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Why Build-A-Bear Workshop Stock Just Popped

What happened

Shares of toy maker Build-A-Bear Workshop (NYSE: BBW) are rising today, up by 4.1% as of 2:15 p.m. EDT, after the company exceeding analysts' expectations in its second-quarter 2021 earnings report this morning.

Instead of the $81 million in sales and $0.20-PER-SHARE loss that Wall Street had expected, Build-A-Bear reported that it earned a pro forma profit of $0.43 per share (and a GAAP profit of $0.42 per share) on sales of nearly $95 million in Q2.

Image source: Getty Images.

So what

Making an extra effort to give investors context for its remarkable performance, Build-A-Bear noted that its sales increased 135% in comparison to the pandemic-depressed numbers it put up in the second quarter of last year -- but also grew 20% in comparison to the pre-pandemic Q2 2019.

Gross margin was similarly much improved even in comparison to 2019 -- 53.2% versus 44.1%. And the company's earnings were better than the losses it posted in both 2019 and 2020.

Now what

Looking ahead to the third quarter and beyond, CEO Sharon John noted that the company is "navigating an environment with higher costs and a tight supply chain as well as monitoring the ongoing evolution of the pandemic." Nevertheless, John said, "[W]e are optimistic about our full-year performance and are again increasing our annual guidance."

Sales for this year are now expected to range from $375 million to $385 million -- well above the $338.5 million recorded in 2019. No word on GAAP profits, but Build-A-Bear said that it expects earnings before interest, taxes, depreciation, and amortization (EBITDA) to range from $45 million to $50 million.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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