Build-A-Bear Workshop, Inc. Reports 2.2% Consolidated Comparable Sales Increase in 2016 First Quarter, Reiterates Annual Guidance and Announces Exploration of Strategic Alternatives

• Consolidated comparable sales increase 2.2%
• New Discovery store format sales increase 14.0%
• Retail gross margin expands 160 basis points to 48.4%
• Pre-tax income of $5.3 million, includes $1.9 million in planned
  new business initiative costs related to Discovery store rollout and
  international expansion
• Reiterates expectation for a 15% to 25% increase in GAAP pre-tax
  income in fiscal 2016
• Board of Directors authorizes an exploration of a full range of
  strategic alternatives to potentially accelerate key growth
  initiatives while enhancing total shareholder value

ST. LOUIS–(BUSINESS WIRE)–Build-A-Bear Workshop, Inc. (NYSE:BBW) today reported results for the
first quarter ended April 2, 2016. The first quarter included increased
net revenues, positive consolidated comparable sales and expansion in
gross margin. As planned, first quarter net income was negatively
impacted by the expenses related to the rollout of the Company’s new
Discovery format stores and costs related to international expansion,
including China. In addition, the Company’s tax rate rose to 33.3% from
3.3% in the 2015 first quarter, due to the release of the tax valuation
allowance in 2015.

Fiscal First Quarter 2016 Highlights (13 weeks ended April 2, 2016)

• Consolidated comparable sales (stores and e-commerce) increased 2.2%
  following a 2.2% increase in the fiscal 2015 first quarter. The fiscal
  2016 first quarter included a 3.0% increase in North America,
  following a flat performance in the fiscal 2015 first quarter and a
  1.8% decrease in Europe, following an increase of 14.0% in the fiscal
  2015 first quarter;
• Sales from Discovery format stores (15 stores as of quarter end)
  increased 14.0% and included a 14.1% increase in North America and a
  13.4% increase in Europe;
• Retail gross margin expanded 160 basis points to 48.4% compared to
  46.8% in the fiscal 2015 first quarter;
• Pre-tax income was $5.3 million, which included $1.9 million in
  business expansion costs, compared to pre-tax income of $7.1 million
  in the fiscal 2015 first quarter;
• Tax expense increased to $1.8 million with a tax rate of 33.3%
  compared to a tax expense of $0.2 million with a tax rate of 3.3% in
  the fiscal 2015 first quarter. The change in the Company’s tax rate as
  compared to the prior year’s first quarter was driven by the release
  of its tax valuation allowance in fiscal 2015; and
• Net income was $3.5 million, or $0.22 per diluted share, compared to
  net income of $6.8 million, or $0.40 per diluted share, in the fiscal
  2015 first quarter.

Sharon Price John, Build-A-Bear Workshop President and Chief Executive
Officer commented, “In the quarter, we delivered higher revenue,
positive consolidated comparable sales and expansion in gross margin.
The 15 stores in our Discovery format achieved an average sales increase
of 14% and continue to outpace our heritage stores on all key metrics.
These consistently strong results support our planned investments in the
ongoing rollout of the Discovery format stores with both remodels and
new locations, including our expansion into China with a flagship store
at the Shanghai Disney Resort that is scheduled to open in June.

“As expected, the expenses associated with these initiatives had a
negative impact on our profitability in the quarter. However, we have
strategically elected to make these key investments during the first
half of the year to maximize the number of Discovery locations open
during our historically strongest season, the fourth quarter,” continued
Ms. John. “Our confidence in this strategy is reflected in the
reiteration of our annual guidance, which includes an expectation of a
15% to 25% increase in pre-tax income in fiscal 2016 while delivering
our fourth consecutive year of increased consolidated comparable sales
and improved profitability.”

Additional Fiscal First Quarter 2016 Details (13 weeks ended April 2,
2016)

• Total revenues were $95.0 million compared to $93.4 million in the
  fiscal 2015 first quarter;
• Consolidated net retail sales were $94.1 million compared to $91.7
  million in the fiscal 2015 first quarter. The increase in net retail
  sales is primarily attributable to higher consolidated comparable
  sales, new store sales and the recognition of gift card breakage as
  revenue partially offset by the impact of currency and closed stores;
• Comparable e-commerce sales increased 1.0%, following an 8.8% increase
  in the fiscal 2015 first quarter;

• Selling, general and administrative expenses (“SG&A”) were $39.7
  million, or 41.8% of total revenues compared to $37.2 million, or
  39.9% of total revenues in the fiscal 2015 first quarter. This
  expected increase in SG&A versus the prior year’s first quarter is
  primarily due to a shift in the timing of marketing expenses,
  increased compensation expense, and investments in new business
  initiatives and international expansion to support the execution of
  the Company’s stated strategies; and
• Business expansion expenses were $1.9 million including store
  preopening expenses of $1.2 million associated with the first and
  second quarter openings of the Company’s new and remodeled Discovery
  format stores. The Company opened four of these locations in the
  fiscal 2016 first quarter and expects to open a minimum of 30
  additional new or remodeled Discovery stores in the remainder of the
  year, with the majority of these occurring in the second quarter.

Store Activity

During the first quarter, the Company had nine stores closures and one
new store opening. As of April 2, 2016, the Company operated 321
Company-owned stores, including 15 in its new Discovery format, with 264
locations in North America and 57 in Europe. The Company’s international
franchisees ended the period with 76 stores in 11 countries.

Balance Sheet

The Company ended the fiscal 2016 first quarter with cash and cash
equivalents totaling $30.8 million and no borrowings under its revolving
credit facility. Total inventory at quarter-end was $54.0 million
compared to $51.2 million in the prior year, an increase of 5.5%. In the
fiscal 2016 first quarter, capital expenditures were $6.2 million, and
depreciation and amortization was $3.8 million.

Share Repurchase Activity

During the fiscal 2016 first quarter, the Company repurchased
approximately 133,000 shares of its common stock for an aggregate amount
of $1.5 million.

Review of Strategic Alternatives

The Company’s Board of Directors authorized an exploration of a full
range of strategic alternatives. The Company retained Guggenheim
Securities, LLC as its financial advisor and Bryan Cave LLP as its legal
counsel to assist with the strategic review.

Commenting on the strategic review, Sharon Price John stated, “The
disciplined execution of our strategy has led to three consecutive years
of positive consolidated comparable sales and profit growth fueled by
margin expansion and improved operational metrics, such as the highest
average transaction value in our history while consistently generating
strong cash flow. The authorization to explore strategic alternatives by
our Board will enable us to evaluate the various opportunities to
potentially accelerate our key growth initiatives while enhancing total
shareholder value.”

No timetable has been set for the Company’s review process. The Company
does not expect to comment further or update the market with any
additional information on the process unless and until its Board of
Directors deems disclosure appropriate or necessary. There is no
assurance that this exploration will result in any strategic
alternatives being announced or executed.

Fiscal 2016 Outlook

For fiscal 2016, the Company continues to expect:

• Total revenue to increase in the low to mid-single digit range
  compared to the prior year;
• Consolidated comparable sales to increase in the low-single digit
  range;
• GAAP pre-tax income to grow 15% to 25% compared to the prior year;
• A tax rate of approximately 30%;
• Capital expenditures in the range of $25 million to $30 million and
  depreciation and amortization in the range of $17 million to $19
  million; and
• To end the year with 340 to 345 stores, 45 to 55 of which are expected
  to be in its new Discovery format.

2016 Key Strategic Initiatives

To increase shareholder value, the Company expects to continue to
execute its “MORE” strategic plan which is designed to leverage the
power of the Build-A-Bear brand by extending into more places
with more products to reach more people to deliver more
long-term profitability with key initiatives in four areas outlined
below:

Expanding into More Places

The Company plans to expand its owned and operated locations in 2016 by
adding 10 to 15 stores, net of closures. Through a combination of
remodels and new openings, the Company expects to end the year with
between 45 and 55 stores in its Discovery format. During the first
quarter, the Company completed remodels of flagship locations at
Broadway at the Beach in Myrtle Beach, South Carolina; Trafford Centre
in Manchester, England; and Tivoli Gardens in Copenhagen, Denmark. The
Company is also on schedule to open a Discovery format location in the
new Disneytown at the Shanghai Disney Resort in China in June 2016. The
Company also plans to continue to diversify its real estate portfolio
with the addition of outlet format stores, shop-in-shops and seasonal
pop-up locations. The Company also expects to offer a branded experience
on board Carnival Cruise Line ships through a wholesale agreement,
beginning in June of 2016.

Developing More Products

The Company plans to continue to develop and expand its offering of
intellectual property concepts designed to appeal to key consumer
segments. To that end, the Company recently successfully launched its
new Horses & Hearts Riding Club collection targeting its older girl
segment which has delivered higher than average dollars per transaction
with high attachment rates of accessory items to the plush products. In
addition, updates to established properties including Honey Girls and
Promise Pets, continued to fuel consumer interest. Each of the Company’s
intellectual property concepts are supported by digital content of
videos, games and/or music. The Company also expects to continue to
expand its wholesale and outbound licensed programs with the addition of
relevant categories throughout 2016, such as Spin Master Corp. and
Frankford Candy Build-A-Bear branded products that will launch during
the second half of the 2016 fiscal year.

Attracting More People

The Company expects to leverage its relationships with key licensors to
reach more people, particularly with the teen-plus consumer, through a
compelling offering of affinity, collectible, entertainment, sports and
fashion properties. Accordingly, the Company continued to develop its
Sports Central collection by offering limited edition products tied to
major championship sporting events such as the exclusive Denver Bronco’s
50^th Anniversary Super Bowl bear which quickly sold out. The
Company expects its planned launch of enhanced enterprise selling
capabilities, which will allow consumers to order in store for home
delivery, to continue to expand this business. In addition, the Company
expects to attract its core segments and affinity consumers with new
Marvel products in advance of the upcoming film, Captain America:
Civil War, as well as launches tied to upcoming theatrical
releases including Paramount Pictures’ Teenage Mutant Ninja
Turtles: Out of the Shadows and Disney-Pixar’s Finding Dory.

Driving More Profitability

The Company expects to increase its 2016 GAAP pretax profit by 15% to
25% over its 2015 fiscal results by the disciplined execution of its
stated strategies including those initiatives detailed above as well as
its on-going efforts in process improvement and organizational
efficiency, system upgrades, value engineering and strategic pricing to
enhance merchandise margins.

Today’s Conference Call Webcast

Build-A-Bear Workshop will host a live Internet webcast of its quarterly
investor conference call at 9 a.m. ET today. The audio broadcast may be
accessed at the Company’s investor relations Web site, http://IR.buildabear.com.
The call is expected to conclude by 10 a.m. ET.

A replay of the conference call webcast will be available in the
investor relations Web site for one year. A telephone replay will be
available beginning at approximately noon ET today until midnight ET on
May 10, 2016. The telephone replay is available by calling 885.384.5517.
The access code is 13634730.

About Build-A-Bear

Founded in St. Louis in 1997, Build-A-Bear, a global brand kids love and
parents trust, seeks to add a little more heart to life. Build-A-Bear
Workshop has approximately 400 stores worldwide where guests can create
customizable furry friends, including company-owned stores in the United
States, Canada, Denmark, Ireland, Puerto Rico, and the United Kingdom,
and franchise stores in Africa, Asia, Australia, Europe, Mexico and the
Middle East. The company was named to the FORTUNE 100 Best Companies to
Work For® list for the eighth year in a row in 2016. Build-A-Bear
Workshop, Inc. (NYSE: BBW) posted total revenue of $377.7 million in
fiscal 2015. For more information, visit the Investor Relations section
of buildabear.com.

Forward-Looking Statements

This press release contains certain statements that are, or may be
considered to be, “forward-looking statements” for the purpose of
federal securities laws, including, but not limited to, statements that
reflect our current views with respect to future events and financial
performance. We generally identify these statements by words or phrases
such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “intend,” “predict,” “future,” “potential” or
“continue,” the negative or any derivative of these terms and other
comparable terminology. All of the information concerning the potential
outcome of exploring strategic alternatives, our future liquidity,
future revenues, margins and other future financial performance and
results, achievement of operating of financial plans or forecasts for
future periods, sources and availability of credit and liquidity, future
cash flows and cash needs, success and results of strategic initiatives
and other future financial performance or financial position, as well as
our assumptions underlying such information, constitute forward-looking
information.

These statements are based only on our current expectations and
projections about future events. Because these forward-looking
statements involve risks and uncertainties, there are important factors
that could cause our actual results, level of activity, performance or
achievements to differ materially from the results, level of activity,
performance or achievements expressed or implied by these
forward-looking statements, including those factors discussed under the
caption entitled “Risks Related to Our Business” and “Forward-Looking
Statements” in our Annual Report on Form 10-K filed with the Securities
and Exchange Commission (“SEC”) on March 17, 2016 and other periodic
reports filed with the SEC which are incorporated herein.

All of our forward-looking statements are as of the date of this Press
Release only. In each case, actual results may differ materially from
such forward-looking information. We can give no assurance that such
expectations or forward-looking statements will prove to be correct. An
occurrence of or any material adverse change in one or more of the risk
factors or other risks and uncertainties referred to in this Press
Release or included in our other public disclosures or our other
periodic reports or other documents or filings filed with or furnished
to the SEC could materially and adversely affect our continuing
operations and our future financial results, cash flows, available
credit, prospects and liquidity. Except as required by law, the Company
does not undertake to publicly update or revise its forward-looking
statements, whether as a result of new information, future events or
otherwise.

All other brand names, product names, or trademarks belong to their
respective holders.

Contacts

Build-A-Bear Workshop
Investors:
Voin Todorovic, 314-423-8000
x5221
or
Media:
Beth Kerley
bethk@buildabear.com