We are reiterating our Buy rating, $41 price target and projections for Build-A-Bear Workshop as we look ahead to 2024. We believe Build-A-Bear was one of the key specialty retailing leaders in 2023, leveraging their experiential shopping experience to drive traffic, add retail locations (owned and partnered), expand the experience to include more adults and adding further accessories (Build-A-Bear Buddies) to expand the offerings/average ticket. Further, with the supply chain normalizing, the company was in an even stronger position to "read and react" to emerging trends and capture incremental sales (and higher returns). The year ended with the release of the Glisten and the Merry Mission movie, which we view as a highly material step in Build-A-Bear expanding their overall franchise. We believe 2024 will see a deepening and continuing expansion of these trends, with Build-A-Bear representing a compelling play on experiential retailing. When combined with a cash rich balance sheet and shareholder friendly management team, we believe BBW, trading under 7X our FY24 EPS, represents a compelling investment, and we reiterate our Buy rating and $41 price target.
