{"url_path":"/sec/bbw/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Financial Statements**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-06-11","source_url":"https://www.sec.gov/Archives/edgar/data/1113809/0001437749-26-020239-index.html","accession_number":"0001437749-26-020239","cik":"0001113809","ticker":"BBW","issuer_name":"BUILD-A-BEAR WORKSHOP INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1113809/0001437749-26-020239-index.html","primary_entity_key":"0001113809","primary_entity_name":"BUILD-A-BEAR WORKSHOP INC"},"word_count":5766,"has_tables":true,"body_markdown":"**Item 1. Financial Statements**\n\n \n\n**BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES**\n\n**CONDENSED CONSOLIDATED BALANCE SHEETS**\n\n(Dollars in thousands, except share and per share data)\n\n \n\n  \n**May 2,**\n  \n**January 31,**\n  \n**May 3,**\n \n\n  \n**2026**\n  \n**2026**\n  \n**2025**\n \n\n  \n(Unaudited)\n      \n(Unaudited)\n \n\n**ASSETS**\n \n\nCurrent assets:\n            \n\nCash, cash equivalents and restricted cash\n $26,247  $26,755  $44,342 \n\nInventories, net\n  77,806   82,203   72,299 \n\nReceivables, net\n  31,630   21,459   13,800 \n\nPrepaid expenses and other current assets\n  12,149   9,603   12,156 \n\nTotal current assets\n  147,832   140,020   142,597 \n\n             \n\nOperating lease right-of-use asset\n  119,622   121,129   92,699 \n\nProperty and equipment, net\n  73,778   70,926   59,260 \n\nDeferred tax assets\n  7,243   7,370   7,667 \n\nOther assets, net\n  5,610   6,008   6,080 \n\nTotal Assets\n $354,085  $345,453  $308,303 \n\n             \n\n**LIABILITIES AND STOCKHOLDERS' EQUITY**\n \n\nCurrent liabilities:\n            \n\nAccounts payable\n $15,994  $15,318  $15,890 \n\nAccrued expenses\n  33,932   26,104   24,273 \n\nOperating lease liability short term\n  28,276   28,651   26,507 \n\nGift cards and customer deposits\n  14,260   15,289   14,851 \n\nDeferred revenue and other\n  4,142   5,264   3,830 \n\nTotal current liabilities\n  96,604   90,626   85,351 \n\n             \n\nOperating lease liability long term\n  97,414   98,647   72,957 \n\nOther long-term liabilities\n  1,048   1,152   1,313 \n\n             \n\nStockholders' equity:\n            \n\nPreferred stock, par value $0.01, Shares authorized: 15,000,000; No shares issued or outstanding at May 2, 2026, January 31, 2026 and May 3, 2025\n  -   -   - \n\nCommon stock, par value $0.01, Shares authorized: 50,000,000; Issued and outstanding: 12,628,877, 12,808,954, and 13,174,014 shares, respectively\n  126   128   132 \n\nAdditional paid-in capital\n  59,919   60,821   61,602 \n\nAccumulated other comprehensive loss\n  (10,939)  (10,760)  (11,295)\n\nRetained earnings\n  109,913   104,839   98,243 \n\nTotal stockholders' equity\n  159,019   155,028   148,682 \n\nTotal Liabilities and Stockholders' Equity\n $354,085  $345,453  $308,303 \n\n \n\nSee accompanying notes to condensed consolidated financial statements.\n\n \n\n4\n\n[Table of Contents](#toc)\n\n \n\n \n\n**BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES**\n\n**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**\n\n**AND COMPREHENSIVE INCOME**\n\n**(Unaudited)**\n\n(Dollars in thousands, except share and per share data)\n\n \n\n \n \n\n**Thirteen weeks ended**\n\n \n\n \n \n\n**May 2,**\n\n \n \n\n**May 3,**\n\n \n\n \n \n\n**2026**\n\n \n \n\n**2025**\n\n \n\nRevenues:\n\n \n \n \n \n \n \n \n \n\nNet retail sales\n\n \n$\n113,466\n \n \n$\n119,589\n \n\nCommercial revenue\n\n \n \n10,948\n \n \n \n7,623\n \n\nInternational franchising\n\n \n \n856\n \n \n \n1,183\n \n\nTotal revenues\n\n \n \n125,270\n \n \n \n128,395\n \n\n \n \n \n \n \n \n \n \n \n\nCosts and expenses:\n\n \n \n \n \n \n \n \n \n\nCost of merchandise sold - retail\n\n \n \n40,338\n \n \n \n51,571\n \n\nCost of merchandise sold - commercial\n\n \n \n4,419\n \n \n \n3,014\n \n\nCost of merchandise sold - international franchising\n\n \n \n641\n \n \n \n824\n \n\nTotal cost of merchandise sold\n\n \n \n45,398\n \n \n \n55,409\n \n\nConsolidated gross profit\n\n \n \n79,872\n \n \n \n72,986\n \n\nSelling, general and administrative expense\n\n \n \n56,126\n \n \n \n53,555\n \n\nInterest income, net\n\n \n \n(134\n)\n \n \n(200\n)\n\nIncome before income taxes\n\n \n \n23,880\n \n \n \n19,631\n \n\nIncome tax expense\n\n \n \n5,581\n \n \n \n4,312\n \n\nNet income\n\n \n$\n18,299\n \n \n$\n15,319\n \n\n \n \n \n \n \n \n \n \n \n\nForeign currency translation adjustment\n\n \n \n(179\n)\n \n \n1,259\n \n\nComprehensive income\n\n \n$\n18,120\n \n \n$\n16,578\n \n\n \n \n \n \n \n \n \n \n \n\nIncome per common share:\n\n \n \n \n \n \n \n \n \n\nBasic\n\n \n$\n1.45\n \n \n$\n1.17\n \n\nDiluted\n\n \n$\n1.45\n \n \n$\n1.17\n \n\n \n \n \n \n \n \n \n \n \n\nShares used in computing common per share amounts:\n\n \n \n \n \n \n \n \n \n\nBasic\n\n \n \n12,584,388\n \n \n \n13,080,301\n \n\nDiluted\n\n \n \n12,638,710\n \n \n \n13,144,243\n \n\n  \n\n See accompanying notes to condensed consolidated financial statements. \n\n \n\n5\n\n[Table of Contents](#toc)\n\n \n\n \n\n**BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES**\n\n**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n**(Unaudited)**\n\n(Dollars in thousands) \n\n \n\n \n \n\n**Thirteen weeks ended**\n\n \n\n \n \n\n**May 2,**\n\n \n \n\n**May 3,**\n\n \n\n \n \n\n**2026**\n\n \n \n\n**2025**\n\n \n\n \n \n \n \n \n \n \n \n \n\nCash flows provided by operating activities:\n\n \n \n \n \n \n \n \n \n\nNet income\n\n \n$\n18,299\n \n \n$\n15,319\n \n\nAdjustments to reconcile net income to net cash provided by operating activities:\n\n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n\nDepreciation and amortization\n\n \n \n4,002\n \n \n \n3,700\n \n\nShare-based and performance-based stock compensation\n\n \n \n629\n \n \n \n1,546\n \n\nProvision/adjustments for doubtful accounts\n\n \n \n(29\n)\n \n \n(111\n)\n\nGain on disposal of property and equipment\n\n \n \n(4\n)\n \n \n(10\n)\n\nNet change in film costs and advances\n\n \n \n(33\n)\n \n \n(29\n)\n\nDeferred taxes\n\n \n \n113\n \n \n \n-\n \n\nChange in assets and liabilities:\n\n \n \n \n \n \n \n \n \n\nInventories, net\n\n \n \n4,300\n \n \n \n(1,766\n)\n\nReceivables, net\n\n \n \n3,004\n \n \n \n2,730\n \n\n                     IEEPA tariff refund receivable\n\n \n \n(13,175\n)\n \n \n-\n \n\nPrepaid expenses and other assets\n\n \n \n(2,508\n)\n \n \n638\n \n\nAccounts payable and accrued expenses\n\n \n \n8,914\n \n \n \n7,086\n \n\nOperating leases\n\n \n \n(122\n)\n \n \n(121\n)\n\nGift cards and customer deposits\n\n \n \n(1,025\n)\n \n \n(1,004\n)\n\nDeferred revenue\n\n \n \n(1,141\n)\n \n \n(175\n)\n\nNet cash provided by operating activities\n\n \n \n21,224\n \n \n \n27,803\n \n\nCash flows used in investing activities:\n\n \n \n \n \n \n \n \n \n\nPurchases of property and equipment\n\n \n \n(6,869\n)\n \n \n(2,907\n)\n\nNet cash used in investing activities\n\n \n \n(6,869\n)\n \n \n(2,907\n)\n\nCash flows used in financing activities:\n\n \n \n \n \n \n \n \n \n\nPurchases of common stock for employee equity awards, net of tax\n\n \n \n(350\n)\n \n \n(1,266\n)\n\nCash dividends paid on vested participating securities\n\n \n \n(2,895\n)\n \n \n(2,934\n)\n\nPurchases of Company’s common stock\n\n \n \n(11,509\n)\n \n \n(4,208\n)\n\nNet cash used in financing activities\n\n \n \n(14,754\n)\n \n \n(8,408\n)\n\nEffect of exchange rates on cash\n\n \n \n(109\n)\n \n \n96\n \n\n(Decrease)/Increase in cash, cash equivalents, and restricted cash\n\n \n \n(508\n)\n \n \n16,584\n \n\nCash, cash equivalents and restricted cash, beginning of period\n\n \n \n26,755\n \n \n \n27,758\n \n\nCash, cash equivalents and restricted cash, end of period\n\n \n$\n26,247\n \n \n$\n44,342\n \n\n \n \n \n \n \n \n \n \n \n\nSupplemental disclosure of cash flow information:\n\n \n \n \n \n \n \n \n \n\nCash and cash equivalents\n\n \n$\n25,843\n \n \n$\n43,941\n \n\nRestricted cash from long-term deposits\n\n \n$\n404\n \n \n$\n401\n \n\nTotal cash, cash equivalents and restricted cash\n\n \n$\n26,247\n \n \n$\n44,342\n \n\n \n \n \n \n \n \n \n \n \n\nNet cash paid during the period for income taxes\n\n \n$\n286\n \n \n$\n636\n \n\nSee accompanying notes to condensed consolidated financial statements.\n\n \n\n6\n\n[Table of Contents](#toc)\n\n \n\n**Notes to Condensed Consolidated Financial Statements**\n\n \n\n**1. Basis of Presentation**\n\n \n\nThe condensed consolidated financial statements included herein are unaudited and have been prepared by Build-A-Bear Workshop, Inc. and its subsidiaries (collectively, the “Company”) pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States (\"U.S.\") generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet of the Company as of *January 31, 2026*, was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in the opinion of management, necessary to summarize fairly the financial position of the Company and the results of the Company’s operations and cash flows for the periods presented. All of these adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. Because of the seasonal nature of the Company’s operations, results of operations of any single reporting period should *not* be considered as indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended *January 31, 2026*, which were included in the Company’s Annual Report on Form *10*-K filed with the SEC on *April 16, 2026,*as amended by Amendment *No.* *1* filed with the SEC on *April 17, 2026 (*the *\"2025* Form *10*-K\"). \n\n \n\n \n\n*Significant Accounting Policies*\n\n \n\nThe Company's significant accounting policies are summarized in Note *2* to the consolidated financial statements included in its *2025* Form *10*-K.\n\n \n\n*Recently Adopted Accounting Pronouncements *\n\n \n\nIn *July 2025,*the FASB issued ASU *2025*-*05,* Financial Instruments—Credit Losses (Topic *326*): Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU *2025*-*05* provides the option to apply a practical expedient to address implementation challenges related to the estimation of expected credit losses for current accounts receivable and current assets arising from transactions accounted for under revenue recognition (Topic *606*) and assets acquired through business combinations. The practical expedient allows entities to assume that current conditions as of the balance sheet date remain unchanged over the life of these assets when developing forecasts. The guidance allows entities to bypass the requirement to incorporate macro-economic data into their forecast when such data is *not* expected to materially affect the estimate. The Company adopted the guidance in ASU *2025*-*05* effective *February 1, 2026*prospectively and applied the practical expedient. The adoption of this new accounting standard did *not* have a material impact on the Company's condensed consolidated financial statements.\n\n  \n\n*7*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**2. Revenue**\n\n \n\nCurrently, most of the Company’s revenue is derived from direct-to-consumer (\"DTC\") retail sales (including from its e-commerce sites) and is recognized when control of the merchandise is transferred to the customer. The Company's disaggregated revenue is fully disclosed as net sales to external customers by reporting segment and by geographic area (See Note *11* — Segment Information for additional information). The Company's direct-to-consumer reporting segment represents 91% of consolidated revenue for the *first* quarter of fiscal *2026*. The majority of these sales transactions were single performance obligations that were recorded when control of merchandise was transferred to the customer.\n\n \n\n*The following is a description of principal activities from which the Company generates its revenue through three reportable segments.*\n\n \n\nThe Company’s direct-to-consumer segment includes the operating activities of corporately-managed stores, other retail-delivered operations and online sales. Direct-to-consumer revenue is recognized when control of the merchandise is transferred to the customer and for the Company's online sales, control generally transfers upon delivery to the customer. Revenue is measured as the amount of consideration, including any discounts or incentives, the Company expects to receive in exchange for transferring the merchandise. Product returns have historically averaged less than *one*-half of *one* percent due to the personalized and interactive nature of sales, where consumers customize their own stuffed animal. The Company has elected to exclude from revenue all collected sales, value add, and other taxes paid by its customers.\n\n \n\nFor the Company’s gift cards, revenue is deferred for single transactions until redemption including any related gift card discounts. Approximately 80% of gift cards issued are redeemed within three years of issuance and over the last *three* years, approximately 65% of gift cards issued have been redeemed within the *first* *twelve* months. In addition, unredeemed gift cards or breakage revenue is recorded in proportion to the consumers’ redemption pattern using an estimated breakage rate based on historical experience. Following the reopening of stores after the pandemic, the Company experienced lower gift card redemption rates for all periods of outstanding activated cards compared to historical redemption patterns observed prior to fiscal year *2020,* which impacted the gift card breakage rate. Management believes that the redemption behavior observed during the pandemic was *not* indicative of long-term customer behavior and accordingly adjusted the historical redemption data used to calculate the breakage rate. In more recent periods, gift card redemption patterns have generally returned to levels consistent with pre-*2020* experience. The Company continues to evaluate expected breakage annually and adjusts the breakage rates in the *fourth* quarter of each year, or at other times if significant changes in consumer behavior are detected. Changes to breakage estimates impact revenue recognition prospectively. Further, given the magnitude of the Company's gift card liability, the changes in breakage rates could have a significant impact on the amount of breakage revenue recognized in future periods. As a matter of sensitivity, a hypothetical *1%* change in our gift card breakage rate in fiscal *2025* would have resulted in a change in breakage revenue of $1.3 million.\n\n \n\nFor certain qualifying transactions, a portion of revenue transactions are deferred for the obligation related to the Company’s loyalty program or when a material right in the form of a future discount is granted. In these transactions, the transaction price is allocated to the separate performance obligations based on the relative standalone selling price. The standalone selling price for the points earned for the Company’s loyalty program is estimated using the net retail value of the merchandise purchased, adjusted for estimated breakage based on historical redemption patterns. The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired. Loyalty program points expire if there is *no* qualifying account activity for a period of *12* months. The Company issues certificates daily to loyalty program members who have earned *100* or more points in North America and *50* points or more in the United Kingdom (the \"U.K.\") with certificates historically expiring in *four* months if *not* redeemed. The Company assesses the redemption rates of its certifications on a quarterly basis to update the rate at which loyalty program points turn into certifications and the rate that certifications are redeemed. The Company classifies contract liabilities related to the loyalty program as deferred revenue and other on the condensed consolidated balance sheet.\n\n \n\nThe Company’s commercial segment includes transactions with other businesses and is mainly comprised of  wholesale sales of merchandise, supplies and fixtures, licensing the Company's intellectual properties for *third*-party use, and revenues generated from entertainment activities. Revenue for wholesale sales is recognized when the control of the merchandise or fixtures is transferred to the customer, which generally occurs upon shipment to the customer. The license agreements provide the customer with highly interrelated rights, including the Build-A-Bear retail operations proprietary process, that are *not* distinct in the context of the contract and therefore, have been accounted for as a single performance obligation and recognized as licensee sales occur. If the contract includes a guaranteed minimum, the minimum guarantee is recognized on a straight-line basis over the guarantee term until such time as royalties earned through licensee sales exceed the minimum guarantee. The Company classifies these guaranteed minimum contract liabilities as deferred revenue and other on the condensed consolidated balance sheet. Entertainment revenue is generated through the sale of entertainment assets directly to customers or through licensing agreements. \n\n \n\nThe Company’s international franchising segment includes the activities with franchisees who operate store locations in certain countries and includes development fees, sales-based royalties and merchandise, including supplies and fixture sales. The Company's obligations under the franchise agreements are ongoing and include operations and product development support and training, generally concentrated around initial store openings. These obligations are highly interrelated rights that are *not* distinct in the context of the contract and, therefore, have been accounted for as a single performance obligation and recognized as franchisee sales occur. If the contract includes an initial, *one*-time nonrefundable development fee, this fee is recognized on a straight-line basis over the term of the franchise agreement, which *may*extend for periods up to 25 years. The Company classifies these initial, *one*-time nonrefundable franchise fee contract liabilities as deferred revenue and other on its condensed consolidated balance sheet. Revenue from merchandise and fixture sales is recognized when control is transferred to the franchisee, which generally occurs upon delivery.\n\n \n\nThe Company also incurs expenses directly related to the startup of new franchises, which *may*include finder’s fees, legal and travel costs, expenses related to its ongoing support of the franchises and employee compensation. Accordingly, the Company’s policy is to capitalize any finder’s fee, as an incremental cost, and expense all other costs as incurred. The Company amortizes these capitalized costs into expense in the same pattern as the development fee as described previously. These capitalized costs for the *thirteen* weeks ended *May 2, 2026* are *not* material to the financial statements. \n\n \n\nThe Company reserves for “expected” credit losses on financial instruments and other commitments to extend credit rather than the “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions and reasonable and supportable forecasts.  For the *thirteen* weeks ended *May 2, 2026*and *May 3, 2025*, the Company's accounts receivable are net of $4.1 million and $7.0 million, inclusive of the allowance for credit losses and the reserve for the UK's customs authority \"HMRC\" matter of $0.6 million and $3.6 million, respectively.  See Note *12* for further discussion of the HMRC matter. \n\n \n\nOn *February 20, 2026,*the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (\"IEEPA\"). Further, on *March 4, 2026,*the Court of International Trade ruled that U.S. Customs and Border Protection must refund the IEEPA tariffs that were collected. Based on these court rulings affirming the Company's legal right to recover IEEPA tariffs, the Company determined that it is entitled to a tariff refund of approximately $13.2 million, which was recorded in receivables, net on the condensed consolidated balance sheet. For the *thirteen* weeks ended *May 2, 2026,*the Company recorded a $10.4 million benefit for these tariffs in cost of merchandise sold-retail on the condensed consolidated statements of operations and comprehensive income and reduced the carrying value of inventory by $2.8 million on the condensed consolidated balance sheet as of *May 2, 2026.*\n\n \n\n*8*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**3. Leases**\n\n** **\n\nThe majority of the Company's leases relate to retail stores and corporate offices. For leases with terms greater than *12* months, the Company records the related asset and obligation at the present value of lease payments over the term. Most new retail store leases have an original term of a five to ten-year base period and *may*include renewal options to extend the lease term beyond the initial base period. The extension periods are typically much shorter than the original lease term given the Company's strategic decision to maintain a high level of lease optionality. Some leases also include early termination options, which can be exercised under specific conditions. Additionally, the Company *may*operate stores for a period of time on a month-to-month basis after the expiration of the lease term. The Company's lease agreements do *not* contain any material residual value guarantees or material restrictive covenants. Additionally, certain leases contain incentives, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property.\n\n \n\nThe table below presents certain information related to the lease costs for operating leases for the *thirteen* weeks ended *May 2, 2026*and *May 3, 2025* (in thousands).\n\n \n\n  \n**Thirteen weeks ended**\n \n\n  \n**May 2, 2026**\n  \n**May 3, 2025**\n \n\n         \n\nOperating lease costs\n $11,409  $10,443 \n\nVariable lease costs (1)\n  2,214   2,380 \n\nShort term lease costs\n  27   28 \n\nTotal Operating Lease costs\n $13,650  $12,851 \n\n \n\n \n(*1*)\n\nVariable lease costs consist of leases with variable rent structures, which are intended to increase flexibility in an environment with expected high sales volatility and provide a natural hedge against potential sales declines.\n\n*Other information*\n\n \n\nThe table below presents supplemental cash flow information related to leases for the *thirteen* weeks ended *May 2, 2026*and *May 3, 2025* (in thousands).\n\n \n\n  \n**Thirteen weeks ended**\n \n\n  \n**May 2, 2026**\n  \n**May 3, 2025**\n \n\nOperating cash flows for operating leases\n $11,062  $10,216 \n\n \n\nAs of *May 2, 2026*and *May 3, 2025*, the weighted-average remaining operating lease term was 6.3 years and 6.1 years, respectively, and the weighted-average discount rate was 6.9% and 7.2%, respectively, for operating leases recognized on the Company's condensed consolidated balance sheets.\n\n \n\nThe value of our operating lease asset was $119.6 million and $92.7 million as of *May 2, 2026*and *May 3, 2025*, respectively.  The increase was driven by the Company entering into leases for new stores as well as securing longer-term extensions for existing stores resulting in contracts with more favorable terms.\n\n \n\nFor the *thirteen* weeks ended *May 2, 2026* and the *thirteen* weeks ended *May 3, 2025* the Company incurred no impairment charges against its right-of-use operating lease assets.\n\n \n\n*Undiscounted cash flows*\n\n \n\nThe table below reconciles the undiscounted cash flows for each of the *first* *five* years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet (in thousands).\n\n \n\n**Operating Leases**\n   \n\n2026\n $31,978 \n\n2027\n  27,801 \n\n2028\n  22,270 \n\n2029\n  17,569 \n\n2030\n  13,816 \n\nThereafter\n  41,129 \n\nTotal minimum lease payments\n  154,563 \n\nLess: amount of lease payments representing interest\n  (28,873)\n\nPresent value of future minimum lease payments\n  125,690 \n\nLess: current obligations under leases\n  (28,276)\n\nLong-term lease obligations\n $97,414 \n\n \n\nAs of *May 2, 2026,*the Company had additional executed leases that had *not* yet commenced with operating lease liabilities of $4.4 million. These leases are expected to commence in the *second* quarter of fiscal *2026* with lease terms of 10 years. \n\n \n\n*9*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**4. Other Assets**\n\n \n\nPrepaid expenses and other current assets consist of the following (in thousands):\n\n \n\n  \n**May 2,**\n  \n**January 31,**\n  \n**May 3,**\n \n\n  \n**2026**\n  \n**2026**\n  \n**2025**\n \n\nPrepaid occupancy (1)\n $4,284  $2,570  $4,570 \n\nPrepaid insurance\n  655   1,068   512 \n\nPrepaid taxes (2)\n  43   81   181 \n\nPrepaid gift card fees\n  448   511   411 \n\nPrepaid royalties\n  376   111   285 \n\nOther (3)\n  6,343   5,262   6,197 \n\nTotal\n $12,149  $9,603  $12,156 \n\n  \n\n \n(*1*)\n\nPrepaid occupancy consists of prepaid expenses related to variable non-lease components.\n\n (*2*)Prepaid taxes consist of prepaid federal and state income tax. \n\n (*3*)Other consists primarily of prepaid expense related to information technology maintenance contracts and software as a service.\n\n  \n\nOther non-current assets consist of the following (in thousands):\n\n \n\n  \n**May 2,**\n  \n**January 31,**\n  \n**May 3,**\n \n\n  \n**2026**\n  \n**2026**\n  \n**2025**\n \n\nEntertainment assets (1)\n $4,164  $4,493  $4,251 \n\nDeferred compensation\n  1,322   1,356   1,665 \n\nOther (2)\n  124   159   164 \n\nTotal\n $5,610  $6,008  $6,080 \n\n \n\n (*1*)Entertainment assets includes the direct costs, production overhead and development costs in producing entertainment assets such as films or music.\n\n \n(*2*)\n\nOther consists primarily of deferred financing costs related to the Company's credit facility.\n\n \n\n \n\n**5. Accrued Expenses**\n\n \n\nAccrued expenses consist of the following (in thousands):\n\n \n\n  \n**May 2,**\n  \n**January 31,**\n  \n**May 3,**\n \n\n  \n**2026**\n  \n**2026**\n  \n**2025**\n \n\nAccrued wages, bonuses and related expenses\n $20,837  $16,824  $18,351 \n\nSales and value added taxes payable\n  2,184   3,341   2,219 \n\nCurrent income taxes payable\n  9,086   3,943   2,921 \n\nAccrued rent and related expenses (1)\n  875   1,046   782 \n\nAccrued expense - other (2)\n  950   950   - \n\nTotal\n $33,932  $26,104  $24,273 \n\n \n\n \n(*1*)\n\nAccrued rent and related expenses consist of accrued costs associated with non-lease components.\n\n (*2*)Accrued expense - other consists of costs associated with legal accruals.\n\n \n\n*10*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**6. Stock-based Compensation**\n\n \n\nOn *April **14,* *2020,* the Company's Board of Directors (the “Board”) adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. *2020* Omnibus Incentive Plan (the *“2020* Incentive Plan”).  On *June 11, 2020,*the Company’s stockholders approved the *2020* Incentive Plan.   On *April **11,* *2023,* the Board adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. Amended and Restated *2020* Omnibus Incentive Plan (the “Restated *2020* Incentive Plan”).  On *June 8, 2023,*at the Company’s *2023* Annual Meeting of Stockholders, the Company’s stockholders approved the Restated *2020* Incentive Plan. The Restated *2020* Incentive Plan, which is administered by the Compensation and Human Capital Committee of the Board, permits the grant of stock options (including both incentive and non-qualified stock options), stock appreciation rights, other stock-based awards, including restricted stock and restricted stock units, cash-based awards, and performance awards pursuant to the terms of the Restated *2020* Incentive Plan. The Restated *2020* Incentive Plan will terminate on *April 11, 2033,*unless earlier terminated by the Board. The total number of shares of the Company’s common stock authorized for issuance under the Restated *2020* Incentive Plan increased by 800,000 to a maximum of 1,800,000 since its inception as the *2020* Incentive Plan, subject to customary capitalization adjustments, substitutions of acquired company awards and certain additions of acquired company plan shares, plus shares that are subject to outstanding awards made under the Build-A-Bear Workshop, Inc. *2017* Omnibus Incentive Plan (the *“2017* Plan”) that on or after *April 14, 2020,**may*be forfeited, expire or be settled for cash.\n\n \n\nFor the *thirteen* weeks ended *May 2, 2026*and *May 3, 2025,*selling, general and administrative expense included stock-based compensation expense of $0.7 million and $0.5 million, respectively. As of *May 2, 2026*, there was $5.6 million of total unrecognized compensation expense related to unvested restricted stock awards which is expected to be recognized over a weighted-average period of 1.6 years.\n\n \n\nAs of *May 2, 2026* and *January 31, 2026* the Company had *no* outstanding stock options.    \n\n \n\nThe following table is a summary of the balances and activity related to time-based and performance-based restricted stock for the *thirteen* weeks ended *May 2, 2026*\n\n \n\n  \n**Time-Based Restricted Stock**\n  \n**Performance-Based Restricted Stock**\n \n\n  \n**Shares**\n  \n**Weighted Average Grant Date Fair Value**\n  \n**Shares**\n  \n**Weighted Average Grant Date Fair Value**\n \n\nOutstanding, January 31, 2026 (1)\n  73,588  $37.97   156,665  $32.82 \n\nGranted (1)\n  67,707   38.04   99,826   38.04 \n\nVested\n  (21,397)  26.11   -   - \n\nAdjustment for performance achievement\n  -   -   (40,494)  24.75 \n\nEarned and vested\n  -   -   (9,810)  24.75 \n\nForfeited (1)\n  -   -   -   - \n\nOutstanding, May 2, 2026 (1)\n  119,898  $36.44   206,187  $33.20 \n\n \n\n (*1*)Performance-based restricted stock outstanding, granted, and forfeited are presented at *100%* of target.\n\n \n\nThe total fair value of shares vested during the *thirteen* weeks ended *May 2, 2026*and *May 3, 2025* was $0.8 million and $2.0 million, respectively.\n\n \n\nThe outstanding performance shares as of *May 2, 2026* consist of the following:\n\n \n\n  **Performance Shares** \n\nUnearned shares subject to performance-based restrictions at target:\n    \n\n2024 - 2026 consolidated, cumulative EBITDA objectives\n  44,171 \n\n2024 - 2026 consolidated cumulative revenue objectives\n  14,724 \n\n2025 - 2027 consolidated, consolidated revenue growth objectives\n  47,466 \n\n2026 - 2028 consolidated, consolidated revenue growth objectives\n  99,826 \n\nPerformance shares outstanding, May 2, 2026\n  206,187 \n\n  \n\n \n\n**7. Income Taxes**\n\n \n\nThe Company's effective tax rate was 23.4% for the *thirteen* weeks ended *May 2, 2026* compared to 22.0% for the *thirteen* weeks ended *May 3, 2025*. In the *first* quarter of fiscal *2026,* the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense offset by the tax impact of equity awards vesting and the foreign-derived deduction eligible income (formerly foreign derived intangible income). In the *first* quarter of fiscal *2025,* the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense partially offset by the tax impact of equity awards vesting and foreign derived intangible income.  In addition, in the *first* quarter of fiscal *2026* and *2025,* the Company remains in a full valuation allowance in certain foreign jurisdictions. \n\n  \n\n*11*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**8. Stockholders’ Equity**\n\n \n\nThe following table sets forth the changes in stockholders’ equity (in thousands) for the *thirteen* weeks ended *May 2, 2026*and *May 3, 2025* (in thousands).\n\n \n\n  \n**For the thirteen weeks ended May 2, 2026**\n  \n**For the thirteen weeks ended May 3, 2025**\n \n\n                                         \n\n  \n**Common**\n   * *** **  * *** ** \n**Retained**\n   * *** ** \n**Common**\n   * *** **  * *** ** \n**Retained**\n   * *** **\n\n  \n**stock**\n  \n**APIC (1)**\n  \n**AOCI (2)**\n  \n**earnings**\n  \n**Total**\n  \n**stock**\n  \n**APIC (1)**\n  \n**AOCI (2)**\n  \n**earnings**\n  \n**Total**\n \n\nBalance, beginning\n $128  $60,821  $(10,760) $104,839  $155,028  $133  $61,987  $(12,554) $89,516  $139,082 \n\nShares issued under employee stock plans\n  * *   243   * *   * *   243   * *   1,103   * *   * *   1,103 \n\nStock-based compensation\n  * *   381   * *   * *   381   * *   284   * *   * *   284 \n\nShares withheld in lieu of tax withholdings\n  *-*   (350)  * *   * *   (350)  * *   (1,266)  * *   * *   (1,266)\n\nShare repurchase\n  (2)  (1,176)  * *   (10,331)  (11,509)  (1)  (506)  * *   (3,701)  (4,208)\n\nCash dividends\n  * *   * *   * *   (2,894)  (2,894)  * *   * *   * *   (2,891)  (2,891)\n\nOther\n  * *   * *   * *   -   -   * *   * *   * *   * *   - \n\nOther comprehensive income\n  * *   * *   (179)  * *   (179)  * *   * *   1,259   * *   1,259 \n\nNet income\n  * *   * *   * *   18,299   18,299   * *   * *   * *   15,319   15,319 \n\nBalance, ending\n $126  $59,919  $(10,939) $109,913  $159,019  $132  $61,602  $(11,295) $98,243  $148,682 \n\n \n\n(*1*) Additional paid-in capital (“APIC”)\n\n(*2*) Accumulated other comprehensive loss (“AOCI”)\n\n \n\nDuring the *thirteen* weeks ended *May 2, 2026*, the Company utilized $11.4 million in cash to repurchase 248,118 shares under its $100 million stock repurchase program that was authorized by the Board on *September 11, 2024 (*the *\"September 2024*Stock Repurchase Program\"). Between the end of the *first* fiscal quarter of *2026* and *June 9,* *2026,* the Company utilized an additional $3.8 million in cash to repurchase 103,064 shares under the *September 2024*Stock Repurchase Program, leaving an aggregate of $46.5 million available for future repurchases under that plan.  For the *thirteen* weeks ended *May 2, 2026*, the Board authorized cash dividends to shareholders of $2.9 million on *March 11, 2026,*as the Board declared a quarterly cash dividend of $0.23 per share on the issued and outstanding common stock of the company. The dividend was paid on *April 9, 2026,*to all stockholders of record as of *March 26, 2026.*\n\n \n\nDuring the *thirteen* weeks ended *May 3, 2025*, the Company utilized $4.2 million in cash to repurchase 108,502 shares under the *September 2024*Stock Repurchase Program. The Company's Board of Directors also declared a quarterly cash dividend of $0.22 per share that was paid on *April 10, 2025,*to shareholders of record as of *March 27, 2025. *\n\n    \n\n*12*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**9. Income per Share**\n\n \n\nThe following table sets forth the computation of basic and diluted net income per share (in thousands, except share and per share data):\n\n \n\n  \n**Thirteen weeks ended**\n \n\n  \n**May 2,**\n  \n**May 3,**\n \n\n  \n**2026**\n  \n**2025**\n \n\nNUMERATOR:\n        \n\nNet income\n $18,299  $15,319 \n\n         \n\nDENOMINATOR:\n        \n\nWeighted average number of common shares outstanding - basic\n  12,584,388   13,080,301 \n\nDilutive effect of share-based awards:\n  54,322   63,942 \n\nWeighted average number of common shares outstanding - dilutive\n  12,638,710   13,144,243 \n\n         \n\nBasic net income per common share\n $1.45  $1.17 \n\nDiluted net income per common share\n $1.45  $1.17 \n\n \n\nIn calculating the diluted income per share for the *thirteen* weeks ended *May 2, 2026*, there were 19,214 shares of common stock that were outstanding at the end of the period that were *not* included in the computation of diluted income per share due to their anti-dilutive effect. For the *thirteen* weeks ended *May 3, 2025,*there were zero shares of common stock that were outstanding at the end of the period that were *not* included in the computation of diluted income per share due to their anti-dilutive effect.\n\n \n\n \n\n**10. Comprehensive Income**\n\n** **\n\nThe difference between comprehensive income or loss and net income or loss is the result of foreign currency translation adjustments on the balance sheets of subsidiaries whose functional currency is *not* the U.S. dollar. The accumulated other comprehensive loss balance on *May 2, 2026*and *May 3, 2025* was comprised entirely of foreign currency translation. For the *thirteen* weeks ended *May 2, 2026*and *May 3, 2025*, the Company had no reclassifications out of accumulated other comprehensive loss.\n\n  \n\n*13*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**11. Segment Information **\n\n \n\nThe Company’s operations are conducted through three operating segments, consisting of DTC, commercial and international franchising. The DTC segment includes the operating activities of corporately-managed locations and other retail delivery operations in the U.S., Canada, Puerto Rico, the Republic of Ireland and the U.K., including the Company’s e-commerce sites and temporary stores. The commercial segment includes the Company’s transactions with other businesses, mainly comprised of wholesale sales of merchandise, supplies and fixtures, licensing the Company's intellectual properties for *third* party use, and revenues generated from entertainment activities. The international franchising segment includes the licensing activities of the Company’s franchise agreements with store locations in select countries in Asia, Australia, the Middle East, Africa, and South America. The operating segments have discrete sources of revenue, different capital structures and different cost structures. These operating segments represent the basis on which the Company’s chief operating decision maker regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities. Accordingly, the Company has determined that each of its operating segments represent a reportable segment. The three reportable segments follow the same accounting policies used for the Company’s consolidated financial statements.\n\n \n\nThe following is a summary of the financial information for the Company’s reportable segments (in thousands):\n\n \n\n  \n**Direct-to-**\n   * *** ** \n**International**\n   * *** **\n\n  \n**Consumer**\n  \n**Commercial**\n  \n**Franchising**\n  \n**Total**\n \n\nThirteen weeks ended May 2, 2026\n                \n\nTotal Revenue\n $113,466  $10,948  $856  $125,270 \n\nCost of Goods Sold\n  40,338   4,419   641   45,398 \n\nGross Profit\n  73,128   6,529   215   79,872 \n\nSelling, General & Administrative\n  36,080   103   -   36,183 \n\nContribution Margin\n  37,048   6,426   215   43,689 \n\nOverhead Expenses(1)\n  * *   * *   * *   19,943 \n\nInterest Income\n  * *   * *   * *   (134)\n\nIncome before income taxes\n  * *   * *   * *  $23,880 \n\nThirteen weeks ended May 3, 2025\n                \n\nTotal Revenue\n $119,589  $7,623  $1,183  $128,395 \n\nCost of Goods Sold\n  51,571   3,014   824   55,409 \n\nGross Profit\n  68,018   4,609   359   72,986 \n\nSelling, General & Administrative\n  34,352   96   -   34,448 \n\nContribution Margin\n  33,666   4,513   359   38,538 \n\nOverhead Expenses(1)\n  * *   * *   * *   19,107 \n\nInterest Income\n  * *   * *   * *   (200)\n\nIncome before income taxes\n  * *   * *   * *  $19,631 \n\n \n\n (*1*)Overhead expenses contain selling, general and administrative expenses *not* attributable to a segment.\n\n \n\n*14*\n\n[Table of Contents](#toc)\n\n \n\nTotal assets, depreciation and amortization, and capital expenditures for the Company's segments, as well as for Corporate and support, are as follows (in thousands):\n\n \n\n  \n**Direct-to-**\n   * *** ** \n**International**\n   * *** **  * *** **\n\n  \n**Consumer**\n  \n**Commercial**\n  \n**Franchising**\n  \n**Corporate**\n  \n**Total**\n \n\nThirteen weeks ended May 2, 2026\n                    \n\nTotal Assets\n $258,483  $15,627  $1,446  $78,529  $354,085 \n\nDepreciation and amortization\n  2,564   358   -   1,080   4,002 \n\nCapital Expenditures\n  5,411      -   1,458   6,869 \n\nThirteen weeks ended May 3, 2025\n                    \n\nTotal Assets\n $209,280  $11,605  $1,831  $85,587  $308,303 \n\nDepreciation and amortization\n  2,734   39   -   927   3,700 \n\nCapital Expenditures\n  1,354   -   -   1,553   2,907 \n\n \n\nThe Company’s reportable segments are primarily determined by the types of products and services that they offer. Each reportable segment *may*operate in many geographic areas. Revenues are recognized in the geographic areas based on the location of the customer or franchisee. The following schedule is a summary of the Company’s sales to external customers and long-lived assets by geographic area (in thousands):\n\n \n\n  \n**North**\n   * *** **  * *** **  * *** **\n\n  \n**America (1)**\n  \n**Europe (2)**\n  \n**Other (3)**\n  \n**Total**\n \n\nThirteen weeks ended May 2, 2026\n                \n\nNet sales to external customers\n $107,498  $14,335  $3,437  $125,270 \n\nThirteen weeks ended May 3, 2025\n                \n\nNet sales to external customers\n $111,273  $15,627  $1,495  $128,395 \n\n \n\nFor purposes of this table only:\n\n(*1*)  North America includes corporately-managed locations and sales to wholesale customers in the United States and Canada.\n\n(*2*)  Europe includes corporately-managed locations in the U.K. and the Republic of Ireland and sales to wholesale customers in Europe.\n\n(*3*)  Other includes wholesale and franchise businesses outside of North America and Europe.\n\n \n\n*15*\n\n[Table of Contents](#toc)\n\n \n\n \n\n**12. Contingencies**\n\n \n\nIn the normal course of business, the Company is subject to legal proceedings, government inquiries and claims, and other commercial disputes. If *one* or more of these matters has an unfavorable resolution, it is possible that the results of operations, liquidity or financial position of the Company could be materially affected in any particular period. The Company accrues a liability for these types of contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. Gain contingencies are recorded when the underlying uncertainty has been settled.\n\n \n\nAssessments made by the U.K. customs authority in *2012* were appealed by the Company, which has paid the disputed duty, strictly under protest, pending the outcome of the continuing dispute, and this is included in receivables, net in the DTC segment. The U.K. customs authority contested the Company's appeal. Rulings by the First Tier Tribunal in *November 2019 *and Upper Tribunal in *March 2021 *held that duty was due on some, but *not* all, of the products at issue. The Company petitioned the Court of Appeal for permission to appeal certain elements of the Upper Tribunal decision, and in early *November 2021,*a judge granted the Company's petition for permission to appeal those elements of the Upper Tribunal decision on some, but *not* all, of the grounds of appeal that the Company had put forward. An appeal was heard by the Court of Appeal during the *first* quarter of fiscal *2022,* and the Court of Appeal dismissed the appeal in the *third* quarter of fiscal *2022.* During the *fourth* quarter of fiscal *2022**,* the UK Supreme Court declined to hear the appeal. The Company is engaging with the customs authority to attempt to resolve all outstanding issues following the application of the determined principles. The case will return to the lower tribunal for a final ruling if outstanding issues cannot be resolved. The Company maintains a provision against the related receivable, based on a current evaluation of collectability, using the latest facts available in the dispute. During the *first* quarter of fiscal *2026,* the Company received approximately $0.6 million from His Majesty's Revenue and Customs (HMRC). Following this receipt, the Company reassessed the collectability of the related receivable and adjusted both the gross receivable balance and the associated reserve by $3.2 million, leaving a gross receivable balance of $0.8 million, a reserve of $0.6 million, and a net receivable of $0.2 million. The Company believes that the outcome of this dispute will *not* have a material adverse impact on the results of operations, liquidity, or financial position of the Company.\n\n \n\n*16*\n\n[Table of Contents](#toc)"}