Why Build-A-Bear Has Been on an Nvidia-Like Run

Bloomberg

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00:00The actual experience of building a bear can be equated to what it takes to be successful

00:05in business.

00:08You're picking something that you really like, you're stuffing it with the exact things that

00:11you need, and then you're willing to put your heart into it.

00:14You're going to increase your level of success for sure.

00:24My name is Sharon Price-John, and I'm the president and CEO of Build-A-Bear Workshop.

00:33First you get to choose your unstuffed furry friend.

00:38I really work very hard to assure that I have people on the team that are the best in the

00:43business.

00:44Now, you know, we're going through a lot of changes right now.

00:47We're growing really, really fast.

00:49Any suggestions, any thoughts about what we can do?

00:54We try to create a really collaborative experience.

00:59We give the team an ability to bring forward ideas independently of what, you know, we think

01:05is next.

01:06So, I had a golden retriever, her name was Katie, so I'm going to build Katie today.

01:13The next step is to put all the goodies inside.

01:20We went through a process of pivoting the company from what was a mall-based retail stuffed animal

01:28store for kids to a branded intellectual property company that just happened to have vertical

01:36retail as one of its revenue streams.

01:38When you can monetize a feeling, that's a much more diversified approach, and that creates

01:45a much more resilient approach to business.

01:48Build-A-Bear is a pioneer in experiential retail.

01:51So, we were doing that back in 1997.

01:54And really, there isn't anyone that does exactly what we do.

01:57Rub it on your heart so she's full of love.

02:00On your head so she's full of your fun memories of Katie.

02:01And on your shoulders so you always have her to lean on when you miss her.

02:03Give it a big kiss.

02:04Give it a big kiss.

02:05Give it a big kiss.

02:06And we have to put that inside so we always kill through that.

02:07There's a magical moment with this where in the mind of a child, the stuffed animal almost

02:14comes to life.

02:15Good job.

02:16Say thank you.

02:19Call it a bear market on a bull run.

02:23One of the best performers in the stock market this year, rising over 50% since the beginning

02:28of the year.

02:29The consistency on the quarter-on-quarter deliverables, we've been not only consistent

02:35from a business perspective, but we've kept a very clean balance sheet.

02:38We have tremendous cash flow.

02:40For those who are parents like a meme stock, how is Build-A-Bear different?

02:44Our stock appreciation is based on the fundamentals.

02:47If you just break down what we've been able to do from an increase in profitability, it starts

02:53to add up.

02:55How have tariffs and supply chain shifts affected your gross margins?

03:00Tariffs are a challenge for any company that's importing and we've diversified our supply

03:05chain significantly, but that still does not keep us unimpacted by tariffs.

03:11We're going to have to cover some of these costs.

03:14We will not be able to cover it all and we won't pass it all on to the consumer, but there'll

03:20be a balance.

03:21What is your lead on consumer discretionary spending on the current economy?

03:25We are not recession-proof, but toys are often very recession-resilient, particularly during

03:32the holidays.

03:33There you go.

03:35And when you think about how we're kind of in this crosshairs of the nostalgia economy,

03:41there's conducting, DIY, and we're sort of mashing a lot of that stuff together.

03:48We've actually doubled the teen and adult business to be 40% of the total sales.

03:53And I'm hoping that we'll be able to enjoy that trend for a while.

03:58The secret sauce of Build-A-Bear's success thus far is that we believe in what we do and we

04:03believe that what we do matters.

04:07If you can recognize that it's probably going to be a long game and you have your heart in

04:14what you're doing, you're really increasing your odds.

04:21Let's see.

04:22Let's see.

04:23Let's see.

04:24Here we go.

04:25Here we go.

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