After a rugged 2017, entertainment and restaurant business operator Dave & Buster’s (PLAY) reported a beat on the consensus estimates of its top and bottom line results. Revenue soared 9.2% to $332.2 million, while earnings on a per share basis increased 6.1% to $1.04.
Dave and Buster’s also announced the retirement of CEO, Stephen King, effective end of second quarter, i.e. August 5, 2018. However, Mr. King will remain on the Board of Directors, and continue to serve as Chairman. Current Chief Financial Officer, Brian Jenkins will be promoted as new CEO. The company will conduct a national search for a new CFO until which Joe DeProspero, Vice President of Finance will assume the post of Chief Financial Officer on an interim basis.
“We continue to be pleased with our new store performance and are confident in our unit growth guidance for the year. Evolving the brand and improving comparable store performance is a priority for us. The upcoming launch of our proprietary virtual reality platform, and the new 100% Angus Butcher’s Blend burger are just two examples of improvements in our overall offering,” said Steve King, Chief Executive Officer.
Comparable sales, which shifted towards the negative territory during last year for the first time since the company went public, continued the trend and declined 4.9% for the quarter. This decline in comp store sales was driven by a 4.8% decrease in walk-in sales and a 6.4% drop in special events sales.
The rapidly growing restaurant base in new locations resulted in weak customer traffic throughout the industry. However, the company has been active in expanding its store base despite the difficult customer traffic faced by the industry. Moving against the trend, Dave & Buster’s opened six new stores in the quarter compared to four new stores a year ago.
In terms of store growth, Dave and Buster said it is on track to open 14 to 15 new stores in 2018, representing a 13% to 14% unit growth. At the top end of the range, the expected new store openings include 11 large, two small and two 17K format stores.
Looking forward, the company reaffirmed its outlook for fiscal 2018, with revenue in the range of $1.20 billion to $1.24 billion and earnings in the range of $95 million to $110 million. In line with last year’s declining trend, comparable store sales are anticipated to decrease in the low-to-mid single digits on a comparable 52-week basis.
The stock has had a poor run through the past one year, slumping 31%, while declining 12% since January. However, the stock soared about 15% post the earnings release on the huge beat on estimates.
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