Build-A-Bear Workshop, Inc., an interactive, entertainment retailer of customized stuffed animals, today participated in the Credit Suisse Consumer and Retail investor conference. Maxine Clark, the company’s chairman and chief executive bear, Barry Erdos, president and chief operating officer bear, and Tina Klocke, chief financial bear attended the conference. During the company’s prepared remarks management provided an update regarding the Company’s U.K. acquisition integration.
“We continue to be pleased with our U.K. acquisition integration progress, which is moving ahead on schedule. Thanks to a great team of associates in the U.K., we completed the conversion of our fifth store yesterday, at Grosvenor Centre in Chester, England, and expect to complete all store conversions in time for the 2006 holiday season,” said Maxine Clark.
“We also continue to believe that our previously announced target of a $0.10 to $0.13 per share dilution from costs associated with the acquisition and integration remains on track. Because of the progress we are making, and because we are expensing our costs as they are incurred, the bulk of the dilution will take place in the second and third quarters, with accretion expected in our fourth quarter.”
Barry Erdos added, “The U.K. acquisition impacts primarily reflect costs associated with rebranding, store conversion, and integration of The Bear Factory stores, as well as, a reduction in franchise fee revenue and lower interest income. The Company expects to rebrand and convert approximately 25 Bear Factory stores.”
“The store conversion process began in May; during the conversion process, stores being converted are closed for approximately 22 days. The dilution to earnings is primarily weighted in the second and third quarter due to the expenses and loss of revenue of store closures and conversions occurring in these quarters.”
On April 3, 2006, the company announced that it had completed the acquisition of The Bear Factory Limited, a United Kingdom-based stuffed animal retailer, and the acquisition of Amsbra, Ltd., its franchisee in the U.K. The acquisition includes 29 Bear Factory stores, 28 in the U.K. and one in Ireland, and 11 Amsbra stores.
The Company expects to close approximately four of these stores – two which are overlapping store locations in the Amsbra and Bear Factory portfolios and two which are concessions within department stores. The Company anticipates opening three to five new Build-A-Bear Workshop stores in the U.K. in 2006.The Company further expects the acquisition to be accretive to earnings per share in fiscal 2007.
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