Build-A-Bear Workshop, Inc. (NYSE:BBW) reported fiscal second-quarter 2026 results Thursday, with revenue falling 7.2% year over year to $115.291 million, missing the $121.067 million estimate.
Adjusted diluted EPS of 70 cents was in line with the 70-cent estimate. GAAP diluted EPS also came in at 70 cents, down from 94 cents a year earlier.
Shares traded lower following the results as investors weighed the revenue miss, a reduced full-year outlook and softer traffic trends.
• Build-A-Bear Workshop stock is testing key support levels. Why did BBW hit a new low?
Margins and Core Sales Weaken
Net income fell to $8.76 million from $12.37 million a year earlier, while pre-tax income declined to $11.6 million from $15.3 million. Pre-tax margin narrowed to 10.1% from 12.3%, and EBITDA decreased to $15.2 million from $18.8 million.
Net retail sales fell 7.1% to $106.5 million, with e-commerce demand down 15.6%. Commercial and international franchise revenue declined 9% to a combined $8.8 million.
Consolidated gross margin contracted 340 basis points to 54.2%, reflecting occupancy deleverage and increased promotional activity.
Tariffs and related costs were approximately $1 million in both periods.
Cash, Buybacks and Store Growth
Build-A-Bear added five net new experience locations during the quarter, bringing its total footprint to 674 locations.
Cash and equivalents declined to $14 million from $39.1 million a year earlier, while capital expenditures increased to $8.6 million from $3.4 million.
Build-A-Bear spent $5.6 million to repurchase 155,118 shares and paid $2.9 million in dividends. It had $43.2 million remaining under its $100 million share repurchase authorization.
Guidance Cut Reflects Tariffs and Wholesale Pressure
Build-A-Bear lowered its fiscal 2026 revenue outlook to $500 million-$525 million from $530 million-$550 million, below the $539.349 million estimate.
The company expects pre-tax income of $60 million-$68 million.
The outlook includes $13 million in IEEPA tariff refunds and $10 million–$11 million in tariffs and related costs.
Excluding roughly $7 million tied to prior-year costs, Build-A-Bear expects adjusted pre-tax income of $53 million-$61 million.
Call Adds Product and Traffic Context
Management said weaker traffic and summer products that strayed too far from Build-A-Bear’s core customization experience weighed on results.
Early third-quarter traffic and sales improved following the Halloween launch but remained slightly below prior expectations.
Management also said last year’s multimillion-dollar Walmart program will not be repeated, while other wholesale opportunities are developing more slowly than expected.
Build-A-Bear now expects commercial revenue to be flat versus fiscal 2025.
The company continues to target at least 50 net new experience locations, about $25 million in capital expenditures, $17 million in depreciation and amortization, and an approximately 24% tax rate, excluding discrete items.
BBW Price Action: Build-A-Bear shares were trading lower by 25.83% at $29 at the time of the publication on Thursday, according to Benzinga Pro.
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