Shares of Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) have dropped over 20% today as it’s CEO, Steve King, announced its updated guidance for its fiscal 2017, which will be ending on February 4th, 2018.
King said that the company anticipated a slower start to the fourth quarter but expected its sales to improve in December. However, the company’s sales did not improve during this time and due to this, it slashed its estimate for its fiscal 2017. From its previous guidance of $110-$112 million, the company expects the income to be around $108-$110 million.
King announced that its new stores that have been opened, are performing very well. The year-one cash returns on its 2016 stores that were opened, was around 54%, which far exceeded its very successful 2014 and 2015.
The CEO states that the company’s key priority is to open new stores with these outstanding returns. Dave and Buster’s still plans on opening 14-15 new stores in 2018 and anticipates to grow its locations by 14 percent this year. In mid-2017, the company has signed 23 location leases for new stores to be opened between now and 2019.
This Christmas season, American’s spent less on gifts this year, than previous years in the past. Some analysts believe this is due to the unlikelihood of raises within the new year. As Dave and Buster’s scratches its head as to why it didn’t make the anticipated amount they were expecting in December, this might be a big reason. As Americans spent less on gifts, they might have opted to spend less on entertainment during the holiday season, as well.
Still, the return the company has made with its new stores is something to be confident about. While a renovation of old stores may be a more cost-effective solution, the company is set on its previous plans and will open its anticipated new stores within the year 2018.
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