Sharon Price John: I think that it’s important to understand, as we highlight in the script that the creation of content and entertainment for us, we created in the construct of primarily to elevate and integrate our characters and our story lines and our intellectual property with our marketing and create more engagement with our consumers. So as I noted, the original Glisten and the Merry Mission movie was based on our best selling product line that we’ve had as a part of Build-A-Bear for many, many years, including Glisten being the number one unit selling products for holiday time period since we launched it. So that’s over $150 million worth of products that we sold without any embellishment from a character evolution or character creation story arc.
So when we first envisioned this, we initiated it as a tool as to create a marketing catalyst. That marketing catalyst was expected to be more in a streaming or digital environment, which will be starting tomorrow, which is exciting. But Cinemark and Build-A-Bear created a very unique, very interesting relationship, because Cinemark and Build-A-Bear are co-located in numerous malls in numerous markets. And it’s a really natural interplay for kids to come to Build-A-Bear and then go to movies. And we do that a lot, even with our licensed film. And so it was the leveraging of that moment and that sort of proven tool to create stuffing events in some of the theaters where Build-A-Bear is just right down the hallway and create excitement, early excitement in the holiday business.
And so indeed, we have generated, as I noted, over 4 billion impressions leading into the key holiday shopping period. The sales of the products associated with the film are indeed very positive. But the key there is that — the objective is to raise the water level and get Build-A-Bear top of mind as, again, we turn the page into the highest potential opportunity, which is the big selling period of December for us. When you imagine the families coming into malls, visiting Santa, a lot of plans Build-A-Bear purchases, and it’s a big arc of opportunity when you think about it. So the paring it down is there were multiple big budget films from major film companies that came out last week, in the middle two weeks of November. And so that was just a combination of working with our partner on how we wanted to manage that, and we’re excited to go that nationwide this coming weekend, but then we will transfer to the digital side and drive that in-home view.
Operator: The next question is coming from Zach Miller of Yost Capital.
Zach Miller: So I wanted to go back to the guidance. I think the implied fourth quarter at the midpoint is something like little over 3% revenue growth. So can you just help us with what’s embedded in that from when we look at new store contribution versus same store sales?
Voin Todorovic: I mean, so first, thanks for the question, Zach. This is one of those things as we are providing the guidance. You are absolutely right at the midpoint of the new guidance range. It shows that like mid-3s from the total revenue growth perspective. We don’t specifically talk about comps, but definitely we have opened some stores, and there is a mix of these stores that we are opening. So definitely when we talk about partner operated locations when we sell to them on a wholesale basis, we are not getting the full retail revenue. So when you are looking at some of those sales, clearly, they are not going to grow at the same pace as your retail sales. So that’s one of the pieces. What we talked about also is that we are seeing some softness in our UK business.
So different geographies are going to be performing — at least they performed so far at a different pace. So we are contemplating some of that, as well as our e-comm business has been softer than what we have planned late in Q3 and like so far.
Zach Miller: And I guess without getting a specific number, I mean, generally, are you guys expecting positive comps in the fourth quarter, or does the guide contemplate negative comps there?
Voin Todorovic: I mean, just like if you think about low versus high end, like you can get to the different numbers. We are considering how some of the challenges from the macro environment, how [prominent] they were like especially late in October and it was a big shift. So we are just trying to be cautious. And as we still have some big weeks ahead of us and we just want to make sure that if these big weeks, if the traffic and things normalizes, you know like it’s one outcome versus if you know you have the opposite. So we are trying to kind of like walk that middle line and just based on the information that we have control things that are within our control and execute and stay focused on profitability, stay focused on things that are directly within our control. And I think that’s part of the reason we are able to grow even in the smaller numbers, still our profit and expand our profit, both from that margin as well as pretax margin perspective.
Sharon Price John: I think that Voin’s point about the controlling what we control, I think that, that is a great note here because that is what we have done to the best of our ability over the past few years that have resulted in continuous profitable growth for the company. And there is a cautious optimistic attitude that’s embedded in this guidance. And I think that given that there was a broad consumer pullback in the last two weeks of the quarter for us, in the last two weeks of October, that we did our best to pause and respond, which is what we do quite well. And now we’re seeing that momentum shift for us. But it really is just a matter of looking at the macro data and being as transparent as we can with the community.
Operator: The next question is coming from Michael Baker of D.A. Davidson.
Michael Baker: I figured I’d just ask one more follow-up on what you said about the dollars per transaction. You said it could be related to a slowdown in consumer but also could be related to the birthday treat situation. If I can push on that, I assume you have data showing that kind of stuff. So maybe I can ask it this way. Within the non-birthday sales, are you seeing anything in terms of lower dollars per transaction, would that be a function of people trading down to lower cost bears or maybe fewer attachments? Or any other way just to take out the impact of the birthday thing and figure out what you’re seeing in terms of dollars per transaction as because I think that’s sort of an important metric to gauge consumer health?
Voin Todorovic: So let me try to add a little bit more color to that, Michael. Birthday Treat Bear represents a big portion of our new customer acquisition and definitely dollar per transaction that we associated with that particular product, it’s lower than our blended rate of everything else that people are buying. So if that grows at a faster pace, that’s one thing that Sharon pointed out earlier, we like that because it’s profitable marketing. It’s marketing for profit in this case is we continue to drive more, get and acquire them and still make some money and extend the lifetime value of these guests. At the same time, that’s just one of the components that’s driving that dollar per transaction down. As I mentioned in my remarks, our transactions are up but the dollar per transaction is down.
Count Your Candles program and Birthday Bear is driving that down. The other piece is all the other transaction and that’s a little bit more challenging to figure out like, okay, it is really what the consumer confidence is and like what choices they are making. But definitely, when you are looking at some of those metrics, they are down year-over-year and we are seeing some change. But this is an area that we continue to stay focused, because driving more transactions, it’s really helping drive the overall — we want people to come to our stores. We are going to continue to drive that. And again, providing great experiences always the goal is to upsell more. But at the end of the day, I’d rather have people coming to a store even if they are spending a lower amount versus not coming to a store at all.
