Needham & Company Maintains a 'Strong Buy' on Build-A-Bear Workshop (BBW); 2012 Store Closings Reduce Sales But Improve Margins

February 17, 2012 8:26 AM EST
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Price: $13.25 --0%

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    4 Buy, 3 Hold, 0 Sell

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Needham & Company maintains a 'Strong Buy' on Build-A-Bear Workshop (NYSE: BBW) price target of $11.00.

Analyst, Sean McGowan, said, "BBW announced 4Q sales and EPS well below our expectations. We expected sales of $125 mm and EPS of $0.56 per share; actual sales were $117 mm and EPS were $0.34, excluding a deferred tax allowance charge of $0.93 per share. EPS compared to $0.35 in 2010, excluding one-time items. Weaker than expected sales of products associated with two movies were the major cause for the sales disappointment. Management stated that if either line had met their forecast, 4Q would have been in line with expectations given solid sales of other products. In 2012, the company plans to close 15–20 stores, open 4–6 new stores and relocate 15 and remodel 5; this reshuffle will likely reduce overall sales but should improve comparable store sales going forward. We have lowered our EPS estimate for 2012 from $0.45 to $0.25, and 2013 from $0.60 to $0.35. We are introducing a 2014 EPS estimate of $0.50."

For an analyst ratings summary and ratings history on Build-A-Bear Workshop click here. For more ratings news on Build-A-Bear Workshop click here.

Shares of Build-A-Bear Workshop closed at $5.95 yesterday.

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