Dave & Buster's Stock Sinks Late As Q4 Sales, Outlook Miss Forecasts
Dave & Buster’s Entertainment (PLAY) beat Q4 earnings views after the close Tuesday, but the restaurant and arcade chain fell short of comp sales forecasts and guided full-year revenue low.
Estimates: Wall Street sees EPS falling 6.3% to 59 cents per share. Revenue is expected to increase 13% to $305 million, according to Zacks Investment Research. Same-store sales are seen falling 5.1% overall, according to Consensus Metrix. Food and beverage comps should tumble 6.8% while amusement and other sales drop 3.7%.
Results: EPS of 61 cents on revenue of $304.9 million. Same-store sales fell 5.9%, with food and beverage down 7.8% while amusements and other decreased 4.2%.
Outlook: Fiscal 2018 revenue of $1.2 billion-$1.24 billion, below consensus views for $1.28 billion, with same-store sales down in the low to mid single digits.
“Our primary growth vehicle and the biggest driver of value continues to be opening stores that offer excellent returns in the face of a more intense competitive environment,” said CEO Steve King in a statement. “However, recent sales trends in our comparable stores have been disappointing and we are working diligently to rebuild momentum by evolving the brand.”
Stock: Dave & Buster’s tumbled 8% late after closing up 1.5% at 40.69 on the stock market today. The stock is below two key technical supports, its 50-day and 200-day lines. Shares have lost more than 30% of their value in the last year and the relative strength line is at a three-year low.
Among other restaurant stocks, Olive Garden parent Darden Restaurants (DRI), which reported mixed results last month, rose 0.6%; and Bloomin’ Brands (BLMN), which beat views last month, climbed 1.7%. Wingstop (WING) rallied 2.4% to bounce off a test of its 50-day average. Shake Shack (SHAK) jumped 3.3%.
Raymond James analyst Brian Vaccaro, in a research note last week, said the road ahead for the company had become less clear, as it struggles with “less compelling amusement content,” harsh weather and competition. He also said that the rising popularity of at-home online gaming could be hurting Dave & Buster’s results.
However, he said he believed that same-store sales could “stabilize” in the second half of the year, helped in part by the launch of a virtual-reality platform over the summer.
Dave & Buster’s also has announced a new, smaller store format of 15,000 to 20,000 square feet. It sees potential to open 20 to 40 of these stores.
On Tuesday, the company confirmed plans to open 13 to 14 stores in fiscal 2018, with two of them being smaller-format locations.
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