What led to Dave & Buster’s Entertainment Inc (NASDAQ: PLAY) stock crash

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Dave & Buster’s Entertainment Inc (NASDAQ: PLAY) stock fell over 7.5% on 11th September, 2019 (as of 11:01 am GMT-4; Source: Google finance) after the company posted mixed results for the second quarter of FY 19. PLAY in the second quarter of FY 19 has reported the adjusted earnings per share of 90 cents, while adjusted revenue growth of 8 percent to $344.6 million in the second quarter of FY 19, missing the analysts’ estimates for revenue of $345.3 billion. Comparable-store sales fell 1.8% in the quarter, compared to a decrease of 2.4% in the comparable period last year. The decrease in comparable store sales was driven by a 2.0% decline in walk-in sales, which was partially offset by a 0.1% increase in special events sales. Comparable store sales decreased 0.8% in Amusements & Other and 3.2% in Food & Beverage. Non-comparable store revenue was $77.2 million in the second quarter of 2019, an increase of $29.6 million or 62.3% versus the comparable period last year.

Additionally, during the second quarter of 2019, the Company repurchased 3.4 million shares for approximately $137 million and at quarter-end had approximately $270 million remaining under the $800 million authorization. The Company paid a quarterly cash dividend of $0.15 per share during the second quarter.

PLAY has guided for a deeper same-store sales decline for fiscal 2019, saying it expects a fall between 3.5% and 2% for the year compared with a previous expectation of a decline between 1.5% and 0.5%. Revenues for the year were seen between $1.338 billion and $1.359 billion, versus a prior expectation of revenue between $1.365 billion and $1.390 billion. The Company remains on track to open 15 to 16 new locations in fiscal 2019, representing unit growth of approximately 12% (net of Gwinnett (Duluth), Georgia closing). At the top end of the range, these store openings will include 11 large and 5 small format locations and will skew towards new markets for the Dave & Buster’s brand.

Further, for FY 19, the company expects net income to be in the range of $91 million to $100 million (vs. $103 million to $113 million). 2019 EBITDA is expected to be in the range of $272 million to $282 million ($274 million to $284 million excluding approximately $2 million in one-time charges) (vs. $283 million to $295 million previously).

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