As sales fall, US experiential retailer Build-a-Bear has signed a franchise expansion deal covering China, Hong Kong and Macau.

The new deal – with the local partner not yet revealed – will see the first store in Beijing in December. Hong Kong will follow with timing yet to be confirmed.

At the end of September, Build-a-Bear had 353 company-owned stores, including one at the Shanghai Disney Resort in China. International franchise stores numbered 90 in 11 countries.

With soft mall traffic in the US, both profit and sales fell in the third quarter for the company, which has relaunched its website and is planning to add more non-mall locations.

Profit came in at US$1.4 million for the three months to September 30, while total revenue fell to $82.4 million, down from $83.7 million a year earlier. Consolidated comparable sales decreased 7.4 per cent, while for e-commerce sales the drop was 18.2 per cent.

However, the company says its new web platform is expected to allow for improved performance in the holiday season and lead the way for increased omnichannel capabilities.

Apart from the web transition and unexpected impact from weather, it was estimated total revenue would have been slightly positive, says president/CEO Sharon Price John. Its lapse follows three consecutive years of building profit levels.

Build-A-Bear has been diversifying its portfolio beyond traditional stores, including a partnership with Carnival Cruise Line to introduce its retail/entertainment experience on its ships.