CEO of Mo.-based Build-A-Bear foresees comeback
01/20/2014 10:04 AM
01/20/2014 10:04 AM
OVERLAND, Mo. (AP) — The new chief executive of Build-A-Bear Workshop Inc. promised investors that the struggling company is making changes that will help it recover from years of declining sales.
The Overland, Mo.-based company, which allows customers to customize and "build" stuffed animals, has seen its sales decline since in 2007, with only one profitable year in the last four years, The St. Louis Post-Dispatch reported (http://bit.ly/1dnSB0o ).
Sharon Price John, who became chief executive officer of the company six months ago, told investors at a conference in Florida last week that sales declined in part because of the economy and because Build-A-Bear did not respond to those economic changes. She said the company continued to offer deep discounts even as the economy improved but it reduced those discounts last year by 30 percent as part of a multi-year turnaround strategy begun in 2012.
"They're not coming in because the bears are cheap, guys," she said. "They're coming in because they want to have this experience."
The chain of more than 400 stores is in the process of closing about 60 underperforming stores in the next two years and is also shrinking the size of its stores. Other strategies include increasing television advertising and updating technology at some of its stores technology to appeal to children who are accustomed to tablets and smartphones.
Preliminary results from fiscal year 2013, which ended Dec. 28, revealed relatively flat sales at $372 million despite having 28 fewer stores, she said. The company is expected to report its net income and other results on Feb. 14.
While about 22 percent of its North American stores were unprofitable in 2012, that percentage dropped to 10 percent last year, according to the Florida presentation. And Build-A-Bear's sales per square feet went up 9 percent last year to $380, the first such increase in several years. And the company's stock has risen 89 percent in the last 12 months to $8.45, although the share price remains well below its high of $36.90 reached in January 2005.
"We still have a long way to go," John said. "But if we can get North America moving in the right direction, we can get this thing fixed."
Jason Long, a St. Louis-area retail consultant with Shift Marketing Group, agreed that Build-A-Bear's sales have stabilized but said they are not close to levels reached before the recession. And he said the company will have to respond to declining shopper traffic to malls, where most of Build-A-Bear's stores are located.
"Frankly, they've got some work to do," he said. "I feel like the brand is a little stale."
Information from: St. Louis Post-Dispatch, http://www.stltoday.com