Key Highlights

  • Second quarter fiscal 2026 total revenues fell 7.2% to $115.3 million, and diluted earnings per share were $0.70 against $0.94.
  • Lowered fiscal 2026 outlook: revenues of $500 to $525 million and pre-tax income of $60 to $68 million.
  • Global locations reached 674 from 627 a year earlier, and the company reaffirmed at least 50 net new locations.
  • Cash was $14.0 million with no revolver borrowings, and a $0.23 quarterly dividend was declared on September 9.

Build-A-Bear Workshop (NYSE:BBW) shares were trading near their 52-week low at USD 24.11 on October 19, 2026, down 3.41%. The company reported unaudited second quarter results on August 27 that its chief executive said fell short of expectations, and lowered its outlook for the full fiscal year the same day.

Second quarter: lower sales and margins, a larger store base

For the 13 weeks ended August 1, 2026, total revenues were $115.3 million, down from $124.2 million a year earlier. Net retail sales fell 7.1% to $106.5 million, commercial revenue fell 6.3% to $8.1 million and international franchising revenue fell 32.8% to $0.7 million. E-commerce demand decreased 15.6%. Gross margin was 54.2% against 57.6%, which the company tied to occupancy cost deleverage and higher promotional activity.

Selling, general and administrative expenses fell to $51.4 million from $56.4 million, mainly on lower incentive compensation. Pre-tax income was $11.6 million versus $15.3 million, net income was $8.8 million versus $12.4 million, and diluted earnings per share were $0.70 versus $0.94. EBITDA, a non-GAAP measure, was $15.2 million against $18.8 million.

For the first half, revenues were $240.6 million, down 4.8%. GAAP net income was $27.1 million, or $2.16 per diluted share, compared with $27.7 million, or $2.11. The first half included a $7 million refund of IEEPA tariffs tied to prior fiscal-year costs. Excluding it, non-GAAP adjusted pre-tax income was $28.5 million and adjusted diluted earnings per share were $1.73, against $2.11 a year earlier.

Global locations totaled 674 at quarter end, up from 627, including 379 corporately managed stores, 177 partner-operated and 118 franchise locations. The quarter added a net five locations.

Cash, shareholder returns and tariff refund

Cash and cash equivalents were $14.0 million, down from $39.1 million a year earlier, which the company linked to share repurchases and the timing of capital expenditures. Nothing was drawn on the revolving credit facility. Inventory was $81.1 million, and capital expenditures were $8.6 million in the quarter.

In the second quarter the company repurchased 155,118 shares for $5.6 million and paid $2.9 million in dividends. It said it returned $22.7 million to shareholders in the first half. Through September 8, further repurchases of $4.2 million left $40.5 million available under the $100 million program adopted in September 2024. On September 9 the board declared a quarterly dividend of $0.23 per share, payable October 8 to holders of record on September 24.

The quarterly report also describes the tariff refund. After Supreme Court rulings on IEEPA tariffs, the company determined it was due a refund of about $13.2 million of tariffs previously paid, collected the refund with interest in the second quarter, and said it had substantially completed recognizing the financial statement effects. Tariffs and related costs were about $1 million in both second quarters.

Lowered outlook and what the company has planned

The company lowered its fiscal 2026 outlook. It now expects total revenues of $500 million to $525 million, compared with $529.8 million in fiscal 2025. Pre-tax income is expected at $60 million to $68 million, which reflects an approximately $13 million IEEPA tariff refund; excluding the roughly $7 million tied to prior-year costs, the adjusted, non-GAAP figure is $53 million to $61 million.

The outlook assumes tariffs and related costs of $10 million to $11 million at the current 12.5% tariff rate, capital expenditures of about $25 million and depreciation and amortization of about $17 million. Commercial revenue is expected to be roughly flat. The company reaffirmed at least 50 net new experience locations and a tax rate of about 24% excluding discrete items. Management said certain wholesale opportunities may take longer to realize than anticipated and pointed to an upcoming ICON Park location in Orlando.