Dave & Buster’s Entertainment (PLAY) reported a 2.5% decline in earnings for the third quarter due to an increase in operating costs despite lower provision for taxes. However, the results exceeded analysts’ expectations. The entertainment and dining venues operator narrowed its revenue guidance and lifted its net income outlook for the full year 2018.
Net income declined 2.5% to $11.9 million while earnings rose 3.4% to $0.30 per share on lower weighted average shares.
Total revenue grew 13% to $282.1 million. Revenue rose 15.4% on a comparable week basis. Across all stores, Food and Beverage revenues increased 10.3% while Amusement and Other revenues grew 14.8%.
Comparable store sales decreased 1.3% in the third quarter, the same as in the comparable period last year. The decline was due to a 0.7% decrease in walk-in sales and a 6.9% dip in special events sales. Comparable store sales in Amusements & Other rose 1.5% while that in Food & Beverage decreased 5%. Non-comparable store revenues soared 135.5%, also on a comparable week basis.
Looking ahead into the full year 2018, the company narrowed its revenue outlook to the range of $1.243 billion to $1.255 billion from the prior range of $1.230 billion to $1.255 billion. Net income guidance was lifted to the range of $106 million to $113 million from the prior estimate range of $101 million to $111 million.
Comparable store sales on a comparable 52-week basis are predicted to decrease in the low single-digit range. EBITDA outlook was tightened to the range of $268 million to $277 million from the prior range of $263 million to $277 million.
In fiscal 2018, the company said it is on track to open 15 new stores, representing 14% unit growth, at the top end of previous guidance. These store openings include 11 large, two small and two 17K format stores, and slightly skewed towards new markets for its brand. The company currently has 12 stores under construction.
For the fiscal year 2019, Dave & Buster’s expects high single-digit growth in revenue and mid-to-high single-digit growth in EBITDA. In fiscal 2019, the company expects to open 15 to 16 new locations and does not plan to renew the lease for one of its older stores, representing net unit growth of about 12%, consistent with its target of 10%-plus annual unit growth.
During the third quarter, the company opened one store in Harrisburg, Pennsylvania. During the fourth quarter, the retailer has already opened stores in Milford, Connecticut and Birmingham, Alabama, which is a new state for the company. Later this month, the company intends to open its final store for the year in Corpus Christi, Texas, which will be its second 17K format store.
Shares of Dave & Buster’s ended Tuesday’s regular session down 2.78% at $51.03 on the Nasdaq. In the after-hours trading, the stock inched down over 11% as the company guided revenue for the fiscal year 2019 below analysts view.