Retailer Build-A-Bear has terminated its Chief Growth Officer, David Henderson, shortly after reporting disappointing second-quarter financial results. Henderson, who assumed the role in June, was let go on Wednesday, as revealed in a recent company filing.
Decline in Financial Performance
Build-A-Bear’s second quarter saw a year-over-year revenue decline of 7.2%, totalling $115.3 million. Net retail sales fell 7.1% to $106.5 million, while pre-tax income decreased by 24%, settling at $11.6 million. In light of these figures, the company has revised its full-year guidance downwards. It now predicts total revenues between $500 million and $525 million, along with pre-tax income ranging from $60 million to $68 million, inclusive of approximately $13 million in IEEPA refunds. This is a reduction from the earlier forecast of $530 million to $550 million in revenues and $72 million to $78 million in pre-tax income.
Challenges in Merchandise and Wholesale
The summer merchandise, which traditionally drives innovation, underperformed as it did not connect effectively with customers, as noted by CEO Chris Hurt during a discussion with analysts. Hurt explained that the products were not as ‘dressable’ or customizable, leading to poor sales outcomes. Additionally, combined commercial and international franchise revenue also witnessed a 9% drop to $8.8 million during this period.
Wholesale operations, a critical component of Build-A-Bear’s growth model, faced hurdles this quarter. Hurt mentioned the failure to replicate a successful multimillion-dollar program with Walmart and slower-than-anticipated progress with other wholesale ventures. Nonetheless, the Walmart program demonstrated the potential to expand the brand through large-scale third-party distributions.
Store Expansion Amid Setbacks
Despite financial challenges, Build-A-Bear expanded its reach by adding five global experience locations and six franchise operations in the second quarter. However, these gains were partially negated by a net reduction of four partner-operated locations, bringing the total number of global locations to 674 by the end of the quarter.
Reporting based on coverage first published by retaildive.com.