Build-A-Bear’s Stock is Up… Thanks to Bluey?

If you've ever stood in line with your kid to drop $50+ on a stuffed animal you already know where I’m going with this. 

I can’t believe I’m talking about stuffed animals right now but once you see some of their financials, you’ll get it. Build-A- Bear, the place where you build those fluffy friends that kids (and, let’s be honest, even some adults) love, just pulled off a major move with their latest release: a Bluey collection. If you don’t know Bluey, it’s the animated Aussie pup that's taken over streaming – in fact, it’s the No. 1 show on U.S. platforms in 2024. And Build-A-Bear saw that and thought, “Yeah, we need that.”

So, they dropped a line of make-your-own Bluey plush toys, complete with accessories like Granny Janet and Bingo outfits (if you know, you know), and the response was insane. We’re talking 50,000 people on the waitlist before these little guys even hit the shelves. And, shocker – they sold out online already. If you didn’t snag one, well, good luck finding one in stores.

Now, why does this matter for Build-A-Bear’s bottom line? This Bluey launch helped shares pop over 5% on Friday and it comes on the heels of some solid numbers for the company. In their latest earnings report, they pulled in just under $112 million in revenue, which is a nice 2% increase from the same time last year. Sure, 2% doesn’t blow the doors off the bank, but analysts were actually expecting a bit less – around $110 million.

And it's not just revenue that’s ticking up. Build-A-Bear’s net income grew by 5%, landing at $8.8 million, or $0.64 per share. That’s better than the forecasted $0.59 per share, and any time a company outperforms like that, it’s a good look. Plus, they’re seeing strong growth in their commercial and international franchises – those jumped by 45%, though it only added about $8.3 million to the pot. Still, it’s a revenue stream with a lot of upside potential.

But what’s really got investors excited is Build-A-Bear’s growth strategy. The company plans to open 50 new stores by the end of 2024, adding to the 37 they opened last year. They’re targeting high-traffic areas like downtown Chicago and Frankenmuth, Michigan— tourist destinations where people are already spending big, which makes sense since Build-A-Bear is all about that in-store experience.

Build-A-Bear’s stock has probably already caught your eye. They’re up a 42% year-to-date, which is pretty impressive. A lot of that comes down to their strong earnings growth. This year, their earnings per share (EPS) are expected to grow by 8.8%. Compare that to the industry average, which is actually shrinking by 7.5%, and it’s clear Build-A-Bear is outpacing a lot of its competition.

Not to mention, their cash flow is looking healthy too. Year-over-year cash flow growth is at 6.2%, well above the industry average of -5.5%. This means they’ve got more cash on hand to invest in projects without needing to take on more debt – a solid position to be in for a growing company.

So, what’s next for Build-A-Bear? For starters, they’re sticking to their guidance for 2024, which means they’re expecting mid-single-digit growth in revenue and pre-tax income. They’re also keeping capital expenditures in the range of $18 million to $20 million – money they’ll likely use to fund those 50 new stores and other expansions.

By the way, last year over 40% of their revenue came from teens and adults. The Bluey collaboration is just one part of their plan to appeal to both kids and nostalgic adults. And let’s not forget about their other partnerships, like Doctor Who and Kung Fu Panda, plus upcoming collaborations with films like “If” and “Kung Fu Panda 4.” They’re also delving into the digital world, with things like the Build-A-Bear Tycoon game in Roblox and various Web 3 activations.

At the end of the day, Build-A-Bear is doing a lot of things right. From their smart collaborations (hello, Bluey) to expanding their retail locations inside every mall of America, they’ve got a solid growth plan in place. With their stock up 42% and earnings growth beating the industry, it’s clear they’re a store with a fluffy future.

PS: We failed. Yep, you read that right. We didn’t hit our usual triple-digit target. Instead, our Wednesday pick only shot up 60%. Is that a letdown? Maybe for perfectionists, but to be honest, we’ll still take it. Want in on our next potential 100%+ winning trade alert? Click here to become a premium member.

Stocks.News has positions in Build-A-Bear and Roblox.