Build-A-Bear Workshop, Inc. Reports Fiscal 2009 Second Quarter Results

* Revenue from European operations, excluding the impact of foreign exchange,
increased 18% to $14 million in second quarter 2009 vs. second quarter 2008.
* Cost reduction plans now expected to be approximately $18 million, up from $15
million, in annualized pre-tax savings in fiscal 2009.
* Balance sheet remains debt-free with consolidated cash balance of $31
million.

ST. LOUIS--(Business Wire)--
Build-A-Bear Workshop, Inc. (NYSE: BBW), an interactive entertainment retailer
of customized stuffed animals, today reported results for the 2009 second
quarter and first six months.

For the second quarter (13 weeks ended July 4, 2009) the company reported a net
loss of $6.0 million, or $0.32 per diluted share, compared to the fiscal 2008
second quarter (13 weeks ended June 28, 2008) net loss of $4.8 million or $0.25
per diluted share. The net loss for the second quarter of fiscal 2009 included
$0.1 million, or $0.01 per diluted share charge for the friends 2B made concept
closure, and $0.3 million, or $0.02 per diluted share non-cash charge resulting
from the allocation of losses related to the company`s minority investment in
Ridemakerz, LLC.

For the first six months (26 weeks ended July 4, 2009) the company reported a
net loss of $6.8 million, or $0.36 per diluted share, compared to the fiscal
2008 first six months (26 weeks ended June 28, 2008) net income of $1.6 million,
or $0.08 per diluted share. The net loss for the first six months of fiscal 2009
included $0.4 million, or $0.02 per diluted share charge for the friends 2B made
concept closure, and $0.3 million, or $0.02 per diluted share non-cash charge
resulting from the allocation of losses related to the company`s minority
investment in Ridemakerz, LLC.

"We ended the second quarter with a strong balance sheet and have expanded our
cost containment initiatives, while not losing sight of the unique product,
service and experience we bring to our Guests," said Build-A-Bear Workshop
Chairman and Chief Executive Bear Maxine Clark. "While our North American sales
continue to be impacted by the economic recession, we have assortment, pricing
and marketing strategies in place to increase transactions and customer traffic
to our stores, which will be greatly enhanced for the back-to-school season with
our first `any stuffed animal, plus any hanging outfit, plus any pair of shoes
for $29.99` offer.

"Our brand building initiatives will expand further for holiday as we take Holly
and Hal Moose: Our Uplifting Christmas Adventure, introduced as a book last
year, to television. Holly and Hal Moose was one of our most successful holiday
promotions and we are excited to broaden this franchise to television with two
airings scheduled to debut on ABC Family during the Thanksgiving holiday season.
We believe our back-to-school and holiday plans have us poised to improve our
brand awareness and sales trends during the remainder of the year."

The company also reported further progress on plans to maximize positive cash
flow in fiscal 2009 through cost savings initiatives now expected to be
approximately $18 million in annualized pre-tax savings, up from a prior
estimate of $15 million, and capital spending plans that remain on track for
expenditures of $9 million, down from $23 million in 2008. The company`s
consolidated cash balance was $31 million at the end of the second quarter
representing an increase of $15.1 million from the end of the second quarter
last year.

Fiscal 2009 Second-Quarter

Total revenues were $82.4 million compared to $94.7 million in the fiscal 2008
second quarter. Consolidated comparable store sales declined 13.9% including an
8.2% increase in Europe and a 17.5% decrease in North America (second quarter
comparable store sales are compared to the 13 week period ended July 5, 2008).

Fiscal 2009 second quarter total revenues include net retail sales of $81.3
million, compared to $93.5 million in 2008. Excluding the impact of foreign
exchange, net retail sales declined 11.3%.

European operations net retail sales were $14.2 million in the 2009 second
quarter, compared to $15.3 million in the 2008 second quarter. Excluding the
impact of foreign exchange, European operations net retail sales increased
17.7%. The pre-tax loss from European operations totaled $1.0 million in the
2009 second quarter, compared to a loss of $1.1 million in the 2008 second
quarter.

Year-to-date Financial Results

Total revenues were $179.7 million compared to $218.5 million in the fiscal 2008
first six months. Consolidated comparable store sales declined 16.0% including a
7.3% increase in Europe and a 19.2% decrease in North America (first six month
comparable store sales are compared to the 26 week period ended July 5, 2008).

Fiscal 2009 first six month total revenues include net retail sales of $177.6
million, compared to $215.3 million in last year`s first six months. Excluding
the impact of foreign exchange, net retail sales declined 15.8%.

European operations net retail sales were $28.3 million in the first six months
of fiscal 2009, compared to $31.6 million in the first six months of fiscal
2008. Excluding the impact of foreign exchange, European operations net retail
sales increased 17.7%. The pre-tax loss from European operations totaled $1.9
million in the 2009 first six months, compared to a loss of $1.3 million in the
2008 first six months.

Stores

Build-A-Bear Workshop ended the 2009 second quarter with 345 company-owned
stores - 291 in North America and 54 in Europe. During the 2009 second quarter
and first six months, the company opened no new stores, as planned, and closed
one store.

During the 2008 second quarter the company opened five new stores - four in
North America and one in Europe. During the first six months of 2008, the
company opened nine new stores - six in North America and three in Europe.

In fiscal 2009 the company plans to open one new store in Calgary, Alberta and
relocate one store in Houston, compared to opening 25 new stores in fiscal 2008.

Other Costs

In the 2009 second quarter the company recorded a net-of-tax charge of $0.1
million or $0.01 per diluted share associated with friends 2B made location
closures. The majority of these charges are attributable to construction costs
required to reformat locations for return to the landlord. The company announced
plans to close the friends 2B made concept, a line of make-your-own dolls and
related products in the fiscal 2008 third quarter. The closure plan affects nine
friends 2B made locations; five of the nine locations were closed at the end of
the 2009 second quarter with the remaining closures to be completed in the 2009
third quarter. Charges associated with this concept closing are identified as
`store closing` costs on the consolidated statement of operations included in
this press release. The company now expects pretax charges related to the
friends 2B made concept of $1.0 - $1.3 million in fiscal 2009, down from a
previous estimate of $1.4 to $1.8 million.

In the 2009 second quarter, the company also recorded a non-cash, net-of-tax
charge of $0.3 million or $0.02 per diluted share resulting from the allocation
of losses related to its investment in Ridemakerz, LLC. Ridemakerz is an
early-stage company that has developed an interactive retail concept that allows
children and families to build and customize their own personalized cars. As
Ridemakerz continues to incur losses, Build-A-Bear Workshop will be required to
recognize those losses as non-cash charges up to the amount of the company`s
total investment, including receivables, unless additional equity investments
are made by other investors. As of July 4, 2009, the company`s investment in
Ridemakerz was approximately $7.6 million and outstanding receivables from
Ridemakerz were $0.8 million.

Today`s Conference Call Webcast

Build-A-Bear Workshop will host a live Internet webcast of its quarterly
investor conference call at 9 a.m. EDT today. The audio broadcast may be
accessed at our investor relations Web site, http://IR.buildabear.com. The call
is expected to conclude by 10 a.m.

A replay of the conference call webcast will be available in the investor
relations Web site for one year. A telephone replay will be available beginning
at approximately noon EDT today until midnight EDT on August 13, 2009. The
telephone replay is available by calling (617) 801-6888. The access code is
95154898.

About Build-A-Bear Workshop, Inc.

Build-A-Bear Workshop, Inc. is the leading and only global company that offers
an interactive make-your-own stuffed animal retail-entertainment experience.
Founded in 1997, the company currently operates more than 400 Build-A-Bear
Workshop® stores worldwide, including company-owned stores in the United States,
Puerto Rico, Canada, the United Kingdom, Ireland and France, and franchise
stores in Europe, Asia, Australia and Africa. In 2007, the interactive
experience was enhanced - all the way to CyBEAR® space - with the launch of
buildabearville.com®, the company`s virtual world stuffed with fun. Build-A-Bear
Workshop (NYSE: BBW) posted total revenue of $468 million in fiscal 2008. For
more information, call 888.560.BEAR (2327) or visit the company`s award-winning
Web sites at www.buildabear.com.

Forward-Looking Statements

This press release contains "forward-looking statements" (within the meaning of
the federal securities laws) which represent Build-A-Bear Workshop expectations
or beliefs with respect to future events. Our actual results may differ
materially from the results discussed in the forward-looking statements. These
risks and uncertainties include, without limitation, those detailed under the
caption "Risk Factors" in our annual report on Form 10-K for the fiscal year
ended January 3, 2009, and quarterly report on Form 10-Q for the fiscal quarter
ended April 4, 2009, as filed with the SEC, and the following: general economic
conditions may continue to deteriorate, which could lead to disproportionately
reduced consumer demand for our products, which represent relatively
discretionary spending; our consolidated financial results may be significantly
affected by changes in foreign currency exchange rates; customer traffic may
continue to decrease in the shopping malls where we are located, on which we
depend to attract guests to our stores; we may be unable to generate interest in
and demand for our interactive retail experience, or to identify and respond to
consumer preferences in a timely fashion; our marketing and on-line initiatives
may not be effective in generating sufficient levels of brand awareness and
guest traffic; we may be unable to generate comparable store sales growth;
losses incurred by our affiliate Ridemakerz LLC may adversely affect our
financial condition and profitability; we may be unable to open new stores or
may be unable to effectively manage our growth; we may be unable to effectively
manage our international franchises or laws relating to those franchises may
change; we may be unable to renew or replace our store leases, or enter into
leases for new stores on favorable terms or in favorable locations, or may
violate the terms of our current leases; the ability of our principal vendors to
deliver merchandise may be disrupted; the availability and costs of our products
could be adversely affected by risks associated with international manufacturing
and trade; high petroleum products prices could increase our inventory
transportation costs and adversely affect our profitability; we may be unable to
close our friends 2B made concept on terms we currently anticipate; we may be
unable to repurchase shares at all or at the times or in the amounts we
currently anticipate or the results of the share repurchase program may not be
as beneficial as we currently anticipate; fluctuations in our quarterly results
of operations could cause the price of our common stock to substantially
decline; we may suffer negative publicity or be sued due to violations of labor
laws or unethical practices by manufacturers of our merchandise; we may
improperly obtain or be unable to protect information from our guests in
violation of privacy or security laws or expectations; our products could become
subject to recalls or product liability claims that could adversely impact our
financial performance and harm our reputation among consumers; we may lose key
personnel, be unable to hire qualified additional personnel, or experience
turnover of our management team; we may be unable to realize the anticipated
benefits from our company-owned distribution center or our third-party
distribution center providers may perform poorly; we may be unable to realize
some of the expected benefits of the acquisition of Amsbra and Bear Factory, and
the inclusion of France as a company-owned country; our market share could be
adversely affected by a significant, or increased, number of competitors; we may
fail to renew, register or otherwise protect our trademarks or other
intellectual property; and we may have disputes with, or be sued by, third
parties for infringement or misappropriation of their proprietary rights. These
risks, uncertainties and other factors may adversely affect our business,
growth, financial condition or profitability, or subject us to potential
liability, and cause our actual results, performance or achievements to be
materially different from those expressed or implied by our forward-looking
statements. The company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.

(Financial Tables Follow)

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)

13 Weeks 13 Weeks
Ended Ended
July 4, % of Total June 28, % of Total
2009 Revenues(1) 2008 Revenues(1)
Revenues:
Net retail sales $ 81,307 98.7 $ 93,468 98.7
Franchise fees 612 0.7 824 0.9
Licensing revenue 485 0.6 403 0.4
Total revenues 82,404 100.0 94,695 100.0
Costs and expenses:
Cost of merchandise sold 54,587 67.1 59,430 63.6
Selling, general and administrative 37,509 45.5 42,174 44.5
Store preopening 17 0.0 622 0.7
Store closing 230 0.3 -- --
Equity losses from investment in affiliate 533 0.6 -- --
Interest expense (income), net (23 ) (0.0 ) (179 ) (0.2 )
Total costs and expenses 92,852 112.7 102,047 107.8
Loss before income taxes (10,448 ) (12.7 ) (7,352 ) (7.8 )
Income tax benefit (4,479 ) (5.4 ) (2,561 ) (2.7 )
Net loss $ (5,969 ) (7.2 ) $ (4,791 ) (5.1 )

Loss per common share:
Basic $ (0.32 ) $ (0.25 )
Diluted $ (0.32 ) $ (0.25 )
Shares used in computing common per share amounts:
Basic 18,871,415 18,935,410
Diluted 18,871,415 18,935,410

(1) Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold which is expressed as a percentage of net retail sales. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales and rounding.

(2) Equity losses from investment in affiliate for the 13 weeks ended July 4, 2009 represent the Company's portion of losses of Ridemakerz LLC. Build-A-Bear Workshop holds a minority interest in Ridemakerz, LLC, which is accounted for under the equity method of accounting. Under current agreements, we are the sole member of an equity class that is allocated losses only following the allocation of losses to all other common and preferred equity holders to the extent of their capital contributions

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)

26 Weeks 26 Weeks
Ended Ended
July 4, % of Total June 28, % of Total
2009 Revenue(1) 2008 Revenue(1)
Revenues:
Net retail sales $ 177,623 98.8 $ 215,322 98.5
Franchise fees 1,209 0.7 2,073 0.9
Licensing revenue 914 0.5 1,107 0.5
Total revenues 179,746 100.0 218,502 100.0
Costs and expenses:
Cost of merchandise sold 115,639 65.1 128,169 59.5
Selling, general and administrative 74,427 41.4 87,001 39.8
Store preopening 17 0.0 1,175 0.5
Store closing 731 0.4 -- --
Equity losses from investment in affiliate 533 0.3 -- --
Interest expense (income), net (47 ) (0.0 ) (639 ) (0.3 )
Total costs and expenses 191,300 106.4 215,706 98.7
Income (loss) before income taxes (11,554 ) (6.4 ) 2,796 1.3
Income tax (benefit) expense (4,760 ) (2.6 ) 1,194 0.5
Net income (loss) $ (6,794 ) (3.8 ) $ 1,602 0.7

Earnings (loss) per common share:
Basic $ (0.36 ) $ 0.08
Diluted $ (0.36 ) $ 0.08
Shares used in computing common per share amounts:
Basic 18,827,665 19,546,596
Diluted 18,827,665 19,637,956

(1) Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold which is expressed as a percentage of net retail sales. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales and rounding.

(2) Equity losses from investment in affiliate for the 26 weeks ended July 4, 2009 represent the Company's portion of losses of Ridemakerz LLC. Build-A-Bear Workshop holds a minority interest in Ridemakerz, LLC, which is accounted for under the equity method of accounting. Under current agreements, we are the sole member of an equity class that is allocated losses only following the allocation of losses to all other common and preferred equity holders to the extent of their capital contributions

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands, except share and per share data)

July 4, January 3,
2009 2009
ASSETS
Current assets:
Cash and cash equivalents $ 30,712 $ 47,000
Inventories 47,766 50,586
Receivables 4,762 8,288
Prepaid expenses and other current assets 19,489 16,151
Deferred tax assets 4,108 3,839
Total current assets 106,837 125,864

Property and equipment, net 112,834 123,193
Goodwill 34,188 30,480
Other intangible assets, net 3,940 3,903
Investment in affiliate 7,554 7,721
Other assets, net 9,285 8,991
Total Assets $ 274,638 $ 300,152

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,035 $ 37,547
Accrued expenses 6,500 12,593
Gift cards and customer deposits 22,502 29,210
Deferred revenue 7,839 7,634
Total current liabilities 63,876 86,984

Deferred franchise revenue 1,821 2,033
Deferred rent 38,360 41,714
Other liabilities 1,745 1,696

Stockholders' equity:
Common stock, par value $0.01 per share 203 195
Additional paid-in capital 77,789 76,852
Accumulated other comprehensive loss (5,627 ) (12,585 )
Retained earnings 96,471 103,263
Total stockholders' equity 168,836 167,725
Total Liabilities and Stockholders' Equity $ 274,638 $ 300,152

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data
(dollars in thousands, except square foot data)

13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
July 4, June 28, July 4, June 28,
2009 2008 2009 2008

Other financial data:
Gross margin ($)(1) $ 26,721 $ 34,038 $ 61,985 $ 87,153
Gross margin (%)(1) 32.9 % 36.4 % 34.9 % 40.5 %
Capital expenditures, net(2) $ 1,612 $ 9,003 $ 3,762 $ 14,715
Depreciation and amortization $ 7,050 $ 7,241 $ 14,089 $ 14,243
Sales over the Internet $ 1,730 $ 1,861 $ 4,234 $ 4,869

Store data(3):
Number of company-owned stores at end of period
North America 291 278
Europe 54 52
Total stores 345 330

Number of franchised stores at end of period 61 58

Company-owned store square footage at end of period
North America 847,330 824,574
Europe(4) 77,520 74,796
Total square footage 924,850 899,370

Comparable store sales change (%)(5)(6)
North America (17.5 )% (20.5 )% (19.2 )% (16.5 )%
Europe 8.2 % 2.2 % 7.3 % 8.3 %
Consolidated (13.9 )% (17.9 )% (16.0 )% (13.9 )%

(1) Gross margin represents net retail sales less cost of merchandise sold. Gross margin percentage
represents gross margin divided by net retail sales.

(2) Capital expenditures, net represents cash paid for property, equipment, other assets and other intangible assets.

(3) Excludes our webstore and seasonal and event-based locations. North American stores are located in the United States, Canada and Puerto Rico. In Europe, stores are located in the United Kingdom, Ireland and France.

(4) Square footage for stores located in Europe is estimated selling square footage.

(5) Comparable store sales percentage changes are based on net retail sales and stores are considered comparable beginning in their thirteenth full month of operation.

(6) Comparable store sales percentage changes for 2009 are based on net retail sales as compared to the 13 and 26 week periods ended July 5, 2008.

Build-A-Bear Workshop, Inc.
Investors:
Molly Salky, 314-423-8000 x5353
or
Media:
Jill Saunders, 314-423-8000 x5293

Copyright Business Wire 2009

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