Full Breakdown
Build-A-Bear Workshop Reports Q2 FY26 Revenue Drop, Cuts Outlook and Fires Growth Officer
8/27/2026, 8:21:37 PM
Q2 FY26 Revenue Decline and Guidance Cut
Build-A-Bear Workshop, Inc. announced that total revenues for the second quarter of fiscal 2026 fell 7.2% year-over-year to $115.3 million, missing the $121.1 million estimate. Net retail sales declined 7.1% to $106.5 million and pre-tax income dropped 24% to $11.6 million. In response, the company lowered its full-year revenue outlook to a range of $500 million-$525 million, down from the prior $530 million-$550 million target, and revised pre-tax income expectations to $60 million-$68 million (including an approximately $13 million International Emergency Economic Powers Act refund).
Background & Context
The retailer had previously warned of a tougher first half of fiscal 2026, but the magnitude of the Q2 shortfall surprised executives. Wholesale performance also lagged; the company was unable to repeat a multimillion-dollar Walmart program from the prior year, and other wholesale opportunities progressed more slowly than anticipated.
Data & Statistics
- Q2 FY26 revenue: $115.3 million (-7.2% YoY)
- Net retail sales: $106.5 million (-7.1% YoY)
- Pre-tax income: $11.6 million (-24% YoY)
- Gross margin: 54.2%, down 340 basis points
- SG&A expense margin improved by 80 basis points, driven by lower incentive compensation
- Commercial and international franchise revenue: $8.8 million, down 9%
- Global store count at quarter-end: 674 locations (five net new experience sites, six new franchise sites, offset by a net loss of four partner-operated locations)
Official Statements & Responses
CEO Chris Hurt explained that the revenue miss stemmed from weaker summer-trend products, ongoing macroeconomic headwinds, and the inability to repeat the prior year’s Walmart program. Despite the softer outlook, management said the company will accelerate openings of experience locations, including a new multi-level destination at ICON Park in Orlando, and targets at least 50 net new experience sites globally over the coming period.
Verbatim Quotes
- “Summer is when we traditionally push that innovation,” — Chris Hurt, CEO
- “However, our experience with Walmart, namely the successful sell-through of our Build-A-Bear branded nonlicensed products, demonstrated that a brand can extend into large-scale third-party distribution and reach consumers beyond our traditional channel.” — Orlando. Build-A-Bear
What's Next
Build-A-Bear plans to open additional experience locations worldwide, aiming for a minimum of 50 net new sites through corporate, partner-operated, and franchise models. The company also expects commercial revenue to remain flat year-over-year while it works to develop new wholesale partnerships beyond the stalled Walmart initiative.
