BuildABear Workshop (FPW) Q2 2026 Earnings Report

The call presented a mixed-to-negative near-term picture: solid strategic progress (record seasonal performance, product successes, international expansion, brand partnerships, and improved sequential e-commerce trends) is offset by notable operational and financial headwinds (Q2 revenue down 7.2%, e-commerce down 15.6%, gross margin contraction of 340 bps, pre-tax income down 24.1%, reduced full-year revenue and profit guidance, slower-than-expected wholesale development, and tariff-driven cost pressure). Management emphasized confidence in long-term brand strength and strategic initiatives but acknowledged that the company has moderated near-term expectations and faces ongoing traffic and macroeconomic challenges.

Management lowered full‑year revenue guidance to $500–$525 million (from $530–$550M) and cut pre‑tax income guidance to $60–$68 million (from $72–$78M); excluding an approximately $7M IEEPA tariff refund, adjusted pre‑tax income is now expected at $53–$61M. The outlook reflects $10–$11M of tariff‑related costs based on a 12.5% tariff rate, roughly $3M of longer‑term investments, and the decision not to anniversary a multimillion‑dollar Walmart program. They still expect to open at least 50 net new locations this year (12 net added through H1; 674 locations across 37 countries at Q2 end) and see Q3 improving sequentially with Q4 as the strongest quarter. Key trailing metrics disclosed: Q2 revenue $115.3M (−7.2% YoY), H1 revenue $240.6M; Q2 pre‑tax income $11.6M (vs. $15.3M LY), H1 pre‑tax income $35.5M (adjusted H1 pre‑tax $28.5M excl. $7M refund); Q2 gross margin 54.2% (−340 bps); SG&A $51.4M (44.6% of revenue vs 45.4% LY); e‑commerce demand −15.6% YoY while total DTC revenue was +3% vs 2024; cash $14M at quarter end; inventory $81.1M (down ~$0.6M YoY); $8.5M returned to shareholders in the quarter, >5% reduction in share count over 12 months, and $43.2M remaining under the $100M buyback authorization.