Question: Can Build-A-Bear Workshop continue its bear-sized success? Founder Maxine Clark was a retailing executive for twenty-five years before she became an entrepreneur in 1997. Thinking back to her much-loved teddy bear and the magic she remembered in special shopping trips as a child, Clark wanted her new business to combine entertainment and retailing to please children of all ages. The retail company she founded, Build-A-Bear Workshop, Inc., has now blossomed into an international chain of more than 200 stores ringing up $375 million in annual sales. Master Bear Builders (store employees) help customers choose the types of animals they want. Bears, bunnies, kittens, ponies, and frogs, available in small or large sizes, are just some of the choices. Next, customers select the fake-fur color and the amount of stuffing and then carefully insert the heart.
To add a voice, they can insert a prerecorded sound chip or record a personalized sound chip. Then customers help stitch the seams, gently fluff the fur, and name their new friends. If they wish, they can pick out clothing and accessories such as angel wings or miniature cowboy gear. The result is a one-ofa-kind stuffed animal that goes home in a house-shaped package. As part of the buying procedure, customers enter their animal's names and their own names and addresses, e-mail addresses, gender, and birth dates at computer stations in each store. Build-A-Bear uses this information to generate each toy's birth certificate, signed by Clark as CEB. (By the way, Clark's CEB title stands for Chief Executive Bear.) Then the information is pooled with sales data and other details, analyzed carefully, and used to plan newsletters and other promotional efforts.
In addition, because each animal contains a unique bar-coded tag, the company can return lost toys by consulting the database to determine ownership. So far the company has used the system to reunite fifty lost animals with their owners. Each Build-A-Bear store rings up $600 per square foot in annual sales, roughly twice the average of a typical mall store. The mix of products is constantly evolving to keep customers coming back again and again. "We add new products monthly to stay in step with the latest fashions and trends," she says. "More than 80 percent of our line changes at least twice a year." To raise millions of dollars for rapid expansion, Clark and her management team decided to take Build-A-Bear public. After filing the legally required forms for an IPO with the SEC, the company was listed on the NYSE, and shares began trading under the BBW symbol on October 28, 2004. First-day trading was brisk: Nearly 6 million shares changed hands, and the stock closed at $25.05 a share. Now that Build-A-Bear is a public corporation, its executives present formal financial reports every quarter and every year.
They also take questions from brokerage firm analysts during earnings conference calls, industry meetings, and other events. Senior managers have been asked about actual and projected revenue, profit margins, store traffic, new product lines, inventory levels, advertising, new stores, and other issues that shed light on how the business-and, in turn, the stock-is likely to perform in the future. Armed with this information, the analysts then issue recommendations about investing in Build-A-Bear. Build-A-Bear has been growing by promoting online purchasing, opening stores in sports stadiums, and branching out into doll-making products. New advertising campaigns are attracting new customers and repeat business from customers who want to add to their collection. Its investors are watching the company's financial position closely and weighing how the overall economic climate will affect the retailer's future. Is a bull or bear market ahead for Build-A-Bear?15
For more information about this company, go to www.buildabear .com.
1. What are the advantages and disadvantages of a corporation such as Build-A-Bear Workshop going public and selling stock?
2. Now, with new stores funded by the money obtained from selling stock, Build-A-Bear has more than 200 stores that generate annual sales revenues of $375 million. Would you buy stock in this company? Explain your answer.
3. What specific information would you want to have before deciding to buy Build-a-Bear stock, and where would you obtain this information?
4. If you were attending Build-A-Bear's annual meeting, what questions would you ask top management-and why?