Dave & Buster’s (PLAY) Bets On New Leaders To Reverse Its Slide

Dave & Buster's Entertainment (PLAY) reported mixed second-quarter fiscal 2026 results on September 14, 2024, revealing both challenges and potential for turnaround. Revenue declined by 2.4% to $544.1 million, while adjusted EBITDA fell to $98.9 million, but comparable sales, which had been declining for over a year, showed improvement.

In June, comparable sales fell 5%, then 2.9% in July after a 5% decline in June, and Harper reported further improvement in the first five weeks of the third quarter. Food and beverage sales surged 7.6% in the quarter, with the Eat & Play Combo bundle contributing to the growth. Harper has introduced a new leadership team, including a chief marketing officer, chief operations officer, chief technology officer, and chief legal officer.

The company launched 10 new games and attractions, including tie-ins with popular franchises, and remodeled six stores, which now outperform the rest of the chain. Net capital spending decreased to $127.6 million, and adjusted free cash flow turned positive at $19.5 million. Despite the progress, total revenue slipped, and adjusted EBITDA remains low at 18.2%.

The company expects to open only four additional domestic locations this year and five in 2027, with net capital spending expected to fall to $150 million or less. Interim CFO Cory Hatton acknowledged the economic pressure on lower-income customers and warned that the noncash deferral headwind will continue into the third quarter.

The stock trades at a forward P/E of 8.76, indicating potential for sharp movement once the next quarter's numbers are released. Dave & Buster's has shown real progress, but the market's view is divided, with hedge fund ownership increasing and short interest signaling significant skepticism.