Build-A-Bear Workshop 2011 Annual Report Download - page 12

BUILD-A-BEAR WORKSHOP, INC. 2011 FORM 10-K
PART I
ITEM 1. BUSINESS
OVERVIEW
Build-A-Bear Workshop, Inc., a Delaware 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
December 31, 2011, we operated 346 company-owned
retail stores in the United States, Canada, the United Kingdom
and Ireland, including 288 Build-A-Bear Workshop®stores in
the United States and Canada and 58 Build-A-Bear Workshop
stores in the United Kingdom and Ireland. In addition,
franchisees operated 79 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 as well as other brand
appropriate toy and accessory items. 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
2,600 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 children and their
parents. 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,
bearville.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 100 million stuffed animals.
On February 20, 2007, we announced that our board of
directors had authorized a $25 million share repurchase
program of our outstanding common stock. 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 February 23, 2012, we announced
that our share repurchase program had been extended to
March 31, 2013. As of March 12, 2012, we had
$8.7 million of availability under the program.
DESCRIPTION OF OPERATIONS
Guests who visit Build-A-Bear Workshop stores enter a teddy
bear themed environment consisting of eight stuffed animal
making stations: Choose Me, Hear Me, Stuff Me, Stitch Me,
Fluff Me, Dress Me, Name Me, and Take Me Home®.To
attract our target guests, we have designed stores that are
open and inviting with an entryway that spans the majority of
our storefront and are highly visual with colorful teddy bear
themes and displays that create a “theme park” destination in
the mall. The duration of a guest’s experience can vary
greatly depending on his or her preferences. While most
guests choose to participate in the full animal-making process
and all eight stations, a process which we believe averages
45 minutes, guests can also visit a Build-A-Bear Workshop
store and purchase items such as clothing, accessories, our
Bear Buck$®and Cub Cash®gift certificates, Bearville
Outfitters®game cards 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 a Victoria Justice bear and
accessories and Alvin and the Chipmunks®and Smurf™
stuffed characters.
While our concept is a unique combination of experience
and product, we selectively promote seasonal products with
special offers and discounts intended to maximize sales at
peak traffic periods in the year. We also offer frequent
shopper discounts associated with our Stuff Fur Stuff®club
loyalty program and strategically use coupons and gift-with-
purchase promotions to drive traffic to our stores.
As a retailer whose signature product is a stuffed animal
that is typically purchased as a toy or gift, our sales are
highest in our fourth quarter which ends on the Saturday
nearest December 31 each year, followed by the first
quarter. The timing of holidays and school vacations can
impact our quarterly results. Our European-based stores have
historically been more heavily weighted in the fourth quarter
as compared to our North American stores. We cannot
ensure that this will continue to be the case.
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