Dave & Buster’s stock holds steady as Benchmark cites operational improvements

Benchmark reiterated a Hold rating on Dave & Buster’s (NASDAQ:PLAY) following the entertainment company’s first-quarter 2025 results, which showed stabilizing performance and sequential monthly same-store sales improvements since February.

The entertainment and dining chain has implemented a "Back-to-Basics" approach to operations, unwinding strategic decisions made by previous leadership during earlier repositioning efforts. These changes include adjustments to marketing strategy, menu offerings, operations, remodel scope, and game floor investments. With a significant debt burden of $3.4 billion and a concerning current ratio of 0.22, this operational reset comes at a crucial time.

February represented a low point for the company’s performance, with some of the subsequent rebound reflecting broader industry difficulties during that month. The company’s recovery has continued through April, which was affected by later Easter Break timing.

Benchmark noted that Dave & Buster’s sequential improvement proved stronger than overall industry trends, calling the performance "encouraging to see" as the company works to stabilize its business.

The company’s strategic pivot appears to be yielding initial positive results as it focuses on core operational elements rather than the broader repositioning strategy pursued by previous management.

In other recent news, Dave & Buster’s reported its fiscal first-quarter 2025 earnings, revealing a significant shortfall in both earnings per share (EPS) and revenue compared to analyst expectations. The company posted an EPS of $0.76, missing the forecasted $1.01, while revenue came in at $567.7 million, below the anticipated $573.25 million. Despite these setbacks, analysts from Piper Sandler and Loop Capital have adjusted their price targets for the company. Piper Sandler raised its price target from $22.00 to $30.00, maintaining a Neutral rating, while Loop Capital increased its target from $35.00 to $46.00, continuing with a Buy rating. Both firms noted improvements in same-store sales trends, with Loop Capital highlighting sequential improvement through early Q2. Dave & Buster’s management attributed these positive sales trends to a "back to basics" strategy, including a return to television advertising and effective promotions. The company also reported an adjusted EBITDA of $136 million for the quarter, slightly below consensus estimates. Looking ahead, Dave & Buster’s plans to open 10-12 new stores in fiscal year 2025, aiming to strengthen its market position despite current challenges.

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