Dave & Buster's Reports 3% Revenue Decline and $32.7 Million Net Loss in Q3 Fiscal 2024

Dave & Buster's Entertainment, Inc. reported a decline in financial performance for the third quarter of fiscal 2024, ending November 5, 2024. The company generated total revenues of $453.0 million, a decrease of 3.0% from $466.9 million in the same quarter of the previous year. Entertainment revenues fell by 2.5% to $294.6 million, while food and beverage revenues decreased by 3.9% to $158.4 million. The net loss for the quarter was $32.7 million, or $0.84 per diluted share, compared to a net loss of $5.2 million, or $0.12 per diluted share, in the prior year.

In comparison to the previous fiscal period, the company experienced a significant drop in comparable store sales, which decreased by 10.2% on a fiscal period basis and 7.7% when adjusted for the same calendar period. This decline was attributed to reduced consumer demand relative to a more favorable environment in the prior year. Despite the revenue drop, the company opened nine new stores during the nine months ended November 5, 2024, bringing the total to 227 stores across 44 states, Puerto Rico, and one Canadian province.

Operationally, the company reported an Adjusted EBITDA of $68.3 million for the third quarter, down 16.3% from the previous year. The total cost of products decreased to $67.8 million, representing 15.0% of total revenues, down from 16.4% in the prior year. Operating payroll and benefits increased to $120.9 million, accounting for 26.7% of total revenues, primarily due to the addition of new stores. General and administrative expenses decreased slightly to $27.2 million, reflecting lower share-based compensation.

Strategically, Dave & Buster's underwent a significant refinancing of its debt, resulting in a loss on debt refinancing of $15.2 million during the quarter. The company amended its senior secured credit agreement, increasing its revolving credit facility and adding new term loans. As of November 5, 2024, the company had total debt of $1.49 billion, with a net total leverage ratio of 2.6x, well below the maximum permitted ratio of 3.5x. The company also repurchased 2.04 million shares during the nine months ended November 5, 2024, with $112 million remaining under its share repurchase program.

Looking ahead, Dave & Buster's management remains cautious about the economic environment and its impact on consumer spending. The company plans to continue focusing on operational efficiencies and strategic growth through new store openings while navigating the challenges posed by inflation and fluctuating commodity prices. The outlook for the remainder of fiscal 2024 will depend on the company's ability to adapt to changing market conditions and consumer preferences.