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Build-a-Bear Faces Potential 10-15% Tariff Hike on Plush Fabrics

  //stocks-investing.news-articles.net/content/202 .. otential-10-15-tariff-hike-on-plush-fabrics.html
  Published in Stocks and Investing on Sunday, December 14th 2025 at 1:08 GMT by The Motley Fool

Build‑a‑Bear Workshop Stock – Keep an Eye on Tariff
An in‑depth look at how U.S. tariff policy could reshape the stuffed‑animal retailer’s future

The latest article on The Motley Fool takes a close‑look at Build‑a‑Bear Workshop (ticker: BBW), a company that has long been a darling of the “personalized gift” market. The piece frames the stock’s current value proposition in the context of a looming tariff shift that could hit the company’s cost structure—and, by extension, its profitability—by the end of 2025.

1. A Quick Snapshot of Build‑a‑Bear

Build‑a‑Bear, founded in 1977, operates a network of 400+ stores across the United States, Canada, and the U.K. The business model is simple yet powerful: customers create their own plush toys in‑store, and the brand has leveraged a strong brand identity, omnichannel retailing, and a robust direct‑to‑consumer (DTC) presence to grow revenue year over year. In its most recent 2024 quarterly filing, BAW reported:

These numbers underscore a firm that is growing steadily, even as it navigates a challenging retail environment. Still, the margin compression the article highlights is an area of concern for investors.

2. The Tariff Twist

A key pillar of the article is a discussion of the U.S. Trade Administration’s proposed tariff changes that could take effect in the last quarter of 2025. Specifically, the proposed adjustment targets “imported soft plush fabrics” sourced largely from China—a primary supplier of Build‑a‑Bear’s raw materials. The tariff hike could range from 5 % to 15 % on the country’s plush goods, depending on the final tariff schedule. The article links to the U.S. International Trade Commission’s tariff database for readers who want to track the exact percentages for specific product codes.

Because Build‑a‑Bear’s supply chain is heavily reliant on low‑cost Chinese manufacturing, a 10‑percent tariff bump on raw materials could translate into a 3‑5 % increase in the cost of goods sold (COGS). This in turn would shave 1–2 percentage points off the already thin operating margin. The piece also notes that while the company has been using a “just‑in‑time” inventory strategy, it has begun negotiating multi‑year contracts with alternate suppliers in Vietnam and Indonesia to hedge against such tariff shocks.

3. Management’s Response

The article cites recent comments from CEO Jason L. Rogers in a 2025 earnings call. “We are in active discussions with our logistics partners to lock in volume discounts,” Rogers said. “We also plan to shift roughly 15 % of our plush inventory to lower‑tariff jurisdictions over the next two years.”

Moreover, the management team has announced a capital‑expenditure plan to upgrade its e‑commerce infrastructure. By expanding its DTC capabilities, BAW hopes to reduce reliance on in‑store sales—where higher per‑unit cost will have a more pronounced impact on profitability.

4. Competitive Landscape

The piece doesn’t shy away from the fact that Build‑a‑Bear faces stiff competition. Key rivals include Melissa & Doug, Gund, and Ty Inc. All of these firms are exploring similar supply‑chain diversifications. The article includes a comparative table of their latest financials:

The article highlights that while Gund has a slightly lower margin, its strong presence in Europe provides a counter‑balance to tariff pressures in the U.S.

5. Investor Take‑aways

Upside

• Resilient brand: Build‑a‑Bear’s “make‑it‑yourself” concept continues to resonate, especially as consumer spending shifts back toward experiential gifts.
• E‑commerce expansion: Strong online sales growth (10 % YoY) indicates a potentially higher margin channel for the firm.
• Supply‑chain hedging: New contracts with lower‑tariff suppliers could protect the company from sudden cost spikes.

Risk

• Tariff exposure: Even a modest increase in import duties could squeeze the company’s already tight margins.
• Competitive pressure: Rivals are also diversifying supply chains, which could erode Build‑a‑Bear’s competitive advantage.
• Retail uncertainty: The broader retail environment remains volatile; foot‑traffic can be unpredictable in the post‑pandemic era.

The Motley Fool’s piece recommends that investors keep a close eye on tariff schedules released by the U.S. Trade Administration and track Build‑a‑Bear’s quarterly earnings for any changes in gross‑margin trends. Additionally, the article points readers toward a TradeWatch subscription for real‑time tariff updates, linking to the U.S. Trade Representative’s official website.

6. Bottom Line

Build‑a‑Bear Workshop appears to be a company that is both resilient and vulnerable. Its core product—customized plush toys—has a proven track record, but its cost base is heavily exposed to foreign‑trade policy. Investors who want to capture the upside may find the stock attractive, provided they remain vigilant about tariff developments and the company’s supply‑chain strategies. For risk‑averse stakeholders, the article suggests a cautious approach until Build‑a‑Bear demonstrates tangible improvements in its operating margin and a clear mitigation path for tariff risk.

TL;DR: Build‑a‑Bear’s revenue and profitability are solid, but a potential tariff increase on plush fabrics could tighten margins. Management is hedging by shifting suppliers and boosting e‑commerce. Investors should monitor tariff schedules and earnings releases for signs of cost impact.