Despite lower gas prices and improving labor markets, consumer spending has failed to pick up. This stuffed toy maker recently warned about lower than expected sales during the holiday quarter.

About the Company
 
Founded in 1997 and headquartered in St. Louis, Build-A-Bear Workshop (BBW - Snapshot Report) is the only global company that provides an interactive make-your-own stuffed animal entertainment experience.
 
They IPO’d in 2004 and currently have more than 3,500 employees.
 
Disappointing Quarterly Results 
 
The company reported its Q3 financial results on October 30. Net sales for the quarter were $84.3 million, down from $85.6 million in the same quarter a year ago. The increase in comparable store sales and sales from the addition of new stores were more than offset by the negative impact of currency.
 
Adjusted net income was $0.10 per share, 55% short of the Zacks Consensus Estimate of $0.22 per share.
 
Lower Guidance for Fiscal 2015. 2016
 
Earlier this month, the company issued guidance for FY 2015 and 2016 and the fourth quarter 2015.  They expect that sales during the holiday quarter fell more than 10% and consolidated comparable sales, including e-commerce decreased 5.5%. Revenue guidance for 2015 was also short of the street consensus.
 
The Bottom Line

In addition to disappointing consumer spending and mall traffic, the retail space is witnessing a shift toward online shopping. This trend definitely hurts this toy maker which focuses on building toys in store.

The turnaround plan implemented by the company after many years of disappointing performance may work in the longer-term but as of now the outlook for this stock remains cloudy. The stock lost almost half of its value in 2015.

Further, the industry is currently ranked 141 out of 265 Zacks industries (bottom 47%), suggesting potential underperformance in the short-to-medium term.