Build-A-Bear Workshop 2014 Annual Report Download - page 37

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Seasonality and Quarterly Results
The following is a summary of certain unaudited quarterly results of operations data for each of the last two fiscal years.
(1) Retail gross margin represents net retail sales less cost of retail merchandise sold.
Our operating results for one period may not be indicative of results
for other periods, and may fluctuate significantly because of a
variety of factors, including, but not limited to: (1) changes in general
economic conditions and consumer spending patterns; (2) increases
or decreases in our comparable store sales; (3) fluctuations in the
profitability of our stores; (4) changes in foreign currency exchange
rates; (5) the timing and frequency of our marketing initiatives,
including national media and other public relations events; (6) the
timing of our store openings and closings and related expenses;
(7) changes in consumer preferences; (8) the eectiveness of our
inventory management; (9) the actions of our competitors or mall
anchors and co-tenants; (10) seasonal shopping patterns and holiday
and vacation schedules; and (11) weather conditions.
The timing of store openings, closures and remodels may result
in fluctuations in quarterly results as a result of the revenues and
expenses associated with each store location. We typically incur most
preopening costs for a new store in the three months immediately
preceding the store’s opening. Expenses related to store closings are
typically incurred in stages: when the decision is made to close the
store, when the closure is communicated to store associates and at
the time of closure.
As a toy retailer, our sales are highest in our fourth quarter, followed
by the first quarter. The timing of holidays and school vacations can
impact our quarterly results. We cannot ensure that this will continue
to be the case. In addition, for accounting purposes, the quarters of
each fiscal year consist of 13 weeks, although we will have a 14-week
quarter approximately once every six years. The 2014 fiscal fourth
quarter had 14 weeks.
Liquidity and Capital Resources
Our cash requirements are primarily for the opening of new stores,
installation and upgrades of information systems and working
capital. Over the past several years, we have met these requirements
through capital generated from cash flow provided by operations.
We have access to additional cash through a revolving line of credit
that has been in place since 2000.
Operating Activities. Cash flows provided by operating activities
were $34.9 million in fiscal 2014, $19.1 million in fiscal 2013 and $16.5
million in fiscal 2012. Cash flows from operating activities increased
in fiscal 2014 as compared to 2013 primarily due to increased store
contribution. Cash flows from operating activities increased in
fiscal 2013 as compared to 2012 primarily due to increased store
contribution partially oset by the timing of inventory receipts and
payments and the increase in receivables.
Investing Activities. Cash flows used in investing activities were
$11.8 million in fiscal 2014, $19.4 million in fiscal 2013 and $15.1
million in fiscal 2012. Cash used in investing activities in 2014 related
primarily to the opening of five new traditional stores and 11 non-
traditional stores, the continued installation and upgrades of central
oce information technology systems and the purchase of short-
term investments. Cash used in investing activities in 2013 related
primarily to the continued installation and upgrades of central oce
information technology systems, the remodeling or relocation of 20
stores and the opening of nine new locations. Cash used in investing
activities in 2012 related primarily to the continued installation and
upgrades of central oce information technology systems, the
opening of five new stores, the remodeling or relocation of 14 stores,
oset by the maturity of short-term investments.
Fiscal 2014 Fiscal 2013
(Dollars in millions,
except per share data)
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
Total revenues $97.9 $76.2 $ 86.7 $ 131.5 $ 104.3 $ 81.9 $ 84.8 $ 108.1
Retail gross margin(1) 42.1 29.4 37.4 67.9 42.7 29.6 33.5 47.7
Net income (loss) 5.0 (4.3)1.8 11.8 0.0 (6.2)(1.4) 5.4
Income (loss) per common share:
Basic 0.29 (0.25)0.10 0.68 0.00 (0.38)(0.08) 0.31
Diluted 0.29 (0.25)0.10 0.67 0.00 (0.38)(0.08) 0.31
Number of stores (end of quarter) 316 313 313 324 333 323 320 323
BUILD-A-BEAR WORKSHOP, INC. 2014 ANNUAL REPORT 25