How Build-A-Bear is Bucking Trends: Report

Shares of Build-A-Bear (St. Louis) have surged more than 2000 percent over the past 5 years, eclipsing the performance of such high-flying high-tech giants as Microsoft, Nvidia, Oracle and Palantir, The Washington Post reports.

Despite that meteoric rise (from $1 a share in 2020 to $72 or so today) Build-A-Bear is not a meme stock or a bubble, Steve Silver, an analyst with Argus Research told the Post. It’s the market catching up to the company’s “strong fundamentals that have been in place for a couple of years,” Silver noted.

In addition, Build-A-Bear is one of several toy companies to have benefited from “kidulting,” the trend of adults buying and collecting toys out of sentimentality and a search for community. It also helps that the chain’s stores have been interactive/experiential from day one.

“Build-A-Bear’s resilience can largely be credited to its singular in-store experience, which captivates customers at a young age by bringing a “furry friend” to life, Chris Byrne, a toy expert and consultant told the Post.

Looking ahead, “analysts project the company will continue to grow, bucking trends on two fronts: a thriving mall brand that sells items in a highly tariffed category,” the Post reported. “While its counterparts in shopping centers shutter locations and file for bankruptcy, and their peers in the toy industry lower their full-year forecast and do rounds of layoffs, Build-A-Bear workshop is opening stores and raising its guidance.” (Overall , the retailer has 627 stores globally across malls, tourist destinations, cruise ships and department stores. About 100 of those stores opened in the past two years, and the company expects to open 60 more in fiscal 2025.)

As for tariffs, Build-a-Bear sources the majority of its inventory from China, which has a 30 percent tariff rate. While the company stockpiled some core items to avoid the duty, that inventory is running out. The retailer projects an $11 million hit from tariffs this year.

Eric Beder, an analyst with SCC Research, told the newspaper Build-A-Bear has set itself up to weather such setbacks. For years, Beder said, the company was proactive in preparing for uncertainty by reviewing every store and closing those that were unprofitable; adjusting prices and renegotiating deals with landlords and manufacturers to avoid taking on debt; and moving most of its online order fulfillment to stores, expediting delivery time and double-dipping on labor.

Click here for the full Post article. Note: it is behind a paywall.