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Expansion Efforts Aids Dave & Buster's (PLAY), High Costs Ail
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Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is benefiting from robust expansion efforts and strategic initiatives. Also, the emphasis on digitalization and marketing efforts bodes well. However, high costs and economic risks are a concern.
On Dec 13, PLAY touched a new 52-week high of $48.75. The stock pulled back to end the trading session at $48.30, up 4.18% from the previous day’s closing price of $46.36. In the past three months, the stock has rallied 32% compared with the Zacks Retail – Restaurants industry’s 5.6% growth.
The Zacks Rank #3 (Hold) company’s earnings and sales in the fiscal 2024 are likely to witness growth of 13.1% and 14.3% year over year, respectively. Earnings estimates for the fiscal 2024 have increased in the past 30 days, depicting analysts’ optimism regarding the stock’s growth potential.
Solid Expansion Efforts: PLAY maintains a focused approach to expanding its store presence in new and existing markets, leveraging the widespread popularity of its brand. During the third quarter of fiscal 2023, the company opened two new stores and one new Main Event store. Subsequent to quarter-end, the company opened new stores in Colorado Springs, CO, Lafayette, LA, and Pooler, GA. Following the openings, the company reported solid performances. In the fiscal 2023, the company intends to open 16 new stores (including 11 Dave & Buster's and 5 Main Event locations) and relocate Dave & Buster's Vernon Hills store.
To ensure a successful global expansion, the company announced two significant deals in India and Australia. The company recently inked a deal with the Malpani Group to open 15 new stores in India. It partnered with the NightOwl Entertainment Group to open five stores in Australia. These strategic moves mark the company’s second and third multi-store franchise agreements in the APAC and MEA regions, respectively. The move is in line with the commitment made during the global expansion plans announced in 2022.
Strategic Initiatives to Boost Sales: The company is committed to streamlining store operations, enhancing guest experiences and improving food, beverage and entertainment offerings for increased sales and profitability. The company actively organizes programmed events in specific markets to expand its entertainment options and plans to introduce new games. Additionally, strong mobile web adoption exceeded PLAY's expectations.
The company increased its focus on the menu with a multiphase approach. During the fiscal third quarter, it initiated the testing of Phase 2 of Dave & Buster's menu, focusing on operational execution (by removing unnecessary complexity) and speed of service improvement. During the testing period, the company reported a 5% increase in food and beverage revenue per check, a 100-basis point improvement in F&B cost of sales and improved speed of service. The company intends to launch the menu system-wide in April 2024. Also, the company initiated testing of Phase 3 to increase its F&B sales further. Backed by strong results, the company is optimistic and anticipates it will drive growth in the upcoming periods.
Focus on Digitalization: The company emphasizes its data and digital innovation capabilities to drive relevancy, media efficiency and tech-enabled hospitality. In November 2023, the company initiated the domestic rollout of OneDine server tablets. The initiative allows guest-facing team members to execute orders and the closing of transactions from the palm of their hands. By 2023-end, it intends to have 61 D&B stores with updated IT infrastructure and anticipates completing the rollout in the fiscal 2024.
The emphasis on the D&B loyalty program bodes well. The company anticipates the program will add relevance to its mobile app and drive higher engagement as it enables guests to complete challenges and earn rewards.
Concerns
A challenging macro environment, including inflationary pressures on labor and commodities, continues to affect it. The company anticipates headwinds to persist in the next few quarters. Industry players expect to witness higher costs for quite some time due to labor and supply-chain shortages. The company has been witnessing labor challenges in a handful of markets. In the first nine months of fiscal 2023, total operating expenses were $1,389.2 million, up from $1,215.4 million reported in the year-ago period.
Key Picks
Some better-ranked stocks from the Zacks Retail-Wholesale sector are:
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has gained 12.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for EAT’s 2024 sales and earnings per share (EPS) suggests a rise of 5.1% and 26.2%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) flaunts a Zacks Rank #1 at present. It has a trailing four-quarter earnings surprise of 713%, on average. Shares of ANF have surged 230.4% in the past year.
The Zacks Consensus Estimate for ANF’s 2023 sales and EPS suggests increases of 13.3% and 2,196%, respectively, from the year-ago period’s levels.
Beacon Roofing Supply, Inc. (BECN - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 11.1%, on average. Shares of BECN have risen 37.6% in the past year.
The Zacks Consensus Estimate for BECN’s 2023 sales and EPS indicates 7.2% and 9% growth, respectively, from the year-ago period’s levels.
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Expansion Efforts Aids Dave & Buster's (PLAY), High Costs Ail
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is benefiting from robust expansion efforts and strategic initiatives. Also, the emphasis on digitalization and marketing efforts bodes well. However, high costs and economic risks are a concern.
On Dec 13, PLAY touched a new 52-week high of $48.75. The stock pulled back to end the trading session at $48.30, up 4.18% from the previous day’s closing price of $46.36. In the past three months, the stock has rallied 32% compared with the Zacks Retail – Restaurants industry’s 5.6% growth.
The Zacks Rank #3 (Hold) company’s earnings and sales in the fiscal 2024 are likely to witness growth of 13.1% and 14.3% year over year, respectively. Earnings estimates for the fiscal 2024 have increased in the past 30 days, depicting analysts’ optimism regarding the stock’s growth potential.
Image Source: Zacks Investment Research
Let’s check the factors supporting positive investor sentiments amid ongoing headwinds.
Solid Expansion Efforts: PLAY maintains a focused approach to expanding its store presence in new and existing markets, leveraging the widespread popularity of its brand. During the third quarter of fiscal 2023, the company opened two new stores and one new Main Event store. Subsequent to quarter-end, the company opened new stores in Colorado Springs, CO, Lafayette, LA, and Pooler, GA. Following the openings, the company reported solid performances. In the fiscal 2023, the company intends to open 16 new stores (including 11 Dave & Buster's and 5 Main Event locations) and relocate Dave & Buster's Vernon Hills store.
To ensure a successful global expansion, the company announced two significant deals in India and Australia. The company recently inked a deal with the Malpani Group to open 15 new stores in India. It partnered with the NightOwl Entertainment Group to open five stores in Australia. These strategic moves mark the company’s second and third multi-store franchise agreements in the APAC and MEA regions, respectively. The move is in line with the commitment made during the global expansion plans announced in 2022.
Strategic Initiatives to Boost Sales: The company is committed to streamlining store operations, enhancing guest experiences and improving food, beverage and entertainment offerings for increased sales and profitability. The company actively organizes programmed events in specific markets to expand its entertainment options and plans to introduce new games. Additionally, strong mobile web adoption exceeded PLAY's expectations.
The company increased its focus on the menu with a multiphase approach. During the fiscal third quarter, it initiated the testing of Phase 2 of Dave & Buster's menu, focusing on operational execution (by removing unnecessary complexity) and speed of service improvement. During the testing period, the company reported a 5% increase in food and beverage revenue per check, a 100-basis point improvement in F&B cost of sales and improved speed of service. The company intends to launch the menu system-wide in April 2024. Also, the company initiated testing of Phase 3 to increase its F&B sales further. Backed by strong results, the company is optimistic and anticipates it will drive growth in the upcoming periods.
Focus on Digitalization: The company emphasizes its data and digital innovation capabilities to drive relevancy, media efficiency and tech-enabled hospitality. In November 2023, the company initiated the domestic rollout of OneDine server tablets. The initiative allows guest-facing team members to execute orders and the closing of transactions from the palm of their hands. By 2023-end, it intends to have 61 D&B stores with updated IT infrastructure and anticipates completing the rollout in the fiscal 2024.
The emphasis on the D&B loyalty program bodes well. The company anticipates the program will add relevance to its mobile app and drive higher engagement as it enables guests to complete challenges and earn rewards.
Concerns
A challenging macro environment, including inflationary pressures on labor and commodities, continues to affect it. The company anticipates headwinds to persist in the next few quarters. Industry players expect to witness higher costs for quite some time due to labor and supply-chain shortages. The company has been witnessing labor challenges in a handful of markets. In the first nine months of fiscal 2023, total operating expenses were $1,389.2 million, up from $1,215.4 million reported in the year-ago period.
Key Picks
Some better-ranked stocks from the Zacks Retail-Wholesale sector are:
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has gained 12.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for EAT’s 2024 sales and earnings per share (EPS) suggests a rise of 5.1% and 26.2%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) flaunts a Zacks Rank #1 at present. It has a trailing four-quarter earnings surprise of 713%, on average. Shares of ANF have surged 230.4% in the past year.
The Zacks Consensus Estimate for ANF’s 2023 sales and EPS suggests increases of 13.3% and 2,196%, respectively, from the year-ago period’s levels.
Beacon Roofing Supply, Inc. (BECN - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 11.1%, on average. Shares of BECN have risen 37.6% in the past year.
The Zacks Consensus Estimate for BECN’s 2023 sales and EPS indicates 7.2% and 9% growth, respectively, from the year-ago period’s levels.