Dave & Buster's Falls On Poor Guidance, Comps

Shares of Dave & Buster's Entertainment, Inc. PLAY traded down more than 6 percent in Tuesday’s after-hours session, following the company’s Q2 results. While EPS of $0.50 and revenue of $244.3 million (up 12.4 percent year-over-year) beat estimates by $0.06 and $1.16 million, respectively, guidance disappointed investors.

For the full year, management expects revenue of $983 million to $995 million, largely below the $989.72 million consensus. EBITDA is foreseen in the $254 million to $260 million range, comparable store sales anticipated to surge by 2.25 to 3.25 percent, and net income to come in in the $80 million to $85 million span.

Comps for the second quarter rose only 1 percent, versus the 11 percent spike seen a year ago.

CEO Steve King said, “Given our year-to-date performance, we are increasingly confident in our annual guidance for total revenues, net income, and adjusted EBITDA, despite the challenges affecting the casual dining industry and our revised expectations for softer comparable store sales trends this year.  The growing impact of new store development and the continued shift in revenues to our higher-margin amusement category coupled with operating leverage are clearly evident in our second quarter results, as the 20 non-comparable stores contributed $24.7 million to our 12.4% total revenues growth and Adjusted EBITDA growth of 21.9%.”

“We now expect to open ten to eleven stores in fiscal 2016, including up to six openings in new markets for our brand.  Our development pipeline is solid and we are well positioned over the long-term to capitalize on the changing retail dynamics affecting big box operators and malls,” King concluded.