Build-a-Bear Case Study

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Company Background
Build-A-Bears mission statement states, “At Build-A-Bear Workshop®, our mission is to bring the Teddy Bear to life. An American icon, the Teddy Bear brings to mind warm thoughts about our childhood, about friendship, about trust and comfort, and also about love. Build-A-Bear Workshop embodies those thoughts in how we run our business everyday.” (Buildabear.com 2012). Build-A-Bear Workshop, Inc. is the leading and only global company that offers an interactive make-your-own stuffed animal retail-entertainment experience. Founded in 1997, the company currently operates more than 400 Build-A-Bear Workshop® stores worldwide, including company-owned stores in the United States, Puerto Rico, Canada, the United Kingdom, and Ireland, and franchise stores in Europe, Asia, Australia, Africa, the Middle East, Mexico and the South America. Build-A-Bear Workshop extends its in-store interactive experience with its award winning virtual website and entertainment destination at Bearville.com TM (Buildabear.com 2012). External Factors

A decline in general global economic conditions could lead to disproportionately reduced consumer demand for products, which represent relatively discretionary spending, and have an adverse effect on liquidity and profitability. Since purchases of Build-A-Bear merchandise are dependent upon discretionary spending by guests, financial performance is sensitive to changes in overall economic conditions that affect consumer spending. Consumer spending habits are affected by, among other things, prevailing economic conditions, levels of employment, salaries and wage rates, and consumer confidence and consumer perception of economic conditions. A continued slowdown in the United States, Canadian or European economies or uncertainty as to the economic outlook could reduce discretionary spending or cause a shift in consumer discretionary spending to other products. Any of these factors would likely cause Build-A-Bear to delay or slow expansion plans, result in lower net sales and could also result in excess inventories, which could, in turn, lead to increased merchandise markdowns and related costs associated with higher levels of inventory and adversely affect liquidity and profitability. For example, the slower economy in the United States and Europe has caused Build-A-Bear’s sales to decline and led us to slow our growth plans. Internal Factors

Maxine Clark founder of Build-A-Bear states numerous times that the culture at Build-A-Bear is that they encourage employees to contribute and collaboration and the resulting above-average employee retention rates at Build-A-Bear contribute to the quality of the guest experience. Clark describes how they are dependent of their employees and they are very selective of their employees. Building a sustainable company you have to have employees that you can trust and rely on. This is a huge part of how Build-A-Bear operates. Happy employees mean happy customer, and happy customers will purchases more. Leading into the financial statement which are as followed:

Build-A-Bear’s balance sheet:
Exhibit 2 Balance Sheet (in thousands of dollars, except share and per-share data)| |  | January 1, 2011|  | January 1, 2010|
Assets| | | |
Current assets:| | | |
Cash and cash equivalents| $58,755 | | $60,399 |
Inventories| 46,475| | 44,384|
Receivables| 7,923| | 5,337|
Prepaid expenses and other current assets| 18,425| | 19,329| Deferred tax assets| 7,465| | 6,306|
Total current assets| 139,043| | 135,755|
Property and equipment, net| 88,029| | 101,044|
Goodwill| 32,407| | 33,780|
Other intangible assets, net| 1,444| | 3,601|
Other assets, net| 14,871| | 10,093|
Total Assets| $275,794 | | $284,273 |
Liabilities and stockholders’ equity| | | |
Current liabilities:| | | |
Accounts payable| $36,325 | | $32,822 |
Accrued expenses|...
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