Greetings, and welcome to the Build A Bear Workshop Second Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms.
Allison Malkin of ICR, thank you. Please go ahead.
Good morning. Thank you for joining us today. With me are Sharon Price John, CEO and Voin Tovorovich, CFO. For today's call, Sharon will begin with a discussion of our We will then open the call to take your questions. We ask that you limit your questions to 1 question and one follow-up.
This way we can get to everyone's questions during this 1 hour call. Feel free to re queue if you have further questions. Members of the media who may be on our call today should contact us after this conference call with your questions. Please note this 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. 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 ks, we undertake no obligation to revise any forward looking statements. With that, I would now like to turn the call over to Sharon.
Thank you, Alison. Good morning, everyone, and thanks for joining us today to discuss our results For the Q2 of fiscal 2021, we're pleased to have delivered the highest profit in our history for our 2nd quarter, Coming on the hills of a record setting profit in our Q1. Accordingly, in fiscal 2021 thus far, we have achieved the highest profit for our first half in our company's nearly 25 year existence. We believe these results reflect momentum that has been building from the execution of our stated strategy, agility to adapt to a rapidly evolving environment and ability to accelerate key initiatives to drive sustained profitable growth, While recognizing that the business is also benefiting from pandemic related factors such as pent up demand and stimulus funds, I continue to be proud of our team across all areas, from corporate, where we continue to work from a virtual environment, To our store associates enthusiastically engaging with our guests and to those working in our warehouses to move inventory and fulfill orders, Our associates have remained nimble and dedicated to our mission to add a little more heart to life. While we remain appropriately Cautious given the uncertainty in course changes due to COVID-nineteen and its impact on consumer mobility and the supply chain, We began Q3 with continued strength.
We are excited about the opportunities that lie ahead to continue our favorable performance in the second quarter in the second half of the year, which is reflected in the upward revision in annual guidance that was announced this morning. The quarter's results were outstanding. Total revenues were $94,700,000 up 135% from 2020 and up almost 20% Our brick and mortar stores were predominantly temporarily closed last year, So the comparisons to 2019 is irrelevant showing the strength that is coming from this channel, including the benefit from our enhanced Omnichannel capabilities such as buy online and either ship from store or pickup in store or same day delivery with our relationship with Shipt. While e commerce demand was up by 159% over 2019, digital demand declined by 28% compared to fiscal 2020. While we had previously noted and anticipated a decline in our prior year's digital demand, which had been buoyed by temporary store closures and Online exclusive launches of some powerful licensed properties, the decrease was greater than expected, driven by disruptions in the supply chain and delayed Launches of select e commerce products.
2nd quarter gross profit margin improved by 53.2% of total revenue. Our higher margin reflects the benefit of ongoing lease negotiation, leverage of fixed occupancy expense and a triple digit expansion in merchandise margin compared to 2019. And we delivered pretax income of $9,500,000 The highest pretax profit in the 2nd quarter in our company's history, an improvement of over $20,000,000 from the loss we incurred in last year's Q2 and an increase of over $10,000,000 from the fiscal 2019 Q2. As we've previously shared, we remain focused on our strategic priorities for the year, which are centered on 3 key areas. 1st, further acceleration of our digital transformation, including content and entertainment initiatives 2nd, rapidly evolving our retail capabilities and experiences, including omni channel and significant expansion of our e commerce capacity And finally, leveraging our solid financial position, including a strong balance sheet to support our business and enable us to make transformation, we are intent on building our business with more effective use of technology and improved and enhanced fulfillment capabilities, While leveraging our expanded digital platform to inform and drive marketing and content efforts, we believe that the positive Multi year e commerce demand trajectory that we have achieved demonstrates that we are making progress in this area.
In the Q2, we continued to leverage gifting moments and occasions, including Mother's Day, Father's Day as well as Graduation And Just Because, we believe our investment in an expanded digital platform is enhancing our ability to diversify and grow consumer segment during these multi generational gifting opportunities. We continue to invest in platforms to expand our capability to fuel demand across all channels. We are driving positive sales results through new and enhanced use of cloud based technology that we initiated in 2020 and continue to refine. We are able to more effectively target new guests to drive initial transactions as well as connect with existing guests by providing personalized offerings based on individual buying and engagement habits. As we continue to focus on accelerating our digital capabilities, we recently invested in an additional loyalty suite with Salesforce, which we expect to allow us to further leverage our millions of active Bonus Club members to drive repeat visits and increase household lifetime value as well as add new members to the database.
We expect to implement this new technology by early next year. In addition, we continue to use digital media, content and entertainment as marketing and brand building tools to engage consumers and drive sales both online and in our stores. We look forward to the upcoming launch of our new live action feature film Honey Girl starring Grammy Award winning multi platinum artist, Ashanti and Digital Media star, Tessa Brooks. The movie, inspired by our historically successful Top selling Honey Girls product line is expected to be released in late October in conjunction with Sony Worldwide Pictures acquisition. We plan to leverage the buzz and interest to drive demand in Affinity for an updated range of merchandise as well as speed traffic to shop both online and in stores.
Our second initiative, which is to rapidly evolve our retail Our North American stores and our United Kingdom stores were predominantly open throughout 2021 Q2. While traffic continued to trail historical levels, we drove higher transaction values that were approximately 20% up across geographies compared to 2019. Our results included strong sales growth in many of our tourist locations, which has been a strategic priority in the evolution of our real estate portfolio. With this in mind, we recently opened several new stores In tourist locations, including ICON Park in Orlando, Pier Park in Panama City and in the River Center along Riverwalk in San Antonio. In addition, we continue to leverage the strong strategic optionality that we have maintained across our real estate portfolio with 70% of our leases having a natural lease event in the next 3 years to give us flexibility to optimize our corporately managed locations.
Our goal is to maintain a strong store base that contributes to our overarching strategic objectives, including supporting our expanded omni channel capabilities and creating memorable relationships with our guests. We also have seen some stability return to our 3rd party retail model, which includes workshop at Great Wolf Lodge, Beaches Family Resort and Carnival Cruise Line, which recently began a staggered return to operation. The 3rd party retail model allows us to expand in a cost efficient manner with each Partner typically funding the capital investment to open their locations, while also managing the operations of the store, inventory and staffing. As for our 3rd priority regarding the company's financial health, we ended the quarter in a position of strength with a strong balance sheet and cash nearly doubled from a year ago. As it relates to our cash and strategic priorities, We continue to evaluate initiatives that would enable a more rapid acceleration of our key programs and investment opportunities to grow our company.
At this time, we have elected to maintain flexibility and optionality as we navigate newly emerging headwinds from an ongoing evolving pandemic. As we look to the back half of the year, we are planning the annual celebration of National Teddy Bear Day in September with an event that will last the entire month and feature a sweepstakes that is designed to further add to our contact database and drive interest in our new product lines. Following that, we have an expanded Halloween collection, which we expect to build on the success we saw last year, And the 4th quarter brings the highest demand of the year for gift giving products for all of our consumer segments. We have a positive outlook for the back half of the year, but do want to voice some caution given external macro variables such as inflationary wage pressure and supply chain disruptions. We continue to closely monitor these issues and have made proactive moves, including accelerating inventory purchases, As we look forward to building on the success that we are seeing in 2021 in order to achieve our goal of sustained profitable growth, We remained focused on our stated strategy and key initiatives.
We expect our growth to be fueled by several factors, including Accelerating and expanding our digital transformation, giving us additional capability and enabling our company to more aggressively A broadened consumer base more efficiently our best in class license relationships that drive interest from engaged affinity segments Our ability to leverage a high level of lease optionality and multiple store expansion opportunities, including diverse formats and models such as our 3rd party retail option, our ability to leverage the emotional connection that consumers have for our brand, including the use of content and entertainment such as the Honey Girls movie coming in October to keep interest high with consumers and finally, a solid financial position with a strong balance sheet to support incremental growth as we move forward. In closing, we are optimistic about our business trends with continued strength in our 3rd party Q3 to date as I noted earlier. We have again raised our profit guidance and look forward to fiscal 2021 year end. We are pleased with the progress that we have made and look forward to continuing to leverage our strong brand appeal to our broad and diverse base of consumers across multiple channels. Now let me turn the call over to Voin to review our financial results in more detail.
Thanks, Erin, and good morning, everyone. We are very pleased to continue to build momentum as we delivered 2nd quarter profit at the highest level in our history. Combined with our record breaking Q1, we were able to report the most profitable 1st 6 months ever for our company as well. Solar revenues, gross profit margin and operating income showed solid improvement compared to the pre pandemic levels the 2019 Q2, further demonstrating the validity of our strategy supported by the focused execution of key initiatives by our team. As Sharon noted, as we look at the balance of the year, we are appropriately cautious given the uncertain path of COVID-nineteen and potential headwinds stemming from supply chain disruptions.
However, our strong first half performance and continuing positive trends give us the confidence to further increase our guidance for total revenues and EBITDA for the 2021 fiscal year, which I will discuss in more detail in just a minute. First, Let me give more detail for our Q2 results, which include comparisons to both the 2020 2019 2nd quarters due to temporary COVID related store closures last year. Total revenues were $94,700,000 135% increase compared to the Q2 of fiscal 2020 and a 19.6% increase compared to 2019. We are pleased to see the strong growth partially fueled by pandemic related factors, but we believe also reflects the ongoing affinity that customers have for our brand and their desire to engage in hands on and personal experiences. Our sales growth was primarily driven by an increase in average transaction value, which grew over 20% in North America Compared to the 2019 Q2 and reached the highest level for a second quarter across geographies.
Gross profit margin of 53.2% was significantly higher than the prior year's results of 18.7% and 44.1% in the Q2 of fiscal 2020 fiscal 2019 respectively. The strong growth in total revenues allowed us to leverage fixed occupancy expense, which benefited from renegotiated lease terms which started to take effect in 2020. Our merchandise margin also expanded Driven by both lower discounting and higher markup rates on certain products as we selectively raise prices to mitigate ongoing supply chain and inflationary pressures that we anticipate being headwinds for the foreseeable future. SG and A dollars increased compared to both the 2020 2019 2nd quarters. However, SG and A as a percent of total revenues improved to 43.2% versus 53.3% last year and 45.1% in 2019.
The increase in SG and A dollars compared to prior years was driven by higher store labor expenses given the reopening of locations and expanded operating hours. We also recorded full corporate salaries this year as opposed to fiscal 2020 when pandemic related cost containment initiatives included temporary wage reductions. In addition, The change in SG and A reflects an increase in variable costs driven by sales growth initiatives inclusive of higher marketing spend and funding of performance incentive programs. Notably, we delivered the highest 2nd quarter pretax profit in our company's nearly 25 year history of $9,500,000 This compares to a pretax loss of $14,000,000 in the prior year's quarter and to a pretax loss of 700 and 42,000 in the Q2 of fiscal 2019. Accordingly, with record breaking first and second quarter profit, We have had a very successful first half.
For the 1st 6 months of fiscal 2021, total revenues were $186,400,000 an increase of 114% compared to the 1st 6 months of fiscal 2020 and 14% versus the 1st 6 months of 2019. Pretax income was $22,700,000 An improvement of over $50,000,000 from the pretax loss recorded in the 1st 6 months of fiscal 2020 And $21,000,000 increase compared to the 1st 6 months of fiscal 2019. And EBITDA was $28,800,000 an increase of $55,300,000 compared to the 1st 6 months of fiscal 2020 and an increase of $19,000,000 compared to the 1st 6 months of fiscal 2019. Turning to the balance sheet. We ended the 2nd quarter with cash and cash equivalents of $51,100,000 with no borrowings on our credit facility.
Our cash balance is somewhat inflated from timing of inventory receipts and capital expenditures. At quarter end, inventory was down $8,000,000 a reduction of 14.4% from last year's 2nd quarter. We have proactively accelerated the timing of our placements and increased quantities for core products And Evergreen Merchandise Collections to support our business momentum and as part of our efforts to mitigate ongoing supply chain disruptions. Assuming no additional material COVID impact either in factories, logistics, Consumer sentiment or store operations, we are targeting to have increased inventory levels compared to the fiscal year ends of both 2020 2019 to meet our anticipated business needs. In addition, our use of capital will continue to focus on investments supporting initiatives that are expected to generate a expect to invest close to $10,000,000 on a full year basis, again, assuming there are no additional significant COVID related disruptions or delays in availability of goods and services.
Also, as our performance expectations improve, we are anticipating making cash tax payments this Based on our strong second quarter performance and positive trends, we are raising our guidance For total revenues and EBITDA for fiscal 2021 as compared to what we shared in conjunction with our Q1 earnings release on May 26. Specifically, we currently expect total revenues to be in the range of $375,000,000 to $385,000,000 which represents an increase from our previous guidance for fiscal 2021 total revenues to exceed fiscal 2019 total revenues of 300 $38,500,000 and EBITDA to be in the range of $45,000,000 to $15,000,000 an increase from our previous expectation for EBITDA in the range of $28,000,000 to $32,000,000 In addition, we continue to expect depreciation and amortization in the range of $13,000,000 to $14,000,000 As it relates to our Q3, as noted in this morning's press release, sales trends have remained strong and we expect Total revenues to exceed both 2020 2019 levels. That growth is coming from the recapture of sales in our physical stores, which as I have noted are partially closed last year. We expect our 3rd quarter e commerce demand to remain flat with last year's 3rd quarter, while still representing a triple digit increase over 2019.
We expect to have higher overall expenses driven in part by higher payroll and marketing costs resulting from temporary reductions in last year's Q3 to mitigate COVID closings. The Q3 is generally our smallest quarter of the year and is historically typical. We currently expect to have a pretax loss in the period. Our full year guidance assumes No additional significant negative impact from the pandemic such as prolonged store closures due to government mandates. Please keep in mind that while we expect to see annualized savings from expense reduction initiatives implemented in fiscal 2020, Our guidance includes the impact of higher payroll and marketing expenses to support the current business and drive growth.
Accordingly, our guidance also reflects funding of performance based incentive programs as well as projections on inflationary pressures
from
product, freight and minimum wage increases. In closing, we are pleased With our record selling 1st 6 months and our momentum so far in the Q3, we remain focused on accelerating the execution of key strategic initiatives and we are confident that we are in a position to achieve our goal of long term Sustained profitable growth. This concludes our prepared remarks, and we will now turn the call back over to the operator for questions. Operator?
Thank you. The floor is now open for questions. Our first question is coming from Eric Beder of SCC Research. Please go ahead.
Good morning. Congratulations on a great quarter.
Thank you, Eric.
Thank you, Eric.
When you look at I'm going to ask it differently. So you've obviously picked up a lot of customers here and there was tremendous pent up demand from COVID. So how do you feel about converting that first time customer into a many time customer going forward? And how do you look upon that as an opportunity here?
Yes. Thank you for the question, Eric. You are correct. As we noted in the prepared remarks, we do believe that this is a combination Factors that are driving this growth, yes, there is some impact of the pent up demand and stimulus fund, But we do believe that some of the fundamental changes that we've made in the business from Infrastructure, particularly IT, technology, e commerce, opening up our ability to ship from stores, Much of what was implemented over the course of years and interestingly, we flipped the switch on The final portions of some of this was warehouse management system and the new sales force relationship in February of 2020. All of that has enabled us to manage this in a very interesting way where It's almost as if it's synergistic.
So yes, people are coming back into our stores, but we have Sure. And enhance that relationship with them, and new opportunities, whether it's journey, or Loyalty program to reengage them to drive that lifetime value. Now to answer your specific question with all of that background, It depends is the answer. Some of these more traditional consumers that we have that might be in the 60% that are 12 and under, we will use a lot of our traditional ways and know what they shopped for before, Why they got in why they came into Build A Bear for the first time? How do we engage with them based on, what property they may have purchased or when they're Perhaps even if they provided this information through our loyalty data when their next birthday is.
On the adult side, the 12 plus, the 40% that are Teens, tweens and adults that are shopping us, that really depends on some of the affinity products. If they're, for example, a Pokemon plan, It's highly likely that they will reengage with us. There's a lot of data about the collectability of that particular line. If they are engaging with us in some of these new gifting programs, adult to adult gifting, we're still learning And evolving on how we then get them to engage with us in the next gifting opportunity. Working to shift in the mindset Build A Bear as an optional gift, for a wide variety of reasons, and that's a lot of our, Internet That we're making to push Build A Bear as an option up as competitive sort of in a competitive realm of other Natural gifting opportunities.
Interestingly, this past year, because people were separated, Build A Bear has served as a, as I mentioned in the remarks, a just because gift, Just people wanting to reach out and send a little bit of heart to someone and let them know that they're thinking about them. And we believe that, that is a big opportunity for us going forward.
Great. And just a follow-up here. So the 3rd party business, national franchising, Those seem to be a little bit more of a lagging indicator than what you're seeing at the stores. Should we be thinking about going forward Those opportunities are going to become much more, if COVID stays the way it is, much more something more aggressively to pursue As they start to ramp up once again?
Yes. And it's a bit bifurcated, Eric. Great Wolf Lodge is Tracking not that differently from the rest of our fleet, and Carnival Cruise Lines for obvious reasons. It's just now Sort of getting the staggered launch up and running. But COVID aside, the 3rd party retail opportunity is, we believe quite advantageous for us on a number of fronts, not the least of which Is the lower capital required to roll out new locations and create new guests The new memories, the new loyalty members, as we as new the next generation gets to experience Build A Bear.
So we have a few things that we are working on all the time on how do we take this opportunity and drive that low capital expansion of our experience in the right types of locations which tend to be tourist destination.
Great. Good luck to the back half. Thanks so much. Thanks.
Thank you. Our Next question is coming from David Cannon of Cannon Wealth Management. Please go ahead.
Good morning. Congratulations. Excellent quarter.
Thank you, David.
Thank you, David.
So a couple of questions. First, For the back half of the year and for next fiscal year, do we have any transformational initiatives? So far, you guys, as I see it, have done a better job of executing On things that we've done all along, is there anything new? And what I'm referring to would be the enhanced website that you've alluded to in the past that incorporates virtual reality Components, potentially getting into the pet gifting category and or crypto NFTs Or if there's something that I'm missing, if you could call that out.
Thanks so much, David. Appreciate Question. We have been very focused on 3 initiatives As we've highlighted on driving our strategy, in the first initiative is acceleration of the digital transformation. And as Part of that, yes, we're always looking for ways to engage with consumers in new and different ways and advance the Interconnectivity and engagement and experience level, even on e com, because that's It's really the core of who we believe we are as a brand since we're often getting credit for reinventing experience retail almost 25 years ago. So With that in mind, as a matter of fact, we actually are in the soft launch of the Bear Builder 3 d, which we did announce It was expected to launch this year on our ICR, I believe in an ICR deck earlier this fiscal year.
And feel free to go online right now. We're soft launching to make sure that we pick up any of these. It's really an advanced Technology with a lot of great partners. So we're working through it to make sure that it is seamless and exciting and fun. If you go online, you can find the Bear Builder 3 d on your laptop, desktop, on the upper right hand corner.
And if you're on your phone, you'll have to click sorry for the e com language on hamburger to get it to pull up. So feel free to experience it and let me know what you think. On the other front of Continuing to evolve and do things transformational, this last year, 2020 was the year for us to have buy online, ship in store, buy online, pick up in store, buy online, and have it delivered in the same day. So they're all a part of the broadened approach to initiatives where we can meet the consumer Where they want to be met and where we can meet the needs of a broader range of consumers. We believe that Build A Bear being multi generational now Has the opportunity to engage with a much, much broader addressable market for many more occasions and All of these different mechanisms, we believe are allowing us to be able to do that more efficiently and effectively.
Okay. So really the only thing that is new in term that potentially transformational is the 3 d Build A Bear, which is being launched currently. You're doing a soft launch right now. There's nothing else potentially transformative like Another thing I would mention is a new third large national chain for 3rd party retail, I would view that as Transformational. But you don't have anything else like pets or crypto pets, Crypto plus NFTs, none of that is currently in the pipeline for this year or next year.
So David, again, the 3rd party, we have noted, we agree with you. We believe that's very Important to us, I just noted on the remarks that we are always looking for good partners. And We believe that there is continued opportunity and that is a very efficient model for us. From a transformational We're very excited to be able to launch brand new movie with Sony, that is highlighting one of our own intellectual properties called Honey Girls with Multiple Grammy Award winning artists, Grammy Music, we believe that, that has an opportunity and the continued relationship with our multidimensional, multiyear To be transformational as well and pushing into all of our other entertainment and content efforts and NFTs as we noted on the last Call, it is something that we are looking at. And the assessment we're working with on the assessment of the validity of that on and how we would execute that within the Build A Bear property.
Do you have an aversion to making toys for pets? Is that something that you think It is not effective use of your time or is it something that you're interested in?
David, I'm so glad that you asked that question as well. I apologize, please, for not answering in In the previous response, we actually are launching a new pet line in conjunction with relationship, we're not privy to speak about it in detail yet. Thank you.
Okay. Glad to hear that. Good luck and Look forward to chatting on the next call.
Thank you. Thank you. Our next question is coming from Greg Cohen of Rambleside Holdings. Please go ahead.
Hi, Sharon. Congrats on a great quarter.
Thank you. Really appreciate it.
I just have one question on capital allocation. By my math, our enterprise value It is roughly $250,000,000 and the guidance actually Seems like it might be conservative given the Q4 holiday season being a very strong one for this company. And so given the valuation, it could be as low as 4 times EBITDA, and we have a significant cash balance, no debt. And it seems like our CapEx is very light. So my question is, do we have any plans To return capital to shareholders in the form of buybacks or anything that would be accretive to earnings per share?
Yes, I'll start and going to anything if you'd like. Yes, we agree and clearly we're Twice cash balances we were last year. We also pointed out that some of that is moment in time We have a few things that we're going to have to pay to bring that cash balance down with the payment of inventory that's So moving in some changes, some pressures on the cash in the back half as well as some of our delayed rent payments, but for the most part, absolutely understand your point. We, as always, Work with our Board of Directors to assess proper capital allocation and look at different options on Many of the things that you've pointed out and as you know, we have in the past implemented buyback programs and do believe in those types of programs to return shareholder value. And I think though one of the notes that I had included in the prepared remarks, As of this moment with some of the additional wrap up of new COVID issues, we do want to stay Very fiscally responsible until we understand exactly what is what's In the future, what the future holds and I think that we all have learned if we I think we can agree That is very difficult to predict how these types of things unfold.
And we All of our recommendations and all of our current even our changes in our guidance are isolating any Ongoing or acute COVID impact. So we really want to stay Prudent on that front. And I don't know, Juan, if there's anything you want to add.
I think you covered it really well.
Okay, great. That's helpful. And I guess kind of the second question as a follow-up to that would be, Obviously, the stock price is 2 components, right? It's Earnings per share, EBITDA per share and obviously the multiple that would be applied to that. And I think one of the reasons why we trade at such a low multiple, I mean, This is frankly one of the cheapest stocks, I think, in the entire stock market.
And when you layer on The significant growth that we're seeing, the significant profitability, the significant margin improvement and all These good factors, it's actually shocking that we're trading at such a cheap price. And I guess My question is why do you think that is? I think one of the other callers alluded to the fact that We haven't made at least any public announcements in some of the more Progressive forward thinking, digital monetization tools such as NFTs, which you're seeing in similar consumer brands, obviously, Playboy being 1, Funko being another. So that's just my personal view because otherwise I can't figure out why we're trading at such cheap multiples. Curious how what would you think about why the market is sort of undervaluing the company or misunderstanding The significant value capture opportunity at these levels.
Thanks.
Yes. Again, I'll start with this and open it up. 1st, I think that the market looks for consistency and deliverables. And we I've had a goal for many years of driving sustained profitable growth. And I think a lot of companies have been somewhat challenged.
We've had some issues with that over the past few years that you know whether that's with the Significant contraction of traffic to mall based retailers. And we've had to go through this really dramatic transition of our retail evolution, e commerce evolution, and we had to rebuild our Our infrastructure to get to this particular point. And now you're starting to see that consistency, And you're also starting to see some revenue growth, which I know that, that has been something that the investors have been looking for. So We're really excited about that as we believe we're expanding the potential addressable market as I shared with you and also being able to get That addressable market that has a longer lifetime value, so there's multiple fronts and levers. The second piece of that on the multiple front, We believe that our evolution to be more of a branded intellectual Property company versus just a retailer should be able to drive us toward A higher multiple range, if you look at life companies, that is the endeavor into a lot of the entertainment and content types of business, where there's a different approach on how intellectual property is valued.
So, I think we're just We have to show that consistency, and we need to be able to provide some proof points of this hypothesis. Even though we believe we've shown some proof points in the hypothesis, I believe that the consistency on top of that would likely provide Some data that perhaps could provide a little more confidence from the investment community on both front
Yes. So great question. And again, over the last several years, we have done a lot from the transformation perspective and diversification, Especially as we think about our web business and like when Sharon and I joined the company, our web business was like in low single digits As a percentage of total revenue, now our web demand is a significant portion. So even when we are talking about diversifications of revenue channels, significant change. When we think about 3rd party revenue and getting that asset light model with different multiple, different valuation, definitely, That's been one big area of focus for us.
As Sharon talked earlier about entertainment, all these different revenue streams Do have different multiples, but again, that's still the biggest chunk of our revenue, it's coming from the Retail stores, and that's probably partially a reason for some of those valuations. But we are working and we are, as we mentioned, exploring some of those Opportunities that were presented, and we are looking forward to be sharing more information when at the appropriate time. But we definitely are looking for ways to expand and really create some of that momentum in these different channels. And as you pointed out, over the last few years, like our CapEx has been managed, we've been managing our expenses, we are seeing this revenue growth from different And our flow through to the bottom line has been strong, and we definitely expect some of that to be realized by the investment community In months years to come.
Okay. Thank you.
Thank you. We do have one follow-up question coming from David Cannon of Cannon Wealth Management. Please proceed with
Yes. Some retailers are talking more about, And you alluded to this, being an omnichannel company and giving people product the way they want it, whether it's buy online, pick up in Store visiting the store, ecom or and this is the new thing that I wanted you to add some color to Is same day delivery. It seems like the market is starting to figure out that In a way, brick and mortar retailers actually have an advantage over a pure play e commerce company using the brick and mortar store essentially As a DC or warehouse, if you will, and being able to deliver to people same day, can you talk a little bit about your strategy thereof? I saw an announcement with Shipt. Are there other partners?
And how specifically are you going to market that? And is that an advantage for you?
So David, yes, you are correct. That's the initiative we started late last year. I think we signed a deal in December of 20 2020, definitely that was an extension of that buy online, ship from store, pickup in store. And as Sharon talked about earlier, Expanding our capabilities and providing our guests with whichever option they would like to engage with the brand. This is one of those areas where we believe it's a big opportunity, especially around holidays when we do have compressed Delivery times and time windows shipping from in the past one focal point of our Ohio warehouse.
So definitely, as you get closer to holidays, this provides us with tremendous optionality to provide that product And be part of the consideration set as guests are placed These orders, so this last mile program and things that you know, that's kind of like the buzz in the industry is definitely one of those big areas that we are Spending a lot of time and energy. We believe it's a big opportunity and it's still relatively new, But it's definitely one of those things that's differentiating us, providing that experience as quickly as possible to our guests. It's critical.
I think the this dovetails nicely, David, into our discussion about gifting as well. So the gifting side of this for our 2 largest holidays, whether that's Christmas or Valentine, Those last few days are important to consumers, and that same day delivery can be very critical for us to Sales opportunity in the final moments of providing a gift for loved one.
Have you specifically marketed that service up until this point? And if not, do you see yourselves Putting some dollars behind that initiative.
We have marketed it and we expect to continue to do so, especially at the last days of holiday Because we believe there's a big opportunity there for to meet, which would have otherwise been lost sales.
Okay. Just out of curiosity, do you agree in the past being a brick and mortar retailer was perceived as an arbitrage that Perhaps in the marketplace, people are beginning to rethink it and possibly perceive brick and mortar retailers that have BOPIS, ecom, as well as same day delivery as potentially disrupting pure play ecom companies. Just curious of your thoughts on that.
I don't want to speak with everyone else's belief, but I'll certainly tell you that we have always believed That well run profitable retail locations are an asset, not an anchor for Build A Bear. It's a virtuous circle that we're creating in a relationship with the consumer, where they create a really memorable experience And have great brand affinity for us. It's proven over time. Our affinity numbers are as big as some of the best known kids companies today, And it's coming from that experience that they have. And now we've evolved those 300 some odd locations into many warehouses, as you say, And small delivery pool points.
And yes, that is a tremendous asset for us.
Thank you. Ladies and gentlemen, at this time, I'd like to turn the floor back over to management for closing comments.
Thanks for everyone joining us today. We appreciate it and we look forward to seeing everyone on our 3rd quarter call.
Ladies and gentlemen, thank you for your participation and interest in