Build-A-Bear Workshop reported results for the fourth quarter and fiscal year ended February 2, 2019.
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Consolidated revenues were $336.6 million compared to $364.0 million in fiscal 2017, a decline of 7.5%.
Fiscal 2017 included $6.0 million in sales from the addition of the 53rd week and benefited from $3.9 million in gift card breakage revenue recognized under the prior revenue recognition rules.
On an adjusted basis, consolidated revenues declined 4.9% as compared to fiscal year 2017.
By geography, Build-A-Bear Workshop revenue in North America was $283.3 million, a decline of 2.0% from the prior year adjusted basis. Revenue in Europe was $51.2 million, a decline of 17.6% from the prior year adjusted basis.
Consolidated revenues in fiscal 2018 also included a 13.8% increase in consolidated e-commerce sales primarily driven by North America compared to fiscal year 2017.
Build-A-Bear Workshop retail gross margin dollars were $139.5 million or 42.7% of retail sales.
The retail gross margin rate, excluding non-cash store impairment charges, declined 450 basis points, including approximately 230 basis points related to the deleverage of fixed occupancy costs as well as approximately 70 basis points related to the impact of the adoption of the new revenue recognition standard.
The remaining decline was driven primarily by higher promotional activity mainly related to Pay Your Age Day events.
Selling, general and administrative expenses decreased $1.6 million to $157.2 million from $158.8 million in fiscal 2017.
Pre-tax loss was $18.5 million compared to pre-tax income of $14.0 million in fiscal 2017; adjusted pre-tax loss was $7.7 million, exclusively driven by operating losses outside of North America (see reconciliation of GAAP to non-GAAP results).
Income tax benefit was $0.6 million, compared to income tax expense of $6.1 million in fiscal 2017.
In fiscal 2018, a $3.7 million tax valuation allowance was recorded on deferred tax assets in the United Kingdom (see reconciliation of GAAP to non-GAAP results).
Net loss was $17.9 million and adjusted net loss was $5.9 million (see reconciliation of GAAP to non-GAAP results).
In fiscal 2018, the Company opened 52 locations, closed 33 locations and remodeled or reformatted 12 stores into a Discovery format, ending the year with 37% of its store base in an updated Discovery format.
As of February 2, 2019, the Company operated 373 corporately-managed locations, including 313 in North America and 60 outside of North America. Build-A-Bear Workshop’s international franchisees ended the year with 97 stores in 11 countries.
As of February 2, 2019, cash and cash equivalents totaled $17.9 million. Build-A-Bear Workshop ended fiscal 2018 with no borrowings under its revolving credit facility.
Total inventory at year-end was $58.4 million compared to $58.1 million at 2017 year-end. On-hand inventory was down 5% offset by in-transit inventory growth due to the shift in the timing of Chinese New Year. In fiscal 2018, capital expenditures totaled $11.3 million and depreciation and amortization were $16.0 million. ■