experience” that comes with a Bear Bucks ®  gift card. We believe the hands-on and interactive nature of our store and high touch  service model result in guests forming an emotional connection with our brand. We believe there are opportunities in the future to leverage the  strength of the Build-A-Bear brand and generate incremental  revenue and profits given the high consumer recognition and strong  positioning as a trusted, high quality brand that is emotionally  connected with both kids and their parents.  Our company is in the midst of a multi-year turnaround plan that  builds on a strong base of profitable stores and focuses on four key  strategies: Build-A-Bear Workshop, Inc., a Delaware corporation, was formed  in 1997 and is primarily a specialty retailer offering a “make your  own stuffed animal” interactive retail-entertainment experience. As of December 28, 2013, we operated 323 company-owned retail  stores in the United States, Canada, the United Kingdom and Ireland,  including 252 traditional and 11 non-traditional Build-A-Bear  Workshop ®   stores in the United States and Canada and 58 traditional  and two non-traditional Build-A-Bear Workshop stores in the United Kingdom and Ireland. In addition, franchisees operated 86 Build-A-Bear Workshop stores in other international locations.  We conduct our operations through three reportable segments  consisting of retail, international franchising, and commercial. Our reportable segments are primarily determined by the types  of customers they serve and the types of products and services  that they offer. Each reportable segment may operate in many  geographic areas. Financial information related to our segments  and the geographic areas in which we operate is contained in “Item  7. Management’s Discussion and Analysis of Financial Condition  and Results of Operations.” See Note 16 – Segment Information to the  Consolidated Financial Statements for information regarding sales,  results of operations and identifiable assets of the Company by business segment and geographic area.  Currently, we primarily operate specialty retail stores that provide  a “make your own stuffed animal” interactive entertainment  experience in which our guests visit eight stuffed animal making  stations: Choose Me, Hear Me, Stuff Me, Stitch Me, Fluff Me, Dress  Me, Name Me, and Take Me Home ® . In our new store design, we have  added an additional Love Me station to our signature process. Our  retail concept is a unique combination of experience and product  and we are focused on enhancing our brand equity while meeting  the needs of consumers by offering premium products that meet  high quality standards, offer a relevant selection and are trend- right. We seek to provide outstanding guest service and experiences  across all channels and touch points including our stores, our Web  sites, our mobile sites and apps as well as traditional and social  media. Our store experience appeals to a broad range of age groups  and demographics, including children, teens, their parents and  grandparents. We have relatively balanced seasonality on a quarterly  basis and guests visit our stores for multiple reasons including  interactive family experiences, birthdays, parties and other milestone  occasion celebrations and to purchase gifts including the “gift of  Operating Strategies Segments and Geographic Areas Overview 2013 FORM 10-K 4  BUILD-A-BEAR WORKSHOP, INC.  1.  Optimize our real estate portfolio: In North America, we are  closing stores, primarily in multi-store markets where we can  transfer a portion of sales to other stores in the same markets.  Additionally, in conjunction with lease renewals, we will  strategically refresh and upgrade other stores with key features.  In 2013, we closed 37 stores and transferred approximately 20%  of sales from closed stores to other ongoing stores in the same  markets and remodeled 20 stores in a new design; 2.  Refine the consumer value equation: We continue to reposition  and integrate our marketing programs to focus on brand  building and new product launches while also reducing  discounts and price promotions. We believe that our brand  building initiatives drove approximately 70% of North America’s  5.7% annual comparable store sales increase in 2013 with  the balance coming from real estate optimization actions.  Additionally, in 2013, we reduced discounts in North America by 30%;  3.  Rationalize our expense structure: We are in the ongoing  process of value engineering our product designs and we have  initiated an end-to-end review of our supply chain to identify  opportunities to improve product margins and leverage  selling, general and administrative expenses. In 2013, we  expanded product margins and decreased selling, general and  administrative expenses. The expense savings resulted from  closed stores, renegotiation of terms with vendors and suppliers,  and adjustments to our store labor model to better align to guest  traffic patterns; and 4.  Build on our core competencies: We continue to focus on  improving our high touch retail service model and customizable  product offerings. We are also laying the groundwork to further  leverage the strength of the Build-A-Bear brand and generate  incremental revenue and profits. Description of Operations Part 1 ITEM 1. BUSINESS