Build-A-Bear Workshop (NYSE:BBW) shares tanked nearly 4% today after the retailer of plush animals reported a mixed set of numbers for the third quarter and scaled back its financial outlook. Although revenue ticked higher by 3% year-over-year to $107.6 million, it missed expectations by about $1.2 million. EPS of $0.53, on the other hand, fared better than estimates by $0.02.
During the quarter, consolidated eCommerce demand rose by 7.1%. In addition, Commercial and International franchise revenue rose by 36.2% to $7.2 million. Moreover, a combination of lower freight expenses and expansion in the Commercial and Franchise segments helped the company expand its gross margin by 70 basis points.
Further, the company increased its global store count by 14 to 511 locations. Despite this growth, BBW scaled back its financial outlook due to macroeconomic headwinds. For Fiscal Year 2023, BBW now expects revenue to increase by 3% to 5%, compared to the prior expectations of a 5% to 7% increase. Pre-tax income is anticipated to rise by 5% to 10%. This is a sharp moderation from BBW’s prior anticipated range of a 10% to 15% growth in pre-tax income.
What is the Target Price for Build-A-Bear?
Overall, the Street has a Moderate Buy consensus rating on Build-A-Bear. The average BBW price target of $39 points to a substantial 59% potential upside in the stock. That’s on top of a nearly 35% rise in the company’s share price over the past six months.
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