Dave & Buster’s Inc., the operator of 58 big box restaurant and entertainment complexes, swung to profit in the fourth quarter, seeing its first same-store sales improvements since 2008.
Fourth-quarter same-store sales increased 1.2 percent, and were positive for the first time since the second quarter of 2008, company executives said in an earnings call with note holders Thursday. Oak Hill Capital Partners and Dave & Buster’s management took the company private in June 2010.
For the fourth quarter, which ended Jan. 30, Dave & Buster’s reported net income of $4.5 million, compared to a loss of $90,000 in the same quarter last year. Latest-quarter revenue rose 1.4 percent to $135.5 million.
Brian Jenkins, Dave & Buster’s chief financial officer, said “2010 was really an inflection or turning point year for us as we experienced a difficult sales environment in the first half of the year as the economy continued to sputter, but we saw sales strengthen significantly in the back half.”
For the year Dave & Busters reported a loss of $7.3 million, compared to a loss of $350,000 in fiscal 2009. The company said the gap reflected increased long-term debt and interest expenses.
In Thursday’s call with note holders, the company also reported:
• Flooded Nashville, Tenn., store progress: Steve King, Dave & Buster’s chief executive, said the company is making headway on re-opening the Opry Mills store, which has been closed since flooding in May 2010. “We’re optimistic that we can begin rebuilding that store during the second quarter,” King said. “The opening is still a little uncertain, but we are making progress in negotiations with our landlord.”
• Insurance recovery: Related to the Nashville flooding damage, the company said it will realize $9 million from insurance, with $4.4 million of that for business interruption.
• Openings this year: The company plans to open new stores in Orlando, Fla., and Braintree, Mass., the latter of which will be the first in its market. A third store will opening Oklahoma City, Okla., by year’s end and that will be the first of a smaller format, at about 22,000 square feet.
• Sales by market: The sales recovery has been “well distributed” from a geographic perspective, King said. Executives add that same-store sales for the first 10 weeks of fiscal 2011 are “encouraging.”
In February, Dave & Buster’s parent holding company, Dave & Buster's Parent Inc., completed a private placement of about $180.8 million in notes at 12.25-percent interest, generating gross proceeds of about $100 million. The notes were the obligation of Dave & Buster’s Parent, intended as dividend or to repurchase common stock, and the company did not receive proceeds, it said.
Dave & Buster’s has locations in 24 states and one franchised location in Canada.
Contact Ron Ruggless at [email protected].
