Dave & Buster’s said Tuesday that a more challenging macroeconomic environment led to a second quarter that was more difficult than anticipated, as same-store sales rose just 1 percent in the period ended July 31.
“The macroeconomic environment, and especially the casual-dining industry, slowed relatively to the first quarter,” Dave & Buster’s CEO Steve King said during the company’s earnings call Tuesday.
Dave & Buster’s lowered guidance for full-year same-store sales as a result of the slowdown. The Dallas-based operator now expects same-store sales to rise 2.25 percent to 3.25 percent, down from 3.25 percent to 4.35 percent.
Wall Street didn’t like the news. Dave & Buster’s stock fell nearly 4 percent in Wednesday morning trading.
Still, Dave & Buster’s is up against some difficult comparisons from the previous year. Same-store sales in the same period a year ago rose 11 percent, making its two-year same-store sales gain 12 percent.
Executives noted that the casual-dining and entertainment chain has outperformed the casual-dining industry, as noted by the Knapp-Track casual-dining index, for 17 straight quarters.
Dave & Buster’s total revenue rose 12.4 percent in the quarter, to $244.3 million, from $217.3 million the previous year.
Net income in the period rose 71.1 percent, to $21.5 million, or 50 cents per share, from $12.6 million, or 29 cents per share a year ago.
“Even in an environment such as this, with casual dining so challenged, we are demonstrating our ability to outperform because we’re one of those customizable experiences that enable our guests to eat, drink, play and watch — all under one roof,” King said.
Dave & Buster’s has 87 locations that can be 40,000 square feet or larger. The company opened two new locations in the second quarter, and expects to open as many as 11 units this year.
The company’s unit-level cash-flow margin was 30.3 percent of sales, up 150 basis points, and the highest margin the company has ever generated in the second quarter, Dave & Buster’s CFO Brian Jenkins said during the earnings call.
Lower commodity costs, along with “greater discipline,” have helped improve costs, Dave & Buster’s said. The company has set specific benchmarks for unit managers on customer feedback, as well as labor and food costs.
“We’re steadily improving the ways we bring stores up to our standard,” King said.