Build-A-Bear's Six Steps to Turnaround
Build-A-Bear Workshop, although closing stores, continues to grow. How's that you wonder? For the fourth quarter ended December 29, 2012 the retailer's e-commerce sales rose 14% (8% for the year). The investments that have been made to improve the design and features of the website have resulted in stronger online conversion. In addition to new branding and marketing campaigns, Build-A-Bear is focused on six key initiatives for a multi-year turnaround plan.
On January 31, 2013, Maxine Clark announced her plan to retire as chief executive bear at Build-A-Bear Workshop. With multi-year turnaround strategies in place to position the company for long-term profitable growth (and beginning to gain traction), Clark felt the time was appropriate.
In 2012, progress was made on the six key initiatives of the multi-year turnaround:
1. New store design. The first six newly designed stores were opened with strong guest response, and continue to have sales increases of 30% or more. The remodeled stores are driving repeat and new guest visits and maintaining strong average transaction value. The retailer expects to remodel 40-50 additional store locations over the next two years to build on the destination appeal.
2. Store closure plans. Build-A-Bear continues to execute store closure plans in time with natural lease events to improve productivity and profitability. A total of 50-60 closures in the next two years are expected. The pace of closures is increasing – in 2013, 13 of the approximately 35 stores planned for the year have already closed.
3. Brand and experience marketing. An emphasis has been placed back on brand and experience marketing. The retailer introduced brand-building TV advertising in the U.S. that features the store experience. This led to the improvement in the North American comp trend and also drove increased merchandise margins, eliminating select promotions.
4. Gift program. The gift program has moved forward, particularly in the key fourth quarter when gift card sales increased by over 30% on a consolidated basis. Brand advertising contributed to the strong sales of gift cards by prompting parents and other relatives to give the gift of experience.
5. Global growth. Build-A-Bear continues to grow globally, finishing the year with 91 stores in 14 countries. The retailer also opened two stores in the U.K. and expects franchisees to open eight to 12 stores in 2013.
6. Improve cost efficiencies. With a focus on improving cost efficiencies, the retailer saved an additional $7.5 million during the year, enabling it to offset product cost increases and support the brand-building marketing advertising. It continues to adjust the expense structure to reflect the smaller store base that will be created by closing stores.
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