Build-A-Bear Workshop 2012 Annual Report Download - page 12

BUILD-A-BEAR WORKSHOP, INC. 2012 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 29, 2012, we operated 351 company-owned
retail stores in the United States, Canada, the United Kingdom
and Ireland, including 283 traditional and eight
non-traditional Build-A-Bear Workshop®stores in the
United States and Canada and 60 traditional Build-A-Bear
Workshop stores in the United Kingdom and Ireland. In
addition, franchisees operated 91 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, sounds and scents that can be added to the stuffed
animals and a wide variety of clothing, shoes and
accessories, as well as other brand appropriate toy and
novelty 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. In 2012 we opened the
first six stores in our new highly interactive design, which
features a bold new look and enhanced 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 programs incorporate consistent messaging across a
variety of media, and are designed to increase our brand
awareness and store traffic and attract more first-time and
repeat guests. In addition to supporting our e-commerce, our
Web sites, buildabear.com®and bearville.com™, promote
brand connection and in-store products and events.
Since opening our first store in St. Louis, Missouri in
October 1997, we have sold over 110 million stuffed
animals.
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®. In our
new store design, we have added an additional Love Me
station to our signature process. 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 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
cards, 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 over 30 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 the
NHL™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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