Not Your Average Bear

By Dody Tsiantar

Everywhere maxine clark goes, people ask her, "Are you the bear lady?" And it's not because she has a cuddly stuffed bear named Curly strapped into the backseat of her car. A former shoe executive, Clark, 56, is the founder and chief executive of Build-A-Bear Workshop, a mall-based toy retailer that has sold more than 26 million customer-made teddies ($10 to $25 each; outfits and accessories cost extra) since it opened its first store in St. Louis , Mo., eight years ago. Today the chain has more than 180 U.S. stores and 16 overseas franchises; last year it earned $20 million on sales of $302 million. "Teddy bears are universal," says Clark, who got the idea during the Beanie Babies craze.

Stock-market bears are not universal, but they have sharp teeth, last month nicking 25% from B-A-B's share price after the company said same-store sales would increase just 2% or 3%, compared with a 13.8% sales increase in last year's first half. The stock recently regained some ground, to around $24 a share. "We overestimated," says Clark, explaining that last year's muscular performance was unsustainable. Clark thinks earnings could still rise 26% to 32% in 2005--great for most companies but ordinary compared with last year's 163% jump.

Has Build-A-Bear outlived its cutefulness? No, argues Amy Ryan, an analyst with New York City--based ThinkEquity: "This is a hiccup. It's a retail concept that matures in a different pattern than most retailers." New Build-A-Bear stores start out so strongly that comp-store sales a year later tend to be lower, she says, so investors have to adjust their expectations. "Build-A-Bear is not a fad," Ryan says. The company plans to open 30 more shops in 2005, expand its line of licensed merchandise, introduce "friends 2B made"--a new make-a-doll concept--and unveil a 21,500-sq.-ft. flagship store on Manhattan's Fifth Avenue this month. Build-A-Bear Workshop may yet prove that it has legs--even if they're only stuffed ones. --By Dody Tsiantar