Jim and Abigail Zimmerman of Lowell Capital Management presented their in-depth investment thesis on Build-A-Bear Workshop (NYSE: BBW) at Wide-Moat Investing Summit 2025.
Thesis Summary
Build-A-Bear Workshop is a multi-channel retailer of plush animals and related products operating across the United States, Canada, the U.K., Ireland, and internationally. It operates through three segments: Direct-to-Consumer, Commercial, and International Franchising, with sales through branded stores, e-commerce, and third-party platforms.
BBW has strategically transitioned from a traditional mall-based retailer to a more diversified, capital-light, brand-centric business model focused on direct-to-consumer, digital content, licensing, and media. BBW targets high-growth areas like gifting, entertainment, and lifestyle through partnerships, while exiting underperforming stores and reallocating capital to franchising, collab stores, and branded content.
BBW has several characteristics Jim and Abby like, including (1) a highly resilient business model with deep customer loyalty and a unique experiential retail format that is difficult to replicate, (2) a highly cash-generative business with low capital expenditure needs, (3) a high-ROIC business model supported by asset-light operating structure and disciplined capital allocation, (4) a strong focus on higher value-added experiences and branded offerings with longer-term and “stickier” customer relationships, (5) an attractive valuation trading at about ~7x adjusted EBITDA and a high single-digit free cash flow yield, (6) a high conversion of adjusted EBITDA into cash from operations (7) an end-market that is growing sustainably over the long term, (8) a record of strong organic growth over several years, (9) a disciplined management team focused on driving organic growth through capital-light partnerships, omni-channel initiatives, and digital expansion, and (10) a long-term strategy to grow sales and EBITDA.
Jim and Abby believe BBW can achieve adjusted EBITDA of $100+ million by 2028, and the highly cash-generative business model can trade for 10x adjusted EBITDA with zero net debt for a market cap of about $1 billion. This could drive share repurchases, reducing shares to around 11 million by 2028, with a share price of $90 or higher versus the recent price of about $50 per share. Further, BBW’s strategic brand partnerships, capital-light operating model, and recurring revenue streams could make it an attractive target for a strategic acquirer or financial sponsor.
Disclaimer
Wide-Moat Investing Summit 2025 was held from June 24 through July 9, 2025. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
Slides
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