Build-A-Bear is up 95% this year because it built-a-biz selling toys to adults
The teddy-bear maker is now the most profitable it’s ever been.
Build-A-Bear Workshop silently rose from the pandemic as a profit-making machine.
Maybe its because I don’t have many children or “Disney adult” types in my life, but I hadn’t thought about Build-A-Bear in a long time. If you would’ve asked me to guess, I’d have bet the company wasn’t doing so hot, considering people don’t go to malls as much as they used to. Also, I’ve noticed Squishmallows grow in popularity while not really hearing people talk about the customizable Build-A-Bear.
I would’ve been wrong: Build-A-Bear is actually more profitable than ever. Its stock is up 95% this year and about 1,388% in the past five years.
Like many other toy companies, there came a time when Build-A-Bear noticed that adults are more lucrative to market to because... well, they actually have jobs and money. Now, about 40% of its end users are teens and adults.
It’s also diversified from its classic method of choosing a limp teddy bear carcass, filling it with fluff and a stitched heart, then buying it clothes and accessories. They’ve been pushing more collectibles, like a $2,000 bear covered in Swarovski crystals.
That switch turned the company around from bleeding money from 2019 to 2021 to reporting upward of $40 million in profit each year since.
But Build-A-Bear might be flying too close to a fluffy, cuddly sun.
This year the company introduced a line of “Skoosherz,” which are round, plushy stuffed animals. They were promptly sued by Squishmallows, a Berkshire Hathaway-owned company that makes similar products. Squishmallows made $1 billion in sales in 2023. (Build-A-Bear also recently got hit with a class-action over allegedly fake discount prices.)
Build-A-Bear has been able to swell its profits without much expansion to brick-and-mortar stores and a focus on online sales. It currently has 433 stores, compared its peak of 470 locations in 2017, and it was making a fraction of the profits it’s making now.
But the company said in its most recent earnings call on Thursday that it’s noticing some softness in online sales, which tend to be from those adults and teens that it owes that massive profit growth to. Brick-and-mortar sales are more often for children. It also manufactures most of its products in China, so with the reelection of Donald Trump, the threat of tariffs on its inventory is hanging over it.
This might be part of the reason investors seem a bit spooked today, sending the price down 8%.
