Sharon Price John

CEO

Forward looking and cautionary

statements
This presentation contains certain statements that are, or may be considered to be, forward-looking statements for the purpose of federal
securities laws, including, but not limited to, statements that reflect our current views with respect to future events and financial
performance. We generally identify these statements by words or phrases such as may, might, should, expect, plan, anticipate,
believe, estimate, intend, predict, future, potential or continue, the negative or any derivative of these terms and other
comparable terminology. Forward-looking statements are based on current expectation and assumptions that are subject to risks and
uncertainties which may cause results to differ materially from the forward-looking statements. We undertake no obligation to update or
revise publicly any forward-looking statements, whether because of new information, future events or otherwise. Risks and uncertainties
to which our forward-looking statements are subject include: (1) general global economic conditions may decline, which could lead to
disproportionately reduced consumer demand for our products, which represent relatively discretionary spending; (2) customer traffic may
decrease in the shopping malls where we are located, on which we depend to attract guests to our stores; (3) 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; (4) our marketing and on-line initiatives may not be effective in generating sufficient levels of brand awareness and guest traffic;
(5) we may improperly obtain or be unable to adequately protect customer information in violation of privacy or security laws or customer
expectations; (6) we may be unable to generate comparable store sales growth; (7) we may be unable to effectively operate or manage
the overall portfolio of our company-owned stores; (8) we may be unable to renew, renegotiate 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; (9) we may not be able
to operate our international company-owned stores profitably; (10) the availability and costs of our products could be adversely affected by
risks associated with international manufacturing and trade, including foreign currency fluctuation; (11) our products could become subject
to recalls or product liability claims that could adversely impact our financial performance and harm our reputation among consumers; (12)
we may lose key personnel, be unable to hire qualified additional personnel, or experience turnover of our management team; (13) we are
susceptible to disruption in our inventory flow due to our reliance on a few vendors; (14) we may be unable to effectively manage our
international franchises or laws relating to those franchises may change; (15) we may fail to renew, register or otherwise protect our
trademarks or other intellectual property; (16) we are subject to risks associated with technology and digital operations; (17) we may suffer
negative publicity or be sued due to violations of labor laws or unethical practices by manufacturers of our merchandise; (18) we may be
unable to operate our company-owned distribution center efficiently or our third-party distribution center providers may perform poorly; (19)
high petroleum products prices could increase our inventory transportation costs and adversely affect our profitability; (20) our plans to
leverage the Build-A-Bear brand to drive strategic expansion may not be successful; (21) our market share could be adversely affected by
a significant, or increased, number of competitors; (22) we may suffer negative publicity or negative sales if the non-proprietary toy
products we sell in our stores do not meet our quality or sales expectations; (23) poor global economic conditions could have a material
adverse effect on our liquidity and capital resources; (24) fluctuations in our quarterly results of operations could cause the price of our
common stock to substantially decline; and (25) we may be unable to repurchase shares of our common stock 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. For
additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to our
most recent reports on Form 10-K, Form 10-Q and Form 8-K.

Background: BBW
Founded in 1997, as a specialty
retailer to make-your-own stuffed
animals
2004 IPO
- Post IPO 22% CAGR and doubledigit EBITDA thru 2007
- 2007 saw highest revenue:
$474M
- 2008 was the beginning of a
multi-year contraction
Currently in ~400 locations in 15
countries including:
330 owned and operated
70+ international franchise
stores

2013
Marked the Beginning of a
Corporate Turnaround

Over 3,500 employees

BUILD-A-BEAR 2016

Store counts are as of end of fiscal year 2015 (January 2, 2016),

includes traditional and non-traditional stores

Background:
Struggling
retail Trend
business
Pre-2013: Multi-Year
Negative
Declining Retail

Failing Strategy

Trend of Unprofitablity

Eight consecutive
years
of comp store declines

Tired product
development

~ 110 bps
Gross Margin decline

80% of doors not

updated since opening

(2005-2012)

Marketing had become

couponing
Brand refresh overdue

2012 revenue down

$93M from 2007 peak
22% of NA stores
unprofitable in 2012
BUILD-A-BEAR 2016

Not optimizing licensed

relationships
Aged processes and
systems

Cumulative Net Loss of

$78M
(2009-2012)

2012 largest loss in

companys history
(Net and Adjusted Net)

2013 mid-year loss of

($6M)

Objectives

1. Return to
Profitability
2. Sustain
Profitability

BUILD-A-BEAR 2016

CUMULATIVE
CUMULATIVERESULTS
RESULTS2013-2015:
2012-2015:
Adjusted Net Income (Loss)*

BBW
Profit
Improvement

~$17M

~720bps
(based on adjusted net income as a percent of revenue)

($10M)
53 wks

(on a similar topline)

(with 5% fewer stores &

Revenue

Prelim

2012*

2013*

2014*

2015*

$381M

$379M

$392M

$378M

351

323

324

Total
Stores #

334

11% less square footage)

BUILD-A-BEAR 2016

*Adjusted Net Income/Loss excludes mngmt transition and store closing costs, asset & store impairment, goodwill
impairment & deferred tax asset valuation allowance; 2015 results are preliminary and may change; $17.25M is the

CUMULATIVE
CUMULATIVERESULTS
RESULTS2013-2015:
2012-2015:

BBW 2015
Retail Gross Margin

47%

$44.10
*

(820 bps point

improvement versus 2012)
(highest since 2006)
BUILD-A-BEAR 2016

2015
NA dollars
per transaction**
HIGHEST EVER

2015
NA units
per transaction**

3.95
HIGHEST
since 2008
*Retail Gross Margin % reflects the mid-point of expected range
**2015 results are preliminary and may change

CUMULATIVE RESULTS
RESULTS 2013-2015:
2012-2015:
CUMULATIVE
2015
North American
4-wall contribution*

19.6%

980bps
improvement
since 2012

(only 3 unprofitable NA
store versus 61 in 2012)
BUILD-A-BEAR 2016

*2015 results are preliminary and may change

CUMULATIVE RESULTS
RESULTS 2013-2015:
2012-2015:
CUMULATIVE
Margin Expansion

Three
Consecutive
Years of
Improvement

Increases in
Average
Transaction Value
Improved
Profitability
Positive
Consolidated
Same Store Sales

BUILD-A-BEAR 2016

All While Fundamentally Changing the Company

Developed New Strategy

Re-orged with new leadership

team including:
CFO, COO, CMO, CPO

Evolved 50% of the Board

Updated circa pre-2008 IT, Digital

and POS infrastructure

Instituted more efficient, datadriven processes

Launched new brand look

Elevated and expanded powerful

partner relationships

FORTUNE
100 Best Companies to Work For
7th consecutive year
BUILD-A-BEAR 2016

Objectives
1. Return to
Profitability
2. Sustain
Profitability

BUILD-A-BEAR 2016

Strategy?

FIX THE RETAIL BUSINESS

MAINTAIN THE BRAND

BUILD-A-BEAR 2016

Objectives
1. Return to
Profitability
2. Sustain
Profitability
3. Drive Profitable
Growth
BUILD-A-BEAR 2016

Strategy

DIVERSIFY
THE BUSINESS MODEL
MONETIZE THE BRAND
Profitably Extend Build-A-Bear across multiple
Revenue Streams to access business via new
Locations, Categories & Consumers
BUILD-A-BEAR 2016

Our most valuable asset

Build-A-Bear is a

BRAND

Global
Multi-generational
Emotional
Trusted
Extendable
Updated

BUILD-A-BEAR 2016

to maximize our potential,

we must pivot from a retailer

that built a powerful brand
to a BRAND company thats
more than a retailer

Strong Brand:Balanced Appeal and Seasonality*

Consumer Age Distribution

Consumer Gender Distribution

Revenue by Quarter**

12%
26%

23%

31%

22%
15%
12%
0-2

3-5

21%
25%

22%
25%
6-8

9-12

BUILD-A-BEAR 2016

Teen +

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

* Source: Build-A-Bear Workshop Internal Data

** 3 years rolling data

Strong Brand:

High Awareness and Appeal

Build-A-Bear
Aided Brand Awareness

Since new branding launch,

appeal ratings have increased

2007 Rating 85%

2015 Rating 87%
BUILD-A-BEAR 2016

Source (Awareness): C&R Research, Fall 2012, US Market Report

Source (Consumer Appeal): E-Poll Market Research

Strong Brand:

Similar to larger Brands

Build-A-Bear
BRAND ADVOCACY

Advocacy is based on a variety of

measures including awareness, trust,
quality, uniqueness and
likelihood to recommend
BUILD-A-BEAR 2016

Build-A-Bear Workshops ADVOCACY

number is equal to or higher than
other retail brands including
American Girl, LEGO, Toys R Us
and Disney
Source: Burke Research 2013

Strong Concept
BBW experiential retail process is*:
- Unique (lacks direct competition)
- Engaging
- Understood in many cultures
BBW high touch service model is*:
- Special
- Personalized
- Memorable
Aligned with macro-trends:
- Do-it-yourself
- Crafting
- Personalization/Customization
- Rise in the power of entertainment &
sports brands
Aligned with Millennial values
- Value experiences over things
- Want to make memories with kids
- Value brands that give back
BUILD-A-BEAR 2016

*Source: Envirosell, a leading consumer behavior research and

consulting firm, in 2011

Strategy
DIVERSIFY THE BUSINESS MODEL
Overhaul
Global Owned &
Operated Retail
+ Enterprise
Selling
Operations

Build Scalable
International
Franchising
Model/Systems

Develop New
Outbound
Brand
Licensing &
Entertainment
Capabilities

Implement
Wholesale and
Corporate
Sales Systems
& Processes

MONETIZE THE BRAND

Profitably Extend Build-A-Bear across multiple
Revenue Streams to access business via new
Locations, Categories & Consumers
BUILD-A-BEAR 2016

Strategy
DIVERSIFY THE BUSINESS MODEL

Strategic Investment
MONETIZE THE BRAND
Profitably Extend Build-A-Bear across multiple
Revenue Streams to access business via new
Locations, Categories & Consumers
BUILD-A-BEAR 2016

Strategy
DIVERSIFY THE BUSINESS MODEL
Global Owned
& Operated
Retail +
Enterprise
Selling

International
Franchising

Outbound
Brand
Licensing &
Entertainment

Wholesale
& Corporate

Diversify and Add Locations

Diversify and Add Categories
Diversify and Add Consumers

MONETIZE THE BRAND

BUILD-A-BEAR 2016

Strategy
DIVERSIFY THE BUSINESS MODEL
Global Owned
& Operated
Retail +
Enterprise
Selling

International
Franchising

Outbound
Brand
Licensing &
Entertainment

Wholesale
and Corporate
Sales

MORE PLACES
MORE PRODUCT
MORE PEOPLE

MONETIZE THE BRAND

BUILD-A-BEAR 2016

EXPANSION: 2016 and Beyond

MORE PLACES
Beyond updating the look, we
researched and created the new
store design with an objective to:
optimize spatial planning
improve productivity

Discovery Store is a HIT!

The 11 new & remodeled locations
opened in the US and the UK in 2015
are over-indexing on key metrics:
Double-Digit comp vs norm
Increased Traffic
Higher Dollars per transaction
Higher Units per transaction
BUILD-A-BEAR 2016

Discovery Store

EXPANSION: 2016 and Beyond

MORE PLACES
Discovery Store
Secret Weapon the STUFFER
- Lease line theater
- Front/center position opens up
merchandising wall space
- Faster fill rate and extra nozzle
has increased our peak
capacity by 60%
We expect to have
45-55 new and/or remodeled
Discovery Stores
by the end of 2016
including 4 flagships
in multiple countries
BUILD-A-BEAR 2016

EXPANSION:
EXPANSION:2016
2016and
andBeyond
Beyond

MORE PLACES

A Discovery Store flagship in

Copenhagen, Demark at Tivoli
Gardens (remodel)

New Discovery Store flagship in

Shanghai, China

New Franchise Stores

Additional International Openings

expected in 2016 include 20-25
New Franchise Stores

A Special Project in Shanghai

will be announced in the
coming weeks
(Expected to open mid 2016)

BUILD-A-BEAR 2016

EXPANSION: 2016 and Beyond

MORE PLACES
Non-Traditional
OUTLETS
- First value-based format
- Successful openings in UK and US
- Improves product life-cycle management
- Leveraging Tourist Locations where
BBW over-indexes on key metrics
ENTERPRISE SELLING
- Starting in 1st half 2016
- In-store, On-line, Mobile visibility
EXPERIENTIAL Wholesale
- Re-building Rainforest Caf and T-Rex
Caf relationship with Landrys
- New Carnival Cruise lines relationship
- BBW expected to be on-board in 2016

BUILD-A-BEAR 2016

Opened 6 BBW Outlets in 2015

Expect to open 5 more in 2016

EXPANSION: 2016 and Beyond

MORE PRODUCT
Drove additional Wholesale
business with:

COSTCO holiday gift set pallet

program was successful, plans to
expand in 2016

Secured 10 out-bound branded

licensed agreements in a wide
variety of consumer categories,
mostly launching in 2016
including:

75% of our best guest surveyed

are interested in Build-A-Bear
branded consumer products*

Spin Master toys

Frankford novelty candies

BUILD-A-BEAR 2016

* Source: Build-A-Bear Workshop Internal Dat

EXPANSION: 2016 and Beyond

MORE PRODUCT
The classic product offering
generates our highest unit
volume of any segment at
favorable margins and is:
Critical for our core
consumer base and party
business
Now updated more
frequently to maintain instore freshness for our
best guests
BUILD-A-BEAR 2016

EXPANSION: 2016 and Beyond

MORE PRODUCT
Since 4Q 2014, we have been
introducing Intellectual Properties
that include back stories, apps,
music, videos and games to drive
Play beyond the Plush with:
- Honey Girls
- Merry Mission
- Promise Pets
Contributed to almost $60M in
lifetime revenue and ~10M total
digital interfaces
Merry Missions Glisten reindeer
was our #1 item for Q4 2015
BUILD-A-BEAR 2016

EXPANSION: 2016 and Beyond

MORE PEOPLE
Our Traditional Licensing
approach drives
Core Consumer sales

Plus, we have improved ability to chase

hot properties
BUILD-A-BEAR 2016

EXPANSION: 2016 and Beyond

MORE PEOPLE
FreshLicensingstrategyisattractingnewConsumers

AffinityCollectiblesEntertainmentSportsFashionGifts
BUILD-A-BEAR 2016

EXPANSION: 2016 and Beyond

MORE PEOPLE
The Collectible, Gifting and Teen+
Consumer is generally less price
sensitive, more likely to shop online and over-indexes with key
licenses like:

Minions
Star Wars
Pikachu
Toothless
The #1 item sold on-line in 2015?
Our new GIFT BOX
BUILD-A-BEAR 2016

2016 Expectations
Transitioning from Sustained
Profitability to Profitable Growth
Revenue Growth in Mid-Single Digits
Continued Profit Growth
Increase in Capital Spend
Continue Share Repurchase Program
Investment alignment with Strategy
BUILD-A-BEAR 2016

2016: Projected Revenue

Total Revenue Growth in Mid-Single Digits
Driven by:

Organic comp growth in existing stores

Accelerated comp in remodeled stores
Volume from ~10 new permanent stores* net of closures
Double-digit growth in Digital (Mobile + Ecomm)
Enterprise Selling opportunity
Benefit from continued strategy of driving IP and Licensing via
a consumer segmentation strategy coupled with elevated
product/marketing integration

Projected 2016 Comparable Store Performance by Quarter

Consolidated Comp Store Growth Expected to be low to mid-single digits
2016
1st
2nd
3rd
4th
Full Year
Quarter
Expected
Comp
BUILD-A-BEAR 2016

*Permanent stores are defined as traditional and outlet locations and

do not include:Seasonal, Shop in shop or pop-up locations

2016: Projected Profit

Planning Continued Profit Growth
2015 Pre-tax income projected
in the range of $16.5M-$18M
2016 Pre-tax income expected
to increase by 15%-25%

BUILD-A-BEAR 2016

Store counts do not include Carnival Cruise ships, Landrys or

international franchise locations

2016: Intended use of Capital

Capital Plan

$25$30M

75%

New Stores
Remodels
Update Store Systems

25%

IT/Systems Upgrades
Play beyond the Plush/IP

Improved
Retail
Operations
Infrastructure &
Platforms for new
revenue streams

Estimated 18-24 month payback on new and remodeled stores

Expected 4-wall contribution of over 20% for new and remodeled stores
Remodels REQUIRE store downtime and will impact total revenue
Store openings & remodels require both capital & expense investment
Remodel downtimes are generally planned for lowest revenue quarters
Puts and takes will disrupt average store sales & sales/sq ft data comparisons
Goal is to assure flexibility in capital spending to maintain our
solid cash flow, strong balance sheet and lack of debt

BUILD-A-BEAR 2016

2016: Intended use of Capital

Share Repurchase Plan
In fiscal 2015, the company spent $25.9M on
share repurchases
$9M remains under the current share
repurchase plan
The company intends to continue to
opportunistically assess additional share
repurchase plans

BUILD-A-BEAR 2016

Store counts do not include Carnival Cruise ships, Landrys or

international franchise locations

2016: Investments support Strategy

Diversify the Business Model
Overhaul
Global Owned
& Operated
Retail +
Enterprise
Selling
Operations
1

Build Scalable
International
Franchising
Model/Systems

Develop New
Outbound
Brand
Licensing &
Entertainment
Capabilities

Implement
Wholesale and
Corporate
sales Systems
& Processes

POS Compliance

and Enterprise
selling upgrades

TXT Planning
enhancements
PLM upgrades
New stores/remodels
and tech upgrades
Traffic Counters

Global Ordering
Capability
Reporting and
compliance
processes &
systems

< Capital Tracking System

BUILD-A-BEAR 2016

-----

Play beyond the

Plush apps,
music, video and
digital
development
(Licensing
currently outsourced)

Wholesale
processing
systems
UPC capability

Warehouse System upgrade ----- Talent >

Thank you
Build-A-Bear
1954 Innerbelt Business Center Dr.
St. Louis, MO 63114
www.buildabear.com