Build-A-Bear Expanding Licensing Program
Build-A-Bear (BAB) will broaden its licensing program this year to include bedding, eyewear, party supplies, games and publishing this year as it seeks to position itself as an IP company, CEO Sharon Price John said in releasing Q4 earnings.
The retailer, which operates 373 company-owned stores, struck a series of agreements last year with Just Play (plush, blind boxes), Esquire Footwear (slippers), Global Brands Group (lip balm, gels) and others that led its commercial revenue (licensing and wholesale agreements with Carnival Cruise Line and Great Wolf Lodge as well as international store franchisees) to more than double to $2.3 million in Q4 ended Feb. 3.
The expanded licensing comes as BAB is in the midst of a multi-year effort to “become an intellectual property company leveraging the strength of the Build-A-Bear brand with retail as one of our channels,” Price John said.
The gains in commercial revenue offset a 20% decline in sales of licensed products through its stores in the year ended Feb. 3 due largely to a “significant reduction” in number of “family-focused” films released in 2018, Price Johns said. Licensed products account for about 40% of BAB’s annual retail revenue, she said. BAB, however, has so far posted “promising sales” of to its recently introduced products based on How to Train Your Dragon, providing an “indication of a potential license property tailwind” for 2019, Price John said.
BAB’s Q4 net loss widened slightly to $10.4 million as total revenue declined 13.5% to $101.5 million. Retail sales dropped 14.6% to $98.5 million, due to lower sales of licensed products and a 24.2% decline in Europe to $16.2 million. North American revenue fell 9.3% to $84.9 million.
BAB will rely on its licensing, wholesale and franchise businesses to help offset the closing of about 30 company-owned stores during the next 24 months, company executives said. It also tested a store-within-a-store format at six Walmart locations last fall and will expand that program this year, while Great Wolf Lodge shops will increase from four to 21. Great Wolf Lodge staffs the stores and buys merchandise from BAB. BAB is responsible for the Walmart locations. BAB also signed a franchise agreement for India with Lulu Group’s, which has opened three stores in the Bangalore area, while its franchisee in China has eight locations. BAB also recently signed a franchise pact for Chile. The company has 97 franchised locations in 11 countries.
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