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Build-A-Bear Cites Licensing Missteps in Reporting Loss image

Build-A-Bear Cites Licensing Missteps in Reporting Loss

Build-A-Bear Workshop is planning a “comprehensive” licensing program focused on “key properties” for 2017 as it seeks to rebound from disappointing holiday sales, company executives told analysts. In addition, the 438-store retailer is expanding the outbound licensing program it launched last year with Spin Master Corp., having added a new licensee for make-up tied to its “Honey Girls” YouTube series.

The push to increase licensing follows Build-A-Bear’s same-store sales falling 8.3% in Q4 ending Dec. 31, due partly to Star Wars-related revenue being short of the retailer’s projections, Build-A-Bear CEO Sharon Price John said. Same-store sales fell 10.4% in North America and 0.4% in Europe as revenue dropped 6.2% to $110.3 million.

“We thought residual interest in Star Wars and a new movie would buoy the business, but that did not happen,” said Price John, referring to Rogue One: A Star Wars Story that was released in December. While Build-A-Bear had planned for its Star Wars business to be “down significantly, it still didn’t hit our projected number,” she said.

Build-A-Bear also “left some money on the table” in Q4 due to a “mix issue” with products linked to DreamWorks’ Trolls film, Price John said. Build-A-Bear’s Q4 sales of Trolls products were “significantly skewed” toward the film’s Poppy character and “we had to chase him a bit” during the quarter for inventory, she said.

The retailer also ran into shortages of Pokemon-related products, including exclusive online bundles tied to the Pikachu and Eevee characters, Price John said.

The inventory shortages came as Build-A-Bear launched a new web site as part of an effort to expand its e-commerce business that accounts for less than 5% of its annual sales. Build-A-Bear also is testing smaller, less expensive “concourse” stores – about 15 of which will open this year — that would be located in a shopping mall’s concourse areas, as an alternative to full-scale inline stores.

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