The Company expects capital expenditures to be approximately $18 million in fiscal 2012 to support the update and repositioning of stores as well as investment in infrastructure. In fiscal 2012, the Company will close nine stores, including certain non-traditional locations, and remodel 14 stores, including five stores in its new design. The Company will open five new stores across geographies including one store in its new design. Depreciation and amortization is expected to be approximately $21 million.
The Company currently plans to close an additional 50 to 60 stores in fiscal 2013 and 2014 to reach its optimal store count of 225 to 250 stores. These select store closures are expected to transfer approximately 20% of sales to other stores in the same markets.
During the quarter, the Company closed three stores across geographies. At quarter end, the Company operated 283 traditional stores and ten non-traditional stores in North America and 58 traditional stores in Europe. (See Company-Owned Store Activity Schedule.) The Company’s international franchisees opened three stores, net of closures, ending the quarter with 87 stores in 14 countries.Accomplishments Toward 2012 Objectives:
- Introduce a new store design – The Company opened the first three newly imagined stores with sales that exceeded expectations and is on track to have six stores opened by the end of fiscal 2012. These new stores elevate the experience of making a stuffed animal and position the Company to achieve higher sales.
- Improve store productivity and profitability – In the 2012 fiscal year, the Company will close nine stores, transferring a portion of the sales to other stores in the market and will reduce the square footage of 11 other stores by remodeling and moving them to smaller locations within the same malls.
- Increase shopping frequency – The Company reintroduced brand building TV advertising beginning in mid-October to drive customer traffic, further engage existing guests and attract new guests to its stores.
- Reinforce Build-A-Bear Workshop as a top destination for gifts – The Company will capitalize on its brand advertising to remind Guests about the gift of experience and has expanded third-party outlets for gift cards during the peak gifting season in the fourth quarter.
- Increase the Company’s global presence – In the 2012 fiscal year, the Company has opened two stores in the UK and anticipates the opening of 14 international franchise locations, net of closures.
- Improve cost efficiencies – The Company is on track to achieve cost savings of approximately $7 million in fiscal 2012, a portion of which has offset expected product cost increases and will support sales-driving marketing initiatives in the fourth quarter.