Build-A-Bear’s strategic alternatives: “our activist investor is only us!”
Posted by: admin in Investments and Raising Money
Filed under: Management, Investments, Activist investing, Value and lack thereof
Build-A-Bear Workshop, Inc. (NYSE: BBW) has announced that it has completed its previously announced review of strategic alternatives, and it isn’t going to be going private and won’t be making any major initiatives. The retailer of customized stuffed animals has authorized an increase in the share repurchase program to up to $50 million.
This is a disappointment that the company could not find a buyer or better alternative, but this can’t be too big of a shock. The company’s CEO last month had already noted that the current tightening credit markets and a shrinking consumer pocketbook were taking a toll. When the company issued its strategic review last year shares were around $25.00, and while shares briefly rose they have been cut in more than half since then.
It is also slowing growth to 25 new stores from 50 last year and is also creating a director of Workshop Experience. It wants to increase web presence and continue its push in Europe, and it wants to use its club program and TV campaign.
As far as other initiatives, what the company is really telling you is that it will not be getting a major premium buyout. Of the prior $25 million share buyback, it has only spent $4.7 million for some 176,500 shares. The company noted that it has $66 million in cash and is essentially debt-free.
Its market cap is $221.8 million after a 1% drop to $10.94 today, and that is at the bottom of a $9.40 to $31.19 close over the last 52-weeks. If the company retires all of that stock, it will actually be a substantial absorption of the float and liquidity with almost 14-days worth of average share trading being absorbed. Here I keep asking myself, “Did this one ever need to come public in the first place?”
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