Sometimes the most revealing part of an investment thesis is not what an investor does when a stock is climbing, but how they respond when it takes a serious beating. That distinction is especially relevant in the case of Michael Burry and Build-A-Bear Workshop (BBW).
Burry purchased Build-A-Bear’s shares between Tuesday, Aug. 18, and Thursday, Aug. 20, just days before the company released its Q2 FY2026 results. The retailer, best known for letting customers create and customize stuffed animals, was already enduring a difficult year as the company faced softer sales, heavier promotion, and rising pressure from tariffs and occupancy costs.
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The result was a steep decline in the company’s shares. Under normal circumstances, a selloff of that magnitude might be enough to make an investor head for the exit. Burry, however, appeared to have viewed the decline differently. Instead, Burry noted that the quarter had something of a kitchen-sink feel, but the numbers did not bear that out.
If the disappointing quarter had been weighed down by significant one-time charges, the market reaction could have been difficult to justify on an ongoing basis. Without those charges, however, the weakness pointed more directly toward the company’s underlying sales and margins.
More recently, Burry has shown that his conviction remains intact. This week, he disclosed that he had added to his Build-A-Bear position, saying the stocks he had purchased had “corrected tremendously” and that he viewed their prices as attractive. He also noted that BBW stock is now a full position.
With one of the market’s better-known contrarian investors increasing his exposure after a historic one-day selloff, Build-A-Bear warrants a closer look.
About Build-A-Bear Stock
Headquartered in Saint Louis, Missouri, Build-A-Bear Workshop is a specialty retailer built around interactive, customizable plush-toy experiences. With a market cap of nearly $319.8 million, the company sells customizable stuffed animals, apparel, accessories, sounds, scents, and other products through its stores, e-commerce platforms, and franchise network.
The stock, however, has faced considerable pressure. Shares of Build-A-Bear have plummeted 65% in the past 52 weeks and are down 59% year-to-date (YTD). The weakness has persisted in the near term as well, with shares falling 22% over the past three months.
www.barchart.com The steep decline has also brought the valuation down. BBW stock currently trades at 7.18 times forward adjusted earnings and 0.61 times sales. Both multiples sit at a discount to the industry averages and their own five-year average multiples, suggesting a wise entry point for long-term investors.
The company also returns capital to shareholders through dividends. It pays an annual dividend of $0.92 per share, representing a dividend yield of 3.54%. Its most recent dividend of $0.23 per share is scheduled to be paid on Thursday, Oct. 8, to shareholders of record as of Thursday, Sept. 24.
A Closer Look at Build-A-Bear’s Q2 Earnings
Build-A-Bear’s Q2 FY2026 results provide much of the context behind the stock’s recent weakness. On Aug. 27, BBW stock fell 27.3% as the company reported that its total revenue declined 7.2% year-over-year (YoY) to $115.3 million, missing Street expectations of $121.7 million.
Net retail sales, which represent the largest portion of the business, fell 7.1% from the year-ago value to $106.5 million. Profitability also weakened. Consolidated gross profit fell 12.6% from the same quarter last year to $62.5 million, while net income dropped 29.2% from the year-ago value to $8.8 million. Net income per share also plunged 25.5% YoY to $0.70, matching Wall Street expectations.
On to the balance sheet, cash and cash equivalents totaled $14 million, down from $39.1 million at the end of the second quarter last year, primarily driven by share repurchases and the timing of capital expenditures. Importantly, Build-A-Bear ended the quarter with no borrowings under its revolving credit facility.
The weaker quarter prompted management to reduce its expectations for FY2026. Management lowered the revenue guidance to $500–$525 million, while adjusted pre-tax income guidance was reduced to $53–$61 million.
At the same time, Build-A-Bear is expanding its physical footprint. During the quarter, the company delivered net new unit growth of five global experience locations. That included three corporately managed locations and six franchise locations, partially offset by a net decline of four partner-operated locations.
The earnings outlook remains under pressure in the near term. Analysts expect Q3 FY2026 EPS to decline 14.5% YoY to $0.53. For full-year FY2026, the bottom line is projected to decrease 10.5% from the previous year to $3.57. However, looking ahead to FY2027, EPS is projected to grow 5.3% from the last year to $3.76.
What Do Analysts Expect for BBW Stock?
Despite the recent earnings disappointment and substantial decline in the share price, Wall Street’s overall assessment of Build-A-Bear remains favorable. BBW stock currently carries an overall rating of “Moderate Buy.” Among the four analysts covering the name, three recommend “Strong Buy,” while one gives the stock a “Strong Sell” rating.
To that end, the average price target stands at $45, representing potential upside of 79%. The Street-high target of $50 implies a 99% gain from current levels.
www.barchart.com On the date of publication, Aanchal Sugandh 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.
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