Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity research on small cap consumer names.

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

<ul><li>We are reiterating our Buy rating, but lowering our projections and reducing our price target of BBW to $65 (from $75) after Build-A-Bear reported solid 3Q EBITDA & EPS upside, but lighter than expected revenue, and implied deep tariff impacts into 1HFY26 will serve to offset near-term positives and materially impact operating results.</li><li>3Q tariffs negatively impacted the company by $4 million (or a projected $0.23 in EPS) with a $6 million further negative impact in 4Q (projected $0.35 in EPS) and, we believe approximately $7 million to $9 million (projected $0.41 to $0.53 in EPS) in the first five months of FY26.</li><li>While we view this scenario as potentially conservative, we have to face the facts that overall gross margins, if tariff impacts remain similar to 2HFY25 in 1HFY26 without any further material offsets, will significantly decline.</li></ul>

We are reiterating our Buy rating, but lowering our projections and reducing our price target of BBW to $65 (from $75) after Build-A-Bear reported solid 3Q EBITDA & EPS upside, but lighter than expected revenue, and implied deep tariff impacts into 1HFY26 will serve to offset near-term positives and materially impact operating results.3Q tariffs negatively impacted the company by $4 million (or a projected $0.23 in EPS) with a $6 million further negative impact in 4Q (projected $0.35 in EPS) and, we believe approximately $7 million to $9 million (projected $0.41 to $0.53 in EPS) in the first five months of FY26.While we view this scenario as potentially conservative, we have to face the facts that overall gross margins, if tariff impacts remain similar to 2HFY25 in 1HFY26 without any further material offsets, will significantly decline.

BBW: 3Q Review: Tariffs To Be Even Further  Drag into FY26; Lowering EPS & PT

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BBW: 3Q Review: Tariffs To Be Even Further Drag into FY26; Lowering EPS & PT