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Dave & Buster's (PLAY) Dismal Comps Woes Persist in Q4

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Dave & Buster's Entertainment, Inc. (PLAY - Free Report) recently provided business update for the first nine weeks of fourth-quarter fiscal 2020. The company’s results in the quarter continue to be impacted by the coronavirus pandemic.

The company commenced fourth-quarter with 104 stores operational. However, it had 89 stores operational as of Jan 3, 2021, due to rise in coronavirus cases and renewed operating restrictions imposed by local jurisdictions during November and December.

Preliminary revenues for the first nine weeks of fourth-quarter fiscal 2020 were $69.4 million, suggesting a decline of 75% in comparable store sales. Preliminary EBITDA loss was $ million. The company is likely to have witnessed weekly cash burn of $3.7 million in the quarter.

As of Jan 3, 2021, cash and cash equivalents were $12 million. CEO Brian Jenkins said “Fourth quarter business trends have been consistent with commentary we provided in December in conjunction with our third quarter results.”

The company anticipates to open more than 100 stores by mid-January. It anticipates fourth-quarter revenues in the range of $98 million to $102 million. The company is likely to report fourth-quarter results in early April 2021.

Price Performance

Dave & Buster's is likely to benefit from increased focus in amusement business, digital initiatives, store reopening and expansion plans. In the past three months, shares of the company have gained 122.1% compared with the Zacks Retail – Restaurants industry’s growth of 5.2%.



The company continues to pursue a disciplined new store growth strategy in both new and existing markets, given the broad appeal of its brand. Management believes that it can grow the concept to more than 200 units in North America over time. Meanwhile, in addition to growth potential that exists in North America, management is optimistic regarding the brand’s significant appeal in certain international markets. During third-quarter fiscal 2020, the company opened two new stores — one in Manchester, NH; and one in Lehigh Valley, PA.

Dave & Buster's currently carries a Zacks Rank #4 (Sell).

Key Picks

Some better-ranked stocks in the same space are Jack in the Box Inc. (JACK - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Yum! Brands, Inc. (YUM - Free Report) . Jack in the Box sports a Zacks Rank #1 (Strong Buy), while Arcos Dorados and Yum! Brands carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Jack in the Box has a three-five year earnings per share growth rate of 10.6%.

Arcos Dorados and Yum! Brands’ 2021 earnings are expected to rise 127.3% and 12.1%, respectively.

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