Welcome to the Build-A-Bear Workshop first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Gary Schnierow from Build-A-Bear Investor Relations. Please go ahead. Thank you. Good morning, everyone, and welcome to Build-A-Bear's first quarter 2026 earnings conference call. With us today are Sharon John, Build-A-Bear's Chief Executive Officer, Chris Hurt, our Chief Operating Officer and CEO elect, and Voin Todorovic, our Chief Financial Officer. During this call, we'll refer to forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factor section. We undertake no obligation to update any forward-looking statement. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our investor relations website. Now, I'll turn the call over to Sharon. Thank you, Gary. Good morning, everyone. I appreciate you joining us today for Build-A-Bear's first quarter fiscal 2026 earnings call. Before reviewing the business, as I'm nearing in on my last day as CEO of Build-A-Bear on June 11th, I wanted to briefly reiterate what a privilege it's been to serve this beloved company for 13 years. Build-A-Bear is an exceptional organization, envisioned by an inspiring founder, nurtured by a remarkable team of people who care deeply about the brand, working at our headquarters in the U.S. and the U.K., as well as our warehouses and retail locations around the world. It is supported by amazing partners across scores of functional areas, from factories to fulfillment. I've gotten to know many of these individuals over the years, and like them, have been moved by the indelible, memorable impact Build-A-Bear can have on people of all ages around the globe. Needless to say, this has been incredibly rewarding to have navigated the company through multiple challenges with this great team and to have been an integral part of its successful strategy, brand expansion, and revenue growth, and particularly over the last few years, the shareholder value that has been created since taking the position. One of the most important decisions, however, was to bring Chris Hurt on board as the COO in 2015. Over the past 11 years, Chris has proven his dedication to this company, as well as his resilience and ability to drive the business forward. As such, both the board and I believe he is ready to take the helm of Build-A-Bear and that he will continue to be a trusted partner to this outstanding leadership team and the company at large, just as he was during his leadership of our largest business division, global retail operations, during a period of significant profit improvement and later, while driving our global location expansion, as well as more recently with his oversight and process reinvention of our product and brand go-to-market strategy. With this successful track record, I have confidence that the company will be in excellent hands as he builds on our success while also taking the company to new heights and look forward to staying appropriately engaged from my continued role as a member of the Build-A-Bear board of directors. With that, I would like to formally congratulate Chris as he takes the helm, and I am enthusiastically looking forward to this next chapter. Chris? Thank you, Sharon, for the introduction and your leadership, as well as our partnership for more than a decade, which has helped the company operationally and financially evolve to achieve new levels of success. With the last five years of record results establishing the groundwork from which to drive the next phase of growth, I am proud to build on that foundation. Even though we've been pleased with advancements in our strategic initiatives, ranging from store openings to learnings and positive impacts from innovative product launches. As you may recall from last quarter, we know the likelihood of a slower start to fiscal 2026, and expected first quarter revenue to be approximately flat year-over-year, which was based on the traffic trends we were seeing through mid-March. As the quarter progressed, unfortunately, traffic and the subsequent results fell below our expectations. While we're continuing to assess and address the causal factors, both in store and related to the noted web demand challenges, we believe a portion of the softness and variability reflects a broader macro shift. Consumer sentiment data has been mixed but cautious, largely driven by geopolitical concerns and related price increases. Conversely, we had our best Valentine's Day in our North American history and a solid Easter performance. When consumers engaged with the brand in the quarter, both in store and online, it drove positive operating metrics, including higher dollars per transaction because of improvements in both units per transaction and price increases. This is directly related to our trend product launches, which are focused on the tween, teen, and adult segments of our business, and possibly a nod to the K economy. We also saw increase in our Birthday Treat Bear, the key item of our entry-level Pay Your Age program designed for kids This may reflect some trade-down behavior, but it remains important as this product serves as a key customer and loyalty program acquisition tool and could be a bellwether for future brand relevance. It shows that children continue to choose Build-A-Bear as an experience to celebrate their most special day. To give you a sense of the scale of this program, we sell more than 20,000 Birthday Treat Bears each week, which in turn drives guests to join our Bonus Club loyalty program. Importantly, even as we've seen some traffic challenges, we believe both of these consumer group insights, as well as the ongoing interest around visiting Build-A-Bear Workshop during key occasions like Valentine's, Easter, and birthdays, supports the continued underlying strength of the brand. All this led to mixed results for the first quarter. Specifically, we delivered $125 million in revenue, down 2% year-over-year. Still representing the second-best first quarter in the company's history and a 9% increase over 2024. Commercial segment sales grew 34%, partially offsetting a decline in net retail sales. While pre-tax income increased almost $24 million, with a $7 million tariff refund benefit related to 2025 is excluded, pre-tax income was almost $17 million. While the first quarter results were an important factor, they were not the only factor that we contemplated when looking at our revenue expectations for the remainder of the year. While we've ultimately chosen to reduce our full-year revenue guidance, we remain confident in certain initiatives that are slated for the back half, even as we are taking a more cautious view of the economic and geopolitical environment, traffic trends, and inflationary pressures. Importantly, this update reflects a disciplined approach to aligning our outlook with current visibility and does not change our strategy or our confidence in the long-term opportunity. As part of our updated outlook, we are also revising our pre-tax income guidance to reflect the favorable tariff adjustment offset by lower than expected operating performance. Voin will provide additional details in his commentary. Moving to the strategy. As we have shared over the past several years, we've been evolving and diversifying our business model to better leverage the power of the Build-A-Bear brand. Simultaneously, we have had a disciplined approach to strengthening the business operationally and financially. Today, Build-A-Bear is materially stronger than it was just a few years ago. For example, 2025 represented the largest revenue year in the company's history. We have meaningfully broadened the addressable market. We have opened 129 net new global locations over the past two years. Our retail fleet is essentially 100% profitable. We made substantial progress on systems investments, not only to improve efficiencies, but to be more effectively expand into new channels of distribution. Therefore, looking ahead, our focus is increasingly on further scaling the company. We expect the next phase of growth to be driven by the four strategic pillars we discussed last quarter, which are all expected to drive revenue. As a reminder, the four pillars are, one, drive organic growth. Two, location expansion. Three, wholesale and outbound brand licensing. Four, gifting and personalization. With the pillars of organic growth and location expansion continuing to leverage proven strategies and the newer revenue streams represented by the two other pillars. My intention is to highlight key advancement of select pillars each quarter to keep you informed of our strategic progress. Today, we will update you on our organic growth, international expansion, and wholesale. Organic growth is critical for the success of our omni-channel business. While both our stores and e-commerce businesses face tougher year-over-year comparisons and we saw softer-than-expected traffic and revenue in the first quarter, our stores continued to deliver top-tier return on invested capital. Although our e-commerce business has continued to face challenges, we remain dedicated to mitigating the disruption associated with Google-driven AI search changes from last year. We are currently working with external partners while also adding experienced industry talent to develop targeted initiatives to enhance performance across the changing AI search landscape to drive improvements in our omni-channel metrics, loyalty program, and personalized engagement. Based on a softer than expected quarter-to-date performance, combined with continued tough comparisons and macroeconomic challenges, we believe second quarter will likely be weaker than the first quarter, with easier comparisons and planned growth for the third and fourth quarters. With that in mind, we have plans in place to activate opportunities throughout the balance of the year, with some of these efforts based on seasonal needs and new initiatives. While we did not successfully anniversary some key stories and license launches in the first quarter, we did have some strategic wins that will help inform our go-forward plan. Specifically, select launches resonated with our older collector consumer, often referred to as kidults. These consumers tend to over-index on nostalgic concepts. As an example of this, our Fresh Frosted Animal Cookies collection, which harkens back to childhood for this segment, was a top performer for Q1, with most products selling through in less than two weeks. Our public relations approach to this collection topped PR Newswire's published list of March's top five press releases due to its ability to catch both eyeballs and AI agents. We are pipelining additional creative nostalgic offerings later this year, especially as we get closer to our 30th-anniversary kickoff, which I will discuss later. We also saw strength in our Promise Pets collection, which we recently relaunched with a new marketing campaign. As you may know, Promise Pets is one of Build-A-Bear's owned intellectual properties and is positioned as a product enabling kids to have an opportunity to demonstrate responsible pet ownership. Promise Pets, including the launch of our first Promise Pets Mini Beans collection, more than doubled sales year-over-year in the first quarter, and we believe that this collection will continue to attract the core kid consumer back into our workshops. Our pre-stuff collection of Mini Beans continued strong momentum in the first quarter, beating last year's results by almost 30%, selling nearly four million units since launch across all channels. We have continued to add to this collection with expansion in our own intellectual property, including the aforementioned Promise Pets and the Kabu characters based on our kawaii-inspired animated series, which now has over two million views, along with licensed Mini Beans such as Sanrio's Hello Kitty. We reopened our newly remodeled New York City FAO Schwarz store, making one of our best stores even better and refreshing it with a fun twist, a New York subway-themed experience, complete with a personalization station where guests can now create embroidered furry friends and personalized T-shirts right in the store. Thus far, overall guest response has driven positive results. Acknowledging the back half waiting of the year, looking ahead, we want to share a few fun highlights. In August, we will be introducing a new innovative Halloween collection to support what has become one of Build-A-Bear's biggest seasons, including exciting exclusive items. In October, we will kick off our year-long 30th anniversary celebration, commemorating three decades of memory-making experiences, including opening up our vault to relaunch some of our most popular nostalgic furry friends from the past for millions of guests and fans around the world. In December, we will launch a refreshed Harry Potter collection in conjunction with the premiere of a new HBO series. We also saw key advances in our second pillar through continued expansion of the brand into markets both domestically and internationally through a mix of our three business models, corporately managed, partner-operated, and franchise, which bring our signature workshop experience to more people in more places for more occasions. We are particularly focused on international expansion with our asset-light partner-operated model through a broad range of formats, from smaller shop-in-shops to larger tourist destinations, as well as on our multi-level ICON Park store that will open later this year. This Orlando corporately managed destination is planned to feature new innovations and experiences that are intended to enhance brand engagement while providing learnings for inclusion in other workshops. In the first quarter, we opened seven net new locations, making progress towards our goal of opening at least 50 this year. We added a new country in the quarter, the Philippines, bringing our international footprint to 37 countries, up from 19 just two years ago. As we've shared, Build-A-Bear re-entered Germany in the early part of fourth quarter through one of our existing European partners, Intersource. This has become our fastest expanding market, opening four standalone stores in the fourth quarter of last year with tremendous success and three more in the first quarter in Cologne, Hanover, and Münster. This marks an important step in our European growth strategy. We also continue to open stores in Italy, Colombia, Mexico, Latvia, and Norway. As is typical, we are constantly evolving our retail footprint, which is why we report our net new locations. For example, our Norway partner closed three shop-in-shop locations, replacing them with two full standalone locations, and our Italian partner closed a location to open a superior tourist location in Como. Shifting back to the U.S., we continue to expand our corporate store footprint. Two additional Build-A-Bear and Hello Kitty and Friends workshops we mentioned last quarter opened in Mall of America and American Dream. Early results are outpacing initial expectations to the light of enthusiastic Hello Kitty and Build-A-Bear fans of all ages. As a reminder, we believe our successful global expansion underscores the international scalability of the Build-A-Bear experience, reinforcing that a teddy bear hug is understood in every language. I also want to briefly touch base on wholesale, part of our third pillar of growth. The goal for wholesale is twofold, to, of course, increase revenue, but also to extend our brand presence to tens of thousands of new points of sale. Importantly, we view wholesale as complementary to our workshops with the intention of ultimately serving as a mechanism for awareness and trial, which should also increase brand affinity and drive traffic back to our stores for the full Build-A-Bear experience. In the first quarter, we expanded the team for this important strategy and opened a new Build-A-Bear showroom in Los Angeles to help serve our wholesale account base. This was partially based on the confidence from the recent launch into 1,500 Walmart locations featuring our popular Mini Beans collection. I look forward to updating you as we continue to execute on these strategic pillars. Before closing, as we've discussed, we anticipate 2026 will be a tale of two halves, with more challenging comparisons in the first half and easier comparisons, along with more opportunities in the back half of the year. Of note, this is Sharon's 52nd and last earnings call with us. I want to take another moment to thank Sharon for her truly exceptional leadership as our CEO. It's been a privilege to work for and learn from her over the past decade, and I know that our entire team shares this sentiment. Under Sharon's direction, Build-A-Bear has created significant shareholder value, and the team here has had a lot of fun in the process. We wish Sharon all the best in her next chapter. I'm excited to officially step into the CEO role in two weeks and continue to execute on our strategy to deliver consistently strong returns on invested capital that our shareholders expect from Build-A-Bear. With that, I'd like to turn over to our CFO, Voin Todorovic. Thank you, Chris, and good morning, everyone. Before sharing Q1 comments, I also want to express my deep gratitude for Sharon's exceptional leadership and partnership, which have been instrumental in driving our company's success and delivering value to our shareholders. Sharon, best of luck in your new endeavors. Now, I will move to discuss our quarterly performance. On the last call, we shared that we expected this quarter to be flat with the prior year, but it fell short of our expectations. Specifically, for the first quarter, total revenues were $125.3 million, a decrease of 2.4%, driven by a decline in our direct-to-consumer business, partially offset by the growth in our commercial segment. In the direct-to-consumer segment, transactions declined, primarily due to reduced store traffic. While average unit retail and units per transaction increased, domestic traffic was down 7%, which lagged national retail traffic trends in the U.S. Last year's first quarter benefited from robust traffic and strong demand for our new collections, especially among teens and adults. This year, however, with a few exceptions that Chris mentioned, we've seen a more pronounced drop in store visits from this demographic, impacting overall results. E-commerce demand declined 26.1% as web traffic continues to be soft. The commercial segment, which primarily represents wholesale revenues, continues to be the fastest-growing segment of our business. When combined with international franchise revenue, these segments rose 34.1%. Gross margin for the quarter was 63.8%, an increase of 700 basis points compared to last year. This reflects a 560-basis-point benefit from the $7 million tariff refund related to prior fiscal year costs, as well as 140 basis points driven by an increase in average unit retail, partially offset by the leverage of occupancy costs. SG&A expenses were $56.1 million, or 44.8% of total revenues, compared to 41.7% last year. Higher wage rates and investment in talent, followed by general inflationary pressures and timing of longer range investments, all contributed to the 310-basis-point increase. Our pre-tax income was $23.9 million, compared to $19.6 million last year. Excluding the 2025 tariff reversal, adjusted pre-tax income was $16.9 million. EPS totaled $1.45, reflecting higher pre-tax income and a reduced share count, partially offset by a higher tax rate. Adjusted EPS totaled $1.03. Turning to the balance sheet. At the first quarter end, our cash balance was $26.2 million, representing an $18.1 million decrease versus last year, mainly driven by tariff payments and elevated CapEx to support our strategic investments. Inventory at quarter end was $77.8 million, an increase of $5.6 million, mainly driven by tariffs embedded in our product costs, as well as our inventory levels required to support expected increases in sales activity in the back half of the year. The company remains comfortable with the level and composition of its inventory. We continue to deliver capital to shareholders as we returned $14.3 million to shareholders in the first quarter and $45.9 million over the past 12 months through dividends and share repurchases. We have repurchased almost 650,000 shares over the past 12 months, reducing our share count by 5%, and we have $47 million remaining under the board authorized $100 million share repurchase program. Second quarter to date, we have repurchased almost 90,000 additional shares. Turning to the outlook. We reduced our revenue guidance while increasing pre-tax income expectations. We continue to expect the addition of at least 50 net new experience locations, most of which will be operated by our international partners. We continue to expect our commercial segment revenue to grow by at least 20% for the year. We have lowered our revenue guidance to a $530 million-$550 million range, representing essentially flat to 4% growth year-over-year, down from our previous mid-single digit guidance due to first quarter and second quarter to date results coming in below our expectations. Taking a more conservative view for the total year outlook. Moving to our updated pre-tax income guidance. Specifically, we increased our pre-tax outlook to be in the range of $72 million-$78 million. This reflects $13 million of IEEPA tariffs we previously paid, partially offset by the impact from the reduction in our revenue guidance. Excluding the approximately $7 million of tariff refund related to prior year costs, we expect adjusted pre-tax income of $65 million-$71 million. This outlook continues to reflect the current Section 122 tariffs and related costs of approximately $10 million and assumes the 10% tariff rate for the rest of the fiscal year. The outlook also continues to reflect approximately $3 million in longer range investments for fiscal 2026. Given the current trends and the overall macroeconomic and geopolitical environment, we expect second quarter profitability to be down year-over-year. Looking forward, our focus is to execute our strategy and manage controllable factors to address these challenges and cost pressures driven by oil prices and tariff inflation. We continue to see opportunities to expand our global footprint and further develop our wholesale business. Even with our updated guidance, we expect 2026 to be one of the strongest years in Build-A-Bear's history, with the potential to deliver another year of record revenues, maintain solid pre-tax income margins, and continue returning capital to shareholders. With that, on behalf of Sharon, Chris, and myself, I would like to thank our store and warehouse associates, along with our corporate team members and partners, for their dedication to the Build-A-Bear brand as we continue to work toward delivering on our strategic mission to add a little bit more heart to life around the world. This concludes our prepared remarks. We will now turn the call back over to the operator for questions. Operator? Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Our first question comes from the line of Eric Beder with SCC Research. Please proceed. Hi. Hello. Okay. I see the impact of the $7 million. Is there going to be any further tariff impacts beyond what you said here from the remainder of the refund in Q2? Thanks, Eric, for the question. Let me step back and explain. The tariff situation has been very challenging since April of last year. It does create a lot of noise, especially it created a lot of noise last year. It's creating some noise this year. On a positive note, it's good that tariff rates are coming down, and it's beneficial to us, but at the same time, it creates this uncertainty from the forecasting and how the accounting works. I'll try to explain a little bit more detail to help some of that. When we think about what we shared in our previous guidance, we expected to have about $16 million of total tariff impact. This was about $5 million net increase versus $11 million that we experienced last year. Net $5 million. However, since Supreme Court overruled the tariff decision, we booked $13 million in expected refunds. That number, the way it's hitting our P&L, it's part of our GAAP guidance on a full year basis. However, we are calling out a couple of the components, $7 million of that $13 million relates to tariffs that were expensed in the prior fiscal year. That's why we are adjusting the numbers. As for modeling purposes, that's going to be a better comparison for 2027. The remaining $6 million of tariffs, it's for the inventory and product cost related to tariffs that was in inventory at the end of the year and early this year. As that inventory sells through, it's going to be offset with the $6 million. We are going to see a benefit versus our previous guidance of a $6 million that relates to this year. This $6 million is split up. There is a larger portion that's going to hit us in Q1 and smaller portion that's going to be released in Q2, again, just as it ties to inventory timing. Still, tariffs are going to be part of our forecast. As I mentioned earlier in our prepared remarks, we expect on a full year basis still impact of approximately $10 million that's related to tariff related costs that we continue to see, as well as our assumption is to have 10% from Section 122 tariffs that are in effect for the remainder of the fiscal year. Right. Okay. The $13 million refund, have you received any of it yet, and do you expect to receive it all in this year? We received a small portion of that. Again, we booked the receivable, and there are still some things that we'll have to work through, but again, that's going to come back to the treasury and people when they are going to pay us back. That $13 million is part of our results. When that cash is going to come in, it's a little bit outside of our control. Okay. Moving to Walmart, you ramped that up in Q4, came out in Q1. What are kind of the initial learnings from it, and why do you see it going kind of the rest of the year and longer term? Thank you. Thanks, Eric. As we've stated, we've had a relationship with Walmart in various forms over the past years. This was an actual trend pod placement in 1,500 locations to test the viability of some of our products and new collections such as our Micro Mini Beans. Also to be on trend, as we discussed, with blind bags, different packs of these Mini Beans collections. This is one of those areas where we're looking to expand our wholesale business. We're using this as an example of that. As I talked about, we also opened up a Los Angeles showroom to be able to have other accounts, to be able to view our new wholesale lines and grow this business. We've added to our team to do that. As you know, there's a long cycle on the wholesale business, so we're putting plans in place to grow this pillar of our strategy. Okay. Last question. Pokémon and the adult business, a lot of that drives itself through kind of new rollouts and new pieces. I know you're revamping the Pokémon outfits here. What should we think about the potential for either kind of-- or other licensed products going forward to help drive that kind of kidult market even more? Thank you. Sorry, Eric, there was a little bit of a bell in there. Were you talking about movies? Okay, one thing is that you're rolling out relaunching kind of Pokémon again, with the evolution starting, I believe today. I want to talk about how those kind of items drive the kidult market, going forward and kind of what do you see as kind of the focus on that in terms of potential new things going forward? Thank you. Thanks, Eric. Certainly license is an important part of our overall omni-channel business. Our licensed products tend more into the tween, teen, and adult in our, as we talk about, the kidult section of our business. We've had a long-standing partnership with licenses such as you say, as Pokémon, and those provide us opportunities to bring out new characters for these collectors. This is one of those go-forward licenses that we've had for several years and will continue to be an important part of our go-forward strategy with licensing. Another one of those is Sanrio. Sanrio characters, we also have exclusive designs in our stores, and the success of that is what led to us being able to open up our first Hello Kitty store in Los Angeles in Century City. Based on the success of that, as I mentioned in the script, we opened up a Hello Kitty and Friends workshop in Mall of America and also in American Dream. Those opened in the first quarter, and they have exceeded our expectations and have been well received by our Build-A-Bear guests and fans. Licensing is a part of our overall collection. It's an important part of the kidulting area that we have. We combine that to make sure that we have all consumer segments covered in our workshops and in our online business, because as I talked, we materially broadened our market size from kids to adults. Great. Thank you. The next question comes from the line of Chris Moore with CJS Securities. Please proceed. Good morning, guys. Thanks for taking a couple. Maybe start with gross margins. Gross margins were up 140 basis points in the quarter year-over-year, even without the $7 million tariff benefit. Can you just maybe talk about how you're looking at fiscal 2026 versus 2025 from a gross margin perspective without the tariff benefits in there? Yes. We are definitely pleased with the progress that we made from the gross margin perspective and even excluding the impact of tariffs, as you mentioned, 140 basis points improvement year-over-year. Some of that stuff, it's related also to timing. As you know, later in the year, as a result of higher tariff rates, we did some selective price increases. We are seeing some of the benefit in the first quarter as a result of anniversarying lower prices last year. Gross margin and some of the things that are within our control, it's something that we are very focused on. We believe in really managing every chain within our supply chain link and every link within our supply chain. This is an area that since I've been here, like Mantan's been here, like we got over like 1,000 basis points improvement in gross margin. We continue to find ways with our teams to be more efficient from the sourcing perspective. We are really focused on how we are managing promotions and things that are within our control. All these things add up. As we go through the year, it's going to be very important for us to continue to find the right pricing strategies and promotions to really help drive some of the traffic as well as to engage with our guests. Because even when people are coming to our stores, as we mentioned on the call, they continue to spend at higher levels, and our dollars per transactions continue to go up. Got it. Very helpful. You guys obviously have done a great job over the last five or six years. I am just trying to put a little more of kind of a framework around from a three to five-year perspective, financial targets and how that plays into location mix. Obviously, commercial is the highest growth, highest margins, highest ROC. I think at the end of the quarter, commercials was 27% of your locations. Is there a three to five-year target in terms of the percentage of pre-tax income that will come from commercial? Or just any help maybe you can give in terms of a bigger picture perspective on how we should be thinking about from a financial target perspective beyond 2026. Thank you for that question. As we step back and think strategically what our objectives are, it's really to continue to diversify our business streams. As we talked in our prepared remarks, we still believe there is big opportunity from the international store expansion. We are focused on the wholesale opportunities and some of the things that Chris talked about, four different pillars. We haven't provided specific targets or numbers for out years at this point. Again, what's out there and what we talked about in the past, when you look at some of those things and how they may be accretive from the overall revenue and profitability perspective, it can be modeled and you guys can make some assumptions based on some of those rates, what we are able to do. When we think about our store count and where we are, roughly half of our stores, like we have 350 locations in North America that we own and operate, but there is a lot more opportunities internationally. Chris mentioned that we are in about 37- 38 countries. That's still very small number because there is no reason that we can't have as many or more stores outside of U.S. than we have in our markets where we are currently operating. Again, when we think strategically, we are focused on some of those areas and these parts of diversification that could have significant addition to the top line, but at the same time, that are very accretive to our bottom line. I got it. I appreciate that. I will leave it there. Thank you very much. The next question comes from the line of Steve Silver with Argus Research. Please proceed. Thanks, operator, and thanks for taking my questions. I was hoping you guys could provide a little color around the shift in the store traffic trends. It's been quite a while that Build-A-Bear has talked about really with the store traffic outpacing national trends, really, as a destination in of itself beyond a regular mall visit. I was hoping you could provide just a little color on what kind of trends you saw in Q1, and maybe just with the store traffic taking a dip in Q1, whether that has provided any opportunity to maybe just reinvigorate a focus on in-store parties just to drive store traffic. Thanks, Steve. Appreciate the question. Yes, as we talked about, our traffic was tougher as a comparison in our first half in Q1. This is coming off five years of record results and in a double-digit increase in Q1 of last year. There are some tougher comparisons as we talked about going into this first quarter and second quarter with easier comparisons in the back half of the year. We have looked at the timing of the success of some of our key stories and licensed launches, and there's movement in those as we move through quarters based on movies or different opportunities that we have when we launch those in-store. We did see some areas where we could improve in those key stories and licensed launches. The macroeconomic environment also has played a part, we believe, in our traffic against national traffic there. We will say, though, Voin mentioned that when our guests are engaged and are in the store, we are seeing the Build-A-Bear experience being of high value to them. They're going through the full experience. Our dollar per transaction is up, and yes, part of that is price increases, but it's also units per transactions. We are seeing our guests come into the store and they are going and engaging through the full Build-A-Bear experience. Those are very good indicators of our brand health. When people are entering, they're engaged, they're having fun, and they're going through our entire process. Certainly, we're looking all areas of our business to drive traffic in our stores, and parties is certainly one of those. As we look forward, I talked about our birthdays and celebrations with our Pay Your Age Bear. Over 20,000 Pay Your Age Bears that we sell a week. Those are mainly for birthdays. That's an opportunity when those people come in, they do bring their family and they do bring other children with them, and they're able to have that experience there as well. We're looking at all different areas to drive traffic in the store and reverse this trend. Great. Thanks for the color. One more, if I may. Obviously, it's very dynamic and the macro environment is subject to change. I'm curious as to your thoughts in terms of what you're seeing in terms of the tourism environment, particularly in Florida as you plan to open the ICON Park store in the second half. Yeah. Thanks for that question. Historically, our locations, our workshops in tourist areas, certainly are some of our highest indexing locations and revenue areas. What we've seen and what we've heard, there's also this idea that people have booked their vacations, they've booked these ideas, and those are happening. As we talked about the emerging K economy, there are people that are trading down in some places. They may not be doing as big a vacation, they may be driving to a destination, such as Pigeon Forge, Tennessee, where we have one of our top-performing stores. They may be then going to an Orlando. Instead of spending seven days there, they're spending three or four days there. We're seeing and hearing those ideas. There's a lot of different variations in that tourist traffic. Again, we over-index in these tourist areas. Build-A-Bear has traditionally been an experience of memory-making. We're one of the ultimate souvenirs when you go on that destination. You remember where you were, you remember going to Build-A-Bear, and you remember making that incredible furry friend. For 50 years, Orlando is a top tourist destination and have 70 million tourists annually. We're very excited about our ICON Park location. This multi-level location is right in the heart of Orlando. It's centered in ICON Park, which is an entertainment district that has a zero price entry to go into this entertainment district, and we will be one of the anchors of this area. Great. Thanks so much for the additional color. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from the line of Keegan Cox with D.A. Davidson. Please proceed. Hi. Thanks. Just want to congratulate you, Sharon, on your time at Build-A-Bear, and good luck with future ventures. To Chris, excited to start working with you more closely. My question is on your commercial and franchise stores, specifically internationally, and how those are performing. Kind of wondering how those openings compared with internal expectations and what gives you confidence in the store opening pipeline for the rest of the year? Yeah. Thanks. Certainly, as we talked about, our commercial segment was up 34% in the first quarter, so those stores are performing very well. Remember, there's a lot of different sizes of formats in those locations. From shop-in-shops that are much smaller, those can sit inside of toy stores internationally or inside of other retail stores in those different countries. There's also standalone stores. Germany is what we talked about, where they're opening standalone stores. Those are larger formats that have the opportunity to have higher volume. We also talked about in Norway, they reduced their shop-in-shops but then opened two standalones because of the success that they were seeing in those locations. We talked about that we are looking for a 20% increase in this commercial segment. As Voin said, we are in 37 countries. There's a whole world out there that we believe the Build-A-Bear experience is scalable and it's recognizable, and that we have an opportunity to grow that business. Yeah. Keegan, just to add maybe a little bit more to that, because when you think about sales to these partners and through the commercial segment. Yeah those are done through the wholesale model. Even whenever we recognize revenue when we sell that product to them, there is usually some timing between when we sell product to them and when they sell the product to the final customer. Their performance and our performance may be a little bit out of sync. Yeah. As a reminder, we're working with partners in these other countries. There's a lot of variables that can happen on the timing of when these particular stores open. We certainly have plans in place, and we work with our partners on the design of those locations, the inventory of those locations, but they're less in our control of when they actually open. To that point, they're less risky because this is an asset-light model where they are putting in the capital to open those stores and then buying that inventory from us in a wholesale basis. Got it. A follow-up is, I kind of just want to parse out what drove the sales in the retail business this quarter. You kind of talked about traffic down, DPT and UPT up. I'm just wondering, what is conversion like both in-store and online? How big of a driver was online to the decline this quarter? Just trying to get a sense of that. I'll try to answer that. As I mentioned, the traffic was down 7%. I think our net retail sales were down about 5%. When you think about some of that stuff, Keegan, some of the product even that we had, some of the traffic last year when we talk about robust traffic last year and strong demand that we experienced in first quarter of 2025 for these licenses, people are coming specifically. There is some impact on conversion because you have that destination traffic. At the end of the day, traffic was the biggest challenge, partially offset by DPT increase. We continue, as Chris said, to focus on what we can do so when we get that traffic in the store, to do the best job we can of converting them, as well as upselling to drive sales and enhance the experience. Awesome. Thank you. Thank you. This concludes the question and answer session, and I'd like to turn the call back to Chris Hurt for closing remarks. Thank you for joining us today. We look forward to you joining us for our second quarter 2026 call. This concludes today's conference. 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