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Sharon Price John

CEO
Forward looking and cautionary
statements
This presentation 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. Forward-looking statements are based on current expectation and assumptions that are subject to risks and
uncertainties which may cause results to differ materially from the forward-looking statements. We undertake no obligation to update or
revise publicly any forward-looking statements, whether because of new information, future events or otherwise. Risks and uncertainties
to which our forward-looking statements are subject include: (1) general global economic conditions may decline, which could lead to
disproportionately reduced consumer demand for our products, which represent relatively discretionary spending; (2) customer traffic may
decrease in the shopping malls where we are located, on which we depend to attract guests to our stores; (3) we may be unable to
generate interest in and demand for our interactive retail experience, or to identify and respond to consumer preferences in a timely
fashion; (4) our marketing and on-line initiatives may not be effective in generating sufficient levels of brand awareness and guest traffic;
(5) we may improperly obtain or be unable to adequately protect customer information in violation of privacy or security laws or customer
expectations; (6) we may be unable to generate comparable store sales growth; (7) we may be unable to effectively operate or manage
the overall portfolio of our company-owned stores; (8) we may be unable to renew, renegotiate or replace our store leases, or enter into
leases for new stores on favorable terms or in favorable locations, or may violate the terms of our current leases; (9) we may not be able
to operate our international company-owned stores profitably; (10) the availability and costs of our products could be adversely affected by
risks associated with international manufacturing and trade, including foreign currency fluctuation; (11) our products could become subject
to recalls or product liability claims that could adversely impact our financial performance and harm our reputation among consumers; (12)
we may lose key personnel, be unable to hire qualified additional personnel, or experience turnover of our management team; (13) we are
susceptible to disruption in our inventory flow due to our reliance on a few vendors; (14) we may be unable to effectively manage our
international franchises or laws relating to those franchises may change; (15) we may fail to renew, register or otherwise protect our
trademarks or other intellectual property; (16) we are subject to risks associated with technology and digital operations; (17) we may suffer
negative publicity or be sued due to violations of labor laws or unethical practices by manufacturers of our merchandise; (18) we may be
unable to operate our company-owned distribution center efficiently or our third-party distribution center providers may perform poorly; (19)
high petroleum products prices could increase our inventory transportation costs and adversely affect our profitability; (20) our plans to
leverage the Build-A-Bear brand to drive strategic expansion may not be successful; (21) our market share could be adversely affected by
a significant, or increased, number of competitors; (22) we may suffer negative publicity or negative sales if the non-proprietary toy
products we sell in our stores do not meet our quality or sales expectations; (23) poor global economic conditions could have a material
adverse effect on our liquidity and capital resources; (24) fluctuations in our quarterly results of operations could cause the price of our
common stock to substantially decline; and (25) we may be unable to repurchase shares of our common stock at the times or in the
amounts we currently anticipate or the results of the share repurchase program may not be as beneficial as we currently anticipate. For
additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to our
most recent reports on Form 10-K, Form 10-Q and Form 8-K.
Background: BBW
• Founded in 1997, as a specialty
retailer to “make-your-own stuffed
animals”
• 2004 IPO
- Post IPO 22% CAGR and double-
digit EBITDA thru 2007
- 2007 saw highest revenue:
$474M
- 2008 was the beginning of a
multi-year contraction
• Currently in ~400 locations in 15
countries including: 2013
• 330 owned and operated
• 70+ international franchise
Marked the Beginning of a
stores
Corporate Turnaround
• Over 3,500 employees
Store counts are as of end of fiscal year 2015 (January 2, 2016),
BUILD-A-BEAR 2016 includes traditional and non-traditional stores
Background: Struggling
Pre-2013: Multi-Year retail Trend
Negative business
Declining Retail Failing Strategy Trend of Unprofitablity

Eight consecutive Tired product ~ 110 bps


years development Gross Margin decline
(2005-2012)
of comp store declines
Marketing had become
“couponing” Cumulative Net Loss of
80% of doors not
$78M
updated since opening (2009-2012)
Brand refresh overdue
2012 revenue down 2012 largest loss in
$93M from 2007 peak Not optimizing licensed
company’s history
relationships (Net and Adjusted Net)
22% of NA stores
unprofitable in 2012 Aged processes and 2013 mid-year loss of
systems ($6M)
BUILD-A-BEAR 2016
Objectives

1. Return to
Profitability
2. Sustain
Profitability

BUILD-A-BEAR 2016
CUMULATIVE
CUMULATIVERESULTS
RESULTS2013-2015:
2012-2015:
Adjusted Net Income (Loss)*
BBW ~$17M
Profit
Improvement

~720bps
(based on adjusted net income as a percent of revenue)

($10M)
53 wks Prelim
2012* 2013* 2014* 2015*
(on a similar topline) Revenue $381M $379M $392M $378M
(with 6% fewer stores & Total
351 323 324 330
11% less square footage) Stores #

*Adjusted Net Income/Loss excludes mngmt transition and store closing costs, asset & store impairment, goodwill
impairment & deferred tax asset valuation allowance; 2015 results are preliminary and may change; $17.25M is the
BUILD-A-BEAR 2016 mid-point of the projected range
CUMULATIVE
CUMULATIVERESULTS
RESULTS2013-2015:
2012-2015:
BBW 2015 2015
Retail Gross Margin NA dollars
per transaction**
$44.10
47% *
HIGHEST EVER

2015
NA units
(820 bps point per transaction**
improvement versus 2012) 3.95
HIGHEST
(highest since 2006) since 2008

*Retail Gross Margin % reflects the mid-point of expected range


BUILD-A-BEAR 2016 **2015 results are preliminary and may change
CUMULATIVE RESULTS
CUMULATIVE RESULTS 2013-2015:
2012-2015:
2015
North American
4-wall contribution*
980bps
improvement

19.6% since 2012

(only 3 unprofitable NA
store versus 61 in 2012)
BUILD-A-BEAR 2016 *2015 results are preliminary and may change
CUMULATIVE RESULTS
CUMULATIVE RESULTS 2013-2015:
2012-2015:
• Margin Expansion
• Increases in
Three Average
Consecutive Transaction Value
Years of • Improved
Profitability
Improvement
• Positive
Consolidated
Same Store Sales
BUILD-A-BEAR 2016
All While Fundamentally Changing the Company
Developed New Strategy
• Re-orged with new leadership
team including:
CFO, COO, CMO, CPO
• Evolved 50% of the Board
• Updated circa pre-2008 IT, Digital
and POS infrastructure
• Instituted more efficient, data-
driven processes
• Launched new brand look
• Elevated and expanded powerful
partner relationships

FORTUNE
“100 Best Companies to Work For”
7th consecutive year
BUILD-A-BEAR 2016
Objectives

1. Return to
Profitability
2. Sustain
Profitability

BUILD-A-BEAR 2016
Strategy?

FIX THE RETAIL BUSINESS

MAINTAIN THE BRAND

BUILD-A-BEAR 2016
Objectives

1. Return to
Profitability
2. Sustain
Profitability
3. Drive Profitable
Growth

BUILD-A-BEAR 2016
Strategy

DIVERSIFY
THE BUSINESS MODEL

MONETIZE THE BRAND


Profitably Extend Build-A-Bear across multiple
Revenue Streams to access business via new
Locations, Categories & Consumers
BUILD-A-BEAR 2016
Our most valuable asset
Build-A-Bear is a

BRAND
• Global
• Multi-generational
• Emotional
“to maximize our potential,
• Trusted we must pivot from a retailer
• Extendable that built a powerful brand
to a BRAND company that’s
• Updated more than a retailer”

BUILD-A-BEAR 2016
Strong Brand:Balanced Appeal and Seasonality*
Consumer Age Distribution Consumer Gender Distribution Revenue by Quarter**

12%
26% 23%
31%
22%
15% 21%
25%
22% 25%
12%

0-2 3-5 6-8 9-12 Teen + 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

* Source: Build-A-Bear Workshop Internal Data


BUILD-A-BEAR 2016 ** 3 years rolling data
Strong Brand: High Awareness and Appeal

Build-A-Bear
Aided Brand Awareness

Since new branding launch,


appeal ratings have increased
2007 Rating – 85%
2015 Rating – 87%
Source (Awareness): C&R Research, Fall 2012, US Market Report
BUILD-A-BEAR 2016 Source (Consumer Appeal): E-Poll Market Research
Strong Brand: Similar to larger Brands

Build-A-Bear
BRAND ADVOCACY

“Advocacy” is based on a variety of Build-A-Bear Workshop’s ADVOCACY


measures including awareness, trust, number is equal to or higher than
quality, uniqueness and other retail brands including
likelihood to recommend American Girl, LEGO, Toys “R” Us
and Disney

BUILD-A-BEAR 2016 Source: Burke Research 2013


Strong Concept
BBW experiential retail process is*:
- Unique (lacks direct competition)
- Engaging
- Understood in many cultures

BBW high touch service model is*:


- “Special”
- Personalized
- Memorable

Aligned with macro-trends:


- Do-it-yourself
- Crafting
- Personalization/Customization
- Rise in the power of entertainment &
sports brands

Aligned with Millennial values


- Value “experiences” over “things”
- Want to “make memories with kids”
- Value brands that “give back”

*Source: Envirosell, a leading consumer behavior research and


BUILD-A-BEAR 2016 consulting firm, in 2011
Strategy
DIVERSIFY THE BUSINESS MODEL
Overhaul Develop New
Implement
Global Owned & Build Scalable Outbound
Wholesale and
Operated Retail International Brand
Corporate
+ Enterprise Franchising Licensing &
Sales Systems
Selling Model/Systems Entertainment
& Processes
Operations Capabilities
1 2 3 4

MONETIZE THE BRAND


Profitably Extend Build-A-Bear across multiple
Revenue Streams to access business via new
Locations, Categories & Consumers
BUILD-A-BEAR 2016
Strategy
DIVERSIFY THE BUSINESS MODEL

Strategic Investment

MONETIZE THE BRAND


Profitably Extend Build-A-Bear across multiple
Revenue Streams to access business via new
Locations, Categories & Consumers
BUILD-A-BEAR 2016
Strategy
DIVERSIFY THE BUSINESS MODEL
Global Owned Outbound
& Operated International Brand
Retail + Wholesale
Franchising Licensing &
Enterprise & Corporate
Entertainment
Selling

1 2 3 4
Diversify and Add Locations
Diversify and Add Categories
Diversify and Add Consumers
MONETIZE THE BRAND
BUILD-A-BEAR 2016
Strategy
DIVERSIFY THE BUSINESS MODEL
Global Owned Outbound
& Operated International Brand Wholesale
Retail + Franchising Licensing & and Corporate
Enterprise Entertainment Sales
Selling

1 2 3 4
MORE PLACES
MORE PRODUCT
MORE PEOPLE
MONETIZE THE BRAND
BUILD-A-BEAR 2016
EXPANSION: 2016 and Beyond
MORE PLACES
Beyond updating the look, we
researched and created the new
store design with an objective to:
• optimize spatial planning
• improve productivity

“Discovery Store” is a HIT!


The 11 new & remodeled locations
“Discovery Store”
opened in the US and the UK in 2015
are over-indexing on key metrics:
• Double-Digit comp vs norm
• Increased Traffic
• Higher Dollars per transaction
• Higher Units per transaction

BUILD-A-BEAR 2016
EXPANSION: 2016 and Beyond
MORE PLACES
Discovery Store
“Secret Weapon” – the STUFFER
- Lease line “theater”
- Front/center position opens up
merchandising wall space
- Faster fill rate and extra nozzle
has increased our peak
capacity by 60%
We expect to have
45-55 new and/or remodeled
Discovery Stores
by the end of 2016
including 4 flagships
in multiple countries

BUILD-A-BEAR 2016
EXPANSION:
EXPANSION:2016
2016and
andBeyond
Beyond
MORE PLACES
• A Discovery Store flagship in
金泰迪工作室
Copenhagen, Demark at Tivoli
Gardens (remodel)
• New Discovery Store flagship in
Shanghai, China

New Franchise Stores


• Additional International Openings A Special Project in Shanghai
expected in 2016 include 20-25 will be announced in the
New Franchise Stores coming weeks

(Expected to open mid 2016)


BUILD-A-BEAR 2016
EXPANSION: 2016 and Beyond
MORE PLACES
Non-Traditional
OUTLETS
- First value-based format
- Successful openings in UK and US
Opened 6 BBW Outlets in 2015
- Improves product life-cycle management
- Leveraging “Tourist Locations” where
Expect to open 5 more in 2016
BBW over-indexes on key metrics

ENTERPRISE SELLING
- Starting in 1st half 2016
- In-store, On-line, Mobile visibility

EXPERIENTIAL “Wholesale”
- Re-building Rainforest Café and T-Rex
Café relationship with Landry’s
- New Carnival Cruise lines relationship
- BBW expected to be “on-board” in 2016

BUILD-A-BEAR 2016
EXPANSION: 2016 and Beyond
MORE PRODUCT
Drove additional Wholesale
business with:
• COSTCO holiday gift set pallet
program was successful, plans to
expand in 2016
Secured 10 out-bound branded 75% of our best guest surveyed
licensed agreements in a wide are interested in Build-A-Bear
variety of consumer categories, branded consumer products*
mostly launching in 2016
including:

• Spin Master toys


• Frankford novelty candies

BUILD-A-BEAR 2016 * Source: Build-A-Bear Workshop Internal Data


EXPANSION: 2016 and Beyond
MORE PRODUCT
The “classic” product offering
generates our highest unit
volume of any segment at
favorable margins and is:

• Critical for our core


consumer base and party
business
• Now updated more
frequently to maintain in-
store freshness for our
best guests

BUILD-A-BEAR 2016
EXPANSION: 2016 and Beyond
MORE PRODUCT
Since 4Q 2014, we have been
introducing Intellectual Properties
that include back stories, apps,
music, videos and games to drive
“Play beyond the Plush” with:
- Honey Girls
- Merry Mission
- Promise Pets
Contributed to almost $60M in
lifetime revenue and ~10M total
digital interfaces

Merry Mission’s Glisten reindeer


was our #1 item for Q4 2015

BUILD-A-BEAR 2016
EXPANSION: 2016 and Beyond
MORE PEOPLE
Our Traditional Licensing
approach drives
Core Consumer sales

Plus, we have improved ability to “chase”


hot properties
BUILD-A-BEAR 2016
EXPANSION: 2016 and Beyond
MORE PEOPLE
Fresh Licensing strategy is attracting  new Consumers

Affinity   Collectibles   Entertainment   Sports   Fashion  Gifts
BUILD-A-BEAR 2016
EXPANSION: 2016 and Beyond
MORE PEOPLE
The Collectible, Gifting and Teen+
Consumer is generally less price
sensitive, more likely to shop on-
line and over-indexes with key
licenses like:

Minions
Star Wars
Pikachu
Toothless

The #1 item sold on-line in 2015?


Our new GIFT BOX

BUILD-A-BEAR 2016
2016 Expectations
Transitioning from Sustained
Profitability to Profitable Growth
Revenue Growth in Mid-Single Digits
Continued Profit Growth
Increase in Capital Spend
Continue Share Repurchase Program
Investment alignment with Strategy
BUILD-A-BEAR 2016
2016: Projected Revenue
Total Revenue Growth in Mid-Single Digits
Driven by:
• Organic comp growth in existing stores
• Accelerated comp in remodeled stores
• Volume from ~10 new permanent stores* net of closures
• Double-digit growth in Digital (Mobile + Ecomm)
• Enterprise Selling opportunity
• Benefit from continued strategy of driving IP and Licensing via
a consumer segmentation strategy coupled with elevated
product/marketing integration

Projected 2016 Comparable Store Performance by Quarter


Consolidated Comp Store Growth Expected to be low to mid-single digits
2016 1st 2nd 3rd 4th Full Year
Quarter
Expected
Comp
*Permanent stores are defined as traditional and outlet locations and
BUILD-A-BEAR 2016 do not include: Seasonal, Shop in shop or pop-up locations
2016: Projected Profit
Planning Continued Profit Growth

• 2015 Pre-tax income projected


in the range of $16.5M-$18M

• 2016 Pre-tax income expected


to increase by 15%-25%

Store counts do not include Carnival Cruise ships, Landry’s or


BUILD-A-BEAR 2016 international franchise locations
2016: Intended use of Capital
Capital Plan
Improved
New Stores
$25- 75% Remodels
Update Store Systems
Retail
Operations

$30M 25%
IT/Systems Upgrades
“Play beyond the Plush”/IP
Infrastructure &
Platforms for new
revenue streams

• Estimated 18-24 month payback on new and remodeled stores


• Expected 4-wall contribution of over 20% for new and remodeled stores
• Remodels REQUIRE store downtime and will impact total revenue
• Store openings & remodels require both “capital” & “expense” investment
• Remodel downtimes are generally planned for lowest revenue quarters
• Puts and takes will disrupt average store sales & sales/sq ft data comparisons

Goal is to assure flexibility in capital spending to maintain our


solid cash flow, strong balance sheet and lack of debt

BUILD-A-BEAR 2016
2016: Intended use of Capital
Share Repurchase Plan

• In fiscal 2015, the company spent $25.9M on


share repurchases
• $9M remains under the current share
repurchase plan
• The company intends to continue to
opportunistically assess additional share
repurchase plans

Store counts do not include Carnival Cruise ships, Landry’s or


BUILD-A-BEAR 2016 international franchise locations
2016: Investments support Strategy
Diversify the Business Model
Overhaul Develop New
Build Scalable Implement
Global Owned Outbound
International Wholesale and
& Operated Brand
Franchising Corporate
Retail + Licensing &
Model/Systems sales Systems
Enterprise Entertainment
& Processes
Selling Capabilities
Operations
1 2 3 4

• POS Compliance • Global Ordering • “Play beyond the • Wholesale


and Enterprise Capability Plush” apps, processing
selling upgrades • Reporting and music, video and systems
• TXT Planning compliance digital • UPC capability
enhancements processes & development
• PLM upgrades systems • (Licensing
• New stores/remodels currently out-
and tech upgrades sourced)
• Traffic Counters
< Capital Tracking System ----- Warehouse System upgrade ----- Talent >
BUILD-A-BEAR 2016
Thank you

Build-A-Bear
1954 Innerbelt Business Center Dr.
St. Louis, MO 63114
www.buildabear.com