Very few companies have been able to turn around from the penny stocks at the bottom of the mall retail collapse and adjust their strategy to gain leadership buy-in and come out the other side as a profitable, sustainable, emotionally anchored company.
But that’s the amazing story of Build-A-Bear Workshop (BBW).
If you took a random sample of retailers that were popular for their shopping centers, most people would overlook Build-A-Bear. But five years ago it traded around $3, and today it trades around $56 per share, with a price-to-earnings (P/E) ratio of 13.55 times and a market cap of $736 million. USD.
Meanwhile, AI-driven growth stocks such as Nvidia (NVDA), Meta Platforms (META), and Tesla (TSLA) grabbed all the headlines. But Build-A-Bear’s 1,419% return over the past five years crushes them all.
in 2025 Build-A-Bear posted another profit in the second quarter. EPS was $0.94, up from $0.66, a whopping 42.4%. Revenue reached 124.2 million. USD, which reduced by 116.52 million. USD estimate and grew by 11.1% per year. Net retail sales rose 10.8%, e-commerce sales rose 15.1%, and commercial revenue jumped 15.2%.
“We expect record results for the fifth consecutive year in fiscal year 2025,” said CEO Sharon Price John. CFO Voin Todorovic emphasized: “This was the most profitable second quarter and first half of the year in the company’s history.
Stocks responded accordingly, hitting new highs in mid-September. Wall Street took note: Three out of four analyst coverage rates BBW a “strong buy,” with an average price target of $80, indicating significant upside from current levels.
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So how did it happen? There are several factors that make this a great success story.
First, the numbers confirm the transformation. Build-A-Bear has a return on equity of 37%, compared to an industry average of just 17%. The company earns $0.37 in earnings for every $1 in shareholders’ equity, indicating exceptional operating efficiency. Over the past five years, net income has grown 38%, compared to just 7.8%.
Perhaps most telling: Build-A-Bear keeps 84% of its profits to reinvest rather than paying it all out as dividends. This is not a recessionary company; it is a company that invests in growth.
The turnaround came as a result of management settling in and aligning itself with strategy, survival and relentless waste reduction. They closed stores that were not profitable. They have developed their e-commerce strategy. And most importantly, they created an “emotional ditch.”
This emotional moat comes from people who associate their Build-A-Bear experience with the most important moments in their lives, whether it was their first stuffed animal, a graduation gift, or a new gift for their first child. Therefore, the retailer sells not only stuffed animals, but also time capsules and memorabilia.
“We’re in the business of telling stories, not just selling things,” explains the CEO. “So we’re counting dollars per transaction, not just unit cost.” COO Christopher Hurt captured it perfectly: “A bear hug is understood in all languages, and it’s absolutely true.”
The company has transformed into a capital, global operation. Today, 157 partner-operated locations represent 25% of all locations, bringing the brand to 32 countries, with 86% of the new Q2 locations being international. The Mini Beans collection saw an 80% year-over-year increase in revenue. The management increased the 2025 recommendations to at least 60 new locations from 50.
This strategic commitment, combined with financial discipline, led to one of the biggest turnarounds (and it continues). The company has 39.1 million USD cash and no debt. Gross margin increased to 57.6% and EBITDA margin reached nearly 17%, tripling from 2019. In just the first half of the year, 13.1 million was returned to shareholders. USD, and 80 million remained in the redemption permit. USD.
Despite the fact that tariffs and increased labor costs cost nearly $16 million annually.
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With this overlooked company now profitable and consistently outperforming earnings, Wall Street is asking, “Should you buy Build-A-Bear?”
Here’s what’s important: The management team that orchestrated the turnaround is still steering the ship, and they’re all very focused on their strategy and their company. “Simply put, we’re building on the brand’s iconic status to bring it to more people, more places and more products for more purposes,” explained John.
Although BBW can jump another 1000%. or not, BBW’s consistent performance, tactical partnerships, and collections like the just-sold-out Halloween collection are strong indicators that this stock has resilience, adaptability, and an eye toward the future.
Analysts say the “strong buy” rating is justified.
In a market obsessed with what AI stocks to pursue next, Build-A-Bear shows that sometimes the best returns come from companies that understand something more important than algorithms: human emotions have no expiration date.
For more analysis on Build-A-Bear’s amazing transformation, see our previous coverage.
At the time of publication, Justin Estes held the position: TSLA. All information and data provided in this article are for informational purposes only. This article was originally published on Barchart.com
