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Why Dave & Buster’s Lost 13% in May

By Demitri Kalogeropoulos – Jun 7, 2019 at 12:26PM

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The stock underperformed the market ahead of the chain's upcoming earnings report.

What happened

Restaurant and entertainment specialist Dave & Buster's (PLAY 1.27%) underperformed a weak market last month as the stock lost 13% compared to a 7% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop removed much of shareholders' above-market gains for the year, and the stock now is roughly even with the broader market's 13% increase in 2019.

A father and son playing arcade games.

Image source: Getty Images.

So what

Dave & Buster's announced a new CFO early in the month and also celebrated the addition of its fourth North Carolina location. Yet May's stock slump was likely driven more by weakness in the broader stock market and by concerns that the company might announce weak first-quarter sales results in its upcoming earnings report.

Now what

The chain is expected to post modestly higher comparable-store sales on Wednesday, June 12, to likely mark its second straight quarter of growth following more than a year of declines. In addition to those customer traffic trends, investors will be watching for signs that profitability is stabilizing, with help from a revamped food menu and the addition of several exclusive VR gaming titles. Success on these points should support management's aggressive expansion plans, which call for adding a record 16 new locations to the sales footprint in 2019.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Dave & Buster's Entertainment. The Motley Fool has a disclosure policy.

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