Dave & Buster's (PLAY 59.50, +1.98, +3.44%) climbed as much as
4.2% in pre-market after beating quarterly expectations, raising its guidance,
and initiating a quarterly dividend.
The owner and operator of arcade entertainment and dining venues reported above-consensus second quarter earnings of $0.84/share on a 13.7% year/year jump in revenue to $319.2 mln, which was also ahead of expectations. The company was able to beat estimates despite a 2.4% decline in comparable store sales.
In addition to beating expectations, Dave & Buster's raised the midpoint of its revenue guidance for the fiscal year, priming the market for sales between $1.23 bln and $1.26 bln, up from the previous guidance for revenue between $1.20 bln and $1.24 bln. Net income is expected between $101 mln and $111 mln, up from previous guidance for net income between $95 mln and $110 mln. The company expects that comparable store sales will show a low single-digit decrease after previous guidance called for a decline in the low to mid-single digits.
Dave & Buster's also announced new capital allocation initiatives, including a $100 mln increase to its share repurchase authorization and the initiation of a quarterly cash dividend of $0.15/share. The dividend will be payable on October 10 to shareholders of record on September 25. As for the repurchase authorization, the company now has $146.9 mln remaining for share repurchases.
Returning to second quarter results, Food and Beverage revenue grew 9.7% to $130.2 mln, making up 40.8% of total revenue. Amusements and Other revenue jumped 16.6% to $188.9 mln, accounting for 59.2% of total revenue. One year ago, Food & Beverage revenue made up 42.3% of total revenue while Amusements and Other revenue made up 57.7% of total sales.
Comparable store sales declined 2.4% due to a 2.6% decline in walk-in sales and a 0.1% uptick in special events sales. Comparable store sales in Amusements and Other declined 1.2% while Food and Beverage comparable sales fell 4.1%.
Operating margin improved by 50 basis points to 14.4%.
The company opened five stores during the second quarter -- including one in Utah, where it had not previously operated -- and currently has eight stores under construction. The company is on track to open 14 or 15 new stores during the fiscal year.
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