Dave & Buster's stock swung higher Wednesday after the arcade restaurant operator cleared Q2 expectations late Tuesday.
Dave & Buster's reported a 65% increase in earnings to 99 cents per share, clearing FactSet forecasts for 84 cents per share. Improved restaurant margins and lower general costs boosted earnings. On an adjusted basis, earnings rose 19% to $1.12 per share, which beat estimates of 84 cents.
Total revenue rose 2.8% to $557.1 million, while analysts predicted $560.6 million in sales. Food and beverage revenue was flat year-over-year, and entertainment revenue rose more than 4% to $375.5 million.
Dave & Buster's reported a 6.3% decline in comparable sales, missing views for a 3.6% decline.
CEO Chris Morris said the company was disappointed with its same store sales performance amid "this complex and challenging environment." But Dave & Buster's is remodeling stores, testing price changes and rolling out new menu offerings, which have been well-received by guests, according to Morris. Morris expects the turnaround initiatives to increase same-store sales growth, revenue, EBITDA and cash flow in the coming quarters.
He added Dave & Buster's has seen a "material improvement" in its special events business with "substantial growth in same store sales in the quarter and year to date." The company's forward bookings for fiscal 2024 are significantly above the prior year, Morris said.
The Dallas-based restaurant chain repurchased $47.4 million shares during the quarter, bringing its total buybacks for the year to $60 million. Dave & Buster's still has $140 million remaining in its repurchase plan.
Dave & Buster's Stock Jumps
Dave & Buster's stock surged 4.7% Wednesday, paring gains from a nearly 6% jump after the open. Shares leapt nearly 14% premarket Wednesday on results.
PLAY shares tested resistance at their 50-day moving average on the early surge before easing. The move would have snapped the down-sloping trend line in the stock's five-month decline.
Dave & Buster's shares unraveled 42% in 2024.
BMO Capital cut the stock's price target to 55, from 65, following Tuesday's report. It maintained an outperform rating on the shares.
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