Dave & Buster’s Stock Plummets After Q2 Results

• Dave & Buster’s Entertainment missed profit and sales forecasts as comparable store sales fell.

• The game-themed restaurant also warned that it might not be able to cover the possible costs of inflation, tariffs, and other expenses.

• New CEO Tarun Lal said he will focus on boosting sales and cash flow.
  

Shares of Dave & Buster’s Entertainment (PLAY) plunged in morning trading when the game-themed restaurant posted worse-than-expected results as comparable store sales declined and it warned that inflation and tariffs might hurt future demand.

The operator of Dave & Buster’s and Main Event locations reported second-quarter adjusted earnings per share of $0.40, less than half of what analysts surveyed by Visible Alpha were looking for. Revenue was basically flat at $557.4 million, also short of estimates. Comparable store sales fell 3.0% compared to a year earlier.

The company noted that big jumps in inflation, “whether due to imposed tariffs or standard economic conditions, could affect the United States or global economies and have an adverse impact on our business, financial condition and results of operation.” It added that if its other expenses rise at the same time, “we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand.”

CEO Tarun Lal, who took over in July, said that his “immediate focus is clear: reinforce our guest-first culture, deliver memorable experiences, and drive meaningful growth in sales, cash flow and shareholder value.”

Shares were down more than 15% in early morning trading. Prior to today’s session, Dave & Buster’s Entertainment shares had lost about 18% this year. 

Read the original article on Investopedia