Dave & Buster's Cooks Up Disappointing Sales Number in the Second Quarter

Dave & Buster's Entertainment Inc. (PLAY) just dealt Wall Street a bust.

After the market close on Tuesday, Sept. 5, the entertainment and restaurant operator reported second-quarter adjusted earnings of 59 cents a share, higher than the earnings of 55 cents a share analysts surveyed at Factset expected, and the earnings of 50 cents a share generated in the year-ago period.

Dave & Buster's reported second-quarter revenue rose 14.9% year over year to $280.8 million from $244.3 million, missing Wall Street's estimates for $281.7 million. Likely as a result, shares of the company dropped 6.6% in after-hours trading. The quarter ended on July 30.

The company said in its earnings release that three of its stores in Houston were closed due to Hurricane Harvey, which first touched down near Corpus Christi, Texas, on Friday, Aug. 25, as a Category 4 hurricane. They were reopened on Friday, Sept. 1. Texas is one of Dave & Buster's most competitive regions.

"Our thoughts and prayers go out to everyone affected by Hurricane Harvey, including many Dave & Buster's employees who have been significantly impacted. We are working to help get them back on their feet as soon as possible," Dave & Buster's CEO Steve King said in a statement.

Still, King said that despite the storm, the company delivered "another successful quarter." The chain will be working to open 14 new restaurants, for a total of 106 locations, by the end of the year.

Dave & Buster's same-store sales gained a tepid 1.1% for the period ended July 30. Ebitda increased 11.5% to $64 million, from $57.4 million in the year-ago period.

On an earnings call with analysts Tuesday evening, King said same-store sales "came in lower than expectations," due to pressures within the casual dining space. Still, he said the Dave & Buster's amusement segment drove the comparable-store sales increase.

The company lowered its full-year same-store sales guidance to a 1% to 2% growth, from its previous outlook for a 2% to 3% boost.

Dave & Buster's was one of just a few restaurant and bar chains, alongside Buffalo Wild Wings (BWLD) , to broadcast the highly anticipated fight between Floyd Mayweather, a boxing promoter and retired professional boxer, and Ultimate Fighting Championship mixed-martial artist Conor McGregor on Aug. 26.

Mayweather came out the winner in the Pay Per View match, which individuals paid $100 to watch. Bars and restaurants were charged based on the number of people who showed up.

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