Build-A-Bear Workshop 2014 Annual Report Download - page 18

We are aware of several small companies that operate “make
your own” teddy bear and stued animal stores or kiosks in retail
locations, but we believe none of those companies oer the breadth
of assortment nor depth of experience or operate as a national or
international retail company.
Intellectual Property and Trademarks
We believe our copyrights, service marks, trademarks, trade secrets,
patents and similar intellectual property are critical to our success,
and we intend, directly or indirectly, to maintain and protect these
marks and, where applicable, license the intellectual property and
the registrations for the intellectual property. Our patents have
expirations ranging from 2015 to 2024.
We have developed licensing and strategic relationships with some of
the leading retail and cultural organizations. We plan to continue to
add partnerships with companies that have strong, family-oriented
brands and provide us with attractive marketing and merchandising
opportunities. These relationships for specific products are generally
reflected in contractual arrangements for limited terms that are
terminable by either party upon specified notice. Specifically, we
have key strategic relationships with select companies in which we
feature their brands on products sold in our stores, including Disney®,
Hasbro, Sanrio®, Star Wars, and major professional and collegiate
sports along with other culturally relevant brands. Additionally, we
have developed promotional arrangements with select organizations.
Our arrangements with Major League Baseball teams, including
the Chicago Cubs®, St. Louis Cardinals™ and Pittsburg Pirates® have
featured stued animal giveaways at each club’s ballpark on a day
when our brand is highly promoted within the stadium.
Availability of Information
We make certain filings with the Securities and Exchange Commission
(the “SEC”), including our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and all
amendments and exhibits to those reports, available free of charge
in the Investor Relations section of our corporate website, http://
ir.buildabear.com, as soon as reasonably practicable after they are
filed with the SEC. The filings are also available through the SEC at
the SEC’s Public Reference Room at 100 F Street, N.E., Washington,
D.C. 20549 or by calling 1-800-SEC-0330. Also, these filings are
available on the internet at http://www.sec.gov. Our Annual Reports
to shareholders, press releases and investor updates are also
available on our website, free of charge, in the Investor Relations
section or by writing to the Investor Relations department at World
Bearquarters, 1954 Innerbelt Business Center Dr., St. Louis, MO 63114.
ITEM 1A. RISK FACTORS
We operate in a changing environment that involves numerous known
and unknown risks and uncertainties that could materially aect our
operations. The risks, uncertainties and other factors set forth below
may cause our actual results, performances or achievements to be
materially dierent from those expressed or implied by our forward-
looking statements. If any of these risks or events occur, our business,
financial condition or results of operations may be adversely aected.
Risks Related to Our Business
A decline in general global economic conditions could lead to
disproportionately reduced consumer demand for our products,
which represent relatively discretionary spending, and have an
adverse eect on our liquidity and profitability.
Since purchases of our merchandise are dependent upon
discretionary spending by our guests, our financial performance
is sensitive to changes in overall economic conditions that aect
consumer spending. Consumer spending habits are aected by,
among other things, prevailing economic conditions, levels of
employment, salaries and wage rates, consumer confidence and
consumer perception of economic conditions. A slowdown in the
United States, Canadian or European economies or in the economies
of the countries in which our franchisees operate or uncertainty as
to the economic outlook could reduce discretionary spending or
cause a shift in consumer discretionary spending to other products.
Any of these factors would likely result in lower net retail sales and
could also result in excess inventories, which could, in turn, lead to
increased merchandise markdowns and related costs associated
with higher levels of inventory and adversely aect our liquidity and
profitability. For example, for fiscal 2008 through 2010 and again in
2012, we attributed a portion of our decline in comparable store sales
to the slower economy in the United States and Europe.
We depend upon the shopping malls in which we are located to
attract guests to our stores and a decline in mall trac could
adversely aect our financial performance and profitability.
While we invest in integrated marketing eorts and believe we are
more of a destination location than traditional retailers, we rely to
a great extent on consumer trac in the malls in which our stores
are located. We rely on the ability of the malls’ anchor tenants,
generally large department stores, and on the continuing popularity
of malls as shopping destinations to attract high levels of consumer
trac. We cannot control the development of new shopping malls,
the addition or loss of anchors and co-tenants, the availability or
cost of appropriate locations within existing or new shopping malls
or the desirability, safety or success of shopping malls. In addition,
consumer mall trac may be reduced due to factors such as the
economy, civil unrest, actual or threatened acts of terrorism to
shopping malls, the impact of weather or natural disasters or a
decline in consumer confidence resulting from international conflicts
or war. A decrease in shopping mall trac could have an adverse
eect on our financial condition and profitability.
If we are unable to generate interest in and demand for our
interactive retail experience and products, including being able to
6 BUILD-A-BEAR WORKSHOP, INC. 2014 ANNUAL REPORT