How ‘kidulting’ helped make Build-A-Bear a Wall Street darling
By Vanessa Yurkevich, CNN
New York (CNN) — Build-A-Bear Workshop, the nearly 30-year-old toy brand, is having a breakout moment, eclipsing some of Wall Street’s biggest winners by targeting customers across a broad age range.
The toy company’s revenue grew 11% in the second quarter to a record $124.2 million, and it even raised full-year guidance – all while mitigating the cost of tariffs. That’s a stark contrast to years of unprofitability before 2012.
Investors have taken notice. In the last year alone, Build-A-Bear’s stock is up 76%. In the last five years, the toy company’s share price (BBW) has risen nearly 2,000% – besting even tech companies riding the AI boom like Palantir, Nvidia and Microsoft.
But the company faces potential headwinds, including the impact of tariffs and increasingly squeezed consumers, who might pare back on non-essentials as they tighten budgets while inflation stays hot.
Build-A-Bear broadened its customer base beyond kids and capitalized on customer trends that emerged after the pandemic, focusing on experiences and tapping into what Sharon Price John, the company’s CEO, calls the “nostalgia economy.”
“’Kidulting,’ (is) adults wanting to be kids, and they’re buying things that they loved when they were kids. So we leaned into that with really interesting licenses that played on their memory,” John told CNN.
Build-A-Bear has licensing deals with nostalgic brands like Hello Kitty, Pokémon and Harry Potter. John said adults and teens are now 40% of the company’s business.
“A lot of the adults with kids also have fond memories of Build-A-Bear themselves,” said Neil Saunders, managing director and retail analyst at GlobalData. “So they’ve been keen to expose their kids to that. It’s a memory that they have and are fond of, and they’re keen to recreate that for a new generation.”
For parents, the fusion of entertainment and product from picking out and building a bear is valuable, as is Build-A-Bear’s price point, especially for birthday bears that cost a customer’s age.
“That’s very helpful to the retailer because we are in an era where money’s a bit tighter. People are thinking about what represents value, and Build-A-Bear has a proposition that’s really centered around value,” said Saunders.
And while many mall brands have faded, Build-A-Bear is growing. The company announced it would open 60 stores this year, 10 more than previously announced.
“Malls are still a big part of what we do, but that’s almost 30-40% of our retail environment,” said John. “Now we’re in tourist locations, cruise ships, hospitality and we also built out our e-commerce business. We had to participate in the digital economy.”
The tariff question
Like most toy companies, the company said tariffs will take a bite: an expected $11 million this year, despite front-loading component imports from China and Vietnam, which have 30% and 20% tariffs respectively.
The brand has controlled price hikes for now but expects to raise them at some point, albeit in specific spots rather than across-the-board, John said.
“I think that that has pleased investors because they’ve said, well, yes, there may be some downside on tariffs here, but it’s significantly less than maybe it is elsewhere in the toy sector,” said Saunders.
And as Americans face tighter wallets in the face of inflation, non-essentials – like Build-A-Bear’s product – could get cut from family budgets. Inflation has remained above the Federal Reserve’s 2% target for years, and a stagnating labor market has reignited fears that more families could see their incomes shrink.
Saunders also cited concerns about slowing foot traffic at shopping malls – and the chance that the current collectibles craze could go the way of Beanie Babies and Cabbage Patch kids in years past.
“Some of these (worries) may not materialize in the near-term, but the company needs to be alert to all of them,” said Saunders.
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