Build-A-Bear Workshop 2011 Annual Report Download - page 37

BUILD-A-BEAR WORKSHOP, INC. 2011 FORM 10-K
Fiscal Year Ended December 31, 2011 (52 weeks) Compared
to Fiscal Year Ended January 1, 2011 (52 weeks)
Total revenues. Net retail sales were $387.0 million for
fiscal 2011, compared to $387.2 million for fiscal 2010, a
decrease of $0.2 million. Comparable store sales decreased
$7.6 million in fiscal 2011, or 2.1% and sales from
non-comparable locations, comprised primarily of relocated
and remodeled locations, decreased $3.6 million. Partially
offsetting these decreases are increases of $4.4 million from
sales in new stores, $1.0 million in e-commerce sales and of
$2.7 million in sales from non-store locations which includes
temporary locations. Other changes, adding $2.9 million to
net retail sales, resulted from the impact of foreign currency
exchange rates, changes in deferred revenue estimate, offset
by redemptions throughout the year, and other revenue.
Commercial revenue was $3.9 million in fiscal 2011
compared to $11.2 million in fiscal 2010. This decrease was
primarily due to $6.4 million in non-recurring wholesale
transactions in fiscal 2010. Excluding these transactions,
commercial revenues decreased $0.9 million, primarily due to
the 2010 Build-A-Bear Craftshop launch that did not reoccur
in 2011. Revenue from international franchise fees increased
to $3.4 million for fiscal 2011 from $3.0 million for fiscal
2010, an increase of $0.4 million. This increase was
primarily due to the increase in the number of franchise
locations from 63 at the end of fiscal 2010 to 79 at the end
of fiscal 2011.
Gross margin. Total gross margin, calculated as net retail
sales and commercial revenues less cost of merchandise sold,
was $156.8 million for fiscal 2011 compared to
$158.9 million for fiscal 2010, a decrease of $2.1 million, or
1.3%. Retail gross margin was $154.5 million in fiscal 2011
compared to $155.1 million in fiscal 2010, a decrease of
$0.7 million or 0.4%. As a percentage of net retail sales,
retail gross margin decreased to 39.9% for fiscal 2011 from
40.1% for fiscal 2010, a decrease of 20 basis points as a
percentage of net retail sales (bps). This decline in margin
was primarily attributable to decreased merchandise margin,
decreased leverage on fixed occupancy costs and increased
purchasing costs offset by cost savings in distribution costs.
Selling, general and administrative. Selling, general and
administrative expenses were $162.3 million for fiscal 2011
as compared to $163.9 million for fiscal 2010, a decrease of
$1.6 million, or 1.0%. As a percentage of total revenues,
selling, general and administrative expenses were 41.2% for
fiscal 2011, compared to 40.8% in fiscal 2010. The dollar
decrease was primarily attributable to higher costs in 2010 of
$1.6 million in charges related to the closure of our stores in
France and corporate payroll costs primarily related to a
bonus that did not reoccur in 2011. These decreases were
partially offset by consulting costs related to continuing efforts
to improve efficiencies and reduce expenses.
Store preopening. Store preopening expense was
$0.5 million for fiscal 2011 as compared to $0.7 million for
fiscal 2010. These amounts include preopening rent expense
of $0.2 million for 2011 and $0.1 million for 2010.
Preopening expenses include expenses for stores that have
opened, including temporary locations, as well as some
expenses incurred for stores that will be opened at a
later date.
Interest expense (income), net. Interest income, net of
interest expense, was $0.1 million for fiscal 2011 as
compared to $0.3 million for fiscal 2010.
Provision for income taxes. Income tax expense was
$14.4 million in fiscal 2011, compared to an income tax
benefit of $2.6 million for fiscal 2010. The effective rate was
(543.4)% in 2011 and 104.2% in 2010. The fluctuation in
the effective rate in 2011 was primarily attributable to the
recording of a $15.6 million valuation allowance in 2011 on
the US deferred tax assets.
Fiscal Year Ended January 1, 2011 (52 weeks) Compared to
Fiscal Year Ended January 2, 2010 (52 weeks)
Total revenues. Net retail sales decreased to
$387.2 million for fiscal 2010 from $388.6 million for fiscal
2009, a decrease of $1.4 million, or 0.4%. Comparable
store sales decreased $7.2 million in fiscal 2010, or
2.0% and sales from non-comparable locations decreased
$2.1 million. Partially offsetting these decreases is an increase
of $4.3 million related to the revenue deferral under our
customer loyalty program. This year-end adjustment
represented a refinement in the calculation used to estimate
the liability that also took into account the change in
member’s redemption patterns experienced in 2010. This
increase was partially offset by $1.9 million of revenue
deferred throughout the year as estimated under the previous
approach. Increases in net retail sales resulted from sales in
new stores and increases in sales over the Internet of
$2.4 million and $1.2 million, respectively. Other increases
totaling $1.9 million came from sales at non-store locations
which includes temporary locations, other retail revenues and
the impact of foreign currency exchange rates.
Commercial revenue was $11.2 million in fiscal 2010
compared to $4.0 million in fiscal 2009. This increase was
primarily due to $6.4 million in non-recurring wholesale
transactions. Excluding these transactions, commercial
revenues increased $0.8 million reflecting the introduction of
Build-A-Bear Craftshop kits. Revenue from international
franchise fees decreased to $3.0 million for fiscal 2010 from
$3.4 million for fiscal 2009, a decrease of $0.4 million. This
decrease was primarily due to continuing adverse global
economic conditions.
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