Dave & Buster’s climbs 12% on a stronger than expected Q4 earnings report

Dave & Buster’s Entertainment (NASDAQ:PLAY) released its quarterly performance results on Thursday that topped analysts’ estimates for earnings and revenue and sent the stock 12% higher in after-hours trading. The stock, however, had declined 6.1% earlier in the regular session. Closing at £8.20 per share on Thursday, the American restaurant and entertainment business was still around 75% down year to date in the stock market.

Dave
& Buster’s also announced cost-cutting measures on Thursday amidst the
Coronavirus pandemic that has pushed its countrywide locations into a temporary
shutdown.

According
to the company, it made 65.28 pence of earnings per share in the fourth
quarter. At £20.40 million, its net income came significantly lower than £23.99
million that was reported in the same quarter last year.

Dave
& Buster’s Slashed 90% Of Its Corporate & Store Management Staff

Dave
& Buster’s revenue, however, climbed from £270.73 million last year to £283.30
million in the recent quarter. As per FactSet, analysts had anticipated the
company to make 56.30 pence of earnings por share in Q4 and generate £281.10
million in revenue.

In
terms of cost-cutting strategies to cushion the economic
blow from the Coronavirus pandemic, the arcade-themed U.S restaurant chain
placed 15,000 of its hourly employees on furlough, slashed 90% of its corporate
and store management staff, and canceled board compensation for 2020. The
company also announced a 50% cut on the salaries of its senior management.

Dave
& Buster’s further added declared its share buybacks and dividends
suspended for the year as it also paused capital spending including
construction of new stores. As of March 20^th, the restaurant chain
has closed its 137 U.S locations and is currently negotiating with its vendors
and landlords to minimize expenses.

Dave
& Buster’s Is Negotiating With Private Equity Firms To Supplement Its
Liquidity

To
further strengthen its financial stature, Dave & Buster’s is also seeking
and investment commonly termed as private investment in public equity (PIPE).
Upon striking such a deal with a private equity firm, the buyout firm will get
a significant stake in the American restaurant chain. In return, it will help
Dave & Buster’s improve its credit facility and liquidity at large.

Earlier
in January, KKR
& Co. (private equity firm) had announced its minority stake in Dave
& Buster’s.

At
the time of writing, Dave & Buster’s has a market value of £250.50 million
and over £530.37 million worth of long-term debt.