Dave & Buster's: IPO withdrawal won't impact growth

Dave & Buster's Inc. trimmed its losses in the third quarter, but executives expressed no immediate plans to restart a public offering that was withdrawn earlier in the fall, saying on Tuesday that the withdrawal won't impact growth.

Dallas-based Dave & Buster's, the privately held operator of 60 big-box entertainment/restaurant units, reported a net loss in the quarter ended Oct. 28 of $1.6 million, down from $4.4 million in the same period last year. Revenues in the third quarter rose to $131.1 million from $120.3 million in the prior year, with food and beverage revenues increasing 6 percent and amusements and other revenues climbing 11.8 percent over the prior-year quarter.

Steve King, chief executive of Dave & Buster's, told analysts, who represent holders of senior notes, that the October withdrawal of the IPO filing would have little impact on the company in the year ahead.

"While we had sufficient demand from the market to execute an IPO, market conditions had become increasingly volatile," King explained. "And as a result, we elected not to accept the offer presented to us by our underwriters."

Dave & Buster's originally filed IPO plans in July 2011. In September, the company said it expected an offering of 7.69 million shares to price between $12 and $14 a share, or between $92.2 million and $107.7 million.

"Although we are open to considering a possible IPO at a later time," he said, "our continued status as a private company will have no impact on our ability to execute our strategic plan, including our new-unit growth plans for the foreseeable future."

King said the company still plans to open four to six units in 2013, and the company targets 10 percent new-unit growth in the years beyond that. One new store opened in Orland Park, Ill., during the third quarter of 2012, the company said, and a new, relocated flagship store in Dallas opened earlier in December.

The company said third-quarter same-store sales increased 3.9 percent. "Our comparable-store sales increase of nearly 4 percent was markedly better than the industry-wide benchmark for casual dining, which was essentially flat for the quarter," King said.

On dealing with the Patient Protection and Affordable Care Act, King said the biggest impact is likely to come in 2014. "We have begun working on how we might manage this," King said. "Realistically, most retailers and restaurants are going to have to work on hours and looking at the proportion of part-time people that they have versus full-time people."

He said Dave & Buster's hopes to be in test with some ideas by the end of first quarter 2013, "So that we can measure the effects not just on the cost side but also on how we deliver from a guest standpoint and what happens with guest satisfaction."

Dave & Buster's has stores in 25 states and Canada.

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