Build-A-Bear Workshop, Inc.
(NYSE: BBW) shareholders may have to build their value somewhere else.
The interactive entertainment retailer announced today that tightened
credit markets and a weak retail environment prevented it from pursuing
the strategic alternative that so many investors were expecting - a
sale. Instead, the company opted to double its share repurchase program
and adopt a broad range of operational initiatives according to their 8-K filing with the SEC. So, is this 15% decline justified?
Investors may be disappointed with the lack of a sale, but perhaps
it is understandable given the current economic climate. Instead, the
company chose to focus on improving its operation performance until
things improve. Specifically, the company decided to adopt the
following initiatives:
- Focusing on existing store sales by slowing new store growth to
approximately 25 stores - down from 50 stores in 2007 - and realigning
store operations management by creating a new position, Managing
Director - Workshop Experience, focused on continuing to energize and
update the store experience.
- Enhancing brand appeal with children and growing store sales
through raising awareness of our new online “world” website,
buildabearville.com.
- Continuing the position traction experienced in the European
operations during the fiscal 2007 fourth quarter through raising brand
awareness, increasing average transaction value, and continuing growth
of the in-store parties business.
- Growing store sales by leveraging and expanding our loyalty club
program through improved and more frequent communication to members,
adding new Guests to the club, and introducing the program in United
Kingdom stores.
- Attracting new Guests through multimedia marketing initiatives,
including a new TV advertising campaign that will launch in the second
quarter and will leverage buildabearville.com as a new platform for
communicating with Guests.
- Expanding international franchise fee revenues with the addition of
15 to 20 new franchise stores, including a new store in the United Arab
Emirates.
These initiatives are all good news as they will force the company
to limit its spending while increasing its revenues. This, in turn,
should expand its multiple and make any future acquisitions much more
attractive to shareholders. So, while today’s news may be bad for the
short-term, it is likely the best solution for the long-term. Combined,
these factors make BBW a stock worth watching closely over the next year!
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