The Australian arm of customisable toy retailer Build-a-Bear Workshop has been placed into voluntary administration, hours after its listed parent company in the US reported a 7.5% drop in revenue and sluggish growth in international markets, partially blamed on the collapse of Toys ‘R’ Us and issues posed by Brexit.
Matt Sweeny and Gideon Rathner of Lowe Lippman were appointed as administrators of the company yesterday, which is a franchised entity of the US company that opened its first store in Bondi 14 years ago in 2004.
The company has 30 stores and other retail outlets across Australia, with 10 of those set to close over the next two weeks. Those stores include the ones at Logan Hyperdome, Kawana, Mt Ommaney, Werribee, Eastland, Garden City (WA), Carousel, Marion, Green Hills and Miranda.
The remaining stores will continue to trade normally, administrators say, and staff will continue to be paid normally. Gift cards will also continue to be honoured.
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The reasons for the company’s collapse include increased operating costs, such as wages and rent, and a decrease in shopping centre foot traffic. In a statement, company chief executive Gavin Port said Build-a-Bear Australia was working “diligently” on plans to combat those challenges.
“[We] are taking this action to restructure [Build-a-Bear’s] retail footprint for a more sustainable long-term future for the Build-a-Bear Workshop brand here in Australia,” he said.
“We have an incredibly dedicated team, and have an established brand that resonates with consumers of all ages. We want to thank our entire team and our valued customers and suppliers who have been great supporters of the brand over the last 14 years.”
“The company will continue to focus on bringing smiles and a unique experience to our guests.”
The administrators say they are currently conducting a review of the business, considering restructuring and realisation opportunities.
The collapse of the Australian arm comes after the US parent company issued its Q4 earnings report, revealing the business’ overall revenue was in decline. Though figures for the company’s Australian franchise were not broken out, revenue for the company’s European operations declined as much as 17%.
The company’s chief executive officer Sharon Price John said the company had run into a number of “unusual challenges”, including Brexit, GDPR laws, and the collapse of toy retailing giant Toys ‘R’ Us.
“Waning consumer confidence related to Brexit and new privacy laws that inhibited consumer communication in our largest international market, the United Kingdom, resulted in disappointing financial results for the year on a consolidated basis,” she said in a statement.
“Other impacts for the year included the full-year closure of our most profitable, multi-million-dollar retail store, the liquidation of Toys ‘R’ Us, the impact of new accounting standards and tax policies, and lower licensed product sales due to the significant reduction in family-centric movie properties.”
SmartCompany contacted Build-a-Bear Workshop Australia but did not receive a response prior to publication.