Dave & Buster's (PLAY 60.25, -1.94) is down 3.1% in pre-market despite beating fourth quarter earnings expectations.
The operator of restaurants and video arcades reported above-consensus earnings of $0.63 per share on a 15.4% year-over-year spike in revenue to $270.20 million, which was just north of market estimates.
Fourth quarter comparable store sales increased 3.2% year-over-year, down from last year's growth rate of 6.0%. Walk-in sales increased 3.5% while special event sales grew 1.7%.
Although Dave & Buster's comparable store sales growth slowed down from last year, it remained ahead of the competitive casual dining benchmark for the 19th consecutive quarter. The continued growth helped the company exceed $1 billion in full year sales for the first time.
The company kept its costs in check, which helped cost of food and beverage as a percentage of food and beverage revenue decline to 24.7% from last year's 25.2%. Similarly, cost of amusement and other as a percentage of amusement and other revenue ticked down to 11.6% from 11.9% one year ago.
Operating margin ticked up to 16.5% from 16.3% one year ago.
The company sees more room for expansion, evidenced by plans for 11 or 12 store openings in 2017. The new openings are expected to translate into unit growth between 12.0% and 13.0%. The planned openings will skew towards a large store format and new markets for the brand. The company believes to be in position to generate 10.0%+ unit growth on an annual basis.
Looking ahead, revenue for fiscal year 2017 is expected between $1.155 billion and $1.170 billion, which is close to market expectations. Comparable store sales are expected to be up between 2.0% and 3.0%.
Shares of Dave & Buster's are on track for a lower open, but this comes after the stock ended yesterday's session at a fresh record high. Even with today's pre-market decline, the stock is up 7.0% so far in 2017.