After concluding a strategic review without a sale despite six straight quarters of sales declines, Build-a-Bear Workshop Inc. (BBW - Get Report) may face pressure from its idiosyncratic shareholder base to turn around its retail strategy.

Activist shareholder Cannell Capital LLC is Build-a-Bear's fifth-largest shareholder, with a 4.65% stake as of June 30. A longtime thorn in Build-a-Bear's management's side, Cannell previously urged the company to buy back at least $40 million in shares through a modified Dutch auction at a price of $12 to $13 per share, criticized its corporate governance and threatened a proxy contest.

Build-a-Bear announced May 3, 2016, that it had retained Guggenheim Securities LLC and Bryan Cave LLP to explore strategic alternatives. Nearly 16 months later, on Aug. 21 Build-a-Bear said it had concluded a "very comprehensive" review and instead would embark on a share repurchase program of up to $20 million through 2020.

Since the strategic review concluded, Build-a-Bear also has beefed up its board, hiring executive search company Russell Reynolds Associates Inc.

On Sept. 14, Build-a-Bear added Anne Parducci to its board. The founder of children's media company CaribouKids LLC and a former LionsGate Entertainment Corp. (LGF.A - Get Report) and Mattel Inc. (MAT - Get Report) executive, Parducci will serve on the board's compensation and nominating committees. She succeeds Braden Leonard, a director since 2011, whose firm, BML Capital Management LLC, held 8.88% of Build-a-Bear's shares as of Sept. 29.

Russell Reynolds also is searching for another new director, who may also serve as nonexecutive chairman, replacing interim nonexecutive chairman Coleman Peterson.

A prior strategic review conducted by Lehman Brothers Inc. from 2007 to 2008 also did not result in a sale.

The company's largest shareholder is Steve Cohen's family office, Point72 Asset Management LP, with a 15.81% stake as of Aug. 29. Point72 originally disclosed a 14.8% passive stake on Feb. 17.

Build-a-Bear's same-store sales have declined over the past six consecutive quarters as the company has retrenched and reevaluated its retail presence.

Jefferies LLC analyst Stephanie Wissink said Build-a-Bear's withdrawal from "sub-top tier mall stores," a drag on same-store sales, is not adequately understood by the market. The stock "has been a victim of [its] overly narrow 'retail' definition," she wrote last month, and limited analyst coverage, erratic profits and uncommunicative management during the strategic review have all left Build-a-Bear underappreciated.

Instead of malls, Build-a-Bear is redirecting toward pop-up stores and family-friendly venues with "consumer wallet fungibility," like theaters, parks and cruises, where families buy souvenirs. Recent Build-a-Bear pop-up store locations include AMC Entertainment Holdings Inc.'s (AMC - Get Report) AMC Theatres and Carnival Corp. (CCL - Get Report) cruise ships.

The St. Louis company trades at 4.7 times Ebitda, and as it moves "from retail to brand valuation," it should trade in line with similarly sized brands at 7 to 10 times Ebitda, according to Wissink.

Licensed brands account for 20% to 25% of Build-a-Bear sales, similar to toy companies Hasbro Inc. (HAS) and Mattel, Wissink estimated, and the company should benefit from a "strong product cycle."

According to Wissink, kids "are increasingly biased to 'play' physically with the characters and story worlds that inspire them on the big and small screen." Important licenses going forward include Hasbro's My Little Pony, major sports leagues and Walt Disney Co.'s (DIS - Get Report) Frozen and Star Wars franchises. Shareholders should benefit from CEO Sharon Price John's experience in the toy industry to secure licenses, Wissink added.

Build-a-Bear reports its third-quarter earnings on Oct. 26, its first since concluding the strategic review. Analysts surveyed by FactSet expect the company to earn 10 cents per share on sales of $85.61 million. Shares are down 36.4% year to date, including 0.3% on Friday afternoon.

Citing a quiet period, a Build-a-Bear spokeswoman declined to comment.

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Editors' pick: Originally published Oct. 14.