Build-A-Bear Workshop (NYSE:BBW) executives used the company’s fiscal fourth-quarter 2025 earnings call to outline record full-year results, discuss the impact of tariffs and supply chain disruption, and provide a 2026 outlook that includes continued store expansion and increased investment in wholesale and international growth. Management also addressed a planned leadership transition, with Chief Executive Officer Sharon John announcing her retirement and the appointment of Chief Operating Officer Chris Hurt as CEO effective June 11, 2026.
Record revenue year, tariffs weigh on profitability
John said fiscal 2025 marked a milestone, with the company surpassing $500 million in annual revenue for the first time. She reported revenue reached “close to $530 million,” representing nearly 7% growth, while pretax income increased marginally to $67.2 million after accounting for $11 million in tariff and related costs.
E-commerce demand fell 13.6% in the quarter and declined 5.5% for the full year, which Todorovic attributed primarily to traffic declines and difficult comparisons against strong licensed product launches in the prior year. At the same time, commercial revenue rose 42.2% in the quarter and 23.4% for the year, reflecting wholesale sales to partner operators and shipments tied to Walmart late in the year.
Build-A-Bear’s fourth-quarter gross margin was 55.2%, down 140 basis points from the prior year due to tariff impacts, partially offset by selective price increases. SG&A rose to $63.9 million, or 41.4% of revenue, compared with 38.4% a year ago, driven by higher compensation costs, medical expenses, inflationary pressures, and the timing of marketing expense. Pretax income in Q4 was $21.5 million versus $27.5 million last year, and earnings per share were $1.26 compared with $1.62.
For the full year, Todorovic said revenue totaled $529.8 million, up 6.7%, while pretax income of $67.2 million was a record but reflected approximately $11 million of tariff-related impact and about $5 million of higher medical and labor costs. Full-year EPS was $3.99, up 5%, with tariffs and related costs reducing EPS by roughly $0.65.
Global footprint expands; 50 net new locations targeted in 2026
Hurt said Build-A-Bear continues to expand through a mix of corporately managed, partner-operated, and franchise models. In the fourth quarter, the company added 11 net new “experience locations” across four continents, bringing the total to 64. For the year, the company entered eight new countries, following the addition of 10 new countries in 2024, which Hurt said doubled its international footprint to 36 countries in two years.
At year-end, Build-A-Bear had 375 corporately managed stores, 109 franchise locations, and 178 partner-operated locations. Hurt noted that since the second quarter of 2023, the company has more than doubled its asset-light partner-operated locations, which grew to nearly 30% of the total portfolio.
Hurt highlighted the company’s reentry into Germany through European partner InnerSource, including four standalone stores opened in fiscal Q4, and said the expansion continued into Q1 with openings in Cologne and Hanover. He also pointed to U.S. growth in co-branded locations, citing the first Build-A-Bear Hello Kitty and Friends Workshop in Los Angeles (opened October 2024) and two additional co-branded openings in February at the Mall of America and American Dream.
Looking ahead, Hurt said Build-A-Bear plans to open at least 50 net new locations in 2026, with the majority expected to be in the partner-operated model. He also previewed a new “multi-level next generation retail experience” planned for ICON Park in Orlando, Florida, later in the year, featuring a design studio with higher customization, a Build-A-Bear Bakeshop, rooftop entertainment and event space, and reimagined in-store experience elements including a new scent bar.
Digital headwinds and a shifting search environment
John said the company made progress on select consumer-facing upgrades, including digitizing the “record your voice” offering for e-commerce customers, but most of the year’s effort went toward infrastructure upgrades, including work on legacy inventory management systems. She said some previously planned e-commerce advancements were delayed, contributing to “disappointing online sales.”
Management also discussed changes in digital traffic dynamics. John said the more aggressive rollout of AI-driven changes by Google altered SEO and digital advertising dynamics and contributed to suppressed traffic to buildabear.com. In the Q&A portion, John described a “double-digit impact” to direct click-through from organic search and said the company expects to respond by reducing reliance on organic search, upgrading product schema, increasing direct email, and expanding social media efforts to drive direct click-through. She added that Build-A-Bear’s customer data capture in stores supports more direct communication, noting an “80% capture rate” of shoppers for email outreach.
Brand monetization: Mini Beans, Walmart placement, and Kabu content
John highlighted efforts to extend the brand beyond workshops while still supporting shareholder returns. She discussed Mini Beans, a pre-stuffed line launched in 2024, saying the company has sold more than 3 million units since launch. She said the product’s success led to placement at independent retailers and, more recently, a multi-million dollar wholesale order in fiscal Q4 2025 that is now reaching shelves in approximately 1,500 Walmart locations across the U.S.
John also discussed the launch of “Kabu,” an animated episodic series aimed at kids that features Build-A-Bear original characters and launched on the company’s YouTube channel toward the end of 2025. She said Kabu episodes have driven more than 1 million views and that Kabu character plush has surpassed $1 million in sales.
In early fiscal 2026, John said the company saw mixed results, citing challenging traffic trends but a record Valentine’s Day. She said Valentine’s Day was the largest revenue day in North American store history, surpassing last year’s Black Friday, supported by “trend-right products,” strong in-store execution, the updated record-your-voice technology, and a marketing campaign titled “A Squeeze Away.” She also said a new Frosted Animal Cookies collection generated nearly 250 million media impressions in less than a week and was associated with improvements in traffic, dollars per transaction, and sales both online and in stores.
2026 guidance: revenue growth, tariff assumptions, and investment spending
Todorovic guided to mid-single-digit revenue growth in 2026, driven partly by the addition of at least 50 net new experience locations. He said first-quarter revenue is expected to be roughly flat year-over-year, with growth accelerating as the year progresses. The company expects commercial segment revenue to grow at least 20% for the year, with significant back-half weighting.
For profitability, Todorovic said pretax income is expected to range from a mid-single-digit decline to low single-digit growth. The outlook assumes a $16 million estimated impact from tariffs and tariff-related costs, plus approximately $3 million of longer-range investments to support wholesale growth and international expansion, along with pre-opening costs for the ICON Park location. The guidance assumes the current 10% tariff rate remains in effect for the remainder of the fiscal year, while noting that the amount and timing of potential tariff changes or refunds are uncertain and that refunds would be an incremental benefit.
On the balance sheet, Todorovic said year-end cash and cash equivalents were $26.8 million and inventory was $82.2 million, up $12.4 million, reflecting tariff costs included in inventory and incremental investments to support expected growth across channels.
John also emphasized the planned CEO transition and summarized operational progress since 2019, including revenue growth, margin expansion, and shareholder returns. Hurt outlined a strategic framework built on four pillars—organic growth, location expansion, wholesale and outbound licensing, and gifting and personalization—supported by platform areas focused on brand, content, digital, and talent.
About Build-A-Bear Workshop (NYSE:BBW)
Build-A-Bear Workshop, Inc operates a specialty retail business focused on interactive “workshop” experiences that allow customers to create customized stuffed animals. Through its in-store and online platforms, the company offers a wide range of plush toys, apparel, accessories and sound modules, enabling guests to personalize each creation. In addition to its core bear products, Build-A-Bear has expanded its portfolio to include licensed characters from leading entertainment and media franchises.
Founded in 1997 by Maxine Clark and headquartered in St.
