Build-A-Bear Workshop Reports First Quarter 2026 Results and Revises Full-Year Outlook
Key Highlights from Q1 2026
- Total Revenues: \$125.3 million, a decrease from \$128.4 million in the prior year.
- Pre-Tax Income: \$23.9 million, up from \$19.6 million in Q1 2025. Adjusted pre-tax income was \$16.9 million.
- Diluted EPS: \$1.45, compared to \$1.17 last year. Adjusted EPS: \$1.03.
- Shareholder Returns: \$14.2 million returned to shareholders through share repurchases and quarterly dividends in Q1.
- Inventory: Ended the quarter at \$77.8 million, up 7.7% due primarily to tariffs and preparations for higher expected sales.
- Capital Expenditures: \$6.9 million, compared to \$2.9 million last year.
Shareholder-Focused Developments
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Share Repurchases and Dividends:
- \$11.4 million spent on repurchasing 248,118 shares in Q1.
- \$2.9 million paid out in quarterly cash dividends.
- Since quarter end, an additional \$3.3 million was used to repurchase 89,966 shares.
- \$47 million remains under the current \$100 million repurchase program (as of May 27, 2026).
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2026 Outlook Revised:
- Total Revenue: Now expected between \$530 million and \$550 million (down from prior guidance).
- Pre-Tax Income: Now expected between \$72 million and \$78 million, also revised down.
- Commercial Revenue Growth: At least 20% growth targeted.
- Capital Expenditures: Now anticipated between \$22 million and \$25 million.
- Depreciation and Amortization: Estimated at approximately \$16 million.
- Income Tax Rate: Expected at about 24% (excluding discrete items).
- The outlook incorporates considerations for tariffs, labor costs, freight expenses, and ongoing inflation. It does not factor in any further significant changes in tariffs, foreign exchange, or macroeconomic/geopolitical conditions at the time of guidance.
Management Commentary
CEO Sharon Price John acknowledged the impact of a more uncertain economic environment and challenging consumer traffic, resulting in lower-than-expected results for the quarter. The company is implementing measures to address these challenges and remains focused on leveraging the Build-A-Bear brand and continuing strategic initiatives, especially as leadership transitions to Chris Hurt.
Notably, management emphasized the company’s strong cash flow, enabling the return of \$46 million to shareholders over the past 12 months through share repurchases and dividends, including over \$14 million in the first quarter alone.
Detailed Financial Data
- Retail Gross Margin: Increased to 64.4% from 56.9% in the prior year.
- Commercial Revenue for Q1 2026: \$10.95 million.
- Selling, General & Administrative Expenses: \$56.1 million (41.7% of revenue).
- EBITDA: \$27.7 million; Adjusted EBITDA: \$20.7 million.
- Net Income: \$18.3 million; Adjusted Net Income: \$13.0 million.
- Cash, Cash Equivalents & Restricted Cash: \$26.2 million at quarter-end.
- Total Current Assets: \$147.8 million.
- Total Stockholders’ Equity: \$159.0 million.
Important Considerations for Shareholders
- Lower Revenue and Income Guidance: The revised outlook for revenue and pre-tax income is likely to be seen as a negative for the share price, as it reflects ongoing consumer and macroeconomic challenges.
- Strong Capital Return: Continued aggressive share repurchases and dividends may help support the stock, demonstrating confidence in long-term value and efficient capital allocation.
- Inventory Build: The increase in inventory, driven by tariffs and expectations of higher sales, could be a risk factor if consumer demand continues to be weak.
- Leadership Transition: The CEO transition to Chris Hurt is a key event for strategic direction and execution.
- Tariff Refunds and Costs: The company’s guidance incorporates expectations for tariff refunds and ongoing cost pressures, but any further changes in tariffs or inflation could impact results.
Conference Call and Further Information
Build-A-Bear will host a webcast and conference call for investors and analysts at 9:00 a.m. ET. Details are available on the company’s Investor Relations website.
Non-GAAP Financial Metrics
The company continues to provide non-GAAP financial measures such as adjusted pre-tax income, adjusted net income, and adjusted EBITDA, to supplement its GAAP reporting. These metrics are intended to highlight underlying business trends and exclude items not indicative of core operating results. Full reconciliations are available in the official report.
Forward-Looking Statements
Management cautions that forward-looking statements, including outlook and guidance, are subject to risks and uncertainties, including economic conditions, tariffs, inflation, consumer trends, and other factors described in the company’s SEC filings.
Contact Information
- Investor Relations: Gary Schnierow, Vice President, Investor Relations & Corporate Finance, [email protected]
- Media Relations: [email protected]
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Disclaimer: This article is a summary and interpretation of Build-A-Bear Workshop, Inc.’s Q1 2026 results and outlook based on the company’s official filings and press release. It is intended for informational purposes only and should not be construed as investment advice. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please consult the company’s SEC filings and your financial advisor before making investment decisions.
