Dave and Busters 1Q16 Earnings Call Notes

posted in: Notes | 0

Dave & Buster’s (PLAY) CEO Stephen King on Q1 2016 Results

17% Revenue Growth

I am especially excited by our 17.7% revenue growth, demonstrating that our newer stores are adding significantly to the top line, enabling us to continue to leverage our margins and grow the bottom line at an even faster rate.
While comparable store sales decelerated relative to last year’s fourth quarter as we had anticipated, total revenue growth accelerated because of the sales generated from newer stores.

Did see some softness in Texas

Like many others we did experience softness in Texas where we have seven comp stores representing about 10% of our comp store base. We attribute the softness to the impact of cannibalization as three of our 2015 new stores demonstrate some competitive intrusion along with economic pressures related to the oil industry.

There’s a lot of real estate becoming available thanks to struggling retailers

Given what’s going on with some of the department store brands and big box retailers, there is a lot of real estate becoming available in markets to meet our criteria. And while others are having challenges at their mall locations, our mall stores are performing quite well.
So as landlords and developers pivot towards more entertainment options versus traditional fashion retail and mall, we are in a good position to capitalize on these opportunities.

VR has been a cool novelty, but people don’t tend to play it over and over

as it relates to VR, we have tested some VR products and I would say that our results are not compelling from an overall revenue growth standpoint at this point. And I don’t think that means we are going to give up on VR. I still think there is something to it and there is a probably a way for us to roll that in a way that we will create some significant, either attraction for us or in a potentially meaningful increase in revenue. But I think that what we have seen so far is that the content is such that people are likely to do it a single time and then not repeat, which makes it more difficult for — so it has some novelty value, I guess is one way to think about it. And so people are willing to try it but they don’t tend to play it over and over.

Brian Jenkins

Macro environment is volatile

That said, the overall macro environment is rather volatile and these company specific factors may not prove sufficient to sustain comp store sales at the higher end of our new range.