Dave & Buster's Entertainment (NASDAQ: PLAY) reported Q3 EPS of ($1.01), $0.10 better than the analyst estimate of ($1.11). Revenue for the quarter came in at $109.1 million versus the consensus estimate of $109.36 million.

Fourth Quarter Business Update

The recent resurgence of COVID cases has resulted in renewed operating limitations imposed by local jurisdictions, several store reclosures, and further delays in the Company’s ability to re-open its California and New York stores, which represent approximately 25% of historical annual sales. As a result, during the first five weeks of the fourth quarter through December 6, 2020, the Company’s sales recovery has moderated, including:

• Overall comparable store sales decline of 71%
• Sales index of approximately 49% across an average of 71 open comp stores
• The net reclosure of 15 stores due to local mandates and one new store opening, leaving 90 stores open, or 65% of the chain
• Reduced operating hours for currently open stores

For the month of November, these conditions resulted in sales of approximately $32.6 million, including a 69% decline in overall comparable store sales, and an EBITDA loss of approximately $11.0 million, equating to an average weekly EBITDA burn rate of approximately $2.7 million.

The Company currently anticipates that the trend of COVID cases and resulting actions by local jurisdictions to limit operations or re-close stores will intensify over the balance of the fourth quarter, and that re-opening its California and New York stores will be delayed until early 2021. These conditions will be especially impactful to the Company’s December sales and profitability, a month in which it has historically benefited from high foot traffic and a robust special events business.

As a result, the Company expects further erosion in fourth quarter comparable store sales and EBITDA, including the following anticipated cost pressures:

• Increased store labor costs, reflecting the Company’s decision to recall key store leadership positions to maintain talent and to ensure store restart capabilities
• Increased repair & maintenance costs
• Above-normal spoilage costs due to prolonged closures
• Reduction of rent abatements due to expiration of landlord agreements
• Increased G&A costs reflecting the recall of select positions

For earnings history and earnings-related data on Dave & Buster's Entertainment (PLAY) click here.