After last night reporting better than expected Q2 earnings, shares of entertainment and dining operator Dave & Busters (PLAY 52.94, -5.20) trade about 8.9% lower as revenue and same-store sales came in short of Street expectations.
PLAY’s SSS increased 1.1% in Q2 compared to a 1.0% increase last year. The company’s comparable store sales growth was driven by a 1.1% increase in walk-in sales and a 1.9% increase in special events sales. Non-comparable store revenues increased $34.1 million in Q2 to $61.1 million.
As mentioned, revenues fell short of Street views, increasing 14.9% to $280.8 million from $244.3 million a year ago. Across all stores, Food and Beverage revenues increased 10.2% to $118.7 million from $107.7 million and Amusement and Other revenues increased 18.6% to $162.1 million from $136.7 million.
Food and Beverage represented 42.3% of total revenues while Amusements and Other represented 57.7% of total revenues in Q2. In last year’s second quarter, Food & Beverage represented 44.1% of total revenues while Amusements and Other represented 55.9% of total revenues.
Net income, excluding the $0.16 per share favorable impact of ASU 2016-09 and the $0.04 per share unfavorable impact of the litigation settlement, was $0.59 per diluted share. This compared to net income of $21.5 million, or $0.50 per diluted share (43.3 million diluted share base), in the same period last year.
Looking ahead, PLAY kept FY18 revenue guidance unchanged at $1.16-1.17 billion but lowered its SSS expectations. For FY18, the company now sees SSS of 1-2% (compared to prior expectations of 2-3% SSS) on 14 new store openings (compared to prior 12 store openings) on net income of $109-113 million (compared to prior of $107-111 million).
The sales miss seems to be the overwhelming driver of the share losses today, and with a full year SSS cut to boot, shares dip to 8-month lows. With today’s sell-off, PLAY now trades a little higher than 20x expected FY18 earnings and the stock now posts losses of 7.6% YTD.