Build-A-Bear Workshop 2009 Annual Report Download - page 14

BUILD-A-BEAR WORKSHOP, INC. 2009 FORM 10-K
PART I
ITEM 1. BUSINESS
OVERVIEW
Build-A-Bear Workshop, Inc., a Delaware C corporation, was
formed in 1997 and is the leading, and only international
company providing a “make your own stuffed animal”
interactive retail-entertainment experience. As of January 2,
2010, we operated 345 company-owned retail stores in the
United States, Canada, the United Kingdom, Ireland, and
France including 291 Build-A-Bear Workshop®stores in the
United States and Canada, 51 Build-A-Bear Workshop stores
in the United Kingdom and Ireland and three Build-A-Bear
Workshop stores in France. In addition, franchisees operated
65 Build-A-Bear Workshop stores in other international
locations. Our core concept is based on our guests making,
personalizing and customizing their own stuffed animals,
and capitalizes on what we believe is the relatively untapped
demand for experience-based shopping as well as the
widespread appeal of stuffed animals.
We offer an extensive and coordinated selection of
merchandise, including over 30 different styles of animals
to be stuffed and a wide variety of clothing, shoes and
accessories for the stuffed animals. Our concept appeals to
a broad range of age groups and demographics, including
children, teens, parents and grandparents. We believe that
our stores, which are primarily located in malls, are
destination locations and draw guests from a large
geographic reach. Our stores average approximately
2,700 square feet in size and have a highly visual and
colorful appearance, including custom-designed fixtures
featuring teddy bears and other themes relating to the
Build-A-Bear Workshop experience.
We also market our products and build our brand
awareness and equity in our countries of operation through
national multi-media marketing programs that target our core
demographic guests, principally parents and children. The
program incorporates consistent messaging across a variety
of media, and is designed to increase our brand awareness
and store traffic and attract more first-time and repeat guests.
In addition, our virtual world Web site, buildabearville.com®,
promotes brand connection and in-store products and events
with branded games, activities and social connectivity
features.
Since opening our first store in St. Louis, Missouri in
October 1997, we have sold over 80 million stuffed animals.
We have grown our store base from 271 stores at the end of
fiscal 2006 to 345 as of January 2, 2010.
On March 10, 2008, we announced that the Board of
Directors had authorized an increase in our share repurchase
program to up to $50 million. On March 3, 2009, we
announced a twelve month extension of our share
repurchase program. On March 3, 2010, we announced an
additional extension of our share repurchase program to
March 31, 2011.
DESCRIPTION OF OPERATIONS
Guests who visit Build-A-Bear Workshop stores enter a teddy
bear-themed environment consisting of eight stuffed animal-
making stations: Choose Me, Hear Me, Stuff Me, Stitch Me,
Fluff Me, Dress Me, Name Me, and Take Me Home®.To
attract our target guests, we have designed our stores to
provide a “theme park” destination in the mall that is open
and inviting with an entryway that spans the majority of our
storefront and highly visual and colorful teddy bear themes
and displays. The duration of a guest’s experience can vary
greatly depending on his or her preferences. While most
guests choose to participate in the full animal-making process
and all eight stations, a process which we believe averages
45 minutes to complete, guests can also visit a Build-A-Bear
Workshop store and purchase items such as clothing,
accessories, our Bear Buck$®gift certificates, Bearville
Outfitters®game cards to buy items in our virtual world or
pre-made animals in only a few minutes. We also offer a
wide variety of animals and accessories on our e-commerce
Web site, buildabear.com.
We offer an extensive and coordinated selection of
merchandise including approximately 30 to 35 varieties of
animals to be stuffed, as well as a wide variety of other
clothing and accessory items for the animals. Our clothing is
inspired by human fashion and includes authentic details such
as functional buttons, working pockets, belt loops and zippers
and has child-friendly, easy-to-dress details such as an
opening for the stuffed animal’s tail and adjustable closures to
help fit any size animal. We enhance the authentic nature of
a number of our products with strategic product licensing
relationships with brands that are in demand with our guests
such as officially sanctioned NFL®, NBA®, MLB®and FIFA™
team apparel, Skechers®shoes and Justice®clothing. We
also tap into pop culture that is relevant to our guests by
featuring merchandise such as the iCarly bear or Alvin and
the Chipmunks®stuffed animals. There are approximately
450 SKUs in our store at any one time and we intend for
each item to be highly productive.
While our concept is a unique combination of experience
and product, we selectively promote seasonal products with
special offers and promotions intended to maximize sales at
peak traffic periods in the year. We expect to build upon our
product and store promotions to drive store visits and
conversion of shoppers. We also offer frequent shopper
discounts associated with our Stuff Fur Stuff®club loyalty
program and selectively use coupons and gift-with-purchase
promotions to drive traffic to our stores.
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