Build-A-Bear shares fall 27% after Q2 revenue miss, CFO departure

What happened

Build-A-Bear Workshop Inc. (NYSE: BBW), the St. Louis-based retailer known for its make-your-own stuffed animal stores, reported financial results for its fiscal second quarter ended August 1, 2026, and announced the termination of its Chief Growth Officer. The stock fell 27.26% to close at $28.44 on August 27, 2026, on volume more than 14 times its average.

For the second quarter, total revenues were $115.3 million, down from $124.2 million in the same quarter last year. Pre-tax income was $11.6 million, compared to $15.3 million a year earlier. Diluted earnings per share (EPS) were $0.70, versus $0.94 in the prior-year quarter.

For the first half of fiscal 2026, total revenues were $240.6 million, a 4.8% decrease from the first half of the prior year. Pre-tax income was $35.5 million, or 14.8% of total revenues, compared to $34.9 million, or 13.8% of total revenues in the first half of the prior year. Diluted EPS for the first half was $2.16, versus $2.11 in the prior-year period.

The company also lowered its fiscal 2026 outlook, now expecting total revenues in the range of $500 million to $525 million and pre-tax income in the range of $60 million to $68 million. The filing does not state the previous outlook figures.

Separately, the company announced that it terminated the employment of David Henderson, Chief Growth Officer, without cause, effective August 26, 2026. Henderson will receive a cash severance of $501,500 paid over 12 months, a lump sum of $31,723.92 for health coverage, and a prorated bonus based on actual 2026 performance, subject to his signing a separation agreement with a release of claims and one-year non-compete and non-solicitation restrictions. His unvested restricted stock and outstanding long-term performance-based cash awards will be forfeited.

Why it matters

The revenue decline and lowered guidance suggest the company is facing weaker demand than expected. The 27% stock drop reflects the market's reaction to these results and the executive departure.

The termination of the Chief Growth Officer, announced alongside the earnings miss, signals a leadership change at a time when the company is revising its financial expectations. The filing does not explain why Henderson was terminated, only that it was without cause.

What this means

This is an 8-K filing, a form companies use to alert investors to significant events that occur between regular quarterly reports. Item 2.02 covers the earnings release, Item 5.02 covers the departure of an executive officer, and Item 9.01 covers the attached exhibits, which include the press release and the separation agreement form.

The company's business is building customized stuffed animals at retail locations, which is a discretionary purchase. A decline in revenue could indicate consumers are spending less on such items, but the filing does not provide a reason for the decline, and this article does not speculate on causes.

The severance package is a standard arrangement for an executive terminated without cause, including cash payments, continued benefits, and a requirement to sign a release of claims. The forfeiture of equity awards is typical when an executive leaves before they vest.

Investors should note that the company's guidance cut implies management expects the weaker revenue trend to continue for the rest of the year. The exact reasons for the lowered outlook are not detailed in the filing.