Build-A-Bear Jumps As BMO Upgrades On Sales Trends

NEW YORK (AP) — Shares of toy retailer Build-A-Bear Workshop Inc. jumped Monday morning after a BMO Capital Markets analyst upgraded its shares to the highest rating, saying he thinks better-than-expected sales are going to drive shares higher.

Shares rose 78 cents, or 15.9 percent, to $5.68. The stock has traded between $3.02 and $7.27 over the past year.

Build-A-Bear is set to report third-quarter results Oct. 29, and analyst Gerrick Johnson, in a note to investors, says investor eyes will laser in on the measure that describes sales at stores open at least a year in North America.

That metric is a key indicator of a retailer's health, because it excludes the typically fast-growing sales at new stores.

Build-A-Bear's sales comparison measure for North America dropped 20.5 percent in the first quarter and 17.5 percent in the second quarter.

New promotional strategies, improving mall traffic and BMO's survey of Build-A-Bear stores lead him to think sales in stores open at least a year are stabilizing, and will start growing in 2010.

He believes that starting in the third quarter, that sales measure won't be as bad as analysts think, with a 5-percent decline. Analysts surveyed by Thomson Reuters expect a 10.8-percent drop in that sales metric in the third quarter, improving to an 0.8 percent fall in 2010.

Johnson upgraded Build-A-Bear to "Outperform" from "Market Perform" and raised his price target by $1 to $6.