Why Build-A-Bear Stock Dropped Today
Key Points
Build-A-Bear is expanding into new markets.
Sales are rising, but costs are growing faster.
- 10 stocks we like better than Build-A-Bear Workshop ›
Shares of Build-A-Bear Workshop (NYSE: BBW) sank more than 15% on Thursday after the stuffed animals seller warned that tariffs were taking a bite out of its profits.
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Build-A-Bear's earnings shortfall spooked investors
Build-A-Bear's revenue rose 2.7% year over year to $122.7 million in its fiscal third quarter ended Nov. 1. The teddy bear retailer opened 24 net new stores during the quarter and a total of more than so far in 2025, as it expanded into seven additional countries. That brought Build-A-Bear's store count to 651 at the end of the third quarter.
However, Build-A-Bear's profits were dented by tariffs. The company's pre-tax income declined 18% to $10.7 million, primarily due to $4 million in tariff-associated costs. Build-A-Bear's earnings per share, in turn, fell 15% to $0.62.
"While the company pre-emptively mitigated significant tariff impacts during the first half of the year, the third quarter marked the first meaningful expenses from tariffs and related costs," chief financial officer Voin Todorovic said in a press release. "We expect this elevated level of impact to continue through the fourth quarter and into the next fiscal year."
Build-A-Bear's expansion plans remain on track
Still, Build-A-Bear affirmed its full-year business outlook, including:
- At least 60 net new store openings
- Mid-to-high-single-digit revenue growth
- Pre-tax income of $62 million to $70 million, with $11 million of tariffs and related costs
"Looking ahead, we remain focused on advancing our long-term strategic initiatives, particularly the global expansion of our partner-operated model, while continuing to navigate a dynamic economic environment," CEO Sharon Price John said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Build-A-Bear Workshop. The Motley Fool has a disclosure policy.
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