DALLAS - Shares of Dave & Buster's Entertainment, Inc. (NASDAQ: PLAY) plunged 14% after the company reported first-quarter earnings and revenue that fell short of Wall Street expectations. The entertainment and dining venue operator disclosed that for the quarter ended May 5, 2024, it earned an adjusted $1.12 per share, significantly below the analyst consensus of $1.77. Revenue also disappointed, coming in at $588.1 million against expectations of $618.7 million.
The company's revenue decreased by 1.5% compared to the first quarter of the previous year, while comparable store sales saw a decline of 5.6%. Net income also took a hit, totaling $41.4 million, or $0.99 per diluted share, a stark contrast to the $70.1 million, or $1.45 per diluted share, reported in the same period last year. Adjusted EBITDA fell by 12.6% YoY, with the company citing over $10 million in incremental labor and marketing costs associated with new initiatives and marketing tests as contributing factors.
Despite the disappointing results, CEO Chris Morris remains optimistic about the company's growth strategies and the potential improvement in revenue and profitability over the medium term. Morris stated, "We continue to make material progress advancing our key organic growth initiatives." He also highlighted the company's success in growing its loyalty database, refining its games pricing strategy, and the clear outperformance in its remodel initiative.
Dave & Buster's also continued its expansion, opening three new locations and one new Main Event store during the quarter. Additionally, the company has entered into an international franchise partnership agreement to develop five stores in the Philippines, with up to four of these stores expected to open in the next 12 months.
Looking ahead, Dave & Buster's did not provide specific financial guidance for the upcoming quarters. However, the company's focus on new store openings, international expansion, and strategic marketing initiatives suggest a drive to rebound from the current quarter's downturn. The market's reaction, as indicated by the significant drop in stock price, reflects investor concerns over the company's ability to meet its financial targets amidst a challenging macroeconomic environment.
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