Build-A-Bear (BBW) Plunges 15.54% on Tariff Costs Margin Pressures Despite Record Revenue

Build-A-Bear Workshop, Inc. (NYSE: BBW) plunged 15.54% in pre-market trading on Dec. 5, 2025, following a mixed earnings report that highlighted rising tariff costs and margin pressures despite record revenue. The company reported Q3 fiscal 2025 net income of $8.1 million, or $0.62 per share, down from $13.1 million, or $0.73 per share, a year earlier. Pre-tax income fell to $10.7 million, a 13% decline, as $4 million in tariff-related expenses began to materialize after being mitigated in the first half of the year.

The results, while exceeding analyst expectations for earnings per share, fell short on revenue, which rose 2.7% to $122.7 million, below the $124 million forecast. CFO Voin Todorovic noted that the third quarter marked the first meaningful impact of tariffs and related costs, which are expected to persist through Q4 and into fiscal 2026. Gross margins contracted due to higher tariffs and inflationary pressures, while SG&A expenses rose 180 basis points, driven by increased labor and marketing costs.

Despite reaffirming full-year guidance, the stock’s sharp decline reflects investor concerns over the durability of profit margins amid ongoing trade tensions. The company cited a $12.5 million increase in inventory, partly due to tariff mitigation strategies, and remains on track for at least 60 new store openings. However, the drag from tariffs—projected to cost $11 million in the remainder of fiscal 2025—overshadowed growth in direct-to-consumer and commercial segments.