Build-A-Bear had a multimillion-dollar Walmart program last year that put its stuffed animals inside another retailer’s stores. That arrangement was not renewed, and the company has now warned investors twice that its year will be weaker than previously expected.
The market’s reaction was brutal. Build-A-Bear shares plunged 27.3% Thursday to $28.44—their worst one-day percentage decline on record and their lowest closing level in about two years. The stock is now down 54% this year.
Revenue for the three months ended Aug. 1 fell 7.2% to $115.3 million. Retail sales declined 7.1% to $106.5 million, while online demand dropped 15.6%. Pre-tax income fell 24% to $11.6 million.
Management said store traffic remained weak and acknowledged that its summer merchandise failed to connect with shoppers as expected.
The guidance did the most damage. Build-A-Bear now expects full-year revenue of $500 million to $525 million, down from its previous forecast of $530 million to $550 million. Projected pre-tax income was reduced to between $60 million and $68 million from $72 million to $78 million.
It is the company’s second revenue-forecast reduction this year. The first came in May, when Build-A-Bear cited softer traffic at its stores.
The wholesale business is where the growth plan ran into trouble. Build-A-Bear had been counting on selling more branded merchandise through outside retailers, reducing its dependence on its own mall-based stores.
That segment had been expected to grow by at least 20% this year. It is now projected to remain approximately flat after the Walmart program was not renewed and other prospective wholesale arrangements progressed more slowly than management expected.
Someone paid for the miss. Build-A-Bear terminated Chief Growth Officer David Henderson without cause, effective Wednesday. Henderson joined the company as chief revenue officer in September 2024 and received the chief growth officer title in June—the same month Chris Hurt succeeded longtime chief executive Sharon Price John.
Tariffs are adding another layer of pressure. Build-A-Bear said its annual forecast includes between $10 million and $11 million in continuing tariff and related costs. The projected profit range also includes approximately $13 million in expected refunds involving previously paid tariffs.
The company is still pursuing the strategy that suffered the biggest setback: placing Build-A-Bear products inside other retailers. The Walmart program demonstrated that the brand could generate business beyond its own stores, but losing that arrangement exposed how quickly wholesale expectations can disappear.
Build-A-Bear must now prove that it can secure replacement partners while restoring traffic and demand inside its existing stores. Until then, investors are being asked to believe in a growth strategy that has not yet produced the promised results.
JBizNews Desk | New York
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