How Build-A-Bear went from a penny stock to a retail winner

From Struggling Retailer to Success Story: The Build-A-Bear Workshop Turnaround

Build-A-Bear Workshop, the beloved toy store where kids can build and customize their own stuffed animals, has undergone a remarkable transformation since CEO Sharon Price John took the reins in 2013. At the time, the company was facing significant challenges, including a $49 million loss in fiscal 2012, which had sent its stock plummeting. However, under Price John’s leadership, Build-A-Bear has managed to turn its fortunes around, with a focus on e-commerce, diversifying its sales channels, and creating a unique, interactive experience for customers.

A Broken Business, Not a Broken Brand

When Price John first joined the company, she recognized that the brand itself was still strong, but the business model was in need of repair. By investing in e-commerce and shifting orders to stores instead of its distribution center, Build-A-Bear was able to streamline its operations and improve efficiency. The company also expanded its sales beyond malls, exploring new channels and partnerships to reach a wider audience. This strategic shift has paid off, with virtually all of Build-A-Bear’s stores now operating profitably.

The results have been impressive, with the company’s stock experiencing a significant surge in recent years, reaching an all-time high of around $76 in September. While the stock has since come down slightly, it remains up over 125% over the past two years. Build-A-Bear is on track to reach $500 million in annual revenue for the first time, a testament to the success of its turnaround strategy.

Challenges Ahead: Tariffs and Market Volatility

Despite its success, Build-A-Bear is not immune to external challenges. The company imports over 90% of its products from China and Vietnam, making it vulnerable to tariffs. In its third-quarter earnings report, Build-A-Bear estimated that it would take a roughly $11 million hit from tariffs in fiscal 2025. Additionally, the company experienced a slowdown in traffic in October during the government shutdown, which had a negative impact on sales.

Analysts have taken note of these challenges, with Small Cap Consumer Research analyst Eric Beder lowering his projections and reducing his price target for the company. However, Beder still believes that Build-A-Bear has a unique advantage in the market, thanks to its interactive, experiential approach to retail. As he notes, “You can buy stuffed animals or a plush pretty much everywhere, but at Build-A-Bear, it’s yours. You helped make it.”

As the retail landscape continues to evolve, Build-A-Bear Workshop’s story serves as a reminder that even struggling companies can turn things around with the right strategy and leadership. By focusing on its strengths and adapting to changing market conditions, Build-A-Bear has managed to thrive in a crowded and competitive industry.