Build‑A‑Bear Workshop (BBW) reported third‑quarter 2025 revenue of $122.7 million, a 2.7% year‑over‑year increase that falls short of the $124.28 million consensus estimate. Diluted earnings per share came in at $0.62, beating the $0.55 estimate by $0.07, or 12.7%. The company reaffirmed its full‑year revenue outlook of mid‑to‑high single‑digit growth and a pre‑tax income range of $62 million to $70 million.
The quarter’s revenue mix reflected strong performance in the Direct‑to‑Consumer segment, driven by robust in‑store sales and a 10% increase in average transaction value. The Commercial segment delivered double‑digit revenue growth, adding $15 million in new contracts. However, consolidated e‑commerce demand fell 10.8%, a decline attributed to shifting consumer behavior and intensified competition. BBW opened 50 net new units year‑to‑date, expanding into seven additional countries, which helped offset the e‑commerce slowdown.
Margin compression was evident: pre‑tax income dropped to $10.7 million from $13.1 million year‑over‑year, a decline largely driven by tariff‑related costs that increased by $4 million in the quarter. Gross margin slipped 40 basis points, while SG&A expenses rose 180 basis points, reflecting higher compensation and marketing spend. The company’s cash and cash equivalents stood at $27.7 million, and it reported no outstanding borrowings under its revolving credit facility.
Management expressed confidence in the guidance, noting that tariff impacts are expected to continue through the fourth quarter and into the next fiscal year. The CFO highlighted disciplined expense management and the company’s ability to mitigate tariff costs through inventory acceleration and supply‑chain diversification. The CEO emphasized the strategic focus on partner‑operated and franchise models, which are accelerating global footprint growth and diversifying revenue streams.
In pre‑market trading, BBW’s shares fell 6.13%, a reaction largely driven by the revenue miss and the continued margin pressure from tariffs. Investors weighed the EPS beat against the top‑line shortfall and the outlook for ongoing cost headwinds.
"We remain confident in our guidance as we navigate tariff impacts and continue to execute on our global expansion strategy," said CEO Sharon Price John. "The record revenue and strong store performance underscore the resilience of our business model, even as we adapt to evolving market conditions," added CFO Voin Todorovic.
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