Bear construction workshop It wasn't always a retail winner.
The toy store, known for its interactive experience in building and decorating stuffed animals, has undergone significant change since CEO Sharon Price John took the helm of the company more than a decade ago.
“When I first arrived in 2013, that assessment of the brand was strong,” he told CNBC. “We don't have a broken brand, we have a broken business, and when you started doing interviews, you really understood how much this brand meant to people.”
The company found initial success in shopping malls in the early 2000s, but Build-A-Bear shares plummeted after the 2008 financial crisis, and the company reported a loss of $49 million in fiscal 2012.
Under Price John, the company began investing in e-commerce, moving orders to stores instead of its distribution center and diversifying its sales beyond malls to turn the company around.
“Our overall goal was to create sustained, profitable growth, but profitable came first,” Price John said.
That strategy worked. Virtually all of Build-A-Bear's stores are now profitable, and the stock went on an Nvidia-like run earlier this year, hitting an all-time high of around $76 in September. The stock has dropped a bit since then, but is still up more than 125% in the last two years.
But tariffs have hurt business. Build-A-Bear imports more than 90% of its products from China and Vietnam, and the company said in its third-quarter earnings report in early December that it expects to take a hit of about $11 million from tariffs by fiscal 2025.
Company executives also said in a call with analysts that the company experienced a slowdown in traffic in October during the government shutdown.
Small Cap Consumer Research analyst Eric Beder wrote in a note this month that the company was lowering projections and lowering its price target by $10 due to the company reporting lower-than-expected revenue and “deep implied tariff impacts.”
Still, the company is outperforming most of its retail competitors and expects to hit $500 million in annual revenue for the first time.
“You can buy stuffed animals or stuffed animals pretty much everywhere, from Target to FAO Schwarz and everywhere in between,” Beder told CNBC. “The difference is that at Build-A-Bear, it's yours. You helped make it happen.”
Watch the video to learn more about how Build-A-Bear is back.
