Build-a-bear Workshop, Inc. · NYSE:BBW
Build-a-bear Workshop — 2019 ICR Conference
25 slides from Build-a-bear Workshop's conference presentation, Jan 14, 2019
Slide 1: Build-A-Bear Workshop 2019 ICR Conference
Build-A-Bear Workshop 2019 ICR Conference
Slide 2: Forward looking and cautionary statements
Forward looking and cautionary statements This presentation contains certain statements that are, or may be considered to be, “forward-looking statements” for the purpose of federal securities laws, including, but not limited to, statements that reflect our current views with respect to future event
Slide 3: BBW Snapshot
BBW Snapshot • Founded in 1997, as a specialty retailer to “make-your-own stuffed animals” • 2004 IPO • Currently in ~500 locations* in 16 countries including: • ~370 corporately-managed stores • ~100 international franchise stores • ~30 third party retail locations • Over 3,500 employees • Over 180
Slide 4: Monetizable Powerful Brand
Monetizable Powerful Brand Broad Consumer Appeal: Gender, Age and Geography 180 Million Furry Friends Sold – and Memories Made - Globally** 90%+ Aided Brand Awareness* Powerful Social & Loyalty Engagement; 6+MM Bonus Club Members *US data, C&R Research, Jan 2017 **Since 1997 BBW 2019 4
Slide 5: Multi-Phase Strategic Blueprint for Growth
5 Multi-Phase Strategic Blueprint for Growth Return to Profitability Deliver Sustained Profitability Drive Profitable Growth Diversify and expand the retail footprint globally Leverage the power of the brand An experiential retailer with a strong brand A strong branded company with a diversified pro
Slide 6: Evolution 2013-2017: Returned to Profitability
• Diversified retail real estate portfolio; renegotiated leases and closed select stores • Reduced discounts, enhanced marketing to leverage the brand emotion and highlight the in-store EXPERIENCE; relaunched Bonus Club loyalty program • Refreshed brand look and store design focused on productivity
Slide 7: Rebuilding Systems and Processes & Updating Org Structure
Rebuilding Systems and Processes & Updating Org Structure • Re-organized with new management team and diversified and upgraded talent while also evolving Board of Directors • Instituted new, more efficient processes and restructured key functional areas • Restructured vendor base and supply chain •
Slide 8: BBW is a Stronger Company than at the Start of the Evolution
2009-2012 2013 2014-2017 BBW 2019 BBW is a Stronger Company than at the Start of the Evolution Based on preliminary FY2017 results BEGINNING OF TURNAROUND PLAN Pre-Turnaround: 4 consecutive years of Pre-Tax Losses Post Turnaround: 4 consecutive years of Pre-Tax Profits ($77MM) Cumulative GAAP Pre-Ta
Slide 9: BBW Retail Gross Margin With Improvement in Retail Fundamentals
BBW Retail Gross Margin With Improvement in Retail Fundamentals +800 bps $35.38 $37.32 $40.61 $44.10 $45.61 $46.29 2012 2013 2014 2015 2016 2017 NA Dollars Per Transaction +31% NA Units Per Transaction 3.66 3.69 3.76 3.95 3.99 4.06 2012 2013 2014 2015 2016 2017 +11% 38.9% 41.1% 45.6% 47.1% 45.2% 46.
Slide 10: A Backdrop of Unprecedented and Rapid Change in US Retail
A Backdrop of Unprecedented and Rapid Change in US Retail Traditional mall traffic declined close to -50% *2012-2018 estimate based on ShopperTrak and Retail Next data *BBW 2019 10 2017/18 US Retail Store Closures -14K Nearly 40 bankruptcies 2017 vs 2012 US E-commerce +75% Over-malled: 20% of US mal
Slide 11: With Brexit Triggering Accelerated UK Changes
With Brexit Triggering Accelerated UK Changes BBW 2019 11 Consumer confidence NEGATIVE every quarter since 2016 2017/18 UK Retail Store Closures -2K 2017 vs 2012 UK E-commerce +45% with 18% YOY growth in 2018* Source: Office of National Statistics; *YTD through November 2018 vs 2017 2018 UK Retail J
Slide 12: Multiple Factors Point to BBW's 2018 as an Anomaly
Multiple Factors Point to BBW’s 2018 as an Anomaly Legal/Administrative Issues Macro retail trends BBW Sales Shifts • Continuing mall traffic declines and changing consumer shopping habits • Mall shopping in December, historically our largest sales month, is less recreational and family-oriented cha
Slide 13: Movies Have Multi-Dimensional Impact
13 Movies Have Multi-Dimensional Impact *Source: Shoppertrak Decline in high-impact, family-centric movies impacts level and composition of traffic as well as product sales of characters and related licensed products: Licensed product sales, including movies, can be 30% to as high as 50% of total re
Slide 14: 2018 Licensed Product Impact at BBW
14 2018 Licensed Product Impact at BBW • In 2018, sales of licensed products, inclusive of movies, declined at double digit rates in both North America and the UK with the impact in the UK greater given their historical over-indexing on movie licensed product sales • 2018 Licensed product revenue lo
Slide 15: Solid Balance Sheet Supports Ongoing Evolution
15 Solid Balance Sheet Supports Ongoing Evolution • NO DEBT • CASH FROM OPERATIONS HAS FUNDED - AND IS EXPECTED TO CONTINUE TO FUND - ONGOING STRATEGIC INITIATIVES BBW 2019 Even with a backdrop of change and disruptions throughout 2018, we have stayed focused on the overarching strategy with an eye
Slide 16: The Future State Business Model
16 The Future State Business Model BBW 2019 Continued focus on the evolution of our Strategic Plan to monetize the Build-A-Bear brand across channels, geographies, consumers and categories: 1. Retail Diversification and Accessibility 2. E-commerce and Gifting Growth 3. International Franchising Expa
Slide 17: Retail Diversification and Accessibility in NA
17 Retail Diversification and Accessibility in NA Mall locations continue to deliver sales and profit: • ~95% of NA locations are profitable* • Portfolio management includes short-term lease extension with rent reductions, shift to concourse model Portfolio continues to diversify to increase demogra
Slide 18: E-Commerce and Gifting Growth
18 E-Commerce and Gifting Growth BBW 2019 • New e-commerce platform launched in 2017; double-digit sales growth every quarter since upgrade • Opportunity to expand gifting business with personalization features (e.g., sound and embroidery) and build affinity consumer segment through web-exclusive pr
Slide 19: International Franchising Expansion
19 International Franchising Expansion 2017: • Territories included Mexico, South Africa, Germany, the Middle East, Australia, Thailand, Singapore 2019: • Develop China and India • Acquire Germany BBW 2019 2017/18: • First franchised stores opened in China 2019: • Expect to open first stores in Indi
Slide 20: Revenue Diversification through Outbound Licensing
20 Revenue Diversification through Outbound Licensing Toys, Plush Apparel, Accessories, Party Electronic/Tech, Bookbags, etc Beauty, Creativity Over 20 product categories are currently licensed for BBW with products in market or in development Plush-Driven Connected experiences (e.g., parties) Non-P
Slide 21: Revenue Diversification through Entertainment
21 Revenue Diversification through Entertainment BBW 2019 Radio platform has multiple benefits: • Partnership with DASH radio, a multi-station streaming platform with over 10 million subscribers, as exclusive kids’ targeted channel launched on 10/10 at 10 a.m. • Consumer reach: Averaging ~400K liste
Slide 22: 2019 Outlook
2019 Outlook BBW 2019 22 1 2 Increased pace of real estate restructuring away from traditional malls • High optionality and flexibility, particularly in NA real estate portfolio, provides major real estate transition opportunity • Through disciplined lease management, over 60% of corporate leases ex
Slide 23: 2019 Outlook (continued)
of Contents 23 2019 Outlook 3 BBW 2019 Revenue diversification efforts gaining traction: • Outbound brand licensing • International franchising • 3rd Party Retail business model 4 Evolution of corporate structure to reflect future state while leveraging IT and infrastructure investments 6 5 Emerging
Slide 24: Why BBW?
24 Why BBW? BBW 2019 • Believe FY2018 is an anomaly with multiple factors colliding to negatively impact results vs consistent progress from 2013-2017 on a multiphase strategic plan to make BBW a multidimensional IP company with retail as one of our channels • Debt free, positive cash flow, solid ba
Slide 25: Buildabear.com #celeBEARate
Buildabear.com #celeBEARate