Build-A-Bear Workshop, Inc. (BBW) Q1 2020 Earnings Report, Transcript and Summary

Greetings and welcome to the Build-A-Bear Workshop First Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Allison Malkin of ICR. Thank you. You may begin.

Good morning. Thank you for joining us. With me today are Sharon Price John, CEO; and Voin Todorovic, CFO. For today's call, Sharon will begin with a discussion of our first quarter 2020 performance as well as our positioning and actions in response to the COVID-19 pandemic. After, Voin will review the financials in more detail. We will then open the call to take your questions. [Operator Instructions] Members of the media who may be on our call today should contact us after this conference call with their questions. Please note, the call is being recorded and broadcast live via the Internet. The earnings release is available on the Investor Relations portion of our corporate website. A replay of both our call and webcast will be available later today on the IR site. The COVID-19 pandemic continues to have a significant impact on our operations, cash flow and financial position. The uncertain and dynamic nature of current conditions and its ongoing impact could materially alter our outlook. I will remind everyone that forward-looking statements are inherently subject to risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors, including those set forth in the Risk Factors section in the company's annual report on Form 10-K. We undertake no obligation to revise any forward-looking statements. And now I would like to turn the call over to Sharon.

Good morning. Thanks for joining us today. I would like to update you on the current status of our business and our plans for the coming months. As you are well aware, globally, COVID-19 has disrupted the way families, friends and colleagues interact with each other, including how they shop and what they do for entertainment. This has significantly impacted not only our business, but the global economy overall. However, we believe that Build-a-Bear is well positioned to both manage through this crisis and to emerge for future growth as we work to accelerate strategic changes that have been previously initiated. In fact, as we've consistently shared, we've been executing a strategy to build on our brand strength and diversify our retail channel, expand digitally and add incremental profitable revenue streams. Our goal has been to leverage the synergy between retail and intellectual property initiatives to profitably grow the entire business. We have been methodically upgrading systems, adding talent and aggressively managing change within the organization given the backdrop of a rapidly evolving retail, consumer and geopolitical environment. That fluidity and flexibility has never been more relevant than in the circumstances that we currently face. In addition to a sound strategy, upgraded foundation and enhanced infrastructure, on the onset of the pandemic, we were in a positive cash position with no borrowings on our credit facility. We believe that our strategic repositioning that has been underway will be vital to surviving and ultimately thriving in the new world normal. Our advantages include our powerful brand with high-consumer awareness and affinity; a passionate and engaged consumer base with over 8 million accounts opted in for marketing communications; high optionality on our retail store portfolio with over 70% of leases up for renewal in the next 3 years; a rapidly growing e-commerce segment that is leveraging the expanding digital economy and reaching a broader demographic of affinity and adult-gifting segments; and the groundwork in place to further leverage our intellectual property through new revenue streams, including outbound licensing, wholesale and entertainment. As we discussed on our year-end call in March, in addition to a stronger cash position, we ended fiscal '19 with growth in total revenues and improved profitability. We were building on the momentum of last year's fourth quarter as we started fiscal 2020 with a positive sales trend and we had expected to deliver profit growth for the year. As the severity of COVID-19 became apparent, we put plans in motion to comply with new international governmental recommendations regarding health and safety, which led to the temporary closure of all of our North American and European corporately managed retail stores. This, in turn, necessitated the furlough of over 90% of our workforce and a reduction in salaries for all other staff. We moved to a work-from-home model for our remaining corporate associates and quickly instituted aggressive cash preservation and expense aversion policies. Simultaneously, we shifted our focus in remaining resources to support our e-commerce channel. Since the store closures, we have seen triple-digit e-commerce growth with high volume of key affinity products, including record-setting demand when we launched an initial offering of a furry friend based on the Child from the Disney+ series, The Mandalorian. We quickly modified processes and enhanced capabilities to more efficiently respond to the digital demand, which I will discuss further in detail in a moment. While we made meaningful progress in moving forward, we were not able to offset the complete closure of our store base. Historically, e-commerce has represented less than 10% of our revenues. So even with aggressive growth in that channel, we will still need to reopen a significant number of stores to regain -- and regain traffic patterns to return to a position of overall growth and profitability with the current business model and mix. Our expectations for the balance of the year continue to evolve as we collect additional data and monitor government decisions and actions. Let me update you on the progress regarding our retail stores and retail portfolio, key digital initiatives and cash generation and preservation. First, as it relates to our retail stores, which, as noted, are a vital component of our revenue stream, we have started to reopen retail stores on a staggered basis in select areas with the goal of delivering a modified version of our beloved retail experience, recognizing the new guidelines that are now standard to essentially all public businesses. In preparation for the reopenings, we modified our in-store experience to accommodate these new standards, including limited occupancy based on store size to allow for social distancing; protective face coverings for our store associates; floor markings, directional signage and new processes to -- in interactive areas, such as the Stuffing Station, to limit personal contact; heightened sanitation processes throughout the store; and associate training focused on the consistent delivery of these new requirements and safety practices. Thus far, with approximately 40 stores reopened, the modifications have been well received on -- based on the positive feedback from both our associates and our guests. We have seen varying levels of business recovery compared to the prior year at stores that have reopened with tourist locations generally faring better than traditional mall sites. Most recently, a limited number of select locations have also been impacted by protest and social unrest in certain areas. Separately, in the U.K., the government has announced June 15 as the day for retailers to begin to reopen, and we are planning accordingly. At this time, we expect to continue to roll out store openings as restrictions ease while we monitor the business rebound and consumer traffic patterns over the upcoming weeks. As I previously mentioned, we began the year with high levels of lease optionality with over 70% of locations having a lease event in the next 3 years, a strategic position we took as we recognized the shifts that have been underway in consumer shopping patterns away from traditional malls into places where families increasingly spend time, including the digital space. We have been working to leverage this position with our landlords to achieve more favorable and flexible terms. In the discussions and negotiations with landlords, we believe that Build-a-Bear is perceived to be a valued tenant that is also seemed to be a part of the long-term outlook and the new retail landscape. Thus far, we have maintained the lease optionality that has been so important to our strategy to diversify and evolve our real estate portfolio, and we'll continue to aggressively manage this process. There are many scenarios that we continue to review and modify, which may include selective store closures if terms are not able to reflect the impact of reduced traffic and changing mall performance going forward. Turning to our digital progress, including e-commerce, the investments in platforms, systems and talent that we have systematically made in recent years enabled us to deliver our tenth consecutive quarter of double-digit growth in online sales. After the temporary store closures, the rate of increase grew to triple-digit rates on a sustained basis. With reliance on our e-commerce channel as our primary revenue source during this crisis, we took several actions. These include reworking processes at our fulfillment center to incorporate recommendations of governmental and health agencies. While this initially negatively impacted our order processing time in terms -- and as the teams adapted to the new requirements, we also made additional changes to improve our processing, such as tightening our -- with our heightened e-commerce volume, we quickly made modifications to our fulfillment approach to expand dedicated assembly lines, utilizing simplified bundle offers specifically designed to service certain high-demand items, which increased throughput and overall efficiency. After recording the largest single e-commerce demand day in our history with initial quantities of the stuffed animal version of the Child from the Disney+ series, The Mandalorian, which sold out within hours, we added new features to support high-demand product launches. These include a virtual waiting room and a chat bot. We have now had 2 additional sold out events of the Child. Notably, the second event set another record demand day, already eclipsing the level previously set in the first quarter. We intend to use these enhancements to support additional business capabilities going forward, including ongoing releases of the Child and other affinity products. In addition, we expedited the infrastructure to be able to buy online and ship from store in order to supplement e-commerce fulfillment while leveraging labor that we would already have available in retail stores after they've reopened. We continue to review all aspects of e-commerce with the goal of driving further growth on both a short and long-term basis, and we expect -- as we expect demand to remain high even with the reopening of stores. Separately, as a tool for consumer engagement and platform for key digital marketing messages, we introduced a program called Workshop Wednesdays as a resource for families to find entertainment, activities and fun product ideas. This platform further positions Build-a-Bear in the entertainment space, suggest options for gift-giving and increases awareness of key products while helping stay connected to our valued guests. We garnered almost 100 million media impressions when we announced Workshop Wednesdays, indicating the continued interest in our brand. Importantly, the concept is one that we plan to transfer to our retail channel in the future to increase destination-driven traffic when appropriate. We also plan to continue key actions that were immediately instituted to address the initial crisis, including assertive cash preservation, tight inventory management, a revised marketing strategy and a reduced workforce. As we look forward to the balance of the year, we are focused on accelerating our digital transformation inclusive of e-commerce, content development, CRM advancement and entertainment platforms. While we are actively executing a staggered store reopening plan, we believe that our future state will reflect the business transformation that has been the underlying driver of our strategic plan. In closing, these are clearly unusual times that necessitate innovation and flexibility as well as the reevaluation of a wide array of previously held business models, beliefs and corporate constructs. Even with that standard, I continue to believe that our stated strategy of evolving our company to better monetize the innate value of our brand across more channels to more consumers remains directionally on course. In fact, shifting our business focus to the acceleration of our digital transformation will be key to our future as new consumer shopping patterns and preferences are expected to also accelerate at an even more rapid rate to an online space. Build-a-Bear has weathered storms before. We have proven ourselves to be a resilient organization with an authentic emotional brand that continues to be meaningful to consumers. And while I am truly moved by the devastating impact of this pandemic, I still have great hope for the future and remain genuinely proud and grateful to not only lead, but to be a part of a team that has proven time and again that they are passionately believers in this company and that this brand -- and this brand by facing and emerging from a wide variety of challenges in recent years. I'm also pleased that through the efforts of the Build-A-Bear Foundation, we've been able to support organizations that have been providing assistance to those in need during this time. Finally, even as life and business move forward in a very different world, recent events clearly indicate that we are likely to face continued uncertainty on many fronts. Our goal is to emerge in a position of growth, understanding the need to remain flexible while accelerating these key initiatives of our strategy we mentioned to take us into the future, whatever form that may take. For our company, it circles back to our mission statement of adding a little more heart to life and choosing to believe that people will still want to experience joy and special moments by creating their own furry friend for life and having the comfort of a teddy bear hug maybe now more than ever. And now I would like to turn the call over to Voin to review our financials in more detail.

Thanks, Sharon, and good morning, everyone. I would also like to start by thanking our team and their dedication to our company throughout this challenging period. Not only have they dealt with the store closures, our headquarter associates transitioned to a full work-from-home model and our warehouse employees have worked feverishly to modify processes and fulfill our web orders at record levels. With the reopening of approximately 35 locations, we have begun to welcome back some store employees who were furloughed. I'm proud of how our team has managed thus far through this time. As Sharon mentioned, the first quarter ended very differently than it began. At the start of the year, we expected to report profitability above 2019. And at the time of our last earnings call, we were aligned with that goal. That said, with the spread of the coronavirus, we made the difficult decision to temporarily close all of our stores starting on March 18. At the same time, we implemented several initiatives to provide financial flexibility to manage through this crisis while evolving our business to further capitalize on and expand our omnichannel capabilities to meet the needs of our guests. As it relates to containing costs and as previously announced during the first quarter, we took several actions, including furloughing over 90% of our employees and reducing compensation by 20% for all employees not on temporary leave, including our executive officers. We also eliminated the annual cash retainers for all nonemployee directors serving on the Board of the first -- for the first quarter. In addition, we delayed full payment of bonuses earned by executive officers for fiscal 2019 and 80% of such bonuses for associates as well as delayed the payment of our contribution to our 401(k) plan, as we shared in 8-K filed with the SEC on March 27. Separately, we generated savings from a reduction in marketing expenses and the extension of payment terms, among other areas. As of the end of first quarter, we have not made any cash payments for April store rent. And while the expense was appropriately recorded, we are in active discussions with our landlords to obtain some combination of rent abatement and deferral on an immediate basis and more favorable and flexible terms going forward. As Sharon noted, we maintained high lease optionality with over 70% of our leases coming up for renewal in the next 3 years, including approximately 120 locations with natural lease events before the end of this fiscal year. While the vast majority of these locations have historically been profitable, we have the flexibility to accelerate store closings if store traffic and profitability do not meet our expectations going forward. Over the past few weeks, we have reopened approximately 35 stores where governmental orders have been lifted or relaxed, and we currently expect to have the majority of our locations open by the end of second quarter. As Sharon noted, most recently, a handful of our stores were negatively impacted by local protests and social unrest. We continue to run multiple scenarios and to maintain tight control of expenses as the situation remains fluid and thus, our rollout schedule may change. As we open stores, we are monitoring traffic patterns and sales recovery. In May, while relatively small in number, reopened stores recaptured approximately 65% of their sales from prior year. This rate improves when the web order fulfillment from our buy online, ship from store program is added on. Notably, in the past 2 weeks, the sales performance has improved, although there is a wide variability with tourist locations meaningfully outperforming the average. The investments we have made to elevate and upgrade our website and e-commerce platform, along with our partnership with Salesforce, and technology upgrades have been critical as we navigate through this time. Unlike many other retailers, e-commerce is a highly profitable channel for us as we benefit from low return rates and minimal discounts. In fact, EBITDA margin in this channel is better than the higher end of our store four-wall EBITDA contribution margin. Post store closures, our web demand has gained momentum posting growth at triple-digit rates. Moving now to a review of the preliminary first quarter results. I want to note that our GAAP results include $6.3 million in noncash pretax expenses comprised mainly of estimated store asset impairments, foreign exchange losses due to the fluctuation of the British pound to the U.S. dollar, and we also recognized that additional bad debt expense. In addition, we recorded $3.3 million tax valuation allowance taken on our deferred tax asset, which also has no impact to cash flow. While my remarks will focus on our adjusted results, you can find our GAAP results and reconciliation of GAAP results to adjusted results in our press release that we issued earlier this morning. In total, for the first quarter, total revenues were $46.6 million compared to $84.4 million in the first quarter of fiscal 2019, reflecting the temporary closure of our stores midway through the quarter. Retail gross margin was significantly lower compared to prior year as it includes full occupancy costs for 13 weeks while we only had sales from stores for approximately 6 weeks. However, during the quarter, merchandise margin was up compared to the prior year driven by low promotional activity on our website. SG&A was $26.7 million, down $9.1 million from the first quarter of 2019 driven by lower store and corporate payroll due to our COVID-19 mitigation efforts during the last 6 weeks of the quarter. SG&A includes approximately $3 million in payroll expenses related to the pay made to furloughed employees across countries, which we expect to be partially offset by government reimbursements. In addition, we recorded bad debt expense of $600,000. Adjusted pretax loss was $12.4 million. This compares to pretax income of $2.4 million in the prior year. Turning to the balance sheet. We ended the first quarter with cash and cash equivalents of $21.9 million with no borrowings on our credit facility. This represents an increase of $1.6 million compared to the end of the first fiscal quarter in 2019. We ended the first quarter with approximately $53 million of consolidated inventories, down about 5% from the end of the 2019 first quarter. We are comfortable with both the composition and level of our inventory. We will continue to manage our inventory prudently as business conditions evolve and normalize, and we currently expect inventory to be down at the end of the fiscal year compared to fiscal 2019 year-end. We will continue to stay focused on working capital to ensure that we have financial flexibility to navigate during this unprecedented time. We believe with our current cash position and the actions taken to reduce expenses with continued disciplined expense in cash management, we will have sufficient liquidity for the next 12 months. Separately, as we reported yesterday, we amended our credit facility with U.S. Bank, which will now expire on September 30 of this year, although we do not expect to draw on the credit line during that time. We expect to secure additional financing during the second quarter, which could include a new credit facility, government loan or monetization of our warehouse assets. This decision will be based on the solution that will give us the most flexibility at the lowest cost. As previously highlighted on our fourth quarter earnings call given the rapidly evolving nature of the pandemic, we do not believe it is prudent to provide guidance given the ongoing uncertainty. In closing, we believe we have the financial flexibility and strategy to navigate during this challenging time while continuing to make progress on our initiatives that evolve our business model to maximize the power of our brand and drive value for our stakeholders. This concludes our prepared remarks. And we will now turn the call back over to the operator for questions. Operator?

[Operator Instructions] Our first question comes from the line of Eric Beder with SCC Research.

When you look at -- so the online business has been really strong, higher margin. When you look at it going forward, I know it's been under 10%, where do you think it needs to go longer term? And how do you look at the potential for savings by doing buy online, ship from store in terms of allowing you to be more productive?

Yes. Great question, Eric. I hope you're doing well. I'll start with a little bit of -- set the stage and then Voin may have some additional comments on this. Of course, this year, we'll probably have our largest e-commerce share in our history, and it is likely to be a much larger percentage as a total percent of revenue. But that's obviously an unusual circumstance on a lower base. So with that being said, I just want to be cautious of how much we overstate the future sales -- e-com sales as a percent of total business for this year. But what -- if there's a silver lining in this, I think that, as I noted in my remarks, it had identified and shine the light on a much broader opportunity, even though we sort of innately knew that we had an e-commerce -- we had some e-commerce runway. It's much greater than, I believe, that we had anticipated. And this has accelerated our advancement of a lot of things that has been in the queue for us to do from a digital transformation perspective. And in this odd way, because the stores were closed, we shifted all of our IT focus, our creative focus on driving those e-commerce sales and unlocked a lot of potential there as we look forward. And yes, the buy online, ship from store could be a key component of that when you -- we've talked about this before, the creation of 200, 300 tiny warehouses scattered all over the country, and that's ultimately what our stores could become and services thus in many ways. One, from a labor perspective, labor utilization perspective, even if traffic might go down a little bit, we can shoot those orders out and have our Bear Builders work on fulfillment. Additionally, with the next phase of technology, we will be able to shift the product to the stores with the right approximation to the delivery space. So it could even decrease our delivery dates and stretch out certain gift-giving time periods to adding 2, 3, 4 more days on to time periods that we would otherwise have to cut off deliveries, which could be significant volume for us, particularly during Christmas. So Voin?

I mean I think you cover it really well. And we continue to make investments, as we said, in our partnership with Salesforce to really continue to make strong investments and continuous investments in this channel as there is a big opportunity. We do have really strong margins in this particular channel. As I mentioned earlier, we do have a business model where our web business really has a low return rate as well as we are not very promotional. So we continue to drive some of those initiatives because we believe this is going to be the future as we continue to work with Salesforce suite of services and different clouds that have been implemented really to help drive some of these things that Sharon has been talking about to really make the omnichannel experience and that our guests are going to be able to really shop both online and in stores. And some of those capabilities are still being in early stages and some of them are going to be coming on as we continue to open most of our fleet.

Great. And just for a follow-up, do all the stores work in this new world of spacing and different types of formats, other pieces? Do all these stores still make sense in terms of -- I'm not a store, but in terms of like can they physically work in terms of providing a healthy experience for a grandson and a grandfather going out to get a bear per se?

Also a great question, Eric. We started this process within days of the shutdown recognizing that the new world would be very different and that we have, unlike a lot of retailers, which generally is a competitive advantage for us, a very interactive engaging experience. So we started building and testing processes to assure that we were meeting CDC and governmental standards early on. And of course, we went through the wide variety of formats that we had to be able to do that. And the key, Eric, is one, of course, in each location, there -- we will be following the recommendations on sanitation and enhancing all that sanitation. So that is going to happen no matter what the footprint and format is. Secondly, all of the distancing processes that you talk about and of course the use of masks where it's -- our associates will always wear masks, but they are expected to always wear masks. And we will be following the individual municipality guidelines for guests in those areas or malls or whatever the recommendations may be. But the key is it's going to be managing and minimizing how many people go into a location. That's how you maintain the social distancing. So we've made it as Build-A-Bear friendly as possible so our -- the masks for our associates actually is a bear muzzle, who's always smiling. And we have our social distancing signage is very friendly, but also the 6-foot differentiation that people need to maintain is marked on the floor by bear paws. So it's easier for us to guide children through this process. And even some of these high-touch experiences like how you go through the Stuffing Station process. We have a place where the consumer can place the bear, step away, the Bear Builder steps up and gets the bear, stuff the bear. And they go through the same process, but over 6 feet apart. And most of our -- which we were very happy to know and I wouldn't have been able to tell you this beforehand, the cords on our stuffing pedal are 6 feet long. So we actually have pulled them far away from the Stuffing Station. And in most of our locations, the child or the child at heart can still step on that stuffing pedal and stuff the bear 6 feet away from the Stuffing Station.

[Operator Instructions] Our next question comes from the line of Steph Wissink with Jefferies.

Voin, I have just a few housekeeping questions and then, Sharon, a couple bigger picture questions for you. So Voin, if we could just start. You mentioned in your prepared remarks that you had occupancy costs essentially carried in your P&L for 13 weeks, although you didn't necessarily pay cash rent in April. So can you just remind us you're expensing a full quarter of rent costs that didn't actually pay. So just help us tie together those comments. And then I think you also mentioned that with respect to your furloughed employees, you had some expenses related to personnel that will be reimbursed. And I'm just curious if that is a reimbursement effect that will come in the second quarter or if you take an accrual for that reimbursement in Q1.

Steph, thanks for the question. First, as we talk about the occupancy expense, yes, from the P&L perspective, we recognized 13 weeks of expense in the quarter. We did fully paid February and March rent in the quarter. We did not pay the April rent as of the end of the Q1. We are in discussions with our landlords, as I mentioned, as we are working on a variety of different solutions from both abatement, deferral and also extending or changing some of the terms on the existing leases, and we will continue to work with them really to navigate through this challenging time and really have the occupancy structure that does make sense for our business on a long-term basis. In addition to that, when we think about the government programs and some of the reimbursements that we have, we did pay our furloughed employees in different jurisdictions, some of that's outside of the North America. And the local governments are reimbursing us for some of those costs as a result of COVID-19 situation. We also have applied for the employee retention credit program with the U.S. government, and some of those monies are expected to come in second quarter or later in the year. But we did recognize some of the receivables as we expect to get that cash, and some of that has already come after the second quarter.

Okay. That's very helpful. And then, Sharon, my two questions for you. One is just related to a prior question. If you think about the post-COVID or new normal experience in your stores with distancing and other measures of safety, how do you think about the throughput of your stores into the future? If we're operating in a more constrained volume basis over the next couple of years, does that change the way you think arithmetically about your store performance and overall fleet? Does it change the mathematics of the number of stores that you need? How should we be thinking about the fleet performance separate from e-commerce?

Yes. Stephanie, that's a multimillion-dollar question. But the challenge right now is -- as we both closed our prepared remarks is just incredible amount of uncertainty on what will the traffic be, how will -- how can we manage this throughput, how long will these procedures and recommended changes last? In its current form, clearly, our throughput is likely to be less even if the demand was there simply because of how long it takes people to go through the process and the fact that in some of our stores, we may have one [ cash rep ] closed down or a Name Me station closed down because of social distancing guidelines. I think we're going to have to watch all of that very closely and at the same time, drive and build the capabilities on our e-commerce business and understand the value of taking our CRM to the next level, particularly with a lot of these -- with this relationship that we've created with Salesforce that we announced at the end of the year because that customer relationship management and the 360 consumer approach provides us with both additional ways to engage with the consumer, but it gives us a venue to remind that consumer of additional reasons to think of Build-A-Bear, particularly from affinity products and gift-giving products. So while the stores will, we believe, remain an important part of why you create the affinity and the love for the brand and -- from the beginning, once you've created that relationship with our brand by going through the process, you -- at least in our recent experience, the online engagement and the approach that we have online is apparently incredibly satisfying for people as well when they want their Build-A-Bear and they want a new furry friend or want to engage with our brand that the virtual experience seems to be of great desire. So we have opportunities to continue to enhance that. And as we are monitoring what is happening from the governmental perspective when we might see some of these restrictions relaxed, we will be responding accordingly. The bigger question, Steph, is this feeds into the lease optionality is this just -- no matter what happens on throughput, how many stores do we need and how much flexibility do we have to respond to this new environment. And the truth is we have a tremendous amount of flexibility. With 70% of our leases with natural lease events, we won't have to buy out a lease. We are in a leverageable situation here. And 120 of those leases, as Voin mentioned, are up before the end of our fiscal year. We have an opportunity, if we so choose, if we cannot reach the proper, flexible or variable type of rent that we believe is necessary for partnership looking forward in this physical retail environment, we may end up with a very different type of footprint. But at the end of the day, it will still be important that we manage the 2 sides of this coin of recognizing the original strategic insight of that experience, feeds our ability to drive these other revenue channels, whether it's e-commerce or it's entertainment or it's outbound licensing, which then feeds the retail store environment. So I'll just also add a little bit there too as well. We also recognize that at least in the very near-term future, some of these experiences and events that we tend to have at Build-A-Bear, we will have to manage those and have to think of those in a very different way, whether that's National Teddy Bear Day or some form of the new versions of Pay Your Age Day, we're looking at different ways to do that, that don't create crowds before it's appropriate.

Okay. That's helpful. And then my last question is just with respect to the success you've had not once but twice now with The Mandalorian and the Child. Does that also reshaped the types of brands and properties and events and that affinity audience that you think about in terms of expanding the TAM? Are there other opportunities like that in the pipeline, whether it's through licensing or through your own brand creation that you could create a much more robust offering online only for big key milestone or tent-pole events in entertainment or other areas that you've learned now through this experience that there is an affinity customer and an audience for your brand in that form factor?

Well, we already knew there was an affinity customer and audience. And that affinity customer was very robust and growing and willing to buy our products online. We significantly over index with our adult consumer and our gift-giving consumer on e-commerce in the -- as we -- in the past, and now it would be even more so if we'd ran those -- that specific data, I'm sure. And we learned that through a number of Star Wars products, our Pokémon line where on any given quarter, over 60%, 70% of those, sometimes those particular items are going to be in the 12-plus age range. And when I say 12 plus, I don't mean 13. I mean 20-something, 30-something that are engaged in the brand. You might -- I mean it's hard sometimes to continue to remember that Build-A-Bear now has been around over 20 years, and we mean something to that consumer base that grew up with both those brands and our brand. So the mash-up of those 2 beloved characters, whether it's the affinity for certain Pokémon -- a Pikachu, let's say, but in the Build-A-Bear form takes a special meaning for people that's beyond what a Pikachu in a different form. And so yes, the child is a perfect example of a lot of different elements coming together at the same time that proves this point in a really powerful way. The demand of the child would not have been -- we would not have been able to predict the significant demand of this. I think we've noted on the last call, even, we had well over 0.25 million people sign up for notification when the child was going to be available. So just that type of raw sheer volume, much of which was not a part of our Build-A-Bear family, is of great benefit, as you might imagine, now and moving forward. Additionally, during this time frame, we had Scooby Doo launch, which was also -- had significant success. As well as the Stitch launch, also another Disney property, a Warner Brothers' property with Scooby Doo and then Stitch, a Disney property. And so it was -- we definitely unlocked something here that is of significant potential. I want to give the IT team and the marketing team and warehouse guys a little bit of credit here. They -- within weeks, they put in the virtual waiting room, so we could manage this demand. And we also put -- like you might get -- when you're buying a concert ticket because there was so much of a crush -- of request to purchase these products. And we were also able to put in a chat bot to help our guest services team manage the enormous volume of questions and comments and requests on the timing of their order and delivery. So those 2 assets now will allow us to drive a lot of I guess, what we call, concentrated volume in these types of items.

We have no further questions at this time. Ms. John, I would now like to turn the floor back over to you for closing comments.

Thank you so much and thanks, everybody, for joining us today. We look forward to providing further updates on our next call following second quarter.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.