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A strong quarter at Build-A-Bear Workshop in a bounce back year for the retailer was overshadowed by the growing weight of tariffs in an ongoing trade war waged by President Donald Trump.
The mall staple was able to get ahead of tariff impacts during the first half of the year through preemptive actions, Chief Financial Officer Voin Todorovic said in a statement Thursday, but the levies caught up to the company in its most recent quarter and will continue to weigh on its performance into 2026.
“We expect this elevated level of impact to continue through the fourth quarter and into the next fiscal year,” Todorovic said. “Nevertheless, we remain confident in our guidance, which accounts for tariff impacts and our focus on disciplined expense management.”
Build-A-Bear shares tumbled 13% Thursday.
Trump acknowledged in April that his tariffs could result in fewer and costlier products in the United States, saying at the time that American kids might “have two dolls instead of 30 dolls.”
Many U.S. companies have been able to avoid price hikes through various maneuvers like aggressively buying supplies before tariffs kicked in. Many have absorbed some of the costs and pulled back on hiring instead of raising prices.
Both importers and economists, however, said that those tactics have an expiration date.
For the period ended Nov. 1, Build-A-Bear earned $8.1 million, or 62 cents per share. A year earlier the St. Louis company earned $9.9 million, or 73 cents per share.
The performance topped the 59 cents per share that analysts polled by FactSet were looking for.
Revenue rose nearly 3% to $122.7 million, but came in below the $124 million that Wall Street expected.
Build-A-Bear still anticipates fiscal 2025 revenue to grow on a mid-to-high-single-digit percentage basis.
Part of the reason for the retailer’s rebound is growing popularity on social media, particularly among what are referred to as “kidults,” those who may have had a Build-A-Bear growing who are buying them again. Those buyers tend to spend more on the products.
Todorovic said that it’s been the most profitable first nine months in the company’s history. And investors have been reaping sizeable gains. Shares closed at $57.40 on Wednesday, which is dramatic growth from five years ago, when the retailer’s stock sat under $3.