Dave & Buster's Entertainment Inc (PLAY) Q1 2025 Earnings Call Highlights: Strategic Growth ...
Revenue: $568 million for the first quarter of fiscal 2025.
Net Income: $22 million or $0.62 per diluted share.
Adjusted Net Income: $27 million or $0.76 per diluted share.
Adjusted EBITDA: $136 million with an adjusted EBITDA margin of 24%.
Comp Store Sales: Decreased 8.3% versus the prior year period.
Operating Cash Flow: $96 million generated during the first quarter.
Cash and Credit Availability: $12 million in cash and $411 million available under the revolving credit facility.
Capital Expenditures: $115 million in capital additions on a gross basis, $110 million on a net basis.
Preopening Expenses: $2.7 million increase versus the prior year.
New Store Openings: Two new stores opened in Calin, Texas, and Lansing, Michigan, with two additional openings in Freehold, New Jersey, and Wilmington, North Carolina.
Store Relocation: Successful relocation of the Honolulu, Hawaii store.
International Expansion: First international franchise location opened in India, with at least seven more expected over the next year.
Warning! GuruFocus has detected 8 Warning Signs with PLAY.
Release Date: June 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Dave & Buster's Entertainment Inc (NASDAQ:PLAY) reported significant improvement in operating results over the first quarter, driven by a back-to-basics strategy.
The company successfully reintroduced the Eat and Play Combo, which has shown positive early results and a double-digit opt-in rate.
Remodeled stores have outperformed the system by over 700 basis points in the last three months, indicating the success of the remodel strategy.
The introduction of new games and attractions, such as the Summer of Games and the human crane, is expected to enhance customer engagement and drive sales.
Dave & Buster's opened new stores in strategic locations, including international expansion, which is expected to drive incremental growth with minimal investment and risk.
Comp store sales decreased by 8.3% in the first quarter compared to the prior year, with a particularly soft February.
The company incurred a $2.7 million increase in preopening expenses due to new store openings and relocations.
There was a significant front-end loading of capital expenditures, with $115 million spent in the first quarter, impacting cash flow.
The company is still in the early stages of implementing its back-to-basics strategy, indicating that full recovery may take time.
Marketing and R&M expenses increased, which may continue to pressure margins if not managed effectively.
Q: Can you provide some predictability on the trajectory of same-store sales and how you're looking at it on a multi-year basis? A: Kevin Sheehan, Interim CEO, explained that while they are in the early stages of recovery, they expect outsized growth over the next few years. Long-term, they aim for 3% same-store sales growth, supplemented by new stores and incremental opportunities like international expansion and catering.
Q: Can you break down the capital expenditures for the first quarter and expectations for the rest of the year? A: Darin Harper, CFO, detailed that $53 million was spent on new stores, $20 million on remodels, $30 million on games, and $12.5 million on maintenance CapEx. The company remains confident in their full-year guidance and plans to manage capital spend diligently.
Q: What improvements have you seen in same-store sales trends, and what are the contributing factors? A: Darin Harper noted improvements driven by increased traffic and higher food and beverage check growth, particularly from the Eat and Play Combo. The company is seeing strong weekend growth and believes they are benefiting from a trade-down effect among higher-income consumers.
Q: Can you discuss the new store manager incentive program and its impact? A: Kevin Sheehan described the program as best-in-class, with competitive salaries, strong bonuses, and long-term incentives tied to same-store sales growth. The program aims to encourage managers to think like business owners and drive sales.
Q: What are the key initiatives contributing to improved comp trends, and what opportunities remain? A: Darin Harper highlighted the impact of marketing and promotions like the Eat & Play Combo. The company sees further opportunities in optimizing marketing spend, enhancing game offerings, and improving operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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