Build-A-Bear rides market gains as tariffs test margins

NEW YORK — Tariffs and years of teetering mall traffic have roiled much of the toy industry. But Build-A-Bear Workshop investors are continuing to reap sizeable gains. Shares of Build-A-Bear Workshop are up more than 60% since the start of 2025, trading just under $72 a share as of Tuesday afternoon. That compares with roughly 13% for the S&P 500 over the same period, and marks a dramatic leap from five years ago when the St. Louis-based retailer's stock traded under $3.

In the first half of its 2025 fiscal year, Build-A-Bear reported revenues of $252.6 million and pre-tax income of $34.9 million — up 11.5% and 31.5% year over year. The company also raised its outlook for the full year despite anticipated tariff costs and other headwinds.

Analysts and industry observers say the environment remains challenging but Build-A-Bear's in-store, experiential model helps offset some of the pressure. 'Tariffs are a real cost that we are facing,' Voin Todorovic, Build-A-Bear's chief financial officer, said in the Aug. 28 earnings call, pointing to current U.S. import taxes of 30% on China and 20% on Vietnam, where the retailer sources much of its products. 'Some of that has already trickled down to the cost of Build-A-Bear merchandise in North America, but these levies will impact the company even more in the second half of the year.' Todorovic added that the company is taking steps such as earlier inventory increases to cushion the impact and remains on track to approach or slightly beat last year's earnings.

Neil Saunders, managing director of GlobalData, said the toy industry has been 'reasonably soft' in recent years, but categories such as crafts have performed well since the height of the COVID-19 pandemic — a trend that fits Build-A-Bear's core model of inviting customers into stores to make their own plush animals. 'The mall may not be a destination, but Build-A-Bear often is — because it’s often a planned trip,' Saunders said, noting the retailer can draw buyers into malls that have struggled to rebound traffic.

The tariff picture remains a headwind, but analysts say Build-A-Bear has a number of levers. Saunders noted that the company generally buys materials rather than labor, a strategy that can hedge against tariff volatility and may offer sourcing flexibility. 'It’s a store within a mall that many consumers make a beeline for,' he added. 'Tariffs affect everyone, and Build-A-Bear is no exception.'

Todorovic said tariffs are expected to cost Build-A-Bear under $11 million for the 2025 fiscal year. With that in mind, the company raised its full-year guidance for pre-tax income to a range of $62 million to $70 million, compared with a little over $67 million in 2024. The retailer pointed to strong store performance and ongoing expansion efforts as reasons for the optimistic outlook and emphasized that consumer demand for the brand’s interactive products remained resilient despite broader macroeconomic challenges.