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Investing.com -- Moody’s Ratings downgraded Dave & Buster’s, Inc.’s corporate family rating to B3 from B2 on Monday, citing weak credit metrics and deteriorating financial performance.
The rating agency also lowered the company’s probability of default rating to B3-PD from B2-PD and downgraded its backed senior secured first lien bank credit facilities ratings to B3 from B2. The outlook was changed to stable from negative, while the SGL-3 speculative grade liquidity rating remained unchanged.
The downgrade reflects Dave & Buster’s debt/EBITDA ratio of 5.9x and EBITA/Interest expense of 1.0x for the twelve-month period ended August 5, 2025. These metrics show a deterioration from the debt/EBITDA of 5.3x and EBITA/interest expense of 1.3x reported for the year ended February 4, 2025.
Moody’s noted that the food and entertainment chain’s operating results have been affected by weak same-store sales trends as consumers remain cautious with their spending. The company is working to improve its execution, including enhancing its value proposition to consumers and reducing its aggressive capital spending program.
The rating agency projects EBITA/Interest expense to improve modestly to 1.2x and debt/EBITDA to reach the mid-5x range over the next 12 months as the company implements various initiatives.
Despite holding a leading position in the niche food and entertainment industry with strong brand recognition, good geographic diversity, and healthy EBITDA margin, Dave & Buster’s faces challenges including cost inflation and negative same-store sales driven by weak consumer traffic.
The company has repurchased over $500 million of shares over the past 2.5 years despite high capital investments amid declining revenue and profitability. Moody’s described the company’s liquidity as adequate, supported by substantial availability on its revolving credit facility and no near-term debt maturities.
The stable outlook reflects Moody’s expectation that Dave & Buster’s growth capital spending will be measured without material reliance on external borrowing, and that credit metrics will improve as the company returns to positive free cash flow generation.
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