Business Overview
Build-A-Bear Workshop operates through three segments: Direct-to-Consumer (91% of revenue) including corporate stores and e-commerce, Commercial including wholesale and licensing, and International Franchising. In Q1 fiscal 2026, the company recorded total revenues of $125.3 million with net income of $18.3 million, benefiting from a $10.4 million tariff refund related to IEEPA court rulings. The company continues to expand its store footprint with longer-term lease extensions and new store openings.
Segment Performance
Direct-to-Consumer net retail sales decreased to $113.5 million in Q1 2026 from $119.6 million in Q1 2025, a decline of 5.1%. Commercial revenue increased to $10.9 million from $7.6 million (+43.6%). International franchising revenue declined to $0.9 million from $1.2 million (-27.6%). Consolidated gross profit improved to $79.9 million in Q1 2026 from $73.0 million in Q1 2025, driven by a $10.4 million IEEPA tariff benefit and improved retail cost of merchandise sold.
Key Risk Factors
Key risks include sensitivity to gift card breakage rate estimates (a 1% change could impact breakage revenue by $1.3 million); retail sales declined 5.1% year-over-year to $113.5 million in Q1 2026; and the company faces ongoing challenges from the UK HMRC customs matter with a $0.6 million reserve. Additionally, the company's seasonal operations mean single quarter results may not be indicative of full-year performance, and future changes in consumer redemption patterns could materially impact revenue recognition.
