Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) shareholders are assuredly having some fun with percentages right now. Specifically, 16% (the percentage of shares sold short as of the most recent data) and 12% (how high PLAY stock rose in Tuesday’s after-hours session).
While the market was expecting per-share earnings of 14 cents on sales of $216.74 million, D&B surprised analysts with a massive 25 cents on revenue of $228.7 million.
Of course, PLAY didn’t just serve up a fatty treat for the masses. It delivered some icing, too, raising its guidance for full-year sales to the neighborhood of $998 million to $1.003 billion. The consensus estimate was for $988.6 million.
Comparable-store sales jumped 5.9% in Q3. That’s less than the 8.3% it grew comps in the year-ago quarter, but it’s a heck of a lot better than the measly percentage point it grew last quarter.
This marks the ninth straight time Dave & Buster’s beat earnings estimates. It’s a highly welcome surprise, as back in September, PLAY lowered its same-store sales expectations for the full year and held its revenue outlook steady. Now, PLAY anticipates comps to increase 3.1% to 3.6%, versus its previous view between 2.25% to 3.25%.
Here’s what Dave & Buster’s CEO Steve King had to say in the press release:
“Dave & Buster’s delivered exceptional quarterly results and we are pleased to be increasing our annual guidance. Our strength was broad-based as we experienced momentum across the country and throughout the quarter. We generated a 5.9% increase in comparable store sales during the third quarter, lapping an 8.8% increase from the prior year, and 14.7% on a two-year stacked basis. Our comparable store sales growth has now exceeded the competitive casual dining benchmark for 18 straight quarters. Guests responded well to the conclusion of our ‘Summer of Games’ promotion, along with our subsequent football-related promotions.”
That train should continue rolling into 2017. D&B looks to open 11 new stores, with six breaking ground in new markets. Initially, Dave & Buster’s planned for nine to 10 new stores.
As King notes:
“Our development pipeline is more robust than ever before and we remain well positioned over the long term to capitalize on the changing retail dynamics affecting big box operators and malls. During 2017, we are projecting eleven to twelve new store openings, representing unit growth of 12% to 13%. Our long-term target for annual unit growth is 10% or more and we continue to foresee a 200+ store opportunity in North America alone.”
In the past month alone, PLAY stock has gained 22%, so I can’t exactly fault those poor short sellers hoping for an earnings flop that they could parlay into massive gains.
But it just didn’t (sorry) play out that way.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
