What happened
Dave & Buster's Entertainment (PLAY 3.15%) shareholders trounced the market this week. Shares jumped 11% through Thursday trading compared to a 2% drop in the S&P 500, according to data provided by S&P Global Market Intelligence. The boost pushed the restaurant and entertainment specialist further into positive territory for the year, up 4% while the broader market has dropped 14%.
It was powered by a positive earnings update from the management team.
So what
Dave & Buster's said on Tuesday that revenue spiked 24% in the fiscal first quarter -- which ended in early May -- a new quarterly record for the business. Consumers returned to its stores, which offer dining, video game, and amusement options, as they shifted spending more toward in-person experiences.
NASDAQ: PLAY
Key Data Points
Demand shifted toward the amusement side of the business, which isn't as dependent on labor costs. That move helped Dave & Buster's set an earnings record despite inflation and rising operating costs. The results, according to management, "demonstrate our ability to drive revenue, profitability and strong cash flow despite continued headwinds in the economy."
Now what
Interim CEO Kevin Sheehan indicated that Dave & Buster's is seeing continued strength early in the second quarter as consumers prioritize activities that were not available in earlier phases of the pandemic.
The second quarter will bring new game offerings, including in the popular virtual reality space. Dave & Buster's also plans to introduce more menu items. While profitability isn't likely to continue expanding at the pace investors saw in Q1, the chain appears well positioned to capture more business this summer given the spending focus on in-person entertainment.
