Build-A-Bear Workshop Initiates Quarterly Dividend Program
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The initiation of a quarterly dividend by Build-A-Bear Workshop, Inc. signifies a pivotal shift in the company's capital allocation strategy. Such a move is often interpreted by the market as a signal of matured and stable cash flows, indicating that the company has reached a point where it can predictably generate excess capital. This decision to return capital to shareholders in the form of dividends is a testament to the company's financial health and management's confidence in its ongoing operations and future prospects.
From a valuation standpoint, the announcement of a $0.20 per share dividend can have implications for the company's stock price. Dividend Discount Models, which are used to estimate the value of a company based on its future dividends, will now incorporate this new information, potentially affecting the intrinsic value calculations made by investors. Additionally, the dividend yield, calculated as the annual dividends per share divided by the stock price, will become a new factor for income-focused investors when evaluating the attractiveness of Build-A-Bear Workshop's stock.
Introducing a dividend can have a broader impact on the company's shareholder base. Typically, a dividend-paying company attracts a different investor profile compared to growth-oriented companies that do not pay dividends. Income-seeking investors, such as retirees or conservative investment funds, may now find Build-A-Bear Workshop's shares more appealing. This could lead to a change in the stock's trading dynamics and potentially increase its stability during market volatility. It is essential to monitor how this change affects the company's stock liquidity and volatility in the upcoming quarters.
Moreover, the market's reaction to such announcements can serve as a barometer for investor sentiment towards the company's governance and strategic direction. If the dividend is well received, it might suggest that the market approves of the company's capital distribution policy and its ability to sustain such payouts. Conversely, if the market reacts negatively, it could indicate concerns over the sustainability of the dividend or the opportunity cost of not reinvesting the capital back into the business for growth.
The declaration of a quarterly dividend by Build-A-Bear Workshop also sheds light on the company's governance practices. Dividend policy is a direct reflection of the board's strategic priorities and their commitment to shareholder returns. It suggests a balanced approach to capital management, where the company is not solely focused on reinvesting all its earnings back into the business or on aggressive expansion but is also considering shareholder wealth maximization.
It is important to assess how this dividend policy aligns with the company's long-term strategic plan. If the dividend payments are well-covered by free cash flow and do not impede the company's ability to invest in future growth opportunities, it can be seen as a positive governance practice. However, if future investments are compromised or debt levels increase to sustain the dividend, it could raise red flags about the sustainability of such a policy. The market will closely observe these factors to gauge the prudence of the board's decision in the context of the company's long-term strategy.
“We are pleased to be able to provide a direct return to our stockholders with the initiation of a quarterly regular dividend that together with our previously authorized stock repurchase plan shows the continued confidence that the Board has in the company’s future and our commitment to regularly return capital to stockholders. Our strong cash flow and capital structure provide the flexibility for us to return capital to our stockholders through share repurchases and regular dividend payments while maintaining the ability to invest for profitable growth and execute our strategic plan,” said Craig Leavitt, Non-Executive Chairman of the Board.
About Build-A-Bear
Build-A-Bear is a multi-generational global brand focused on its mission to “add a little more heart to life” appealing to a wide array of consumer groups who enjoy the personal expression in making their own “furry friends” to celebrate and commemorate life moments. More than 500 interactive brick-and-mortar experience locations operated through a variety of formats provide guests of all ages a hands-on entertaining experience, which often fosters a lasting and emotional brand connection. The Company also offers engaging e-commerce/digital purchasing experiences on www.buildabear.com including its online “Bear-Builder” as well as “HeartBox” and its age-gated adult-focused “Bear Cave.” In addition, extending its brand power beyond retail, Build-A-Bear Entertainment, a subsidiary of Build-A-Bear Workshop, Inc., is dedicated to creating engaging content for kids and adults that fulfills the Company’s mission, while the Company also offers products at wholesale and in non-plush consumer categories via licensing agreements with leading manufacturers. Build-A-Bear Workshop, Inc. (NYSE: BBW) posted total revenues of
Forward-Looking Statements:
This press release contains certain statements that are, or may be considered to be, “forward-looking statements” for the purpose of federal securities laws, including, but not limited to, statements that reflect our current views with respect to future events and financial performance. We generally identify these statements by words or phrases such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “future,” “potential” or “continue,” the negative or any derivative of these terms and other comparable terminology. All of the information concerning our future liquidity, future revenues, margins and other future financial performance and results, achievement of operating of financial plans or forecasts for future periods, sources and availability of credit and liquidity, future cash flows and cash needs, success and results of strategic initiatives and other future financial performance or financial position, as well as our assumptions underlying such information, constitute forward-looking information.
These statements are based only on our current expectations and projections about future events. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements, including those factors discussed under the caption entitled “Risks Related to Our Business” and “Forward-Looking Statements” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 13, 2023 and other periodic reports filed with the SEC which are incorporated herein.
All of our forward-looking statements are as of the date of this Press Release only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or other risks and uncertainties referred to in this Press Release or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the SEC could materially and adversely affect our continuing operations and our future financial results, cash flows, available credit, prospects and liquidity. Except as required by law, the Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
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Investor Relations Contact
Gary Schnierow, Vice President, Investor Relations & Corporate Finance
garys@buildabear.com
Media Relations Contact
pr@buildabear.com
Source: Build-A-Bear Workshop, Inc.
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