Build A Bear Workshop, Inc. (NYSE: BBW) NDIC –

Transcript:Build A Bear Workshop, Inc. (NYSE: BBW) NDIC –:
Build A Bear Workshop, Inc. (NYSE: BBW) NDIC – February 20th, 2020 Zach Margovskiy, Alejandro Perez Elorza Arce, Chris Clinton Which Company Does Not Belong? 2 Investment Thesis Recommendation: Given Build a Bear’s (NYSE:BBW) unique experience in the toy industry, their potential for strategic partnerships, and their undervalued brand equity, it offers a very attractive equity investment opportunity with substantial 3 year upside; we recommend a buy at this time Rationale Given Build a Bear’s experiential retail, they are well poised to survive the retail apocalypse, with their future strategic partnerships, and their undervalued brand equity, we believe that the market is discounting them too negatively--BBW offers a very attractive equity investment opportunity with substantial multiyear upside, they are therefore we recommend a buy at this time 1 Retail as an experience: More than a product 2 Exploiting strategic partnerships 3 Strong brand equity & high customer awareness The Brands Moms Trust and Kids Love “You don’t go to build a bear just for a stuffed animal, you go for an experience”- Anonymous 3 Final Price Target: $5.57 Upside: 26.59% Build A Bear Overview Formed in 1997 by Maxine Clark Specialty retailer in make customizable stuffed animal, in an interactive retail experience 371 corporately managed locations (315 U.S., 60 Canada) 1,000 full time employees, 3,300 regular part time employees Total of 104 international locations, with 59 in Europe 4 Cap IQ, Bloomberg, BBW 10k/10q Shareholder Breakdown Company Overview Ctd. BBW website, 10k Business Model Creates value through its ability to sell a physical product and an experience 361 company-leased retail stores worldwide and 102 franchise retail stores Primary Revenue comes from Direct-to-Consumer sales 84% of Revenue comes from North America 15% of Revenue comes from Europe Much more ability to expand in Europe, most of the region hasn’t experienced BBW yet Current Partnerships Industry Overview Source: IBISWorld; Statista; Toy Association Main Competitors CAGR: 2.71% - Largest Toy Market: Europe - Fastest Growing Market: Asia - Overall Market is dominated by 7 overall players, with no one company having a competitive advantage - $21 billion in revenue - $1.2 billion in profit Key Catalysts 7 Recently entered into an agreement with Disney whereas Build a Bear would have rights to sell a Baby Yoda plush across their stores, sending their stock surging The toy has yet to come out in store, but with the right branding, like their 2018 promotion of