Remodeling efforts and walk-in traffic at Dave & Buster’s Entertainment Inc. led to a robust increase in same-store sales for the third quarter ended Nov. 1, executives said Tuesday.
The Dallas-based operator of big-box restaurant-entertainment venues swung to a profit of $4.6 million, or 11 cents a share, from a loss of $4.6 million, or 13 cents a share, in last year’s quarter, the company reported Tuesday. Revenue in the third quarter rose 17.9 percent, to $192.8 million, from $163.5 million in the same period last year.
Same-store sales increased 8.8 percent in the quarter, rolling over an 8.7-percent increase in the same period last year. Comparative food sales rose 7.3 percent, and comparative beverage sales increased 12.1 percent.
The company also raised its guidance for same-store sales for the full fiscal year, which will end on Jan. 31, to a range of 8.5 percent to 9 percent, from an earlier forecast range of 6.5 percent to 7.5 percent.
“We couldn’t be happier in terms of how 2015 is shaping up,” Steve King, Dave & Buster’s CEO, said in a post-earnings call with analysts, adding that “we look forward to a strong finish in the fourth quarter.”
Third-quarter sales increases were driven by several factors, from remodeled units to marketing initiatives, executives said.
King noted that walk-in sales increased 9.4 percent in the quarter, which he said “marks the clear reflection of our core demographic appeal.”
Andy Barish, an analyst with Jefferies LLC, wrote in a note that sales strength was “helped by increased marketing/promotions, including Summer of Games and the exclusive launch of Angry Birds as well as All You Can Eat Wings during the first three Sundays and Mondays” of the NFL season.
The All You Can Eat Wings special, which was priced at $19.99 and included a $10 game card, “was hugely popular with our guests,” King added.
While it increased the cost of goods sold, he added, “we thought the investment in kicking off the first three weeks of the NFL football season with a compelling offer with a great way to build awareness for Dave & Buster's as a destination for one-of-a-kind sports viewing and it could have a positive implications for building this brand for this entire season and beyond.”
Dave & Buster’s special events business increased 3.9 percent in the quarter, King said, adding that it was the “highest rate of growth thus far this year.”
Brian Jenkins, Dave & Buster’s chief financial officer, noted that the brand is seeing a mix shift to the gaming side of the company’s business, which he noted was more profitable than the food and beverage component.
In the quarter, amusement and other sales grew 20.7 percent, while food and beverage increased 14.9 percent, Jenkins said. During the third quarter, amusements represented 53.4 percent of Dave & Buster’s total revenue, a 120-basis-point increase from the prior-year quarter.
King said Dave & Buster’s remodeling efforts “are critical to taking the brand to the next level.”
So far in fiscal 2015, he said the company has completed three comprehensive remodels, “enhanced” five additional units with D&B Sports lounges, and improved the sports-viewing venues in a number of other locations. More than 70 percent of the brand’s 79 units now include the D&B Sports addition.
For 2016, King said the company is planning six comprehensive remodels and three enhanced units with D&B Sports lounges.
Dave & Buster’s has opened seven of the eight to nine new locations expected by the end of the fiscal year in January, King said, and the company is looking to expand internationally.
In October, the company announced a master development agreement with Dubai-based Apparel Group for seven units in seven years for the Middle East.
King said the company is in discussions for other international developments.
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