As recently as June 2025, specialty retailer Build-a-Bear Workshop (BBW) earned a write-up in this space for its stellar 5-year returns – 4,658%, compared to only 1,490% for artificial intelligence (AI) heavyweight Nvidia (NVDA).
Build-A-Bear has since experienced a dramatic reversal of fortune, with shares plunging 18% in early trading on Thursday, August 27, after the retailer reported disappointing second-quarter results and cut its full-year outlook for the second time this year.
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The company now expects annual sales of $500 million to $525 million, down from its previous guidance of $530 million to $550 million, while also reducing pre-tax income expectations to $60 million to $68 million from $72 million to $78 million.
Build-A-Bear Under Pressure
The quarterly numbers paint a picture of a business under significant pressure. Revenue fell 7% to $115.3 million, missing the $120.8 million that analysts had forecast, while earnings declined to $8.8 million, or 70 cents per share, compared with $12.4 million, or 94 cents per share, a year earlier.
CEO Chris Hurt acknowledged that second-quarter results fell short of expectations and that certain wholesale opportunities may take longer to materialize than previously anticipated.
BBW stock has now declined 46% since the beginning of 2026 and its five-year returns have narrowed to 122%, representing a stunning collapse for a company that had previously been one of retail's most remarkable performers.
The contrast with Nvidia's current trajectory is stark. NVDA last night reported revenue that more than doubled to $96.2 billion, forecast 70% revenue growth for fiscal 2028, and is up 6% today as BBW crashes. Nvidia is now up more than 800% over the past five years.
BBW vs. NVDATariffs, Sentiment Weigh on BBW
Build-A-Bear's management team is also in flux, adding uncertainty to an already difficult situation. Longtime CEO Sharon Price John stepped down in June, and the company just terminated Chief Growth Officer David Henderson without cause, paying him more than $32 million in connection with his departure.
The leadership upheaval comes at precisely the wrong time, as the company battles slowing store traffic attributed to an uncertain economic environment.
The retail company expects to absorb $10 million to $11 million in tariff costs for the year, partially offset by $13 million in anticipated tariff refunds — a dynamic playing out across the retail sector.
However, unlike peers such as Dollar General (DG), which posted 3.5% same-store sales growth, or Target (TGT), whose stock has rallied 66% over the past year, Build-A-Bear lacks the scale and diversification to weather consumer spending headwinds effectively.
The specialty retailer's dependence on discretionary consumer spending for experiential toy purchases makes it particularly vulnerable in an environment where consumer sentiment sits at 49.5, well below recessionary thresholds, and where lower-income consumers are prioritizing essentials over discretionary items.
For now, it seems like the Cinderella story where Build-a-Bear outperforms our favorite AI stocks has been quietly put to bed.
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On the date of publication, Sarah Holzmann did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.