Build-A-Bear Workshop 2013 Annual Report Download - page 29

periods up to 25 years and include a renewal option if certain
conditions are met. Master franchise rights are typically granted to a
franchisee for an entire country or countries. Continuing franchise
fees are based on a percentage of sales made by the franchisees’
stores and are recognized as revenue at the time of those sales.
Commercial revenue: Commercial revenue includes the company’s
transactions with other businesses, mainly through wholesale
and licensing transactions. Revenue from wholesale product sales
includes revenue from merchandise sold at stores operated by
third parties under licensing agreements like Landry’s restaurants.
Revenue from licensing activities is generally based on a percentage
of sales made by licensees to third parties and is recognized at the
time the product is shipped by the licensee or at the point of sale.
We have entered into a number of licensing arrangements whereby
third parties manufacture merchandise carrying the Build-A-Bear
Workshop trademark and sell it to other retailers.
Costs and Expenses
Cost of merchandise sold and retail gross margin: Cost of
merchandise sold includes the cost of the merchandise, including
royalties paid to licensors of third party branded merchandise;
store occupancy cost, including store depreciation and store
asset impairment charges; cost of warehousing and distribution;
packaging; stuffing; damages and shortages; and shipping and
handling costs incurred in shipment to customers. Retail gross
margin is defined as net retail sales less the cost of retail merchandise
sold, which excludes cost of wholesale merchandise sold.
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 management
payroll, benefits, stock-based compensation, normal store closings,
travel, information systems, accounting, insurance, 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. In 2013, we continued to reduce expenses as
we reduced selling, general and administrative expenses in both
dollars and as a percent of revenue. Other store expenses such as
credit card fees and supplies historically have increased or decreased
proportionately with net retail sales.
Stores
Company-owned stores: The number of Build-A-Bear Workshop
stores in the United States, Canada, Puerto Rico, the United Kingdom
and Ireland for the last two fiscal years along with the projections for
fiscal 2014 can be summarized as follows:
Fifty-three Weeks Ended January 3, 2015 - Projected
December 28,
2013 Opened Closed
January 3,
2015
North America
Traditional 252 1(12)241
Non-traditional 11 3(1)13
263 4(13)254
Europe
Traditional 58 - - 58
Non-traditional 2 - - 2
60 - - 60
Tota l 323 4(13)314
Fifty-two Weeks Ended December 28, 2013
December 29,
2012 Opened Closed
December 28,
2013
North America
Traditional 283 3 (34) 252
Non-traditional 85(2)11
291 8 (36) 263
Europe
Traditional 58 1(1)58
Non-traditional 2- - 2
60 1(1)60
Total 351 9 (37) 323
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
Traditional 56 2 - 58
Non-traditional 2 - - 2
58 2 - 60
Tota l 356 5(10)351
BUILD- A-BEAR WORKSHOP, INC. 2013 FORM 10 -K 19