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Speaker 1: Build a Bear Workshop has been delighting the little ones

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Speaker 1: and some big ones too. I know some people who

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Speaker 1: more adults still buy these folks who love stuff animals

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Speaker 1: more than twenty five years. The toymaker is hoping for

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Speaker 1: a boost in sales from the holiday shopping season after

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Speaker 1: unexpected softness in the final two weeks of October. Now

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Speaker 1: you're joining us here in Studio two at our Bloomberg

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Speaker 1: World headquarters is Sharon Price John She's the president and

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Speaker 1: CEO of Build a Bear Workshop. But Jaron, great to

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Speaker 1: have you here on the program.

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Speaker 2: Happy to be here.

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Speaker 1: Okay, I'm going to start off, first of all with

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Speaker 1: the comments from last week or a couple weeks ago

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Speaker 1: about some of the softness that we're seeing there. What

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Speaker 1: do you think was driving that?

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Speaker 2: Yeah, so there's been a lot of conversations really cross

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Speaker 2: sector about a downturn and some consumer spending in the

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Speaker 2: last two weeks of October, and we were no different

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Speaker 2: with that. It struck us as a bit of an

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Speaker 2: unexpected surprise, and I think it did a lot of

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Speaker 2: people until we started to sort of unravel what was

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Speaker 2: going on. It was probably some aspect of just some

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Speaker 2: changes in economic outlook, some concerns from people some geopolitical unrest,

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Speaker 2: and the good news of that though, even though that

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Speaker 2: continued a little bit into November, is in the last

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Speaker 2: week or saw or so we've seen it to start

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Speaker 2: to tick back up again. So as we moved into

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Speaker 2: our earnings call release yesterday morning, we were able to

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Speaker 2: add that insight as well.

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Speaker 1: I am curious about just the nature of toys, if

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Speaker 1: you will, and we've been having this debate as to

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Speaker 1: whether toys are kind of a discretionary item or a staple,

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Speaker 1: because let's face it, kids want what they want and

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Speaker 1: most parents are going to give it to them no

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Speaker 1: matter the costs. Here, I mean, how do you view that?

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Speaker 1: I mean, if we are seeing economic softness, at least

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Speaker 1: among a certain demographic in this country here, does that

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Speaker 1: have a material impact on a company like Build a Bear.

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Speaker 2: I believe that it depends on the sort of the

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Speaker 2: consumer spending latitude and so what socio economic group that

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Speaker 2: you're particularly targeting. As an example, Build a Bear tends

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Speaker 2: to appeal to slightly older target because we're mall based

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Speaker 2: and our average dollars per transaction is over fifty dollars.

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Speaker 2: Even though we assure that with our birthday treat there

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Speaker 2: where you can come in and get a bear for

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Speaker 2: the age you're turning, So if it's two years old,

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Speaker 2: you can get the bear for So we make sure

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Speaker 2: we keep that that broad appeal. But I think that

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Speaker 2: it does have to do with how much you have

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Speaker 2: as a of a discretionary income. Obviously, the toy industry

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Speaker 2: has often considered itself as recession resistant. There really isn't

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Speaker 2: a sector this recession proof, I would say. But yes,

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Speaker 2: particularly as you for a child's birthday or as you

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Speaker 2: approach the holidays, there's a little more latitude between some

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Speaker 2: choices that parents make. They'll forego their own presence often

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Speaker 2: to make sure there's something special under the tree.

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Speaker 3: Yeah. I noticed that in August you said forty percent

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Speaker 3: of your sales are generated by teens and adults. Yeah,

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Speaker 3: really surprised me. That's a pretty big margin. Right now,

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Speaker 3: we're seeing in this autumn and this winter, this expectation

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Speaker 3: people are willing to spend on experiences over things. The

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Speaker 3: things were the heyday of the things were back during

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Speaker 3: the pandemic, and of course people want to go out

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Speaker 3: talk about how you're folding that into what you offer

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Speaker 3: your customers. Particularly this holiday season.

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Speaker 2: Right that's a really great question, And just also just

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Speaker 2: one moment on the condulting trend that's out there that's

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Speaker 2: been showing up in the media all over the place

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Speaker 2: right now. We've been a part of that for a

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Speaker 2: long time, and yes, we have seen an uptick in

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Speaker 2: our business, particularly with some of our licensed products like

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Speaker 2: Hello Kitty or Harry Potter that appealed to this multi generation.

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Speaker 2: But experience is a core part of who we are.

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Speaker 2: In fact, it's our core competency, our point of difference.

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Speaker 2: Even when you come to a build a Bear, you're

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Speaker 2: creating that build a bear and is a very personalized

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Speaker 2: process where you stuff the bear, you put your own

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Speaker 2: voice inside the bear. You can customize it with sense

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Speaker 2: and sounds and dress it exactly the way you want to.

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Speaker 2: So we were experience or retail before that terminology even

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Speaker 2: exists in the over twenty five years that we've been

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Speaker 2: in business, and it means a lot to our guests.

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Speaker 2: We're creating memories. These are special moments, and Build a

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Speaker 2: Bear is a part of the holiday tradition as well

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Speaker 2: as families go out to do their holiday shopping or

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Speaker 2: case the kids to see Santa and we're often a

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Speaker 2: part of that planned trip.

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Speaker 3: Got it, Got it? I noticed also in the last

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Speaker 3: three years you've become more reliant on the US market

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Speaker 3: than overseas markets. Europe is now what eighty seven percent?

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Speaker 3: Excuse me, the US is now eighty seven percent of

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Speaker 3: revenue versus eighty four percent twenty what's the right balance

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Speaker 3: for you? Where do you want to be?

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Speaker 2: That's also fabulous question because Build a Bear is an

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Speaker 2: interesting company and that we have had a much more

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Speaker 2: robust international franchise and partner operated business. In the past,

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Speaker 2: COVID contracted that business, and there've been sometimes when we

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Speaker 2: went through some ups and downs as well during the recession,

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Speaker 2: that contracted that business. We've been actively pursuing additional franchises

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Speaker 2: and international partnership. The Build a Bears that we operate

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Speaker 2: in the UK are part of our owned and operated

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Speaker 2: portion of our company, as well as in Canada, but

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Speaker 2: from Australia to China, to South Africa to Chile, those

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Speaker 2: are franchises in partner operated. We noted on the call

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Speaker 2: that we just opened our first store in some time

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Speaker 2: in Continental Europe in Milan, in a relationship with Hamley's

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Speaker 2: We've had a fabulous relationship with Hamley's, a famous toy store,

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Speaker 2: famous particularly in London. We have a great store in

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Speaker 2: a story store with them, and we're looking forward to

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Speaker 2: rolling out across continental Europe.

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Speaker 1: I am curious just thinking a little bit more long

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Speaker 1: term about just kind of the extension of the brand.

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Speaker 1: We were speaking off camera before you came on about

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Speaker 1: Mattel and then the success that it's had and creating

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Speaker 1: movie franchises around. It's a big names like Barbie and

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Speaker 1: some of the others here. You've got a couple movies

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Speaker 1: coming out this holiday seas. I don't know if they're

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Speaker 1: already out here. Is that a part of the general

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Speaker 1: strategy too, that by doing those movies that drives people

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Speaker 1: to eventually, I guess, buy one of the Bears?

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Speaker 2: Absolutely? I mean that is a part of a lot

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Speaker 2: of the toy industry and toy company strategies because there's

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Speaker 2: an understanding of that when you create a relationship with

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Speaker 2: your guests, when you create character arts and story arts,

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Speaker 2: that raises the meaningfulness and yes, they's also the top

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Speaker 2: of mind awareness. It's an important aspect from a marketing

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Speaker 2: tool and in some cases a revenue generating, but we

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Speaker 2: look at it as a primary marketing catalyst for us,

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Speaker 2: from Hallmark Films who listen in the Marry Mission, which

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Speaker 2: is out already, and even our newly launched documentary Unstuffed,

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Speaker 2: a build a Bear story that chronicles the last twenty

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Speaker 2: five years. It raises the level and thought process of

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Speaker 2: build a Bear from investors to guests.

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Speaker 3: Yeah, well, I appreciate your joining us.

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Speaker 1: Have you seen Unstuffed? I have, I recommend My wife

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Speaker 1: was the one who recommended that to me and because

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Speaker 1: she was completely fascinated by the you know, they kind.

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Speaker 3: Of focus on that is this weekend's viewing.

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Speaker 1: So yeah, it's good.

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Speaker 3: All right, let me know, Sharon, thank you so much.

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Speaker 3: Sharon Price John is president and CEO of a Buildeba

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Speaker 3: Workshop