Dave & Buster’s (NASDAQ: PLAY) made headlines this week, and not in a good way. The company’s stock dropped more than 17% following the release of a disappointing second-quarter earnings report and a cautious tone from new CEO Tarun Lal. Investors were hoping for signs of a rebound or new energy in the business, but what they got instead were signs of deeper problems and a tough road ahead. Based on the current outlook, it’s becoming harder to view Dave & Buster’s as a strong investment opportunity — at least for now.
The company’s second-quarter performance failed to inspire confidence. Comparable store sales declined by 3% year over year, signaling a drop in foot traffic or spending per guest. Total revenue barely moved, ticking up just 0.05% to $557.4 million. While flat sales might not seem catastrophic on their own, the real blow came in the form of sharply declining profitability.
Net income for the quarter was just $11.4 million, or $0.32 per diluted share. That’s a staggering 67% decline from the same period last year, when net income came in at $40.3 million, or $0.99 per share. These numbers are especially concerning when you consider that in 2022, the company was posting triple-digit growth. That momentum has clearly evaporated.