Can 'kiadults' power the next phase of Build-A-Bear’s growth?

Build-A-Bear has built a business on stuffed animals, offering customers the experience to make their own bear. Around three decades later, however, the company is betting not only on children but also on adults, monetizing nostalgia and expanding its presence across the entertainment industry. Oninvest looks at how the teddy bear retailer found new growth drivers, and why analysts now see as much as 90% upside in the stock after it has halved year to date.

The idea behind Build-A-Bear Workshop – not simply buying a stuffed animal but creating one yourself – came to founder Maxine Clark in the late 1990s. Clark, then the successful president of major footwear retailer Payless ShoeSource, later recalled that a neighbor’s daughter could not find the toy she wanted for her collection and remarked that it would be easy to make one herself. Clark seized on the do-it-yourself concept and, a year later, launched Build-A-Bear in 1997.

At Build-A-Bear, children could choose a bear, dress it, and receive a birth certificate. Around 30 years later, Build-A-Bear has a market capitalization of more than $400 million, operates more than 650 locations across over 30 countries, and offers both proprietary and licensed products, including Disney, Pokémon, and Star Wars characters.

From the outset, the chain’s growth was driven in large part by Clark’s retail experience. The entrepreneur developed a detailed 10-year business plan for Build-A-Bear. “I even planned around the 100th anniversary of the teddy bear, which was going to be in 2002,” Clark said. By that milestone, Clark had planned to open, and did open, the company’s 100th store on Long Island, because U.S. President Theodore “Teddy” Roosevelt became the teddy bear’s namesake. During a hunting trip, Roosevelt refused to shoot a bear that had been captured for him. The story of the president’s compassion was quickly picked up by newspapers and cartoonists. Inspired by the illustrations, a New York shop owner created a stuffed bear and marketed it as “Teddy’s Bear.”

Build-A-Bear successfully expanded through shopping malls in the early 2000s, with its workshops becoming popular destinations for children’s parties and birthdays. The company completed an IPO in 2004, raising roughly $150 million. Because the brand’s success depended heavily on mall traffic, however, the 2008-2009 financial crisis hit the business hard. Comparable sales fell at double-digit rates, and the company posted a $12.5 million loss in 2009. Despite closing underperforming stores, Build-A-Bear reported a $49.3 million loss for 2012. The company then brought in a new CEO: Sharon Price John, who had previously built her career at toy-industry giants Mattel and Hasbro.

“When I first came in 2013, that assessment of the brand was strong,” Price John told CNBC. “We don’t have a broken brand, we have a broken business.” The new CEO focused on a strategy of profitable growth, and it worked. Build-A-Bear invested in e-commerce and diversified beyond shopping malls. Workshops appeared aboard Carnival cruise ships, in hotels, and in high-traffic entertainment destinations, helping create what the company described as memorable experiences.

Build-A-Bear experienced another surge in popularity in the 2020s as nostalgia-driven consumption gained momentum and the brand got increasingly popular among “kidults.” Price John argued that Build-A-Bear had become more than a retail chain. “It’s a really emotional, memorable experience that creates a tremendous amount of of equity,” she told CNBC.

While families with children remain the company’s core audience, Build-A-Bear has successfully diversified its customer base. More than 40% of its products are purchased by adults and teenagers, the Wall Street Journal reported. To appeal to the 18+ demographic, the company introduced its After Dark Valentine’s Day collection. A stuffed bear dressed as a stripper or a lion wearing a robe and holding a bottle of champagne generated mixed reactions among fans. The CEO told the WSJ that Build-A-Bear wanted to reflect changing consumer preferences and that the romantic-themed bears were selling well. The collection was subsequently expanded with new characters such as "Cuddly Cougar."

In September last year, Build-A-Bear shares reached an all-time high of about $76 apiece following strong first-half results. Despite a challenging macroeconomic environment, revenue rose around 12% to a record $252.6 million, CNBC reported. That autumn, the company strengthened its management team by hiring former LEGO executive Carmen Flores as senior vice president of e-commerce and digital. For 2025, Build-A-Bear reported revenue growth of 6.7% to $529.8 million, growth across all business segments, and the opening of more than 60 new locations worldwide.

The momentum slowed in the first quarter. Revenue fell 2.4% year over year to $125.3 million. The steepest decline came in e-commerce, where sales dropped 26%, while partner-operated and international franchise revenue increased 34%. Adjusted pretax income fell 14% to $16.9 million, excluding a one-time $7 million tariff refund. The quarter came in below the company’s expectations, prompting Build-A-Bear to lower its revenue guidance by roughly 3-4% to $530-550 million.

On June 11, Price John stepped down as CEO in what the company described as a planned succession. She remains on the board. She was succeeded by Chris Hurt, the company’s chief operations and experience officer, who has been with Build-A-Bear for more than 11 years.

Eric M. Beder of Small Cap Consumer Research pointed out in a note published at the end of May (seen by Oninvest) that Build-A-Bear’s first-quarter revenue came in below expectations because of weak retail sales. At the same time, EBITDA of $20.7 million and earnings per share of $1.03 exceeded Wall Street consensus estimates.

Beder highlighted Build-A-Bear’s partnership with Walmart. He also noted that retail price increases helped offset higher occupancy costs. Beder expects business trends to improve in the second half of the year. Small Cap Consumer Research reiterated its “buy” rating and maintained its target price of $65 per share, roughly double the stock’s current level.

D. A. Davidson analyst Keegan Cox wrote in another note (also seen by Oninvest) that he is usually cautious about stories involving second-half acceleration, which is what the company anticipates. Cox nevertheless believes the company has the necessary ingredients to execute on that scenario.

Over the longer term, D. A. Davidson believes Build-A-Bear’s international store base could double from its current level of roughly 215 locations. The firm reiterated its “buy” rating and target price of $60 per share.

Build-A-Bear shares have lost around 50% of their value since the start of the year. According to MarketWatch data, the stock has four analyst ratings, all of them “buy.” The average target price is $61.25 per share, implying approximately 89% upside from the current share price.