Build-A-Bear Workshop 2013 Annual Report Download - page 28

of operation. Our web store and temporary and seasonal locations are
not included in our comparable store calculations. Non-comparable
stores also result from a store relocation or remodel that results in
a significant change in square footage. The net retail sales for that
location are excluded from comparable store sales calculations until
the thirteenth full month of operation after the date of the change.
We have a loyalty program with a frequent shopper reward feature,
the Stuff Fur Stuff® club. Members of the program receive one point
for every dollar spent and receive awards after reaching certain point
thresholds. On a quarterly basis, an estimate of the obligation related
to the program, based on actual points, awards outstanding and
historical point conversion and award redemption patterns, is recorded
as an adjustment to the deferred revenue liability and net retail sales.
As the awards can be earned or redeemed at any of our store locations,
we account for changes in the deferred revenue account at the total
company level only. Therefore, when we refer to net retail sales by
location, such as comparable stores or new stores, these amounts do
not include any changes in deferred revenue. See “-Critical Accounting
Estimates” for additional details on the accounting for the deferred
revenue related to our customer loyalty program.
We use net retail sales per square foot and comparable store sales as
performance measures for our business. The following table details
net retail sales per square foot for the periods presented:
(1) Net retail sales per gross square foot in North America represents net retail sales
from stores open throughout the entire period in North America divided by the
total gross square footage of such stores.
(2) Excludes our web store and temporary and seasonal locations.
(3) Net retail sales per selling square foot in Europe represents net retail sales from
stores open throughout the entire period in Europe divided by the total selling
square footage of such stores.
The percentage increase (or decrease) in comparable store sales for
the periods presented below is as follows:
(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.
(2) Excludes our web store and temporary and seasonal locations.
Fiscal 2013 consolidated comparable store sales for the full year
are compared to the 52 week period ended December 29, 2012. We
attribute the increase in comparable store sales for the periods
presented primarily to the impact of our brand marketing and
product strategies which have improved results in our overall store
base and our real estate optimization strategies which have driven
sales in selective markets impacted by store closures and remodels.
• The growth in our base business accounted for approximately 70%
of the overall comparable store sales increases in 2013 which we
believe were driven by:
• A 30% reduction in discounts in North America which
contributed to higher transaction value in 2013; and
• Our brand building marketing initiatives, including
national television advertising in the United States, along
with a balance of proprietary and licensed product, which
we believe increased traffic to our stores and contributed to
an increase in transactions.
• We believe that our real estate optimization strategies drove the
remaining 30% of the overall comparable store sales increase in
2013. The real estate optimization plans include selective store
closures, primarily in North American multi-store markets, as well
as updates and remodels of select other stores. These actions drove
a 9% increase in sales per square foot in North America, reversing a
multi-year decline.
Fiscal 2012 consolidated comparable store sales for the full year are
compared to the 52 week period ended December 31, 2011 We believe
the primary drivers of the overall decline in consolidated comparable
store sales for the full year were as follows:
• In the first half of 2012, we had benefit from higher redemption
rates and transaction value of our holiday gift cards and from a
promotion in the United States with McDonald’s Happy Meals®
that drove awareness of our brand and brought traffic to our stores
resulting in slightly positive comparable store sales in North
American through the first twenty-six weeks.
• In the fiscal 2012 third quarter, we experienced a decline in the
number of transactions compared to the 2011 third quarter which
benefited from a strong product offering that was tied to a major
theatrical release supported by studio marketing and advertising.
• In the fiscal 2012 fourth quarter, we believe our new brand building
marketing campaign in the United States along with a return to
traditional holiday product offerings resulted in an increase in
North American comparable store sales.
• In the United Kingdom, we believe the negative economic
conditions contributed to a continued decline in consumer
sentiment and a corresponding decline in spending that negatively
impacted our comparable store sales throughout the year.
Franchise fees: We receive an initial, one-time franchise fee for each
master franchise agreement which is amortized to revenue over the
initial term of the respective franchise agreements, which extend for
Fiscal
2013
Fiscal
2012
Fiscal
2011
Net retail sales per gross square foot -
North America (1) (2) $381 $350 $ 354
Net retail sales per selling square foot -
Europe
(2) (3) £525 £511 £562
Fiscal
2013
Fiscal
2012
Fiscal
2011
Comparable store sales change -
North America (%) (1) (2) 5.7%(2.0)% (2.5)%
Comparable store sales change -
Europe (%) (1) (2) 2.9%(8.4)% (0.2)%
Comparable store sales change -
Consolidated (%) (1) (2) 5.1%(3.3)% (2.1)%
18 BUILD- A-BEAR WORKSHOP, INC. 2013 FORM 10 -K