Dave & Buster's Opened Six Stores Into a 2.9% Fall in Comparable Sales. Adjusted EBITDA Dropped by About $31 Million.

Dave & Buster's Entertainment published results for its second quarter on September 14. Revenue fell, comparable sales fell further, adjusted EBITDA fell by roughly a quarter - and the company opened six more stores during the quarter. The combination is the whole story.

The quarter in figures

• Total revenue: $544.1 million, down 2.4% year on year.
• Comparable store sales: down 2.9%.
• Net loss: $12.5 million, or $(0.36) per diluted share.
• Adjusted net loss: $9.5 million, or $(0.27) per diluted share.
• Adjusted EBITDA: $98.9 million, a margin of 18.2%, against $129.8 million a year earlier.

Games carry the revenue

The business is not a restaurant with an arcade attached. Entertainment revenue was $332.6 million, or 61.1% of the total. Food and beverage was $211.5 million, or 38.9%.

Adding boxes while the box average falls

Six new domestic stores opened in the quarter. The company ended it with 250 company-owned locations - 184 under the Dave & Buster's name and 66 under Main Event - plus six international franchise stores, with at least one more franchise opening expected. Eight remodels have been completed so far this fiscal year and two more are planned.

Revenue per store week was $170,000, down from $182,000. That is the arithmetic tension in the release: more stores, less revenue per store, and a total that still fell.

The balance sheet

• Available liquidity: $492.1 million.
• Long-term debt, net: $1,500.5 million.
• Cash and equivalents: $16.0 million.
• Stockholders' equity: $87.9 million.
• Adjusted free cash flow for the first six months: positive $19.5 million, against negative $36.5 million a year earlier.

Long-term debt is roughly seventeen times stockholders' equity. The six-month free cash flow swing of $56 million is the clearest improvement in the release.

What management said

Our Back-to-Basics strategy is gaining momentum with enhanced executional urgency.

The stated priorities are returning to same-store sales and EBITDA growth, sharpening margin management through cost savings, generating free cash flow and delivering shareholder value.

This article reports a company's published results and is not investment advice or a recommendation to buy or sell any security.