Shares of Dave & Buster’s Entertainment Inc. (PLAY) climbed in early trading on Wednesday after the company delivered upbeat second-quarter results, exceeding expectations despite a challenging economic environment.
The company’s success in the face of headwinds was highlighted by analysts, who praised its ability to navigate a tough consumer spending landscape. BMO Capital Markets analyst Andrew Strelzik reiterated his Outperform rating for Dave & Buster’s, although he lowered the price target from $65 to $55. Strelzik attributed the positive results to stronger restaurant margins and lower general and administrative expenses, which more than offset weaker comparable sales.
While acknowledging the pressure on same-store sales, which declined 6.3% in the second quarter and are expected to continue declining in August, Strelzik expressed confidence in the company’s ability to overcome these challenges. He emphasized that Dave & Buster’s is well-positioned to navigate the difficult environment through cost savings, paving the way for better performance once the economic climate improves.
Truist Securities analyst Jake Bartlett maintained a Buy rating and a $59 price target for Dave & Buster’s, despite the significant decline in same-store sales. Bartlett attributed the earnings beat to cost efficiencies, emphasizing that Dave & Buster’s is strategically addressing the current economic pressures. He highlighted the company’s ongoing sales initiatives, including remodels, a focused marketing campaign for football season, and significant special events, which are expected to drive sales in the coming months.
While the near-term outlook for same-store sales remains uncertain, both analysts believe that Dave & Buster’s is well-equipped to navigate the challenges and capitalize on future opportunities. The company’s focus on cost control and strategic initiatives are expected to help offset the impact of weak consumer spending and drive long-term growth.
