After posting disappointing second quarter financial results, Build-A-Bear Workshop has parted ways with its chief growth officer, citing unsatisfactory product sales and a tough wholesale landscape.
Disappointing Quarter Prompts Leadership Overhaul
In a regulatory filing on Thursday, the company revealed that it ended the employment of Chief Growth Officer David Henderson as of Wednesday. Henderson, who had served as chief growth officer since June and spent about two years with Build-A-Bear, departs at a moment when the company is rethinking its approach to growth amid a sharp earnings downturn.
The executive change accompanied Build-A-Bear’s release of its second quarter financial report, illustrating a 7.2% decrease in total revenue year over year, which reached $115.3 million. Net retail sales declined by 7.1% to $106.5 million, and pre-tax income dropped by 24% to $11.6 million.
Lowered Yearly Forecast Follows Weak Quarter
Following these lackluster results, Build-A-Bear slashed its full-year projections. The company now anticipates total revenues between $500 million and $525 million, with a projected pre-tax income of $60 million to $68 million—a range that includes about $13 million in IEEPA refunds. This update represents a cut from Build-A-Bear’s earlier guidance that predicted $530 million to $550 million in revenue and $72 million to $78 million in pre-tax income.
Commercial and international franchise revenues posted a 9% decline to $8.8 million for the quarter. CEO Chris Hurt spoke on an analyst call about the underwhelming performance of the company’s summer lineup, explaining that merchandise failed to “resonate as well with our consumers.” Hurt said these seasonal products, usually a source of fresh innovation, lacked the adaptability and customizability customers expect, resulting in softer sales.
Wholesale Growth Stalls; Store Network Still Expanding
Build-A-Bear’s wholesale ambitions suffered a setback, with Hurt noting that the company was unable to replicate the previous success of the “multimillion-dollar Walmart program.” He added that alternative wholesale efforts progressed more slowly than hoped. Yet, Hurt did highlight that Build-A-Bear’s branded nonlicensed products had strong sell-through rates at Walmart, suggesting room for further expansion via third-party channels.
Over the course of the quarter, Build-A-Bear opened five new global experience locations and six new franchise locations, but also experienced a net decrease of four partner-operated stores. The brand finished the period with a worldwide total of 674 locations.
Adapting Amid Ongoing Uncertainty
Executives told investors that although they had braced for a difficult first half of the fiscal year, the severity of the second quarter’s decline was unexpected. Both the revised financial outlook and the recent leadership shift reflect the company’s readiness to adapt to evolving consumer preferences and fast-changing wholesale market dynamics.