Build-A-Bear Workshop 2009 Annual Report Download - page 36

BUILD-A-BEAR WORKSHOP, INC. 2009 FORM 10-K
We use net retail sales per gross square foot and
comparable store sales as performance measures for our
business. The following table details net retail sales per gross
square foot by age of store for the periods presented:
Fiscal
2009
Fiscal
2008
Fiscal
2007
Net retail sales per gross square foot –
North America(1)(2)
Store Age > 5 years (164, 145 and
103 stores, respectively) $372 $448 $517
Store Age 3-5 years (62, 54 and
65 stores, respectively) $341 $455 $537
Store Age <3 years (59, 73 and
65 stores, respectively) $333 $432 $497
All comparable stores $358 $445 $516
(1) Net retail sales per gross square foot represents net retail sales from stores
open throughout the entire period divided by the total gross square footage
of such stores. European stores are excluded from the calculation.
Calculated on an annual basis only.
(2) Excludes our webstore and seasonal and event-based locations.
The percentage increase (or decrease) in comparable
store sales for the periods presented below is as follows:
Fiscal
2009
Fiscal
2008
Fiscal
2007
Comparable store sales change –
North America (%)(1)(2)
Store Age > 5 years (164, 145 and
103 stores, respectively) (15.1)% (16.0)% (8.3)%
Store Age 3-5 years (62, 54 and
65 stores, respectively) (17.7)% (16.0)% (10.2)%
Store Age <3 years (59, 73 and
65 stores, respectively) (22.2)% (20.2)% (13.0)%
Total comparable store sales change (16.7)% (16.8)% (9.9)%
Comparable store sales change –
Europe (%)(1)(2) 5.0% 7.7% —
Comparable store sales change –
Consolidated (%)(1)(2) (13.4)% (14.0)% (9.9)%
(1) Comparable store sales percentage changes are based on net retail sales
and stores are considered comparable beginning in their thirteenth full
month of operation. Fiscal 2008 first quarter was the first quarter that our
European operations met the criteria for inclusion in our comparable store
calculation. As such, there is no comparable data for Europe for fiscal
2007.
(2) Excludes our webstore and seasonal and event-based locations.
Prior to 2007, as a group our younger stores have
performed at the highest sales per square foot level, above the
chain-wide average. Often our stores open with strong sales
performance in their first year of operation and show
comparable store sales declines in years two and three; new
stores typically pay for themselves between their first and
second year of operation. Our older stores consistently
perform the best on a comparable store sales basis.
Fiscal 2009 consolidated comparable store sales
decreased by 13.4%, including a 5.0% increase in Europe
and a 16.7% decline in North America (full year comparable
store sales are compared to the 52 week period ended Jan.
3, 2009). We believe the decline in consolidated comparable
store sales was attributed primarily to the following factors:
• the economic recession and dramatic decrease in
consumer sentiment has resulted in a pullback in
consumer spending and impacted our comparable store
sales; and
• the slowdown in North America shopping mall customer
traffic during fiscal 2009 compared to fiscal 2008 has
impacted the number of new and returning guests visiting
our stores and therefore our comparable store sales. The
comparable store sales decline included both a decrease
in the number of transactions and a decrease in the
average transaction value.
Fiscal 2008 consolidated comparable store sales
decreased by 14.0%, including a 7.7% increase in Europe
and a 16.8% decline in North America (full year comparable
store sales are compared to the 53 week period ended Jan.
5, 2008). Fiscal 2008 was the first year that our European
operations met the criteria for inclusion in our comparable
store calculation. The growth in comparable store sales in
Europe largely reflects increases in brand awareness and
improvements in merchandise, store operations, guest
satisfaction and inventory flow since we completed the UK
acquisition in 2006.
We believe the decline in consolidated comparable store
sales was attributed primarily to the following factors:
• the economic recession and dramatic decrease in
consumer wealth has resulted in a significant decline in
consumer sentiment resulting in a pullback in consumer
spending;
• the decline in shopping mall customer traffic during fiscal
2008 compared to fiscal 2007 has impacted the number
of new and returning guests visiting our stores; and
• changes in media, online entertainment, children’s media
consumption, and play patterns, particularly for girls,
have increased the interactive play alternatives available
to children.
Franchise fees: We receive an initial, one-time franchise
fee for each master franchise agreement which is amortized
to revenue over the life of the respective franchise agreements,
which extend for periods up to 25 years. Master franchise
rights are typically granted to a franchisee for an entire
country or countries. Continuing franchise fees are based on
a percentage of sales (generally 7.5%) made by the
franchisees’ stores and are recognized as revenue at the time
of those sales.
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