Dave & Buster’s (PLAY) shares tanked after the company reported disappointing Q3 financial results.
Same-store sales, a key metric for restaurants, fell at a 1.3% rate during the quarter, which was much worse than the 0.7% decline anticipated by analysts.
Among other things, management underestimated the power of wings.
“For the football season, initially, we did not put enough emphasis on sports viewing as we skipped the All You Can Eat Wings promotion that we ran last year during the first 6 weeks of the season. This had an unfavorable impact on comps,” CEO Brian Jenkins said. “To correct course towards the end of the quarter, we introduced a new and more compelling $19.99 unlimited wings promotion on game nights that also included unlimited video game play.”
Shares plunged nearly 15% in pre-market trade on Wednesday.
The company reported better-than-expected earnings of 30 cents per share versus consensus estimates of 24 cents per share.
Revenue also came in well above expectations at $282 million versus $277 million anticipated on Wall Street.
Furthermore, Dave & Buster’s management improved its revenue guidance for fiscal 2018 and now expects revenue between $1.24 billion and $1.26 billion up from the $1.23 billion to $1.26 billion previously expected.
“We are increasing the lower end of our 2018 guidance on key metrics. During the third quarter, in addition to continuing to invest in the business, we paid our first-ever quarterly cash dividend and repurchased additional shares. These actions reflect our strong commitment to enhancing long-term shareholder value,” interim CFO Joe DeProspero said.