Build-A-Bear Workshop, Inc.

First-quarter 2026 total revenue was $125.3 million, down 2.4% year over year. Gross margin was 63.8%, up 700 basis points from last year, driven by a $7 million tariff refund benefit and 140 basis points from higher average unit retail. SG&A was $56.1 million, or 44.8% of revenue, versus 41.7% a year ago. Pretax income was $23.9 million versus $19.6 million last year; excluding the tariff reversal, adjusted pretax income was $16.9 million. EPS was $1.45 and adjusted EPS was $1.03. For the full year, revenue guidance was lowered to $530 million-$550 million, pretax income guidance was raised to $72 million-$78 million, and adjusted pretax income guidance was set at $65 million-$71 million. Management also continued to expect at least 50 net new experience locations and at least 20% commercial segment revenue growth.

Sharon John focused on her leadership transition and framed the company as materially stronger than a few years ago, pointing to record-scale revenue, 129 net new global locations over two years, and an essentially 100% profitable retail fleet. Chris Hurt said the company is moving into a next phase led by four pillars: organic growth, location expansion, wholesale/outbound licensing, and gifting/personalization. He emphasized that the first half of 2026 will be challenged, but the back half should benefit from easier comparisons and seasonal launches including Halloween, the 30th anniversary kickoff, and a refreshed Harry Potter collection.

Vojin Todorovic said Q1 revenue missed expectations because reduced store traffic and softer web demand outweighed commercial growth. He highlighted gross margin of 63.8%, up 700 basis points, with a 560-basis-point tariff refund benefit and 140 basis points from pricing, while SG&A rose to $56.1 million due to wage rates, talent investment, inflation, and timing of longer-range investments. He also said cash at quarter end was $26.2 million, down $18.1 million year over year due mainly to tariff payments and elevated CapEx, inventory was $77.8 million, and the company returned $14.3 million to shareholders in Q1 and $45.9 million over the past 12 months. The company still has $47 million remaining under its $100 million buyback authorization.

Analysts focused on the $7 million tariff refund, asking whether more tariff benefit would flow through in Q2 and when cash would be received; management said a portion has been booked, some will hit Q2 as inventory sells through, and the timing of cash collection is outside their control. Questions also centered on Walmart and wholesale, where management said the 1,500-store launch is a test of new Mini Beans and other assortment strategies, with a Los Angeles showroom added to support the channel. Analysts pressed on traffic softness, and management attributed it to tougher comparisons, weaker performance in key stories/licenses, and macro pressure; they said dollars per transaction improved as guests who did visit spent more. A final set of questions addressed international and commercial growth, with management saying the business is scalable, asset-light, and less risky because partners fund openings, though revenue timing can differ from store sell-through.