Build-A-Bear Workshop 2012 Annual Report Download - page 35

BUILD-A-BEAR WORKSHOP, INC. 2012 FORM 10-K
Selling, general and administrative expense: These
expenses include store payroll and benefits, advertising, credit
card fees, store supplies and preopening expenses as well as
central office general and administrative expenses, including
costs for virtual world maintenance, management payroll,
benefits, stock-based compensation, travel, information
systems, accounting, insurance, normal store closings, legal
and public relations. These expenses also include
depreciation and amortization of central office leasehold
improvements, furniture, fixtures and equipment as well as the
amortization of intellectual property costs.
In 2009, we achieved $22 million in savings in selling,
general and administrative expenses including marketing,
central office payroll and outside services. We were able to
maintain these savings in 2010 and 2011. In 2012, we
saved an additional $4 million in selling general and
administrative expenses that were used to support sales
driving marketing initiatives. Other store expenses such as
credit card fees and supplies historically have increased or
decreased proportionately with net retail sales.
We have share-based compensation plans covering the
majority of our management groups and our Board of
Directors. We account for share-based payments utilizing the
fair value recognition provisions of Accounting Standards
Codification (ASC) Section 718 — Stock Compensation. We
recognize compensation cost for equity awards over the
requisite service period for the entire award. In 2012, 2011
and 2010, we recorded stock based compensation of
approximately $3.6 million, $4.6 million and $4.8 million,
respectively.
STORES
Company-owned stores: The number of Build-A-Bear
Workshop stores in the United States, Canada, Puerto Rico,
the United Kingdom, Ireland and France for the last three
fiscal years along with the projections for fiscal 2013 can be
summarized as follows:
Fifty-two Weeks Ended December 28,
2013 — Projected
December 29,
2012 Opened Closed
December 28,
2013
North America
Traditional 283 2 (34) 251
Non-traditional 8— (2) 6
291 2 (36) 257
Europe 60 — (1) 59
Total 351 2 (37) 316
Fifty-two Weeks Ended December 29, 2012
December 31,
2011 Opened Closed
December 29,
2012
North America
Traditional 287 2 (6) 283
Non-traditional 11 1 (4) 8
298 3 (10) 291
Europe 58 2— 60
Total 356 5 (10) 351
Fifty-two Weeks Ended December 31, 2011
January 1,
2011 Opened Closed
December 31,
2011
North America
Traditional 290 2 (5) 287
Non-traditional 15 2 (6) 11
305 4 (11) 298
Europe 54 5 (1) 58
Total 359 9 (12) 356
Our long term store real estate goal is to improve our
stores’ sales productivity and profitability. Today we believe
that the optimal number of Build-A-Bear Workshop stores in
North America is between 225 and 250 and approximately
60 to 70 in the United Kingdom and Ireland for a total of 285
to 320 stores. We currently expect to reach the optimal level
in North America with the closure of 50 to 60 stores in fiscal
2013 and 2014. Locations to close and the timing of closures
are subject to ongoing negotiations and overall economic
considerations as we continually reevaluate our market
repositioning and optimization plans.
Integral to the success of our real estate optimization
strategies is the opening of our new store design which gives
certain stores destination appeal and increases productivity in
the market. The new design merges Build-A-Bear Workshop’s
iconic hands-on bear-making process with the power of
technology to provide an updated, highly interactive
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