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Edited Transcript of BBW earnings conference call or presentation 29-Nov-18 2:00pm GMT

Q3 2018 Build-A-Bear Workshop Inc Earnings Call

St. Louis Dec 5, 2018 (Thomson StreetEvents) -- Edited Transcript of Build-A-Bear Workshop Inc earnings conference call or presentation Thursday, November 29, 2018 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Sharon Price John

Build-A-Bear Workshop, Inc. - President, CEO & Director

* Voin Todorovic

Build-A-Bear Workshop, Inc. - CFO

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Conference Call Participants

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* Ashley Elizabeth Helgans

Jefferies LLC, Research Division - Equity Associate

* Allison C. Malkin

ICR, LLC - Senior MD

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Presentation

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Operator [1]

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Greetings, and welcome to the Build-A-Bear Workshop Third Quarter 2018 Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Allison Malkin of ICR. Thank you. You may begin.

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Allison C. Malkin, ICR, LLC - Senior MD [2]

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Good morning. Thank you for joining us. With me today are Sharon Price John, CEO; and Voin Todorovic, CFO. For today's call, Sharon will begin with a discussion of our 2018 third quarter performance and review the progress made on the priorities we set at the start of the year. Voin will review the third quarter financials and our fiscal 2018 guidance. We will then open the call to take your questions. (Operator Instructions)

Members of the media who may be on our call today should contact us after this conference call with your questions.

Please note the call is being recorded and broadcast live via the Internet. The earnings release is available on the Investor Relations portion of our corporate website. A replay of both our call and webcast will be available later today on the IR site.

Before I turn the call over to management, I will remind everyone that forward-looking statements are inherently subject to risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors, including those set forth in the Risk Factors section in the company's annual report on Form 10-K. We undertake no obligation to revise any forward-looking statements.

Finally, I want to remind you that we will review results for fiscal 2018 third quarter and 39 weeks ended November 3, 2018. Given the previously announced fiscal year change, references to the prior year results are based on the unaudited recast results for the fiscal year ended February 3, 2018.

And now I would turn the call over to Sharon.

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Sharon Price John, Build-A-Bear Workshop, Inc. - President, CEO & Director [3]

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Thanks, Allison, and good morning, everyone. In a seasonally small third quarter, in which we had forecasted a loss, we ultimately, delivered both sales and profitability that were lower than our expectations. Although the roller coaster ride and residual benefits of the Pay Your Age event drove positive sales through August, they were offset with disappointing results for the balance of the quarter, particularly in September. We attribute the results to a variety of reasons, some in our control and some that were out of our control, which I'll outline shortly. Notably, while we were actively managing the short-term unpredictability of the aftermath of an event with the scale and impact of Pay Your Age, we continued to make progress toward the longer-term transformation of our company.

As noted on our last call, we believe the unprecedented consumer response to the July event is a clear and leverageable proof point of the power of our brand. We expect to ultimately, profitably monetize this equity while further evolving and diversifying our real estate portfolio and revenue stream.

But looking at the third quarter, we attribute the softer-than-expected results to 3 situations.

First, we made a tough strategic decision to purposefully limit our planned marketing, PR and promotional focus for early September, which had been scheduled to celebrate one of our largest, annual sales-generating events, National Teddy Bear Day, and redirected that effort to a new event that is now planned for January. As you may recall, the Pay Your Age event in mid-July, which was created to launch our year-long Count Your Candles birthday program far exceeded expectations for sales and accounted for our highest traffic day in the history of our company. The lines that rest around malls resulted in intensified attention in the press and social media. Although we believe there are many long-term residual benefits from the 3 billion media impressions from the Pay Your Age initiative, given the close proximity and historical lines of our prior National Teddy Bear Day promotion, we elected to moderate the previously planned September event in an effort to manage the probable heightened awareness and sensitivity of both consumers and the press. We felt this was necessary to avoid potentially brand-damaging coverage and social media that could reverse the exceptional bounce-back we had achieved. While the limits and changes that were made to National Teddy Bear Day ultimately resulted in lower third quarter sales, our goal was to recoup a portion of the lost business by amplifying a similar, incremental event on National Hug Day in January, which is also in this current fiscal year.

Second, we experienced a continued deceleration in European revenues driven by a double-digit decline in year-over-year sales in the United Kingdom. As we have been reporting and further cautioned in last quarter's remarks, the overall U.K. market continues to be a burden by one of the most challenging retail environments in history driven by declining consumer confidence and uncertainty around Brexit, which has led to the devaluation and volatility of the pound sterling. This is demonstrated by the comparatively large number of retail store closures and bankruptcies filed this year. This retail turbulence has been further challenged by the implementation of new privacy and data protection regulation, commonly referred to as GDPR, which, as with many companies with European operations, has significantly reduced our database of guests and severely inhibited our ability to collect new subscribers or directly communicate marketing messages to guests since May. Additionally, it's important to note that the financial impact of the U.K. on our business is disproportionate for a company our size as the country represents nearly all of our corporately managed European sale. Although we expect these challenges to continue in the near term, we believe, on a longer-term basis, that the U.K. will return to some form of normalcy. In the interim, we are focusing on impacting areas of the business more in our control, including careful expense management, rebuilding our database within the requirements of the new law as well as rent rationalization as landlords have increased their willingness to negotiate.

And third, as other toy companies have noticed, we are continuing to manage through this year's reduced slate of high-impact, kid-friendly films that have characters that translate well into plush. We believe this has also exacerbated the ongoing mall traffic challenges, particularly with the key family demographic. Although the weaker slate was anticipated, the negative impact was greater than forecasted in the third quarter.

Typically, inbound licensed product sales, which include furry friends associated with entertainment property, can represent between 35% to 45% of our net retail sales in a given year and tend to over-index in the U.K. This includes the contribution of the My Little Pony movie, which launched in October of last year, without a film to balance it in the same quarter in 2018. As a partial offset to the expected softer movie lineup, we proactively created several new girl-centric international properties that have been launched throughout the year. These include Beary Fairy Friends and Rainbow Friends, both of which have been top-selling collections in -- since their release.

On a cumulative basis, our proprietary product sales have increased. However, they have not closed the gap to the degree expected. Of note, and perhaps something that has been comparatively unappreciated, the movie studio promotion dollars that ultimately drive consumers to theaters are the same dollars that are driving consumers to malls, where theaters are often located.

During a big licensed movie launch, it is not unusual to see a number of key metrics improve in our stores that are co-located with these theaters, including traffic, conversion and dollars per transaction. Although we would expect this headwind to continue through December, we look forward to calendar year 2019, which features some of the most promising animated film slates in years. Taking off with the highly anticipated How to Train Your Dragon 3 movie, we plan to launch our furry friends associated with the film in January in advance of the following month's North American premiere. Our lineup will include an updated version of Toothless the Dragon, our best-selling individual movie character of all time.

Turning to the broader outlook, we have faced a variety of both anticipated and unanticipated challenges over the past few years, ranging from the critical need to upgrade a significant portion of our IT infrastructure after years of neglect, so we can effectively run and scale the business through Brexit. Even with the disruption, we have maintained our overall focus to transform this company and monetize inherent value of the Build-A-Bear brand while diversifying our real estate portfolio and revenue streams. And although our financial results have been up and down, we continue to make progress in key areas, which indicates the potential of the long-term strategy. We believe that we can carve a path to success although some of our progress has been masked along the way with headwinds such as mall-traffic declines of over 40% during the same time span and macro-market disruptions in the U.K. To that end, I would like to summarize some of the progress that we believe demonstrates our steps toward better being able to more consistently monetize the strength of the Build-A-Bear brand as well as what we feel has improved points as to the viability of our strategy.

First, we continue to build and leverage our consumer loyalty base that was fueled by the heightened awareness and residual benefits of Pay Your Age Day, which launched our ongoing and successful Count Your Candles birthday program. As you may recall, the introduction of this new birthday platform, which allows children to celebrate at Build-A-Bear and purchase a limited edition Birthday Treat Teddy Bear for the price of their age during their birthday month, was designed to leverage the most frequent visit occasions to our stores and drive new-guest trial and acquisition. The program that is only available for current and new Bonus Club members continues to be very popular. Notably, once it was launched, the Birthday Treat Bear quickly became our #1 unit selling furry friend. Additionally, as planned, the program is successfully attracting children in the target optimal age range of 3 to 6 years' old. While kids in this younger age range receive a larger discount, our data indicate that it should result in more total childhood visits and, ultimately, increase consumer lifetime value. It also encouraged trial with over half the guests participating in the program being first-time visitors, as measured by our new enrollments in our Bonus Club. Supported by investments in our CRM system and infrastructure, our goal is to leverage this meaningful increase in the loyalty program's database with marketing outreach to drive incremental brand engagement and purchasing.

In fact, the program was so successful in the wake of Pay Your Age Day that we quickly sold out of the initial quantities of the Birthday Treat Bear and related accessories that were designed to drive units and dollars per transaction to offset the comparatively low price point of the furry friends. We are now back in stock, and our transaction value has increased, while consumer engagement remains high.

Next, we have gained momentum following our last October's implementation of a new e-commerce platform, with sales in the last 4 consecutive quarters growing at double-digit rate. We are aggressively targeting this channel in the fourth quarter, which has historically represented up to 50% of our annual digital sales. We have seen positive results from our new and improving gifting initiative throughout the year, and we recently, once again, enhanced the capabilities and features in anticipation of heightened demand for the holiday season. We expect e-commerce to remain robust in Q4 as we continue to benefit from investments made in the web platform along with improved processes and evolved digital strategy.

We have seen stronger site traffic, improved conversion and transaction metrics, as well as Bonus Club enrollment, which should bode well for us as we head into this critical time of year and beyond.

Third, we continue to evolve and diversify our real estate portfolios to locations that families are increasingly going to shop and for entertainment, such as tourist destinations and holiday pop-up shops in order to reach a broader consumer base.

As we've previously discussed, while we are actively diversifying our real estate, we are also strategically managing the traditional mall portfolio and renegotiating leases to optimize the cash flow to fund investments needed to achieve our future state. Therefore, we have used favorable short-term extensions to maintain flexibility and optionality within our corporately managed portfolio, with over 60% of our leases across geographies expiring in the next 3 years. Because our tourist store cohorts tend to overindex on key metrics, we have added a number of permanent tourist locations this year, including the recent opening in FAO Schwarz in New York City. In addition, shops have now been opened in 4 Great Wolf lodges, North America's largest operator of family-focused water park resorts, and are expected to roll out to the additional launches going forward. We are working with them in a business model similar to that of Carnival Cruise Lines. On a seasonal basis, we have nearly doubled the number of holiday pop-up locations this year. For example, we expanded the number of sites with adjacencies to Santa's Workshop at Bass Pro Shops and Cabela's, while piloting a number of new venues. We have also returned to the historically successful Gaylord Resorts ICE! event. While early, all of these initiatives are tracking above our expectations.

Separately, as previously announced in October, we opened a half dozen full-service Build-A-Bear Workshop stores inside select Walmart locations. The inaugural sites were selected using comprehensive data analytics, such as toy sales and consumer demographics overlaid with markets where Build-A-Bear is currently underpenetrated. While early, we are pleased with initial customer response and look forward to additional feedback. We believe we are reaching new consumers with upwards of 60% of our Bonus Club enrollees at the sites identified as first-time Build-A-Bear guests.

Turning to entertainment. We are making advancements to enter this arena to emotionally connect and communicate directly with our consumers in a changing media environment while providing a platform to further leverage our brand and collection of proprietary intellectual property. As such, in October, we launched our new digital radio station, Build-A-Bear Radio, in conjunction with Dash Radio, a multi-station streaming platform with over 10 million subscribers. Dash features Build-A-Bear Radio as its exclusive kid-targeted channel, understanding not only that Build-A-Bear a trusted brand but that we have a heritage in music, selling millions of sound chips a year that are placed in the paws of our furry friends.

On the launch day of the radio station, we premiered a new version of Have It All, by Jason Mraz, especially created for Build-A-Bear, as a precursor to a more robust relationship with the GRAMMY Award-winning artist, which we expect to announce in the coming months. The listenership has averaged 100s of thousands a day since the launch, essentially giving us a new platform to engage with highly focused and relevant audience beyond our stores.

Over time, we expect to leverage this platform in a number of ways, including paid sponsorships and brand complementary partnerships, inclusive of our ability to play and promote music from specific artists that can enhance key relationship.

And finally, we had an increase in both commercial and international franchise revenue, which combined reached 5% of total revenues in the quarter. Commercial revenue benefited from outbound licensing programs that were shipped in preparation for the holiday season. These programs include new product offerings in a wide array of retailers from specialty to big box, in a range of categories including footwear and slippers, toys through our relationship with Just Play, health and beauty, instant wear and accessories; and while we are working to build this margin-accretive channel into a more meaningful and consistent revenue stream, we believe that the record of sales performance that we are establishing in national retailers puts us in a position to add other licenses in the future.

On the international franchise side, we have made progress to open the first stores in India later this fiscal year and are on track with our development plans in China. We continue to expect our franchise footprint to expand to approximately 120 locations in 12 countries by year-end, further supporting our belief that a bear hug is understood in any language.

As we look at the holiday season, and kick off our "holiday wishes made here" marketing campaign, we are executing a comprehensive and integrated effort, including in-store, TV, social, e-mail, direct mail, radio, and we are leaning into heavily -- heavily leaning into nontraditional venues, as the media strategies of the past did not deliver with the same predictability. This year, we are inviting guests to visit the workshop to make furry friends and sign the Nice List as a part of their holiday tradition. And we have added a first-time sweepstakes offer to sign the Nice List and win a Wish List.

While quarter-to-date sales are currently negative compared to last year, we are pleased with the initial sales results of the new candy cane-inspired redesign of our proprietary Merry Mission product line. This collection has been our top-selling fourth quarter offering since its launch 4 years ago even among a variety of powerful license options in the past. And it's currently tracking to end this year in the top position again. We also believe there is potential benefit from the shift of January into our new fiscal year as it tends to overindex on gift card redemptions.

Finally, in review, the results of the third quarter are clearly disappointing. However, the data indicate that the majority of the quarter's financial mess can be attributed to a few variables. First, a strategic change in our promotional plans and efforts for National Teddy Bear Day knowingly created a challenging circumstance to comp what had been one of the largest sales weekends of the year in 2017. Second, the continued U.K. market disruption arising from Brexit and GDPR contributed to the sharp double-digit declines in European sales and transactions, which stand in contrast to the low single-digit decline in North America and the strong double-digit increases in e-commerce. Third, in addition to the continued softness leading to the reported mall traffic decreases of over 40% on a cumulative basis over the past 5 years, we believe the composition that the -- that traffic is less kid eccentric given that the malls in general are less likely to be top of mind when families are deciding where to go for shopping, entertainment and making memories.

In response to these 3 issues, first, we expect to recoup a portion of the lost sales resulting from the changes in National Teddy Bear Day with the addition of a similar promotion that is planned for this fiscal year in January in conjunction with National Teddy Bear Day (sic) [National Hug Day]. Second, we are working to rebuild our U.K. consumer database. And assuming the market normalizes, to some degree, post Brexit, we do not believe this quarter's nor the year-end -- year-to-date results are indicative of the longer-term potential of our brand. Third, as noted, given the ongoing traffic challenges and changing consumer shopping pattern, we have been in the process of evolving to be a more tourist-type locations where today's families with younger children prefer to go shopping and for entertainment, while maintaining our real estate optionality with a systematic process of securing short-term, favorable lease extensions in select malls. Again, this process has allowed us to continue to be cash flow positive and maintain some scale as we are testing our way into the best future state for our store footprint. As such, we now have secured a highly flexible lease situation with significant latitude in the next 3 years, given that over 60% of the leases will be up for a negotiation while simultaneously significantly improving our capability to participate in the e-commerce economy.

Additionally, in the meantime, 2019 is stacking up to have one of the most promising licensed movie lineups in recent years for family, with updates of all-time favorites for both box office and toy sales. This slate includes the aforementioned How to Train Your Dragon from DreamWorks followed by 3 highly anticipated Disney offerings, Aladdin, Lion King and the second installment of Frozen. As noted, this is important as it is typical for a film marketing event to drive family traffic to theaters, which are often co-located with malls.

In closing, we believe we are making progress on execution of our transformation strategy, even though these results are disappointing. Some important puzzle pieces are starting to fall in its place, including our retail evolution and diversification, international franchise expansion, outbound licensing traction and to some lesser degree, entertainment. With that in mind, we continue to systematically work toward our goal of being a company that can consistently and profitably monetize the power of one of the most trusted, recognized and beloved kids brands today.

Now I'll turn the call over to Voin to review the financial results and outlook in more detail.

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Voin Todorovic, Build-A-Bear Workshop, Inc. - CFO [4]

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Thanks, Sharon, and good morning, everyone. As I begin, I want to note that given our previously announced fiscal year-end change, all references to prior year third quarter results are based on the recast 13 weeks ended October 28, 2017.

In a quarter that was challenging top and bottom line results, we focused on the disciplined management on expenses, inventory and capital expenditure while implementing our strategy to diversify and grow new revenue streams to broaden the accessibility of the Build-A-Bear brand beyond the 4 walls of our traditional retail stores, such as outbound licensing, international franchising, wholesale revenue, shop-in-shops and the new full-service Build-A-Bear Workshop stores inside select Walmart locations. The added diversity positions Build-A-Bear Workshop to deliver more consistent growth longer term. And while not clearly evident in our performance this quarter, our strategy to have more stores in locations that families go for shopping and entertainment continues to pay dividend.

As Sharon noted, our quarterly consolidated revenue and profit were pressured by a variety of factors. However, it is important to note that our consolidated retail transactions were up slightly in the quarter [effort] by a decline in our dollars per transaction driven by higher promotional activity associated with Pay Your Age Day and the lower mix of licensed product sales associated with the lack of high-profile, kid-centric theatrical releases.

With that backdrop, let me share an overview of our third quarter results in more detail. In total, third quarter consolidated revenues were $68.7 million, a decrease of $7.5 million from $76.2 million in the fiscal 2017 third quarter. This reflects an approximately $2.5 million combined negative impact from the adoption of the new revenue recognition standard and the January closure of one of our most productive stores at Disney Anaheim. Of the 9.8% decrease in consolidated revenues, North America saw a 7.4% decrease, and Europe declined 23.1%. E-commerce revenue, which is included in consolidated revenue, increased 17.8%. Net retail sales were $65.3 million, a decline of 12.3% year-over-year. As expected, we saw an increase of approximately $1.7 million in commercial and international franchise revenue. For the full fiscal year, we continue to expect total non-retail revenue to grow compared to prior year.

Retail gross margin dollars decreased $8 million to $23.2 million compared to the fiscal 2017 third quarter. The retail gross margin rate declined 640 basis points to 35.5%, including approximately 150 basis points related to noncash store impairment charges outside of the U.S. and the adoption of the new revenue recognition standard as well as approximately 370 basis points related to the leverage of fixed occupancy costs. The remaining decline was driven primarily by higher promotional activities related to the residual effects of Pay Your Age Day as well as the deleverage of distribution costs in the quarter. Notably, total occupancy and distribution costs were flat even with a higher store count resulting in a lower average cost per store.

As I mentioned, our continued expense management resulted in an SG&A decrease of $1.1 million to $35.1 million compared to the prior year third quarter. We were able to reduce SG&A expense even though we finished the quarter with 20 more locations compared to prior year. We continue to review our expense structure across the organization and look at ways to improve profitability.

Turning to the balance sheet. At the quarter end, cash and cash equivalents were $8.6 million. We ended the quarter with $7.3 million in borrowings under our revolving credit facility. The cash balance decrease compared to last year was driven by share repurchases as well as the timing of inventories and accounts receivables. We expect to end the year with no borrowings under our revolving credit facility.

We ended the quarter with $57.3 million of consolidated revenues (sic) [inventories], representing an 8.8% decrease from the prior year. We believe our inventory balance and composition position us well for the balance of the year.

As previously noted, the fourth quarter and full year 2018 GAAP revenue will be negatively impacted by the extra week included in the recast 14-week fourth quarter and 53-week fiscal year 2017 results. In addition, the 2018 full year results will reflect the negative multimillion-dollar revenue and pretax income impact from the January 2018 closure of our flagship business store and an estimated $3.9 million negative impact due to adoption of the new revenue recognition standard on both total revenue and pretax income.

As a reminder, it is important to note that we expect fiscal calendar shift to result in a scenario where the fourth quarter represents a greater percentage of the year compared to the prior calendar as the new fiscal period essentially replaces October, one of our lowest-volume months, with January, a much larger-volume month.

We now expect the fourth quarter and annual results to be the following: total GAAP revenue in the fourth quarter to be in the range of $105 million to $110 million, bringing us to $340 million to $345 million for the full fiscal year; SG&A in the fourth quarter to be about 10% lower compared to the prior year recast 14-week fourth quarter, partially driven by one less week of operating expenses; and pretax income to be in the range of $9 million to $13 million, leading to full year pretax result in the range of a $3 million loss to $1 million of income, not inclusive of any additional or unforeseen accounting charges. Separately, for the fourth quarter, we now expect tax expense to be in the range of $4 million to $5.5 million.

For fiscal 2018, we currently expect capital expenditures to be in the range of $14 million to $15 million and depreciation and amortization to be approximately $16 million.

Finally, we expect fiscal 2018 year-end cash balances to be approximately $25 million.

This concludes our prepared remarks. And we will now turn the call back over to the operator for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Stephanie Wissink with Jefferies.

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Ashley Elizabeth Helgans, Jefferies LLC, Research Division - Equity Associate [2]

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This is Ashley on for Steph Wissink. So our first question is on your franchise locations. Are the concourse model shops available for franchising? And is that part of your strategy at all?

Second, how should we expect commercial sales to scale?

And last, any early feedback on the Walmart partnership?

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Sharon Price John, Build-A-Bear Workshop, Inc. - President, CEO & Director [3]

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Yes, the franchise question. Yes, it is available. It's not widely out there yet, but because it has a smaller footprint and is a lot -- requires a lot less capital, it serves a distinct purpose for some of our franchise partners, particularly in China. As I look at both the bigger markets by putting flagships in those markets, like Shanghai and Beijing, that when you get into the secondary type of markets, their belief is that the concourse could be a really great tool for them to roll it out with a lot -- roll out Build-A-Bear across the country with a lot less capital. So it's a great tool. And it's been also on the same side. It's been a great tool for us in the United States as a leverageable tool for us to drive negotiation with our own -- in our own mall systems.

On the second question, I'll turn that over to Voin, on the commercial sales.

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Voin Todorovic, Build-A-Bear Workshop, Inc. - CFO [4]

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Yes, Ashley. Commercial sales and some of these other nontraditional revenue streams are expected to grow. As you know, we have shown some strong indicators that our strategies are working, and we are expanding in that particular area. As Sharon noted, we are starting our relationship with Great Wolf lodge, and we are expecting to be in a lot of their locations next year. We continue to work with similar models that are really highly accretive to us as well as we are looking at other revenue streams in the form of wholesaling and really to diversify our business model. So there are a lot of other initiatives that we are working on in addition to the wholesale piece we talked. Our outbound licensing initiatives continue to work. We had like large slipper programs even in the Q3 that was partially driving our strong improvement in commercial revenue year-over-year.

We feel good about the progress that we are making against those initiatives. But again, we are still in early innings across a lot of these initiatives. We believe there is much more upside over a longer haul as well as our international franchise opportunities are still a big opportunity as recently we announced that India -- addition of the India franchisee, as well as we continue to see expansion on the China front.

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Sharon Price John, Build-A-Bear Workshop, Inc. - President, CEO & Director [5]

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Right. On the Walmart question, we are in 6 pilot locations right now. And as we noted in the remarks, the initial feedback was very positive, and we're particularly thrilled that it is expanding the accessibility of our brand based on some of the Bonus Club data coming in as over 50%, over 60% of the guests have never shopped at a Build-A-Bear before. So that's a really positive piece of feedback as far as we're concerned. Walmart could be a very important partner for us. We just -- but it is a relationship, and we will make these decisions together. But as a dovetailing into Voin's remarks, as an example, even the slipper business that he was -- the successful slipper business that we have, Walmart's our largest partner with that particular program. So there is a potential to be intertwined in a number of ways.

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Operator [6]

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(Operator Instructions) It appears we have no further questions at this time. Ms. Price John, I would now like to turn the floor back over to you for closing comments.

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Sharon Price John, Build-A-Bear Workshop, Inc. - President, CEO & Director [7]

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Okay. Thanks for joining us, everyone, today. We really appreciate it, and we hope everyone has a happy and healthy holiday season. Look forward to speaking to you next year.

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Operator [8]

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Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.