Build-A-Bear Workshop Inc. (NYSE:BBW) shares fell 15.60% in pre-market trading on Thursday after the retailer lowered its fiscal 2026 outlook, overshadowing second-quarter earnings that came in slightly ahead of analyst expectations.
The company reported adjusted earnings per share of $0.70 for the quarter ended August 1, beating the analyst consensus of $0.67. Total revenue, however, declined 7.2% year over year to $115.3 million from $124.2 million and came in below the $121.27 million forecast.
Build-A-Bear reduces fiscal 2026 guidance
Management attributed the revised outlook to weaker-than-expected second-quarter performance and delays in certain wholesale opportunities that are now expected to take longer to materialise.
Build-A-Bear lowered its fiscal 2026 revenue forecast to between $500 million and $525 million. The midpoint of $512.5 million is below the analyst consensus estimate of $538.8 million.
The company also reduced its full-year pre-tax income guidance to a range of $60 million to $68 million. That forecast includes approximately $13 million related to a tariff refund.
“While we expected fiscal 2026 to be back-half weighted, second-quarter results fell short of our expectations, and certain wholesale opportunities may take longer to realize than previously anticipated,” said Chris Hurt, Chief Executive Officer.
Retail and e-commerce sales decline
Net retail sales decreased 7.1% during the quarter to $106.5 million, while consolidated e-commerce demand fell 15.6%.
Pre-tax income declined to $11.6 million, equivalent to 10.1% of total revenue, from $15.3 million, or 12.3% of revenue, in the corresponding period last year.
Build-A-Bear also incurred approximately $1 million of tariffs and related expenses during the quarter.
Balance sheet remains debt-free
Despite the softer quarterly performance, Build-A-Bear continued returning capital to investors. During the first half of fiscal 2026, the company distributed $22.7 million to shareholders through share repurchases and quarterly dividends.
Build-A-Bear ended the quarter with $14.0 million in cash and no outstanding borrowings under its revolving credit facility.
The company’s earnings beat and debt-free revolving credit position provided some positive elements in the report, although the lower revenue and pre-tax income forecasts shifted investor attention towards the pace of improvement expected during the second half of fiscal 2026.
Build-A-Bear Workshop stock price
