sites, as well as partner-operated and franchise locations, and now have more than 35% of total stores in non-traditional settings. While tourist sites have been and will remain a critical part of our location expansion strategy, recent research data supports our opportunity to reengage in profitable expansion in traditional locations on a more localized level, particularly given the numerous and flexible corporate store models we have developed in the past few years. We also continue to develop innovative experiences to expand our brand reach, including Build-A-Bear vending machines, also known as ATMs or automatic teddy machines.
	•	Accelerate our comprehensive digital transformation. In addition to growing our e-commerce channel, this includes our marketing and loyalty programs, including our Count Your Candles offer, and content and entertainment initiatives, such as our first-ever animated theatrical film in 2023 “Glisten and the Merry Mission.” Our digital transformation is designed to elevate our business efficiency, integrate our customer communications to acquire new customers and increase purchase occasions, and expand our total addressable market by reaching beyond our core kid base and to continue to acquire new tween, teen and adult consumers by new offerings including gifting and personalization programs. Our 2023 e-commerce sales, inclusive of softness during the year, have tripled since 2018, which was prior to the implementation of key digital initiatives. In early 2024, we created a new position of Chief Customer & Digital Officer to further align our operating structure with our digital strategy.
	•	Drive profitable growth through investment initiatives while maintaining a commitment to return capital to shareholders. As corporate store operating margins have remained robust from higher levels of revenue combined with disciplined expense management, particularly considering recent inflationary pressures, wage increases and supply chain challenges, and as we continue to evolve our real estate portfolio with new locations and formats, plus shift to asset-light business models, the company’s cash flows have meaningfully improved. This higher-level of cash flows has been used to increase support for key initiatives to deliver long-term profitable growth, while also returning capital to shareholders through dividends and share repurchases. The Company returned capital to shareholders through two special dividends paid December 27, 2021, and April 6, 2023, totaling $42 million, through share repurchases from a $25 million stock repurchase program that was adopted in November 2021, and through a $50 million stock repurchase program announced in August 2022. The Company announced a new dividend program on March 13, 2024, declaring an initial quarterly cash dividend of $0.20 per share that was paid in April 2024 totaling $2.9 million.

   

 

Retail Stores:

 

Corporately-Managed Locations:

 

The table below sets forth the number of Build-A-Bear Workshop corporately-managed stores in North America and Europe for the periods presented:

 

		Thirteen weeks ended
		May 4, 2024												April 29, 2023
		North America				Europe				Total				North America				Europe				Total
Beginning of period			320				39				359				312				38				350
Opened			-				1				1				-				-				-
Closed			(3	)			-				(3	)			-				(1	)			(1	)
End of period			317				40				357				312				37				349

 

As of May 4, 2024, 51% of our corporately-managed stores were in an updated Discovery format. We also expect to close certain stores in accordance with natural lease events as an ongoing part of our real estate management and day-to-day operational plans. The future of our retail store fleet may include expansion into more non-traditional locations, including concourse format shops and by expansion in other locations outside of traditional malls.

 

Third-Party Retail Locations:

 

The number of third-party retail locations opened and closed for the periods presented below is summarized as follows:

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Beginning of period			92				70
Opened			5				-
Closed			-				-
End of period			97				70

 

Through our third-party retail model, there were 97 stores in operation at the end of the first quarter of 2024 with relationships that included Carnival Cruise Line, Great Wolf Lodge Resorts, Landry's and Girl Scouts of the USA. The third-party retail model is capital light for us, with the partner company building out and operating the workshops including providing the real estate location and covering the cost of labor and inventory, which is purchased on a wholesale basis. These locations are heavily-weighted to the hospitality industry, which allow us to further advance our focus on experience location expansion in non-traditional and tourist areas, as well as shop-in-shop arrangements within other retailers’ stores.

 

International Franchise Stores:

 

Our first franchisee location was opened in November 2003. All franchised stores have similar signage, store layout, merchandise characteristics and guest experience as our corporately-managed stores. As of May 4, 2024, we had 5 master franchise agreements, which typically grant franchise rights for a particular country or group of countries, covering an aggregate of 8 countries.

 

The number of franchised stores opened and closed for the periods presented below are summarized as follows:

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Beginning of period			74				68
Opened			3				1
Closed			-				(6	)
End of period			77				63

 

 

In the ordinary course of business, we anticipate signing additional master franchise agreements in the future and terminating other such agreements. We source fixtures and other supplies for our franchisees from China which significantly reduces the capital and lowers the expenses required to open franchises. We are leveraging new formats that have been developed for our corporately-managed locations such as concourses and shop-in-shops with our franchisees.

 

 

Results of Operations

 

The following table sets forth, for the periods indicated, selected income statement data expressed as a percentage of total revenues, except where otherwise indicated. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales, commercial revenue, international franchising, respectively, as well as immaterial rounding:

 

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

		Thirteen weeks ended
		May 4,				April 29,
		2024				2023
Revenues:
Net retail sales			94.0	%			93.3	%
Commercial revenue			5.2				5.6
International franchising			0.8				1.1
Total revenues			100.0				100.0
Costs and expenses:
Cost of merchandise sold - retail (1)			45.8				45.4
Cost of merchandise sold - commercial (1)			42.3				50.2
Cost of merchandise sold - international franchising (1)			70.4				69.9
Total cost of merchandise sold			45.8				45.9
Consolidated gross profit			54.2				53.9
Selling, general and administrative			41.5				38.0
Interest (income) expense, net			(0.4	)			(0.1	)
Income before income taxes			13.1				16.1
Income tax expense			3.1				4.0
Net income			10.0				12.2
Retail Gross Margin (2)			54.2	%			54.6	%

 

(1)	Cost of merchandise sold – retail is expressed as a percentage of net retail sales. Cost of merchandise sold – commercial is expressed as a percentage of commercial revenue. Cost of merchandise sold – international franchising is expressed as a percentage of international franchising revenue.
(2)	Retail gross margin represents net retail sales less cost of merchandise sold - retail; retail gross margin percentage represents retail gross margin divided by net retail sales.

  

Thirteen weeks ended May 4, 2024 compared to thirteen weeks ended April 29, 2023

 

Total revenues. Consolidated revenues decreased 4.4%, primarily driven by a 6.9% decrease in North America and partially offset by a 14.1% increase in Europe.  Although a decline was expected as a result of economic uncertainty and business volatility from our ongoing marketing and website transitions, the impacts were greater than expected, with web demand (online orders fulfilled from either the Company’s warehouse or its stores) being a significant contributor to our total revenue decline. Additionally, the decrease also resulted from the expected negative timing due to the calendar shift (53rd week shift) along with a decrease in commercial revenue due to timing of product shipments to wholesale customers compared to the same period prior year.

Net retail sales for the thirteen weeks ended May 4, 2024 were $107.9 million, compared to $112.1 million for the thirteen weeks ended April 29, 2023, a decrease of $4.2 million, or 3.8%, compared to the prior year period. The components of this decrease are as follows (dollars in thousands):

 

		Thirteen weeks ended
		May 4, 2024
Impact from:
Existing stores		$	(1,853	)
Digital sales			(2,431	)
53rd week shift			(2,067	)
New stores			1,497
Store closures			(350	)
Gift card breakage			197
Foreign currency translation			391
Other			388
Total Change		$	(4,228	)

 

The retail revenue decrease was primarily the result of a decline in web demand resulting in decrease sales through existing stores and our webstore and expected negative timing due to the calendar shift (53^rd week shift). Additionally, we experience small declines in both traffic and dollars per transaction impacting retail revenue for the fiscal quarter. The decline in web demand continued into the second quarter and is expected to have a negative impact on sales made through our existing stores and webstore.

 

Commercial revenue was $6.0 million for the thirteen weeks ended May 4, 2024 compared to $6.7 million for the thirteen weeks ended April 29, 2023. The $0.7 million decrease is primarily the result of timing of product shipments to wholesale customers compared to the same period prior year.

 

International franchising revenue was $0.9 million for the thirteen weeks ended May 4, 2024 compared to $1.3 million for the thirteen weeks ended April 29, 2023. The change is the result of the timing of product shipments.

 

Retail gross margin. Retail gross margin dollars decreased $2.7 million to $58.5 million from $61.2 million for the thirteen weeks ended April 29, 2023. The retail gross margin rate decreased 40 basis points compared to the prior year primarily driven by higher freight and occupancy costs offset by a decrease in merchandise cost compared to the fiscal 2023 first quarter.

 

Selling, general and administrative. SG&A expenses were $47.6 million, or 41.5% of consolidated revenue, for the thirteen weeks ended May 4, 2024, compared to $45.6 million, or 38.0% of consolidated revenue, for the thirteen weeks ended April 29, 2023. The increase in overall expense was driven by higher wage rates, expense timing and general inflationary pressures.

 

Interest income, net. Interest income was $426,000 for the thirteen weeks ended May 4, 2024 compared to interest income of $76,000 for the thirteen weeks ended April 29, 2023. The increase in interest income compared to the prior year is the result of the Company's cash management strategy to invest cash on-hand in short-term, highly liquid investments.

 

Provision for income taxes. Income tax expense was $3.6 million with a tax rate of 23.8% for the thirteen weeks ended May 4, 2024, as compared to $4.7 million with a tax rate of 24.5% for the thirteen weeks ended April 29, 2023.  In the first quarter of fiscal 2024, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense partially offset by the tax impact of equity awards vesting.  In the fourth quarter of fiscal 2023, the Company reversed the valuation allowance on deferred tax assets expected to be realized in the U.K.  In the first quarter of fiscal 2024, the Company remains in a full valuation in certain other foreign jurisdictions.  In the first quarter of fiscal 2023, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense. In addition, the Company remained in a full valuation in certain foreign jurisdictions, including the UK.

 

 

Earnings before Interest, Taxes, Depreciation, and Amortization 

 

We believe that earnings before interest, taxes, depreciation, and amortization ("EBITDA") provides meaningful information about our operational efficiency by excluding the impact of differences in tax jurisdictions and structures, debt levels, and capital investment. Additionally, this measure is the metric used for portions of the Company's incentive compensation structure. This measure is not in accordance with, or an alternative to, GAAP. The most comparable GAAP measure is income before income taxes, or pre-tax income. EBITDA should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate EBIT and EBITDA differently, limiting the usefulness of the measures for comparisons with other companies. The following table sets forth, for the periods indicated, the components of EBITDA (dollars in millions):

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Income before income taxes (pre-tax)		$	15,029			$	19,353
Interest income, net			(426	)			(76	)
Depreciation and amortization expense			3,658				3,080
Earnings before interest, taxes, depreciation, and amortization		$	18,261			$	22,357

 

EBITDA for the thirteen weeks ended May 4, 2024 decreased $4.1 million, or 18.3% to $18.3 million from $22.4 million for the thirteen weeks ended April 29, 2023. The decrease in EBITDA is driven by an increase in SG&A expenses due to higher wages, expense timing, and general inflationary pressures coupled with a slight decrease in retail gross margin.

 

Seasonality and Quarterly Results

 

Our operating results for one period may not be indicative of results for other periods, and may fluctuate significantly because of a variety of factors, including, but not limited to: (1) changes in general economic conditions (including as a result of the pandemic) and consumer spending patterns; (2) changes in store operations in response to the pandemic apart from its effect on the general economy, including temporary store closures required by local governments; (3) increases or decreases in our existing store and e-commerce sales; (4) fluctuations in the profitability of our stores; (5) the timing and frequency of the sales of licensed products tied to major theatrical releases (including the cancellation or delay of such releases due to the pandemic or other external factors) and our marketing initiatives, including national media and other public relations events; (6) changes in foreign currency exchange rates; (7) the timing of new store openings, closings, relocations and remodeling and related expenses; (8) changes in consumer preferences; (9) the effectiveness of our inventory management; (10) the actions of our competitors or mall anchors and co-tenants; (11) seasonal shopping patterns and holiday and vacation schedules; (12) disruptions in store operations due to civil unrest; and (13) weather conditions.

 

The timing of store closures, relocations, remodels, openings and re-openings may result in fluctuations in quarterly results based on the revenues and expenses associated with each store location. Expenses related to store closings are typically incurred in stages: when the decision is made to close the store typically associated with a lease event such as an expiration or lease triggered clause; when the closure is communicated to store associates; and at the time of closure. We typically incur most preopening costs for a new store in the three months immediately preceding the store’s opening.

 

Because our retail operations include toy products which have sales that historically peak in relation to the holiday season as part of our revenue model, our sales have historically been highest in our fourth quarter. The timing of holidays and school vacations can impact our quarterly results. We cannot provide assurance that this will continue to be the case. In addition, for accounting purposes, the quarters of each fiscal year consist of 13 weeks, although we will have a 14-week quarter approximately once every six years. For example, the 2023 fiscal fourth quarter was 14 weeks.

 

Liquidity and Capital Resources

 

As of May 4, 2024, we had a consolidated cash balance of $38.2 million, 83% of which was domiciled within the U.S. Historically, our cash requirements have been primarily for the relocation and remodeling of existing stores in our new design, opening of new stores, investments in information technology infrastructure and working capital. Over the past several years, we have met these requirements through capital generated from cash flow provided by operations. Additionally, during 2024 we have used cash on-hand to invest in short-term, highly liquid investments with original maturities of three months or less resulting in interest income of $0.4 million during the thirteen weeks ended May 4, 2024

 

A summary of our operating, investing and financing activities is shown in the following table (dollars in thousands):

 

		Thirteen weeks ended
		May 4,				April 29,
		2024				2023
Net cash provided by operating activities		$	10,365			$	18,786
Net cash used in investing activities			(2,430	)			(3,065	)
Net cash used in financing activities			(13,978	)			(25,103	)
Effect of exchange rates on cash			(51	)			3
Decrease in cash, cash equivalents, and restricted cash		$	(6,094	)		$	(9,379	)

   

Operating Activities. Cash provided by operating activities decreased $8.4 million for the thirteen weeks ended May 4, 2024, as compared to the thirteen weeks ended April 29, 2023. This decrease in cash from operating activities was primarily driven by decreased sales volume, resulting in lower net income, coupled with an increase in cash spent on inventory purchases. 

 

Investing Activities. Cash used in investing activities decreased $0.6 million for the thirteen weeks ended May 4, 2024, as compared to the thirteen weeks ended April 29, 2023. This decrease in cash used in investing activities was primarily driven by lower spending on capital expenditures related to information technology projects.

 

Financing Activities. Cash used in financing activities decreased $11.1 million for the thirteen weeks ended May 4, 2024, as compared to the thirteen weeks ended April 29, 2023. This decrease in cash used in financing activities was driven primarily by the payment in 2023 fiscal first quarter of a special cash dividend of $22.1 million compared to a quarterly dividend of $2.9 million in the 2024 fiscal first quarter.  This was partially offset by an increase in repurchases of our common stock during the thirteen weeks ended May 4, 2024.

 

 

Capital Resources: We have a revolving credit and security agreement with PNC Bank, as agent, that provides for a secured revolving loan in aggregate principal of up to $25.0 million, subject to a borrowing base formula. As of May 4, 2024, borrowings under the agreement would bear interest at (a) a base rate determined under the agreement, or (b) the borrower's option, at a rate based on SOFR, plus in either case a margin based on average undrawn availability as determined in accordance with the agreement. As of May 4, 2024, our borrowing base was $25.0 million. As a result of a $250,000 letter of credit outstanding against the line of credit, approximately $24.7 million was available for borrowing as of May 4, 2024. We had no outstanding borrowings as of May 4, 2024. 

 

Most of our corporately-managed retail stores are located within shopping malls and all are operated under leases classified as operating leases. Our leases in North America tend to be shorter term leases to provide flexibility in aligning stores with market trends. During fiscal 2023 and into fiscal 2024, lease extensions began to have longer terms as we have secured longer contracts with more favorable terms. Our leases typically require us to pay personal property taxes, our pro rata share of real property taxes of the shopping mall, our own utilities, repairs and maintenance in our store, a pro rata share of the malls’ common area maintenance and, in some instances, merchant association fees and media fund contributions. Many leases contain incentives to help defray the cost of construction of a new store. Typically, a portion of the incentive must be repaid to the landlord if we choose to terminate the lease prior to its contracted term. In addition, some of these leases contain various restrictions relating to change in control of our company. Our leases also subject us to risks relating to compliance with changing mall rules and the exercise of discretion by our landlords on various matters, including rights of termination in some cases. Rents are invoiced monthly and paid in advance.

 

Our leases in the U.K. and Ireland typically have terms of ten years and generally contain a provision whereby every fifth year the rental rate can be adjusted to reflect the current market rates. The leases typically provide the lessee with the first right for renewal at the end of the lease. We may also be required to make deposits and rent guarantees to secure new leases as we expand. Business rates also change according to government time schedules to reflect current market rental rates for the locations we lease. Rents are invoiced monthly or quarterly and paid in advance.

 

 

Capital spending through the thirteen weeks ended May 4, 2024 totaled $2.4 million for information technology projects and new store openings, and we expect to spend approximately $18 to $20 million on capital expenditures in fiscal 2024.

 

Total inventory at quarter end was $64.0 million, a decrease of $2.5 million or 4% from the end of the fiscal 2023 first quarter. We are comfortable with the level and composition of our inventory.

 

We have various contractual or other obligations, including operating lease commitments and obligations under deferred compensation plans. As of May 4, 2024, we had purchase obligations totaling approximately $82.4 million, of which $24.4 million are due in the next 12 months. We believe our operating cash flows are sufficient to meet our material cash requirements for at least the next 12 months.

 

We utilized $9.2 million in cash to repurchase 343,406 shares during the thirteen weeks ended May 4, 2024 compared to using $3.1 million in cash to repurchase 132,385 shares during the thirteen weeks ended April 29, 2023.  Since the end of the first fiscal quarter, we utilized $3.8 million in cash to repurchase 131,419 shares leaving $13.2 millionavailable under the current $50.0 million stock repurchase program adopted on August 31, 2022.

   

Off-Balance Sheet Arrangements

 

None.

 

Inflation

 

Global inflation is well above recent levels and global interest rates have risen in an effort to curb inflation. The impact of inflation on the Company's business operations was seen throughout fiscal 2023 and continued to adversely affect our business in fiscal 2024, mainly through rising store labor costs. However, we continue to take mitigating actions, such as select strategic price increases on highly sought-after products and leveraging distribution costs. We expect the inflationary pressures experienced thus far in fiscal 2024 to continue throughout the rest of fiscal 2024, specifically through wage increases. We continue to monitor the impact of inflation on our business operations on an ongoing basis and may need to adjust our prices further to mitigate the impacts of changes to the rate of inflation during 2024 or in future years. Future volatility of general price inflation and the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead could adversely affect our financial results. Inflationary pressures may be exacerbated by higher transportation costs due to war and other geopolitical conflicts, such as the current Russia-Ukraine conflict, tension between China and Taiwan, and the Israel-Hamas conflict. We cannot provide an estimate or range of impact that such inflation may have on our future results of operations. However, if we are unable to recover the impact of these costs through price increases to our guests, or if consumer spending decreases as a result of inflation, our business, results of operations, financial condition and cash flows may be adversely affected. In addition, ongoing inflation in product costs may result in lower gross margin rates if we elect to maintain higher inventory reserves to mitigate anticipated higher costs.

 

Critical Accounting Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires the appropriate application of certain accounting policies, which require us to make estimates and assumptions about future events and their impact on amounts reported in our financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the financial statements.

 

We believe our application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates, including those related to long-lived assets, leases, revenue recognition and income taxes, are reevaluated on an ongoing basis, and adjustments are made when facts and circumstances dictate a change.

 

Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates. Our critical accounting policies and estimates are discussed in and should be read in conjunction with our Annual Report on Form 10-K for the year ended February 3, 2024 as filed with the SEC on April 18, 2024, which includes audited consolidated financial statements for our 2023 and 2022 fiscal years. There have been no material changes to the critical accounting estimates disclosed in the 2023 Form 10-K. 

 

 

Recent Accounting Pronouncements

 

See Note 1 to the Condensed Consolidated Financial Statements — Basis of Presentation — Recent Accounting Pronouncements – Adopted in the Current Year as disclosed in our Annual Report on Form 10-K for the year ended February 3, 2024 as filed with the SEC on April 18, 2024.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

There have been no material changes to our Quantitative and Qualitative Disclosures About Market Risk as disclosed in our Annual Report on Form 10-K for the year ended February 3, 2024 as filed with the SEC on April 18, 2024.

 

Item 4. Controls and Procedures.

 

Our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our certifying officers, as appropriate to allow timely decisions regarding required disclosure. Based on the foregoing evaluation, our management, including the President and Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of May 4, 2024, the end of the period covered by this Quarterly Report.

 

It should be noted that our management, including the President and Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

Changes in Internal Control Over Financial Reporting. The Company’s management, with the participation of the Company’s President and Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. There have been no changes in our internal control over financial reporting during the quarter covered by this report that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1A. Risk Factors

 

There have been no material changes to our risk factors as disclosed in our Annual Report on Form 10-K for the year ended February 3, 2024 as filed with the SEC on April 18, 2024.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period		(a) Total Number of Shares (or Units) Purchased (1)				(b) Average Price Paid Per Share (or Unit) (2)				(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs				(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (3)
February 4, 2024 - March 2, 2024			78,835			$	22.74				78,835			$	24,312,850
March 3, 2024 - April 6, 2024			53,801				25.52				53,801				22,939,713
April 7, 2024 - May 4, 2024			280,052				28.87				210,770				16,944,485
Total			412,688			$	27.26				343,406			$	16,944,485

 

(1)	Includes shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of restricted shares which vested during the quarter. Our equity incentive plans provide that the value of shares delivered to us to pay the withholding tax obligations is calculated at the closing trading price of our common stock on the date the relevant transactions occur.
(2)	Average Price Paid Per Share includes commissions
(3)	On August 31, 2022, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to $50 million of our common stock. This program authorizes the Company to repurchase shares through August 31, 2025 and does not require the Company to repurchase any specific number of shares, and may be modified, suspended or terminated at any time without prior noticed. Shares repurchased under the program will be subsequently retired.

 

Item 5. Other Information

 

Security Trading Plans of Directors and Executive Officers

 

On March 22, 2024, Sharon John, President and Chief Executive Officer of the Company, adopted a trading arrangement for the sale of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c).  Ms. John’s Rule 10b5-1 Trading Plan, which expires December 6, 2024, provides for the sale of up to 91,034 shares of common stock pursuant to the terms of the plan.

 

On April 8, 2024, Voin Todorovic, Chief Financial Officer of the Company, adopted a Rule 10b5-1 Trading Plan that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c).  Mr. Todorovic’s Rule 10b5-1 Trading Plan, which expires January 31, 2025, provides for the sale of up to 22,929 shares of common stock pursuant to the terms of the plan.

 

25

---

Table of Contents

 

Item 6. Exhibits

 

The following is a list of exhibits filed as a part of the quarterly report on Form 10-Q:

 

Exhibit No.		Description
2.1		Agreement and Plan of Merger dated April 3, 2000 between Build-A-Bear Workshop, L.L.C. and the Registrant (incorporated by reference from Exhibit 2.1 to our Registration Statement on Form S-1, filed on August 12, 2004, Registration No. 333-118142)
3.1		Third Amended and Restated Certificate of Incorporation (incorporated by reference from Exhibit 3.1 of our Current Report on Form 8-K, filed on November 11, 2004)
3.2		Amended and Restated Bylaws, as amended through February 23, 2016 (incorporated by reference from Exhibit 3.1 of our Current Report on Form 8-K, filed on February 24, 2016)
4.1		Specimen Stock Certificate (incorporated by reference from Exhibit 4.1 to Amendment No. 3 to our Registration Statement on Form S-1, filed on October 1, 2004, Registration No. 333-118142)
10.1†		Separation Agreement and General Release by and between Jennifer Kretchmar and Build-A-Bear Workshop, Inc., dated February 4, 2024 (incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K, filed on February 5, 2024)
10.2†		Consulting Agreement by and between Jennifer Kretchmar and Build-A-Bear Workshop, Inc., dated February 4, 2024 (incorporated by reference from Exhibit 10.2 of the Current Report on Form 8-K, filed on February 5, 2024)
10.3		Description of Build-A-Bear Workshop, Inc. Cash Bonus Program for Executive Officers (incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K, filed on April 19, 2024)
10.4		Form of Restricted Stock Agreement under the Registrant’s Amended and Restated 2020 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.2 of the Current Report on Form 8-K, filed on April 19, 2024)
31.1*		Rule 13a-14(a)/15d-14(a) certification (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the President and Chief Executive Officer)
31.2*		Rule 13a-14(a)/15d-14(a) certification (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer)
32.1**		Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the President and Chief Executive Officer)
32.2**		Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer)
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Extension Calculation Linkbase Document
101.DEF		Inline XBRL Extension Definition Linkbase Document
101.LAB		Inline XBRL Extension Label Linkbase Document
101.PRE		Inline XBRL Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

† Management contract or compensatory plan or arrangement.

* File herewith

** Furnished herewith

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: June 13, 2024

 

 

	BUILD-A-BEAR WORKSHOP, INC.
	(Registrant)
	By:	/s/ Sharon John
		Sharon John
		President and Chief Executive Officer (on behalf of the registrant and as principal executive officer)
	By:	/s/ Voin Todorovic
		Voin Todorovic
		Chief Financial Officer (on behalf of the registrant and as principal financial officer)

 

 

Exhibit 31.1

 

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

AND RULE 13a-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

I, Sharon John, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Build-A-Bear Workshop, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

	/s/ Sharon John
	Sharon John
	President and Chief Executive Officer Build-A-Bear Workshop, Inc.
	(Principal Executive Officer)

 

Date: June 13, 2024

 

Exhibit 31.2

 

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

AND RULE 13a-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

I, Voin Todorovic, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Build-A-Bear Workshop, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

	/s/ Voin Todorovic
	Voin Todorovic Chief Financial Officer Build-A-Bear Workshop, Inc. (Principal Financial Officer)

 

Date: June 13, 2024

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Build-A-Bear Workshop, Inc. (the “Company”) on Form 10-Q for the period ended May 4, 2024 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sharon John, President and Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

	/s/ Sharon John
	Sharon John President and Chief Executive Officer Build-A-Bear Workshop, Inc.
	(Principal Executive Officer)

 

Date: June 13, 2024

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Build-A-Bear Workshop, Inc. (the “Company”) on Form 10-Q for the period ended May 4, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Voin Todorovic, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

	/s/ Voin Todorovic
	Voin Todorovic Chief Financial Officer Build-A-Bear Workshop, Inc.
	(Principal Financial Officer)

 

Date: June 13, 2024

 

v3.24.1.1.u2

Document And Entity Information - shares	3 Months Ended
	May 04, 2024	Jun. 10, 2024
Document Information [Line Items]
Entity Central Index Key	0001113809
Entity Registrant Name	BUILD-A-BEAR WORKSHOP INC
Amendment Flag	false
Current Fiscal Year End Date	--02-01
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	May 04, 2024
Document Transition Report	false
Entity File Number	001-32320
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	43-1883836
Entity Address, Address Line One	415 South 18th St.
Entity Address, City or Town	St. Louis
Entity Address, State or Province	MO
Entity Address, Postal Zip Code	63103
City Area Code	314
Local Phone Number	423-8000
Title of 12(b) Security	Common stock
Trading Symbol	BBW
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		13,805,082

v3.24.1.1.u2

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	May 04, 2024	Feb. 03, 2024	Apr. 29, 2023
Current assets:
Cash and cash equivalents	$ 38,233	$ 44,327	$ 32,819
Inventories, net	64,024	63,499	66,489
Receivables, net	9,547	8,569	13,307
Prepaid expenses and other current assets	12,046	11,377	13,503
Total current assets	123,850	127,772	126,118
Operating lease right-of-use asset	72,783	73,443	73,780
Property and equipment, net	53,897	55,262	50,385
Deferred tax assets	8,672	8,682	6,642
Other assets, net	6,074	7,166	4,785
Total Assets	265,276	272,325	261,710
Current liabilities:
Accounts payable	14,793	16,170	13,686
Accrued expenses	19,552	19,954	27,272
Operating lease liability short term	24,276	25,961	27,843
Gift cards and customer deposits	16,620	18,134	18,637
Deferred revenue and other	3,432	3,514	5,010
Total current liabilities	78,673	83,733	92,448
Operating lease liability long term	56,906	57,609	59,030
Other long-term liabilities	1,356	1,321	1,260
Stockholders' equity:
Preferred stock, par value $0.01, Shares authorized: 15,000,000; No shares issued or outstanding at May 4, 2024, February 3, 2024 and April 29, 2023	0	0	0
Common stock, par value $0.01, Shares authorized: 50,000,000; Issued and outstanding: 13,914,176, 14,172,362, and 14,938,825 shares, respectively	139	142	149
Additional paid-in capital	64,065	66,330	70,324
Accumulated other comprehensive loss	(12,153)	(12,082)	(12,177)
Retained earnings	76,290	75,272	50,676
Total stockholders' equity	128,341	129,662	108,972
Total Liabilities and Stockholders' Equity	$ 265,276	$ 272,325	$ 261,710

v3.24.1.1.u2

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	May 04, 2024	Feb. 03, 2024	Apr. 29, 2023
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	15,000,000	15,000,000	15,000,000
Preferred stock, issued (in shares)	0	0	0
Preferred stock, outstanding (in shares)	0	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	50,000,000	50,000,000	50,000,000
Common stock, shares issued (in shares)	13,914,176	14,172,362	14,938,825
Common stock, shares outstanding (in shares)	13,914,176	14,172,362	14,938,825

v3.24.1.1.u2

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Revenues:
Revenue	$ 114,730	$ 120,050
Costs and expenses:
Cost of merchandise sold	52,565	55,147
Consolidated gross profit	62,165	64,903
Selling, general and administrative expense	47,562	45,626
Interest income, net	(426)	(76)
Income before income taxes	15,029	19,353
Income tax expense	3,570	4,745
Net income	11,459	14,608
Foreign currency translation adjustment	(71)	97
Comprehensive income	$ 11,388	$ 14,705
Income per common share:
Basic (in dollars per share)	$ 0.82	$ 1.01
Diluted (in dollars per share)	$ 0.82	$ 0.98
Shares used in computing common per share amounts:
Basic (in shares)	13,925,957	14,457,858
Diluted (in shares)	14,006,400	14,974,930
Retail [Member]
Revenues:
Revenue	$ 107,868	$ 112,096
Costs and expenses:
Cost of merchandise sold	49,415	50,904
Commercial Product and Service [Member]
Revenues:
Revenue	5,985	6,688
Costs and expenses:
Cost of merchandise sold	2,533	3,358
International Franchising [Member]
Revenues:
Revenue	877	1,266
Costs and expenses:
Cost of merchandise sold	$ 617	$ 885

v3.24.1.1.u2

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Cash flows provided by operating activities:
Net income	$ 11,459	$ 14,608
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,658	3,080
Share-based and performance-based stock compensation	412	1,052
Provision/adjustments for doubtful accounts	(78)	(316)
Loss on disposal of property and equipment	139	21
Deferred taxes	0	(53)
Change in assets and liabilities:
Inventories, net	(593)	4,077
Receivables, net	(901)	1,626
Prepaid expenses and other assets	407	5,264
Accounts payable and accrued expenses	(810)	(6,265)
Operating leases	(1,716)	(1,840)
Gift cards and customer deposits	(1,502)	(799)
Deferred revenue	(110)	(1,669)
Net cash provided by operating activities	10,365	18,786
Cash flows used in investing activities:
Purchases of property and equipment	(2,430)	(3,065)
Net cash used in investing activities	(2,430)	(3,065)
Cash flows used in financing activities:
(Purchases) proceeds from the exercise of employee equity awards, net of tax	(1,869)	94
Cash dividends paid	(2,911)	(22,098)
Purchases of Company’s common stock	(9,198)	(3,099)
Net cash used in financing activities	(13,978)	(25,103)
Effect of exchange rates on cash	(51)	3
Decrease in cash, cash equivalents, and restricted cash	(6,094)	(9,379)
Cash, cash equivalents and restricted cash, beginning of period	44,327	42,198
Cash, cash equivalents and restricted cash, end of period	38,233	32,819
Supplemental disclosure of cash flow information:
Cash and cash equivalents	37,840	32,367
Restricted cash from long-term deposits	392	452
Total cash, cash equivalents and restricted cash	38,233	32,819
Net cash paid during the period for income taxes	$ 210	$ 646

v3.24.1.1.u2

Note 1 - Basis of Presentation	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Business Description and Basis of Presentation [Text Block]	1. Basis of Presentation   The condensed consolidated financial statements included herein are unaudited and have been prepared by Build-A-Bear Workshop, Inc. and its subsidiaries (collectively, the “Company”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet of the Company as of February 3, 2024 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in the opinion of management, necessary to summarize fairly the financial position of the Company and the results of the Company’s operations and cash flows for the periods presented. All of these adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. Because of the seasonal nature of the Company’s operations, results of operations of any single reporting period should not be considered as indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended February 3, 2024, which were included in the Company’s Annual Report on Form 10-K filed with the SEC on April 18, 2024.    Certain prior period amounts in the notes to the condensed consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications did not affect net earnings attributable to Build-A-Bear Workshop, Inc.    Significant Accounting Policies   The Company's significant accounting policies are summarized in Note 2 to the consolidated financial statements included in its Form 10-K for the year ended February 3, 2024.

v3.24.1.1.u2

Note 2 - Revenue	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Revenue from Contract with Customer [Text Block]	2. Revenue   Currently, most of the Company’s revenue is derived from retail sales (including from its e-commerce sites) and is recognized when control of the merchandise is transferred to the customer. The Company's disaggregated revenue is fully disclosed as net sales to external customers by reporting segment and by geographic area (See Note 11 — Segment Information for additional information). The Company's direct-to-consumer reporting segment represents 94% of consolidated revenue for the first quarter of fiscal 2024. The majority of these sales transactions were single performance obligations that were recorded when control of merchandise was transferred to the customer.   The following is a description of principal activities from which the Company generates its revenue, by reportable segment.   The Company’s direct-to-consumer segment includes the operating activities of corporately-managed stores, other retail-delivered operations and e-commerce demand (orders generated online to be fulfilled from either the Company's warehouse or its stores). Direct-to-consumer revenue is recognized when control of the merchandise is transferred to the customer and for the Company's online sales, generally upon estimated delivery to the customer. Revenue is measured as the amount of consideration, including any discounts or incentives, the Company expects to receive in exchange for transferring the merchandise. Product returns have historically averaged less than one-half of one percent due to the personalized and interactive nature of its products, where consumers customize their own stuffed animal. The Company has elected to exclude from revenue all collected sales, value added, and other taxes paid by its customers.   For the Company’s gift cards, revenue is deferred for single transactions until redemption including any related gift card discounts. Approximately 80% of gift cards are redeemed within three years of issuance and over the last three years, approximately 65% of gift cards issued have been redeemed within the first twelve months. In addition, unredeemed gift cards or breakage revenue is recorded in proportion to the customers’ redemption pattern using an estimated breakage rate based on historical experience. Subsequent to stores reopening following shutdowns caused by COVID, the Company experienced lower redemptions of its gift cards for all periods of outstanding activated cards compared to pre-pandemic redemption patterns (fiscal year 2019 and earlier), which impacts the gift card breakage rate. The Company does not believe that the redemption pattern experienced during the pandemic reflects the pattern in the future and has adjusted the historical redemption data used to calculate the breakage rate. The Company continues to evaluate expected breakage annually and adjusts the breakage rates in the fourth quarter of each year, or at other times if significant changes in customer behavior are detected. Changes to breakage estimates impact revenue recognition prospectively. Further, given the magnitude of the Company's gift card liability, the changes in breakage rates could have a significant impact on the amount of breakage revenue recognized in future periods. As a matter of sensitivity, a hypothetical 1% change in our gift card breakage rate in fiscal 2023 would have resulted in a change in breakage revenue of $1.0 million.   For certain qualifying transactions, a portion of revenue transactions are deferred for the obligation related to the Company’s loyalty program or when a material right in the form of a future discount is granted. In these transactions, the transaction price is allocated to the separate performance obligations based on the relative standalone selling price. The standalone selling price for the points earned for the Company’s loyalty program is estimated using the net retail value of the merchandise purchased, adjusted for estimated breakage based on historical redemption patterns. The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired. The Company issues certificates daily to loyalty program members who have earned 100 or more points in North America and 50 points or more in the U.K. with certificates historically expiring in six months if not redeemed. The Company assesses the redemption rates of its certifications on a quarterly basis to update the rate at which loyalty program points turn into certifications and the rate that certifications are redeemed. In regard to the consolidated balance sheet, contract liabilities related to the loyalty program are classified as deferred revenue and other.   The Company’s commercial segment includes transactions with other businesses and is mainly comprised of licensing the Company’s intellectual properties for third-party use and wholesale sales of merchandise, including supplies and fixtures. Revenue for wholesale sales is recognized when control of the merchandise or fixtures is transferred to the customer, which generally occurs upon delivery to the customer. The license agreements provide the customer with highly interrelated rights that are not distinct in the context of the contract and therefore, have been accounted for as a single performance obligation and recognized as licensee sales occur. If the contract includes a guaranteed minimum, the minimum guarantee is recognized on a straight-line basis over the guarantee term until such time as royalties earned through licensee sales exceed the minimum guarantee. The Company classifies these guaranteed minimum contract liabilities as deferred revenue on the consolidated balance sheet.   The Company’s international franchising segment includes the activities with franchisees who operate store locations in certain countries and includes development fees, sales-based royalties and merchandise, including supplies and fixture sales. The Company's obligations under the franchise agreements are ongoing and include operations and product development support and training, generally concentrated around initial store openings. These obligations are highly interrelated rights that are not distinct in the context of the contract and, therefore, have been accounted for as a single performance obligation and recognized as franchisee sales occur. If the contract includes an initial, one-time nonrefundable development fee, this fee is recognized on a straight-line basis over the term of the franchise agreement, which may extend for periods up to 25 years. The Company classifies these initial, one-time nonrefundable franchise fee contract liabilities as deferred revenue on its consolidated balance sheet. Revenue from merchandise and fixture sales is recognized when control is transferred to the franchisee, which generally occurs upon delivery.   The Company also incurs expenses directly related to the startup of new franchises, which may include finder’s fees, legal and travel costs, expenses related to its ongoing support of the franchises and employee compensation. Accordingly, the Company’s policy is to capitalize any finder’s fee, as an incremental cost, and expense all other costs as incurred. Additionally, the Company amortizes these capitalized costs into expense in the same pattern as the development fee's recording of revenue as described previously. These capitalized costs for the thirteen weeks ended May 4, 2024 are not material to the financial statements.    The Company reserves for “expected” credit losses on financial instruments and other commitments to extend credit rather than the “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions and reasonable and supportable forecasts.  For the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively, the Company had an allowance for credit losses of $6.9 million and $6.3 million.

v3.24.1.1.u2

Note 3 - Leases	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Lessee, Operating Leases [Text Block]	3. Leases   The majority of the Company's leases relate to retail stores and corporate offices. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Most new retail store leases have an original term of a five to ten-year base period and may include renewal options to extend the lease term beyond the initial base period. The extension periods are typically much shorter than the original lease term given the Company's strategic decision to maintain a high level of lease optionality. Some leases also include early termination options, which can be exercised under specific conditions. Additionally, the Company may operate stores for a period of time on a month-to-month basis after the expiration of the lease term. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, certain leases contain incentives, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property.   The table below presents certain information related to the lease costs for operating leases for the thirteen weeks ended May 4, 2024 and April 29, 2023 (in thousands).       Thirteen weeks ended       May 4, 2024     April 29, 2023                     Operating lease costs   $ 9,584     $ 8,982   Variable lease costs (1)     2,191       2,126   Short term lease costs     26       15   Total Operating Lease costs   $ 11,801     $ 11,123       (1) Variable lease costs consist of leases with variable rent structures, which are intended to increase flexibility in an environment with expected high sales volatility and provide a natural hedge against potential sales declines. Other information   The table below presents supplemental cash flow information related to leases for the thirteen weeks ended May 4, 2024 and April 29, 2023 (in thousands).       Thirteen weeks ended       May 4, 2024     April 29, 2023   Operating cash flows for operating leases   $ 9,814     $ 9,684     As of May 4, 2024 and April 29, 2023, the weighted-average remaining operating lease term was 4.8 years and 4.0 years, respectively, and the weighted-average discount rate was 6.9% and 6.3%, respectively, for operating leases recognized on the Company's condensed consolidated balance sheets.   For the thirteen weeks ended May 4, 2024 and the thirteen weeks ended April 29, 2023 the Company incurred no impairment charges against its right-of-use operating lease assets.   Undiscounted cash flows   The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the balance sheet (in thousands).   Operating Leases       2024   $ 23,716   2025     20,758   2026     13,428   2027     9,758   2028     6,298   Thereafter     27,133   Total minimum lease payments     101,091   Less: amount of lease payments representing interest     (19,909 ) Present value of future minimum lease payments     81,182   Less: current obligations under leases     (24,276 ) Long-term lease obligations   $ 56,906     As of May 4, 2024, the Company had additional executed leases that had not yet commenced with operating lease liabilities of $33.8 million. These leases are expected to commence in fiscal 2024 and fiscal 2025 with lease terms of two to twenty years.

v3.24.1.1.u2

Note 4 - Other Assets	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Prepaid Expenses and Other Assets [Text Block]	4. Other Assets   Prepaid expenses and other current assets consist of the following (in thousands):       May 4,     February 3,     April 29,       2024     2024     2023   Prepaid occupancy (1)   $ 3,807     $ 2,442     $ 3,352   Prepaid insurance     733       1,250       526   Prepaid gift card fees     647       699       768   Prepaid royalties     265       319       449   Prepaid taxes (2)     127       199       28   Other (3)     6,468       6,468       8,380   Total   $ 12,046     $ 11,377     $ 13,503        (1) Prepaid occupancy consists of prepaid expenses related to variable non-lease components.   (2) Prepaid taxes consist of prepaid federal and state income tax.    (3) Other consists primarily of prepaid expense related to information technology maintenance contracts and software as a service.    Other non-current assets consist of the following (in thousands):       May 4,     February 3,     April 29,       2024     2024     2023   Entertainment production asset (1)   $ 4,736     $ 4,734     $ 3,500   Deferred compensation     1,057       2,121       885   Other (2)     281       311       400   Total   $ 6,074     $ 7,166     $ 4,785       (1) Entertainment production asset includes the direct costs, production overhead and development costs in producing entertainment assets such as films or music.   (2) Other consists primarily of deferred financing costs related to the Company's credit facility.

v3.24.1.1.u2

Note 5 - Accrued Expenses	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Accounts Payable and Accrued Liabilities Disclosure [Text Block]	5. Accrued Expenses   Accrued expenses consist of the following (in thousands):       May 4,     February 3,     April 29,       2024     2024     2023   Accrued wages, bonuses and related expenses   $ 12,007     $ 14,549     $ 12,602   Current income taxes payable     4,891       1,602       7,524   Sales and value added taxes payable     1,617       2,447       2,148   Accrued rent and related expenses (1)     1,037       1,356       898   Accrued expense - other (2)     -       -       4,100   Total   $ 19,552     $ 19,954     $ 27,272       (1) Accrued rent and related expenses consist of accrued costs associated with non-lease components.   (2) Accrued expense - other consists of accrued costs associated with a legal reserve accrual.

v3.24.1.1.u2

Note 6 - Stock-based Compensation	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Share-Based Payment Arrangement [Text Block]	6. Stock-based Compensation   On April 14, 2020, the Board of Directors (the “Board”) of Build-A-Bear Workshop, Inc. (the “Company”) adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. 2020 Omnibus Incentive Plan (the “2020 Incentive Plan”).  On June 11, 2020, the Company’s stockholders approved the 2020 Incentive Plan.   On April 11, 2023, the Board adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. Amended and Restated 2020 Omnibus Incentive Plan (the “Restated 2020 Incentive Plan”).  On June 8, 2023, at the Company’s 2023 Annual Meeting of Stockholders (the “Annual Meeting”), the Company’s stockholders approved the Restated 2020 Incentive Plan. The Restated 2020 Incentive Plan, which is administered by the Compensation and Development Committee of the Board, permits the grant of stock options (including both incentive and non-qualified stock options), stock appreciation rights, other stock-based awards, including restricted stock and restricted stock units, cash-based awards, and performance awards pursuant to the terms of the Restated 2020 Incentive Plan. The Restated 2020 Incentive Plan will terminate on April 11, 2033, unless earlier terminated by the Board. The total number of shares of the Company’s common stock authorized for issuance under the Restated 2020 Incentive Plan increased by 800,000 to a maximum  of 1,800,000 since its inception as the 2020 Incentive Plan, subject to customary capitalization adjustments, substitutions of acquired company awards and certain additions of acquired company plan shares, plus shares that are subject to outstanding awards made under the Build-A-Bear Workshop, Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”) that on or after April 14, 2020 may be forfeited, expire or be settled for cash.   For the thirteen weeks ended May 4, 2024 and April 29, 2023, selling, general and administrative expense included stock-based compensation expense of $0.4 million and $1.1 million, respectively.  As of May 4, 2024, there was $4.1 million of total unrecognized compensation expense related to unvested restricted stock awards which is expected to be recognized over a weighted-average period of 2.1 years.   The following table is a summary of the balances and activity for stock options for the thirteen weeks ended May 4, 2024:       Options       Shares     Weighted Average Exercise Price   Outstanding, February 3, 2024     12,375     $ 17.84   Granted     -       -   Exercised     (12,375 )     17.84   Forfeited     -       -   Canceled or expired     -       -   Outstanding, May 4, 2024     -     $ -       The following table is a summary of the balances and activity related to time-based and performance-based restricted stock for the thirteen weeks ended May 4, 2024:       Time-Based Restricted Stock     Performance-Based Restricted Stock       Shares     Weighted Average Grant Date Fair Value     Shares     Weighted Average Grant Date Fair Value   Outstanding, February 4, 2024 (1)     122,609     $ 18.02       185,082     $ 17.37   Granted (1)     39,270       27.50       62,456       27.50   Vested     (59,237 )     13.89       -       -   Adjustment for performance achievement     -       -       53,095       2.78   Earned and Vested     -       -       (106,190 )     2.78   Forfeited (1)     (3,333 )     24.75       (3,333 )     24.75   Outstanding, May 4, 2024 (1)     99,309     $ 24.01       191,110     $ 23.09       (1) Performance-based restricted stock outstanding, granted, and forfeited are presented at 100% of target.   The total fair value of shares vested during the thirteen weeks ended  May 4, 2024 and April 29, 2023 was $2.1 million and $1.6 million, respectively.   The outstanding performance shares as of May 4, 2024 consist of the following:       Performance Shares   Unearned shares subject to performance-based restrictions at target:         2022 - 2024 consolidated, earnings before interest, taxes, depreciation and amortization (EBITDA) growth objectives     54,596   2022 - 2024 consolidated revenue growth objectives     18,198   2023 - 2025 consolidated pre-tax income growth objectives     36,309   2023 - 2025 consolidated revenue growth objectives     19,551   2024 - 2026 consolidated, cumulative earnings before interest, taxes, depreciation and amortization (EBITDA) objectives     40,596   2024 - 2026 consolidated, cumulative revenue objectives     21,860   Performance shares outstanding, May 4, 2024     191,110

v3.24.1.1.u2

Note 7 - Income Taxes	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Income Tax Disclosure [Text Block]	7. Income Taxes   The Company's effective tax rate was 23.8% for the thirteen weeks ended May 4, 2024, compared to 24.5% for the thirteen weeks ended April 29, 2023.  In the first quarter of fiscal 2024, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense partially offset by the tax impact of equity awards vesting.  In the fourth quarter of fiscal 2023, the Company reversed the valuation allowance on deferred tax assets expected to be realized in the U.K.  In the first quarter of fiscal 2024, the Company remains in a full valuation in certain other foreign jurisdictions.  In the first quarter of fiscal 2023, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax.  In addition, the Company remained in a full valuation in certain foreign jurisdictions, including the UK.

v3.24.1.1.u2

Note 8 - Stockholders' Equity	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Equity [Text Block]	8. Stockholders’ Equity   The following table sets forth the changes in stockholders’ equity (in thousands) for the thirteen weeks ended May 4, 2024 and April 29, 2023 (in thousands):       For the thirteen weeks ended May 4, 2024     For the thirteen weeks ended April 29, 2023                                                                                         Common                     Retained             Common                     Retained               stock     APIC (1)     AOCI (2)     earnings     Total     stock     APIC (1)     AOCI (2)     earnings     Total   Balance, beginning   $ 142     $ 66,330     $ (12,082 )   $ 75,272     $ 129,662     $ 148     $ 69,868     $ (12,274 )   $ 61,375     $ 119,117   Adoption of new accounting standard                                                     (785 )     (785 ) Subtotal   $ 142     $ 66,330     $ (12,082 )   $ 75,272     $ 129,662     $ 148     $ 69,868     $ (12,274 )   $ 60,590     $ 118,332   Shares issued under employee stock plans     1       1,094                     1,095       2       691       -       -       693   Stock-based compensation           334                   334       -       389       -       -       389   Shares withheld in lieu of tax withholdings           (2,089 )                 (2,089 )     -       -       -       -       -   Share Repurchase     (4 )     (1,604 )           (7,591 )     (9,199 )     (1 )     (624 )     -       (2,474 )     (3,099 ) Cash Dividends                       (2,810 )     (2,810 )     -       -       -       (22,048 )     (22,048 ) Other                       (40 )     (40 )     -       -       -       -       -   Other comprehensive (loss) income                 (71 )           (71 )     -       -       97       -       97   Net income                       11,459       11,459       -       -       -       14,608       14,608   Balance, ending   $ 139     $ 64,065     $ (12,153 )   $ 76,290     $ 128,341     $ 149     $ 70,324     $ (12,177 )   $ 50,676     $ 108,972     (1) Additional paid-in capital (“APIC”) (2) Accumulated other comprehensive loss (“AOCI”)   During the thirteen weeks ended May 4, 2024, the Company utilized $9.2 million in cash to repurchase 343,406 shares under its $50.0 million program that was authorized by its Board of Directors on August 31, 2022.  The Company's Board of Directors also authorized a quarterly cash dividend of $0.20 per share that was paid on April 11, 2024, to all stockholders of record as of March 28, 2024.   For the thirteen weeks ended April 29, 2023, the Company recorded credit impairment charges of $0.8 million on trade receivables into retained earnings as a result of the adoption of ASC 326 - Credit Impairment.  During the thirteen weeks ended April 29, 2023, the Company utilized $3.1 million in cash to repurchase 132,385 shares under its $50.0 million program that was authorized by its Board of Directors on August 31, 2022.  The Company's Board of Directors also authorized a special cash dividend of $1.50 per share that was paid on April 6, 2023, to all stockholders of record as of March 23, 2023.

v3.24.1.1.u2

Note 9 - Net Income Per Share	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Earnings Per Share [Text Block]	9. Income per Share   The following table sets forth the computation of basic and diluted net income per share (in thousands, except share and per share data):       Thirteen weeks ended       May 4,     April 29,       2024     2023   NUMERATOR:                 Net income   $ 11,459     $ 14,608                     DENOMINATOR:                 Weighted average number of common shares outstanding - basic     13,925,957       14,457,858   Dilutive effect of share-based awards:     80,443       517,072   Weighted average number of common shares outstanding - dilutive     14,006,400       14,974,930                     Basic net income per common share   $ 0.82     $ 1.01   Diluted net income per common share   $ 0.82     $ 0.98     In calculating the diluted income per share for the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively, there were 8,199 and 9,069 shares of common stock that were outstanding at the end of the period that were not included in the computation of diluted income per share due to their anti-dilutive effect.

v3.24.1.1.u2

Note 10 - Comprehensive Income	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Comprehensive Income (Loss) Note [Text Block]	10. Comprehensive Income   The difference between comprehensive income or loss and net income or loss is the result of foreign currency translation adjustments on the balance sheets of subsidiaries whose functional currency is not the U.S. dollar. The accumulated other comprehensive loss balance on  May 4, 2024 and April 29, 2023 was comprised entirely of foreign currency translation. For the thirteen weeks ended May 4, 2024 and April 29, 2023, the Company had no reclassifications out of accumulated other comprehensive loss.

v3.24.1.1.u2

Note 11 - Segment Information	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Segment Reporting Disclosure [Text Block]	11. Segment Information    The Company’s operations are conducted through three operating segments consisting of direct-to-consumer (“DTC”), commercial and international franchising. The DTC segment includes the operating activities of corporately-managed locations and other retail delivery operations in the U.S., Canada, Ireland and the U.K., including the Company’s e-commerce sites and temporary stores. The commercial segment includes the Company’s transactions with other businesses, mainly comprised of licensing the Company’s intellectual properties for third-party use and wholesale activities. The international franchising segment includes the licensing activities of the Company’s franchise agreements with store locations in select countries in Asia, Australia, the Middle East, Africa, and South America. The operating segments have discrete sources of revenue, different capital structures and different cost structures. These operating segments represent the basis on which the Company’s chief operating decision maker regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities. Accordingly, the Company has determined that each of its operating segments represent a reportable segment. The three reportable segments follow the same accounting policies used for the Company’s consolidated financial statements.   Following is a summary of the financial information for the Company’s reportable segments (in thousands):       Direct-to-             International               Consumer     Commercial     Franchising     Total   Thirteen weeks ended May 4, 2024                                 Net sales to external customers   $ 107,868     $ 5,985     $ 877     $ 114,730   Income before income taxes     11,722       3,107       200       15,029   Capital expenditures     2,430       -       -       2,430   Depreciation and amortization     3,606       52       -       3,658   Thirteen weeks ended April 29, 2023                                 Net sales to external customers   $ 112,096     $ 6,688     $ 1,266     $ 120,050   Income before income taxes     15,955       2,890       508       19,353   Capital expenditures     3,065       -       -       3,065   Depreciation and amortization     2,973       107       -       3,080   Total Assets as of:                                 May 4, 2024   $ 254,951     $ 8,948     $ 1,377     $ 265,276   February 3, 2024     262,299       8,801       1,225       272,325   April 29, 2023     253,338       6,902       1,470       261,710     The Company’s reportable segments are primarily determined by the types of products and services that they offer. Each reportable segment may operate in many geographic areas. Revenues are recognized in the geographic areas based on the location of the customer or franchisee. The following schedule is a summary of the Company’s sales to external customers and long-lived assets by geographic area (in thousands):       North                               America (1)     Europe (2)     Other (3)     Total   Thirteen weeks ended May 4, 2024                                 Net sales to external customers   $ 99,451     $ 14,449     $ 830     $ 114,730   Thirteen weeks ended April 29, 2023                                 Net sales to external customers   $ 106,864     $ 12,658     $ 528     $ 120,050     For purposes of this table only: (1)  North America includes corporately-managed locations in the United States and Canada. (2)  Europe includes corporately-managed locations in the U.K. and Ireland and sales to wholesale customers in Europe. (3)  Other includes franchise businesses outside of North America and Europe.

v3.24.1.1.u2

Note 12 - Contingencies	3 Months Ended
	May 04, 2024
Notes to Financial Statements
Commitments and Contingencies Disclosure [Text Block]	12. Contingencies   In the normal course of business, the Company is subject to legal proceedings, government inquiries and claims, and other commercial disputes. If one or more of these matters has an unfavorable resolution, it is possible that the results of operations, liquidity or financial position of the Company could be materially affected in any particular period. The Company accrues a liability for these types of contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. Gain contingencies are recorded when the underlying uncertainty has been settled.   Assessments made by the U.K. customs authority in 2012 were appealed by the Company, which has paid the disputed duty, strictly under protest, pending the outcome of the continuing dispute, and this is included in receivables, net in the DTC segment. The U.K. customs authority contested the Company's appeal. Rulings by the First Tier Tribunal in  November 2019 and Upper Tribunal in  March 2021 held that duty was due on some, but not all, of the products at issue. The Company petitioned the Court of Appeal for permission to appeal certain elements of the Upper Tribunal decision, and in early November 2021, a judge granted the Company's petition for permission to appeal those elements of the Upper Tribunal decision on some, but not all, of the grounds of appeal that the Company had put forward. An appeal was heard by the Court of Appeal during the first quarter of fiscal 2022, and the Court of Appeal dismissed the appeal in the third quarter of fiscal 2022. During the fourth quarter of fiscal 2022, the UK Supreme Court declined to hear the appeal. The Company is engaging with the customs authority to attempt to resolve all outstanding issues following the application of the determined principles. The case will return to the lower tribunal for a final ruling if outstanding issues cannot be resolved. The Company maintains a provision against the related receivable, based on a current evaluation of collectability, using the latest facts available in the dispute. As of May 4, 2024, the Company had a gross receivable balance of $4.8 million and a reserve of $3.7 million, leaving a net receivable of $1.1 million. The Company believes that the outcome of this dispute will not have a material adverse impact on the results of operations, liquidity, or financial position of the Company.

v3.24.1.1.u2

Insider Trading Arrangements	3 Months Ended
	May 04, 2024 shares
ecd_TradingArrByIndTable
Material Terms of Trading Arrangement [Text Block]	Item 5. Other Information   Security Trading Plans of Directors and Executive Officers   On March 22, 2024, Sharon John, President and Chief Executive Officer of the Company, adopted a trading arrangement for the sale of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c).  Ms. John’s Rule 10b5-1 Trading Plan, which expires December 6, 2024, provides for the sale of up to 91,034 shares of common stock pursuant to the terms of the plan.   On April 8, 2024, Voin Todorovic, Chief Financial Officer of the Company, adopted a Rule 10b5-1 Trading Plan that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c).  Mr. Todorovic’s Rule 10b5-1 Trading Plan, which expires January 31, 2025, provides for the sale of up to 22,929 shares of common stock pursuant to the terms of the plan.
Non-Rule 10b5-1 Arrangement Adopted [Flag]	false
Rule 10b5-1 Arrangement Terminated [Flag]	false
Non-Rule 10b5-1 Arrangement Terminated [Flag]	false
BBW_Sharon John [Member]
ecd_TradingArrByIndTable
Trading Arrangement Adoption Date	March 22, 2024
Trading Arrangement, Individual Name	Sharon John
Trading Arrangement, Individual Title	President and Chief Executive Officer
Rule 10b5-1 Arrangement Adopted [Flag]	true
Trading Arrangement, Securities Aggregate Available Amount	91,034
BBW_Voin Todorovic [Member]
ecd_TradingArrByIndTable
Trading Arrangement Adoption Date	April 8, 2024
Trading Arrangement, Individual Name	Voin Todorovic
Trading Arrangement, Individual Title	Chief Financial Officer
Rule 10b5-1 Arrangement Adopted [Flag]	true
Trading Arrangement, Securities Aggregate Available Amount	22,929

v3.24.1.1.u2

Note 3 - Leases (Tables)	3 Months Ended
	May 04, 2024
Notes Tables
Lease, Cost [Table Text Block]	Thirteen weeks ended       May 4, 2024     April 29, 2023                     Operating lease costs   $ 9,584     $ 8,982   Variable lease costs (1)     2,191       2,126   Short term lease costs     26       15   Total Operating Lease costs   $ 11,801     $ 11,123       Thirteen weeks ended       May 4, 2024     April 29, 2023   Operating cash flows for operating leases   $ 9,814     $ 9,684
Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]	Operating Leases       2024   $ 23,716   2025     20,758   2026     13,428   2027     9,758   2028     6,298   Thereafter     27,133   Total minimum lease payments     101,091   Less: amount of lease payments representing interest     (19,909 ) Present value of future minimum lease payments     81,182   Less: current obligations under leases     (24,276 ) Long-term lease obligations   $ 56,906

v3.24.1.1.u2

Note 4 - Other Assets (Tables)	3 Months Ended
	May 04, 2024
Notes Tables
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block]	May 4,     February 3,     April 29,       2024     2024     2023   Prepaid occupancy (1)   $ 3,807     $ 2,442     $ 3,352   Prepaid insurance     733       1,250       526   Prepaid gift card fees     647       699       768   Prepaid royalties     265       319       449   Prepaid taxes (2)     127       199       28   Other (3)     6,468       6,468       8,380   Total   $ 12,046     $ 11,377     $ 13,503
Schedule of Other Assets, Noncurrent [Table Text Block]	May 4,     February 3,     April 29,       2024     2024     2023   Entertainment production asset (1)   $ 4,736     $ 4,734     $ 3,500   Deferred compensation     1,057       2,121       885   Other (2)     281       311       400   Total   $ 6,074     $ 7,166     $ 4,785

v3.24.1.1.u2

Note 5 - Accrued Expenses (Tables)	3 Months Ended
	May 04, 2024
Notes Tables
Schedule of Accrued Liabilities [Table Text Block]	May 4,     February 3,     April 29,       2024     2024     2023   Accrued wages, bonuses and related expenses   $ 12,007     $ 14,549     $ 12,602   Current income taxes payable     4,891       1,602       7,524   Sales and value added taxes payable     1,617       2,447       2,148   Accrued rent and related expenses (1)     1,037       1,356       898   Accrued expense - other (2)     -       -       4,100   Total   $ 19,552     $ 19,954     $ 27,272

v3.24.1.1.u2

Note 6 - Stock-based Compensation (Tables)	3 Months Ended
	May 04, 2024
Notes Tables
Share-Based Payment Arrangement, Option, Activity [Table Text Block]	Options       Shares     Weighted Average Exercise Price   Outstanding, February 3, 2024     12,375     $ 17.84   Granted     -       -   Exercised     (12,375 )     17.84   Forfeited     -       -   Canceled or expired     -       -   Outstanding, May 4, 2024     -     $ -
Share-Based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity [Table Text Block]	Time-Based Restricted Stock     Performance-Based Restricted Stock       Shares     Weighted Average Grant Date Fair Value     Shares     Weighted Average Grant Date Fair Value   Outstanding, February 4, 2024 (1)     122,609     $ 18.02       185,082     $ 17.37   Granted (1)     39,270       27.50       62,456       27.50   Vested     (59,237 )     13.89       -       -   Adjustment for performance achievement     -       -       53,095       2.78   Earned and Vested     -       -       (106,190 )     2.78   Forfeited (1)     (3,333 )     24.75       (3,333 )     24.75   Outstanding, May 4, 2024 (1)     99,309     $ 24.01       191,110     $ 23.09
Share-Based Payment Arrangement, Performance Shares, Outstanding Activity [Table Text Block]	Performance Shares   Unearned shares subject to performance-based restrictions at target:         2022 - 2024 consolidated, earnings before interest, taxes, depreciation and amortization (EBITDA) growth objectives     54,596   2022 - 2024 consolidated revenue growth objectives     18,198   2023 - 2025 consolidated pre-tax income growth objectives     36,309   2023 - 2025 consolidated revenue growth objectives     19,551   2024 - 2026 consolidated, cumulative earnings before interest, taxes, depreciation and amortization (EBITDA) objectives     40,596   2024 - 2026 consolidated, cumulative revenue objectives     21,860   Performance shares outstanding, May 4, 2024     191,110

v3.24.1.1.u2

Note 8 - Stockholders' Equity (Tables)	3 Months Ended
	May 04, 2024
Notes Tables
Schedule of Stockholders Equity [Table Text Block]	For the thirteen weeks ended May 4, 2024     For the thirteen weeks ended April 29, 2023                                                                                         Common                     Retained             Common                     Retained               stock     APIC (1)     AOCI (2)     earnings     Total     stock     APIC (1)     AOCI (2)     earnings     Total   Balance, beginning   $ 142     $ 66,330     $ (12,082 )   $ 75,272     $ 129,662     $ 148     $ 69,868     $ (12,274 )   $ 61,375     $ 119,117   Adoption of new accounting standard                                                     (785 )     (785 ) Subtotal   $ 142     $ 66,330     $ (12,082 )   $ 75,272     $ 129,662     $ 148     $ 69,868     $ (12,274 )   $ 60,590     $ 118,332   Shares issued under employee stock plans     1       1,094                     1,095       2       691       -       -       693   Stock-based compensation           334                   334       -       389       -       -       389   Shares withheld in lieu of tax withholdings           (2,089 )                 (2,089 )     -       -       -       -       -   Share Repurchase     (4 )     (1,604 )           (7,591 )     (9,199 )     (1 )     (624 )     -       (2,474 )     (3,099 ) Cash Dividends                       (2,810 )     (2,810 )     -       -       -       (22,048 )     (22,048 ) Other                       (40 )     (40 )     -       -       -       -       -   Other comprehensive (loss) income                 (71 )           (71 )     -       -       97       -       97   Net income                       11,459       11,459       -       -       -       14,608       14,608   Balance, ending   $ 139     $ 64,065     $ (12,153 )   $ 76,290     $ 128,341     $ 149     $ 70,324     $ (12,177 )   $ 50,676     $ 108,972

v3.24.1.1.u2

Note 9 - Net Income Per Share (Tables)	3 Months Ended
	May 04, 2024
Notes Tables
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	Thirteen weeks ended       May 4,     April 29,       2024     2023   NUMERATOR:                 Net income   $ 11,459     $ 14,608                     DENOMINATOR:                 Weighted average number of common shares outstanding - basic     13,925,957       14,457,858   Dilutive effect of share-based awards:     80,443       517,072   Weighted average number of common shares outstanding - dilutive     14,006,400       14,974,930                     Basic net income per common share   $ 0.82     $ 1.01   Diluted net income per common share   $ 0.82     $ 0.98

v3.24.1.1.u2

Note 11 - Segment Information (Tables)	3 Months Ended
	May 04, 2024
Notes Tables
Schedule of Segment Reporting Information, by Segment [Table Text Block]	Direct-to-             International               Consumer     Commercial     Franchising     Total   Thirteen weeks ended May 4, 2024                                 Net sales to external customers   $ 107,868     $ 5,985     $ 877     $ 114,730   Income before income taxes     11,722       3,107       200       15,029   Capital expenditures     2,430       -       -       2,430   Depreciation and amortization     3,606       52       -       3,658   Thirteen weeks ended April 29, 2023                                 Net sales to external customers   $ 112,096     $ 6,688     $ 1,266     $ 120,050   Income before income taxes     15,955       2,890       508       19,353   Capital expenditures     3,065       -       -       3,065   Depreciation and amortization     2,973       107       -       3,080   Total Assets as of:                                 May 4, 2024   $ 254,951     $ 8,948     $ 1,377     $ 265,276   February 3, 2024     262,299       8,801       1,225       272,325   April 29, 2023     253,338       6,902       1,470       261,710
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]	North                               America (1)     Europe (2)     Other (3)     Total   Thirteen weeks ended May 4, 2024                                 Net sales to external customers   $ 99,451     $ 14,449     $ 830     $ 114,730   Thirteen weeks ended April 29, 2023                                 Net sales to external customers   $ 106,864     $ 12,658     $ 528     $ 120,050

v3.24.1.1.u2

Note 2 - Revenue (Details Textual) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Estimated Percentage of Gift Card Redemptions Within Three Years of Issuance	80.00%
Gift Card Redemption Period (Year)	3 years
Estimated Percentage of Gift Card Redemptions Within First Twelve Months	65.00%
Financing Receivable, Allowance for Credit Loss	$ 6.9	$ 6.3
International Franchising [Member]
Capitalized Contract Cost, Amortization Period (Year)	25 years
Scenario, Change in Gift Card Breakage Rate [Member]
Estimated Increase (Decrease) in Gift Card Breakage Rate (in dollars per share)	$ 1
Contract with Customer, Liability, Revenue Recognized	$ 1.0
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Direct-to-consumer Reporting Segment [Member]
Concentration Risk, Percentage	94.00%

v3.24.1.1.u2

Note 3 - Leases (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Operating Lease, Weighted Average Remaining Lease Term (Year)	4 years 9 months 18 days	4 years
Operating Lease, Weighted Average Discount Rate, Percent	6.90%	6.30%
Operating Lease, Impairment Loss	$ 0	$ 0
Lessee, Operating Lease, Lease Not yet Commenced, Amount		$ 33,800
Minimum [Member]
Lessee, Operating Lease, Term of Contract (Year)	5 years
Lessor, Operating Lease, Lease Not yet Commenced, Term of Contract (Year)	2 years
Maximum [Member]
Lessee, Operating Lease, Term of Contract (Year)	10 years
Lessor, Operating Lease, Lease Not yet Commenced, Term of Contract (Year)	20 years

v3.24.1.1.u2

Note 3 - Leases - Lease Costs (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
		May 04, 2024	Apr. 29, 2023	Feb. 03, 2024	Jan. 28, 2023
Operating lease costs		$ 9,584	$ 8,982
Variable lease costs (1)	[1]	2,191	2,126
Short term lease costs		26	15
Total Operating Lease costs		$ 11,801	$ 11,123
Operating cash flows for operating leases				$ 9,814	$ 9,684
[1] Prepaid occupancy consists of prepaid expenses related to variable non-lease components.

v3.24.1.1.u2

Note 3 - Leases - Reconciliation of the Undiscounted Cash Flows From Operating Leases (Details) - USD ($) $ in Thousands	May 04, 2024	Feb. 03, 2024	Apr. 29, 2023
2024	$ 23,716
2025	20,758
2026	13,428
2027	9,758
2028	6,298
Thereafter	27,133
Total minimum lease payments	101,091
Less: amount of lease payments representing interest	(19,909)
Present value of future minimum lease payments	81,182
Less: current obligations under leases	(24,276)	$ (25,961)	$ (27,843)
Long-term lease obligations	$ 56,906	$ 57,609	$ 59,030

v3.24.1.1.u2

Note 4 - Other Assets - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands		May 04, 2024	Feb. 03, 2024	Apr. 29, 2023	Feb. 03, 2023
Prepaid occupancy	[1]	$ 3,807		$ 3,352	$ 2,442
Prepaid insurance		733		526	1,250
Prepaid gift card fees		647		768	699
Prepaid royalties		265		449	319
Prepaid taxes	[2]	127		28	199
Other	[3]	6,468		8,380	6,468
Total		$ 12,046	$ 11,377	$ 13,503	$ 11,377
[1] Prepaid occupancy consists of prepaid expenses related to variable non-lease components. [2] Prepaid taxes consist of prepaid federal and state income tax. [3] Other consists primarily of prepaid expense related to information technology maintenance contracts and software as a service.

v3.24.1.1.u2

Note 4 - Other Assets - Other Noncurrent Assets (Details) - USD ($) $ in Thousands		May 04, 2024	Feb. 03, 2024	Apr. 29, 2023	Feb. 03, 2023
Entertainment production asset (1)	[1]	$ 4,736		$ 3,500	$ 4,734
Deferred compensation		1,057		885	2,121
Other (2)	[2]	281		400	311
Total		$ 6,074	$ 7,166	$ 4,785	$ 7,166
[1] Entertainment production asset includes the direct costs, production overhead and development costs in producing entertainment assets such as films or music. [2] Other consists primarily of deferred financing costs related to the Company's credit facility.

v3.24.1.1.u2

Note 5 - Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($) $ in Thousands		May 04, 2024	Feb. 03, 2024	Apr. 29, 2023
Accrued wages, bonuses and related expenses		$ 12,007	$ 14,549	$ 12,602
Current income taxes payable		4,891	1,602	7,524
Sales and value added taxes payable		1,617	2,447	2,148
Accrued rent and related expenses	[1]	1,037	1,356	898
Accrued expense - other	[2]	0	0	4,100
Total		$ 19,552	$ 19,954	$ 27,272
[1] Accrued rent and related expenses consist of accrued costs associated with non-lease components. [2] Accrued expense - Other consists of accrued costs associated with a legal reserve accrual.

v3.24.1.1.u2

Note 6 - Stock-based Compensation (Details Textual) - USD ($) $ in Millions		3 Months Ended
	Apr. 11, 2033	May 04, 2024	Apr. 29, 2023
Options and Restricted Stock [Member]
Share-Based Payment Arrangement, Expense		$ 0.4	$ 1.1
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount		$ 4.1
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)		2 years 1 month 6 days
Time-based and Performance-based Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value		$ 2.1	$ 1.6
Incentive Plan 2020 [Member] | Forecast [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized (in shares)	800,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)	1,800,000

v3.24.1.1.u2

Note 6 - Stock-based Compensation - Activity for Stock Options (Details)	3 Months Ended
	May 04, 2024 $ / shares shares
Outstanding (in shares) | shares	12,375
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 17.84
Granted (in shares) | shares	0
Granted, weighted average exercise price (in dollars per share) | $ / shares	$ 0
Exercised (in shares) | shares	(12,375)
Exercised, weighted average exercise price (in dollars per share) | $ / shares	$ 17.84
Forfeited (in shares) | shares	0
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	$ 0
Canceled or expired (in shares) | shares	0
Canceled or expired, weighted average exercise price (in dollars per share) | $ / shares	$ 0
Outstanding (in shares) | shares	0
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 0

v3.24.1.1.u2

Note 6 - Stock-based Compensation - Activity for Time-based and Performance-based Restricted Stock (Details)	3 Months Ended
	May 04, 2024 $ / shares shares
Restricted Stock [Member]
Outstanding (in shares) | shares	122,609	[1]
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 18.02	[1]
Granted (1) (in shares) | shares	39,270	[1]
Granted (1), weighted average grant date fair value (in dollars per share) | $ / shares	$ 27.5	[1]
Vested (in shares) | shares	(59,237)
Vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 13.89
Adjustment for performance achievement (in shares) | shares	0
Adjustment for performance achievement, weighted average grant date fair value (in dollars per share) | $ / shares	$ 0
Earned and Vested (in shares) | shares	0
Earned and Vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 0
Forfeited (1) (in shares) | shares	(3,333)	[1]
Forfeited (1), weighted average grant date fair value (in dollars per share) | $ / shares	$ 24.75	[1]
Outstanding (in shares) | shares	99,309	[1]
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 24.01	[1]
Performance Shares [Member]
Outstanding (in shares) | shares	185,082	[1]
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 17.37	[1]
Granted (1) (in shares) | shares	62,456	[1]
Granted (1), weighted average grant date fair value (in dollars per share) | $ / shares	$ 27.5	[1]
Vested (in shares) | shares	0
Vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 0
Adjustment for performance achievement (in shares) | shares	53,095
Adjustment for performance achievement, weighted average grant date fair value (in dollars per share) | $ / shares	$ 2.78
Earned and Vested (in shares) | shares	(106,190)
Earned and Vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 2.78
Forfeited (1) (in shares) | shares	(3,333)	[1]
Forfeited (1), weighted average grant date fair value (in dollars per share) | $ / shares	$ 24.75	[1]
Outstanding (in shares) | shares	191,110	[1]
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 23.09	[1]
[1] Performance-based restricted stock outstanding, granted, and forfeited are presented at 100% of target.

v3.24.1.1.u2

Note 6 - Stock-based Compensation - Outstanding Performance Shares (Details) - Performance Shares [Member] - shares		May 04, 2024	Feb. 03, 2024
Performance shares (in shares)	[1]	191,110	185,082
Vesting Upon Achievement of 2022 - 2024 Consolidated, Cumulative Earnings Before Interest, Taxes, Depreciation and Amortization Objectives [Member]
Performance shares (in shares)		54,596
Vesting Upon Achievement of 2022 - 2024 Consolidated Growth Revenue Objectives [Member]
Performance shares (in shares)		18,198
Vesting Upon Achievement of 2023 - 2025 Pretax Income Growth Objectives [Member]
Performance shares (in shares)		36,309
Vesting Upon Achievement of 2023 - 2025 Consolidated Revenue Growth Objectives [Member]
Performance shares (in shares)		19,551
Vesting Upon Achievement of 2024 - 2026 Consolidated, Cumulative Earnings Before Interest, Taxes, Depreciation and Amortization Objectives [Member]
Performance shares (in shares)		40,596
Vesting Upon Achievement of 2024 - 2026 Cumulative Revenue Objectives [Member]
Performance shares (in shares)		21,860
[1] Performance-based restricted stock outstanding, granted, and forfeited are presented at 100% of target.

v3.24.1.1.u2

Note 7 - Income Taxes (Details Textual)	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Effective Income Tax Rate Reconciliation, Percent	23.80%	24.50%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%

v3.24.1.1.u2

Note 8 - Stockholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023	Apr. 11, 2024	Apr. 06, 2023
Payments for Repurchase of Common Stock	$ 9,198	$ 3,099
Dividends Payable, Amount Per Share (in dollars per share)			$ 0.2	$ 1.5
Dividends Payable, Date to be Paid	Apr. 11, 2024	Apr. 06, 2023
Dividends Payable, Date of Record	Mar. 28, 2024	Mar. 23, 2023
Credit Impairment Charges, Trade Receivables Credit Losses Recognized in Retained Earnings	$ 800
Share Repurchase Program 2022 [Member]
Payments for Repurchase of Common Stock	$ 9,200	$ 3,100
Stock Repurchased During Period, Shares (in shares)	343,406	132,385
Share Repurchase Program, Authorized, Amount	$ 50,000	$ 50,000

v3.24.1.1.u2

Note 8 - Stockholders' Equity - Changes in Stockholders' Equity (Details) - USD ($) $ in Thousands		3 Months Ended
		May 04, 2024	Apr. 29, 2023
Balance		$ 129,662	$ 119,117
Shares issued under employee stock plans		1,095	693
Stock-based compensation		334	389
Shares withheld in lieu of tax withholdings		(2,089)	0
Share Repurchase		(9,199)	(3,099)
Cash Dividends		(2,810)	(22,048)
Other		(40)	0
Other comprehensive (loss) income		(71)	97
Net income		11,459	14,608
Balance, ending		128,341	108,972
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Balance			(785)
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Accounting Standards Update 2016-13 [Member]
Balance		129,662	118,332
Common Stock [Member]
Balance		142	148
Shares issued under employee stock plans		1	2
Stock-based compensation			0
Shares withheld in lieu of tax withholdings			0
Share Repurchase		(4)	(1)
Cash Dividends			0
Other			0
Other comprehensive (loss) income			0
Net income			0
Balance, ending		139	149
Common Stock [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Balance
Common Stock [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Accounting Standards Update 2016-13 [Member]
Balance		142	148
Additional Paid-in Capital [Member]
Balance	[1]	66,330	69,868
Shares issued under employee stock plans	[1]	1,094	691
Stock-based compensation	[1]	334	389
Shares withheld in lieu of tax withholdings	[1]	(2,089)	0
Share Repurchase	[1]	(1,604)	(624)
Cash Dividends	[1]		0
Other	[1]		0
Other comprehensive (loss) income	[1]		0
Net income	[1]		0
Balance, ending	[1]	64,065	70,324
Additional Paid-in Capital [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Balance	[1]
Additional Paid-in Capital [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Accounting Standards Update 2016-13 [Member]
Balance	[1]	66,330	69,868
AOCI Attributable to Parent [Member]
Balance	[2]	(12,082)	(12,274)
Shares issued under employee stock plans	[2]		0
Stock-based compensation	[2]		0
Shares withheld in lieu of tax withholdings	[2]		0
Share Repurchase	[2]		0
Cash Dividends	[2]		0
Other	[2]		0
Other comprehensive (loss) income	[2]	(71)	97
Net income	[2]		0
Balance, ending	[2]	(12,153)	(12,177)
AOCI Attributable to Parent [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Balance	[2]
AOCI Attributable to Parent [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Accounting Standards Update 2016-13 [Member]
Balance	[2]	(12,082)	(12,274)
Retained Earnings [Member]
Balance		75,272	61,375
Stock-based compensation			0
Shares withheld in lieu of tax withholdings			0
Share Repurchase		(7,591)	(2,474)
Cash Dividends		(2,810)	(22,048)
Other		(40)	0
Other comprehensive (loss) income			0
Net income		11,459	14,608
Balance, ending		76,290	50,676
Retained Earnings [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Balance			(785)
Retained Earnings [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member] | Accounting Standards Update 2016-13 [Member]
Balance		$ 75,272	$ 60,590
[1] Additional paid-in capital (“APIC”) [2] Accumulated other comprehensive income (loss) (“AOCI”)

v3.24.1.1.u2

Note 9 - Net Income Per Share (Details Textual) - shares	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	8,199	9,069

v3.24.1.1.u2

Note 9 - Income Per Share - Computation Basic and Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Net income	$ 11,459	$ 14,608
Weighted average number of common shares outstanding - basic (in shares)	13,925,957	14,457,858
Dilutive effect of share-based awards: (in shares)	80,443	517,072
Weighted average number of common shares outstanding - dilutive (in shares)	14,006,400	14,974,930
Basic net income per common share (in dollars per share)	$ 0.82	$ 1.01
Diluted net income per common share (in dollars per share)	$ 0.82	$ 0.98

v3.24.1.1.u2

Note 10 - Comprehensive Income (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Translation Adjustment Functional to Reporting Currency, Gain (Loss), Reclassified to Earnings, Net of Tax	$ 0	$ 0

v3.24.1.1.u2

Note 11 - Segment Information (Details Textual)	3 Months Ended
	May 04, 2024
Number of Operating Segments	3
Number of Reportable Segments	3

v3.24.1.1.u2

Note 11 - Segment Information - Financial Information for the Company's Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023	Feb. 03, 2024
Net sales to external customers	$ 114,730	$ 120,050
Income (loss) before income taxes	15,029	19,353
Capital expenditures, net	2,430	3,065
Depreciation and amortization	3,658	3,080
Total assets	265,276	261,710	$ 272,325
Direct to Consumer [Member]
Net sales to external customers	107,868	112,096
Income (loss) before income taxes	11,722	15,955
Capital expenditures, net	2,430	3,065
Depreciation and amortization	3,606	2,973
Total assets	254,951	253,338	262,299
Commercial [Member]
Net sales to external customers	5,985	6,688
Income (loss) before income taxes	3,107	2,890
Capital expenditures, net	0	0
Depreciation and amortization	52	107
Total assets	8,948	6,902	8,801
International Franchising [Member]
Net sales to external customers	877	1,266
Income (loss) before income taxes	200	508
Capital expenditures, net	0	0
Depreciation and amortization	0	0
Total assets	$ 1,377	$ 1,470	$ 1,225

v3.24.1.1.u2

Note 11 - Segment Information - Sales to External Customers and Long-lived Assets by Geographic Area (Details) - USD ($) $ in Thousands		3 Months Ended
		May 04, 2024	Apr. 29, 2023
Net sales to external customers		$ 114,730	$ 120,050
North America [Member]
Net sales to external customers	[1]	99,451	106,864
Europe [Member]
Net sales to external customers	[2]	14,449	12,658
Other Geographic Region [Member]
Net sales to external customers	[3]	$ 830	$ 528
[1] North America includes corporately-operated locations in the United States and Canada. [2] Europe includes corporately-operated locations in the U.K. and Ireland and sales to wholesale customers in Europe. [3] Other includes franchise businesses outside of North America and Europe

v3.24.1.1.u2

Note 12 - Contingencies (Details Textual) $ in Millions	May 04, 2024 USD ($)
Litigation Receivable, Gross	$ 4.8
Litigation Receivables, Reserve	3.7
Litigation Receivables, Net	$ 1.1

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