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Build-A-Bear, great idea, awful business?


rukawa
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I walked into a build-a-bear store. This is a store where kids can build their own teddy bears. They can accessorize the bears with little outfits, shoes etc. The bears are cheap...the accessories are pricey. I remember thinking wow what a fantastic idea ... this must be a great business. I checked it out on valueline today. The company is unprofitable. I was really amazed. It appeared to me to be an interesting case study of how a great idea doesn't guarantee a great business.

 

The stores have good gross margins, good inventory turn over but the company has high SG&A. I think it is just a case of over-expansion and bad management. Not sure if anyone knows the story here. I am Canadian so this is the first time I have ever seen a store like this.

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Rukawa,

 

I had the same experience that you did. I saw them in the mall and thought what a great business with excellent margins and thought I might have stumbled upon the Peter Lynch style growth company. But I could never get comfortable with what I saw in the financials.

 

I am still not fully sure why they aren't doing better.

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