Dave & Buster's Entertainment Inc. (NASDAQ:PLAY) remains under pressure as its core business continues to be severely impacted by the effects of COVID-19. The owner and operator of entertainment and dining venues has seen a good number of its store remain closed owing to restrictions imposed by local authorities in a bid to curb the spread of the virus.
Dave & Buster Woes
While the number of stores opened increased to 104 from 84 at the start of the quarter, they still operated under reduced hours. Capacity limitations also continued to bite, seen as the reason revenues fell compared to a year ago.
Revenues in the quarter more than halved to $109.1 million compared to $299.4 million reported a year ago same period. Comparable store sales also took a hit owing to capacity limitations declining 66%. Net loss in the quarter widened to $48 million or $1.01 a share compared to $ a net income of $0.5 million or $0.02 a share reported a year ago.
Amid the disappointing quarter and challenging Macro Environment, Dave & Buster Entertainment made significant progress in reopening the store. Implementation of numerous initiatives and acceleration of business recovery helped avert a further decline.
Sales Bounce Back
Sales could have been much lower had re-opened stores not peaked in late October, up 68% compared to the previous year. Dave & Buster Entertainment management also resorted to a lean operating model in a bid to keep costs lower.
Strong sales recovery through late October affirms resiliency in the core business as the bounce-back continues to gather steam. However, Chief Executive Officer Brian Jenkins has warned that the company’s revenue streams remain at risk of being negatively impacted by the recent resurgence in coronavirus cases.
A spike in cases of infections has triggered stringent measures from authorities, with lockdowns expected to take a toll on entertainment and dining businesses. Local jurisdictions limiting operations or re-closing stores should be impactful to Dave & Buster Entertainment December sale and profitability, which has historically benefited for high foot traffic.