Build-a-bear Workshop, Inc. · NYSE:BBW
Build-a-bear Workshop — B. Riley FBR Annual Consumer & Media Conference 2019
22 slides from Build-a-bear Workshop's conference presentation, Oct 3, 2019
Slide 1: B. Riley FBR Annual Consumer & Media Conference
B. Riley FBR Annual Consumer & Media Conference October 3, 2019
Slide 2: Forward looking and cautionary statements
Forward looking and cautionary statements Juding, But not to, : "may," “might,” should," “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predic,” future,” “potential” or “continue,” the negative or any derivative ofthese ofnew fut ot decine, products, as well as our or Build stockh
Slide 3: BBW Snapshot
BBW Snapshot Founded in 1997, as a specialty retailer to “make-your-own stuffed animals” 2004 IPO Currently in over 500 locations* in 17 countries including: + ~360 corporately-managed stores * ~95 international franchise stores + ~50 third party retail locations Over 3,500 employees Over 180 Millio
Slide 4: Monetizable Powerful Brand
Monetizable Powerful Brand 90%+ Aided Brand Broad Consumer Appeal: Awareness* Gender, Age and Geography Powerful Social & Loyalty Engagement; Friends Sold - and 7MM Bonus Club Memories Made - Members Globally** 180 Million Furry *US data, C&R Research, Jan 2017 **Since 1997 BBW 2019
Slide 5: Multi-Phase Strategic Blueprint for Growth
Multi-Phase Strategic Blueprint for Growth Return to Deliver Sustained Drive Profitable Profitability Profitability Growth WORKSHOP Leverage Diversify and expand the retail Monetize the power footprint globally of the brand $ Investment A sstrong branded company with a An experiential retailer with
Slide 6: BBW Results Since Start of Turnaround
BBW Results Since Start of Turnaround Pre-Turnaround: Post Turnaround: 4 consecutive years of Pre-Tax Losses 4 consecutive years of Pre-Tax Profits 2009-2012 2013 2014-2017 $1.6B Cumulative Revenue $1.5B cumulative Revenue* Cumulative GAAP $52MM Cumulative GAAP Pre-Tax Loss Pre-Tax Profit nee * Incl
Slide 7: A Backdrop of Unprecedented and Rapid Change in US Retail
A Backdrop of Unprecedented and Rapid Change in US Retail Traditional mall traffic 2017 vs 2012 declined close to US E-commerce -50% +75% Source: US Census Bureau Over-malled: 2017/18 US Retail Store 20% Closures of US malls account for 3 a 14K Nearly 40 bankruptcies of all US mall sales In the US,
Slide 8: With Brexit Triggering Accelerated UK Changes
With Brexit Triggering Accelerated UK Changes 2017 vs 2012 UK E-commerce Consumer aes +45 % every quarter since 2016 with 18% YOY growth in 2018* 2017 2017/18 UK Retail Store 2018 UK Retail Job Loss Closures -85K = with over 1,000 retail bankruptcies Source: Coresight.com, “Store Openings & Closures
Slide 9: This Challenging Economic Environment Negatively Impacted 2018 Results
This Challenging Economic Environment Negatively Impacted 2018 Results FY2018 Total revenues were $336.6MM Revenue in North America declined 2% while Europe declined 18%; results included a 14% increase in consolidated e-commerce Pre-tax loss was $18.5MM; adjusted Pre-tax loss was $7.7MM exclusively
Slide 10: Multiple Factors Impacted 2018 Results
Multiple Factors Impacted 2018 Results Some of these factors continue to impact the business in FY2019 as well Continuing mall traffic declines and changing consumer shopping habits * Mall shopping in December, historically our largest sales month, is less recreational and family-oriented changing c
Slide 11: First Half 2019 Results
First Half 2019 Results Total Revenues in Millions $166.4 $163.6 ' - 2018 2019 + 7 consecutive quarter of double digit increase in e-commerce $3.8MM or +187% increase in Commercial revenues SG&A: $2.7MM better than FY2018 e 7% of Total Revenue FY2019 a 6% of Total Revenue FY2018 90 bps improvement P
Slide 12: Solid Balance Sheet Supports Ongoing Evolution
Solid Balance Sheet Supports Ongoing Evolution * No Debt Q2 cash and inventory levels are more in line with 2017 levels, as the impact of 2018 Pay Your Age Events created some unique comparability Cash from operations has funded - and is expected to continue to fund - ongoing strategic initiatives C
Slide 13: The Future State Business Model
The Future State Business Model Continued focus ont the evolution of our Strategic Plan to monetize the Build-A-Bear brand across channels, and ies is intended to: 1. More effectively take advantage of growth in the digital economy 2. Increase acquisition, engagement and lifetime value of loyalty pr
Slide 14: 1. Grow in the Digital Economy
1. Grow in the Digital Economy + New e-commerce platform launched in 2017; double-digit sales growth every quarter since upgrade + With over 85% of site traffic originating from a personal device, recently completed mobile optimization is contributing to higher conversion rates and reduced cart aban
Slide 15: 2. Increase Lifetime Value of Loyalty Club Members
2. Increase Lifetime Value of Loyalty Club Members With over 8MM opted-in e-mail addresses and over 7MM Bonus Club members, opportunity to leverage robust database to add incremental lifetime value with cross-channel engagement * “Count Your Candle” birthday program continues to drive acquisition an
Slide 16: 3. Expand Retail Diversification and Accessibility in NA
3. Expand Retail Diversification and Accessibility in NA 2015 NA Store Portfolio 2018 NA Store Portfolio IE Traditional Mall store Traditional Mall Concourse Tourist all Formats Walmart -asonal/Holiday 3 Party Retail® 274 locations; >90% in traditional mall store format 368 locations; 66% in traditi
Slide 17: 4. Monetize Brand Awareness: 3rd Party Retail
4. Monetize Brand Awareness: 3" Party Retail Have developed wholesale model for select 3 parties to operate Build-A-Bear Workshops: * 3r¢ party provides capital for fixtures and store buildout * 34 party purchases inventory results in low risk and positive operating income To date: Build-A-Bear is o
Slide 18: 4. Monetize Brand Awareness: Licensing
4. Monetize Brand Awareness: Licensing Over 20 product categories are currently licensed for BBW with products in market or in development Flash Driven Connected experiences (eg, parties) ‘Non-Plush-Driven == Bf Eas In 2018, outbound licensed products were carried in multiple retailers including: Wa
Slide 19: 4. Monetize Brand Awareness: Entertainment
4. Monetize Brand Awareness: Entertainme “play beyond the plush” enhances consumer connection: Tuhe * Video and music available on Build-A-Bear’s You Tube channel * Over 100K subscribers + Over 64MM views + Engaging apps support owned intellectual properties: 7MM sessions since launched * Build-A-Be
Slide 20: 2019 Outlook
2019 Outlook We expect: * Total revenue for the year to increase in the low single-digits * Pre-tax income to be slightly positive * Capital expenditures to be in the range of $12 to $14 million * Depreciation and amortization in the range of $15 to $16 million * Operating cash flow less capital exp
Slide 21: Why BBW?
Why BBW? We are evolving to monetize the brand in a variety of ways * Strong, multi-generational brand that parents trust and kids love with a variety of owned intellectual properties that can translate and expand into broader entertainment, global geographies and product categories Who We Are: More
Slide 22: Buildabear.com
Buildabear.com #celeBEARate
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