Build-A-Bear Stock Surges Despite Q3 Revenue Miss
Investors focus on earnings beat and reaffirmed full-year guidance, overlooking a dip in e-commerce and tariff-related pressures.
Build-A-Bear Workshop Inc. (NYSE: BBW) shares climbed over 9% after the company reported mixed third-quarter results that saw earnings beat expectations while revenue fell slightly short. Investors appeared to shrug off the sales miss and headwinds from tariffs, focusing instead on management's confidence as it reaffirmed its full-year fiscal 2025 guidance.
The specialty retailer announced earnings per share of $0.62, narrowly surpassing analyst estimates of $0.59. However, total revenues for the quarter came in at $122.7 million, missing the consensus forecast of $124.3 million. Despite the revenue shortfall, the market's reaction was decisively positive, with the stock closing at $57.40 in the subsequent trading session.
In a statement accompanying the results, company executives highlighted their ability to navigate a challenging retail environment. The quarter's pre-tax income was negatively impacted by approximately $4 million due to tariffs and associated costs, a significant headwind for a business reliant on global supply chains. Furthermore, the company noted a 0.7% decrease in its consolidated e-commerce demand, signaling a slight cooldown in the online sales that surged for many retailers in recent years.
Despite these pressures, Build-A-Bear's leadership held firm on its outlook for the full year. The company reaffirmed its fiscal 2025 guidance for mid-to-high single-digit revenue growth and a pre-tax income range of $62 million to $70 million. This projection, detailed in its 8-K filing with the SEC, signaled to investors that the company believes it can absorb the current challenges without compromising its annual performance targets.
"We are pleased to deliver another profitable quarter, exceeding our earnings expectations while navigating a dynamic operating environment," said Sharon Price John, Build-A-Bear President and CEO. "Our brand's multi-generational appeal and the engaging nature of our retail experience continue to resonate, giving us the confidence to reaffirm our full-year guidance."
Investor sentiment was buoyed by this confidence. The stock's nearly 10% jump adds to a strong performance for the St. Louis-based company, which has seen its market capitalization grow to approximately $692 million. The positive earnings report follows a trend of resilience for the retailer, which has successfully pivoted its business model to include more digital experiences and licensed partnerships, expanding beyond its traditional mall-based footprint.
Analysts have maintained a generally positive outlook on the stock. According to market data, the consensus analyst rating leans towards a 'Buy', with an average price target of $80.00, suggesting further upside from its current levels. This optimism is likely fueled by the company’s consistent profitability and strong return on equity, which stands at over 42%.
Looking ahead, investors and analysts will be closely watching the company’s performance during the crucial holiday season to see if its in-store experiential retail model can offset the slight decline in e-commerce and overcome broader consumer spending concerns. The company’s ability to manage inventory and promotional activity will be key to meeting the annual targets it has confidently reiterated.