Dave & Buster’s Entertainment Plummets After Cutting Revenue Guidance

Dave & Buster's

Dave & Buster’s (NASDAQ: PLAY) shares plunged 17% to $42.81 in after-hours trading on Tuesday, after the retailer announced downbeat fiscal 2019 first-quarter financial results.

Not only did the arcade and dining chain miss Wall Street expectations on both earnings and sales, but it also trimmed its sales guidance for the full year.

The stock, which ended the regular trading session up 1.9%, had lost more than 3.73% since the beginning of the year through its Tuesday’s closing price.

PLAY Earnings & Outlook

Dave & Buster’s reported earnings of $42.4 million, or $1.13 per share, in the first of quarter of 2019. In the same period last year, the company had earnings of $42.2 million, or $1.04 per share. On average, analysts were expecting Dave & Buster’s to post adjusted earnings of $1.15 per share in 1Q2019 based on figures compiled by FactSet.

Revenue, the company said, jumped from $332.2 million in the earlier-year period to $363.6 million. Same-store sales declined 0.3% due to an unfavorable shift in the timing of the Easter holiday. Analysts surveyed by FactSet had been calling for revenue of $372 million in the first quarter of 2019.

For the full year, Dave & Buster’s views revenue of between $1.365 billion to $1.390 billion, compared with its previous forecast for revenue of between $1.370 billion to $1.400 billion. The company also expects full-year net income of between $103 million to $113 million, versus its previous outlook for net income of between $105 million to $117 million.

Dave & Buster’s is also expecting full-year same-store sales of between down 1.5% to up 0.5%, below its previous forecast for a range of flat to up 1.5%.

Dave & Buster’s Executive Comments

“We delivered robust revenue and EPS growth and our new store performance remained strong, but comparable store sales were below expectations largely due to the Easter shift, which proved unfavorable this year. We are fully committed to executing on our four strategic priorities to strengthen the brand and remain focused on creating significant shareholder value over the long term,” said Brian Jenkins, Chief Executive Officer.

“Dave & Buster’s is a clear leader in its category with an excellent track record and a long runway for growth. I’m delighted to be joining this powerful brand and look forward to working with the team to drive future success,” said Scott Bowman, Chief Financial Officer.

Dave & Buster’s Entertainment Inc Profile

Dave & Buster’s Entertainment Inc owns and operates nearly a hundred entertainment and dining establishments in the United States where customers can eat, drink, play games, and watch televised sports.

The play division includes amusement, simulation, and video games, accounts for more than half of total company revenue. Food and beverage accounts for the rest. About one third of food and beverage revenue comes from alcoholic drinks, with the rest coming from food and nonalcoholic beverages.