Published on 12 Apr 2024 on Zacks via Yahoo Finance
Here's Why Investors Should Retain Dave & Buster's (PLAY) Stock
Dave & Buster's Entertainment, Inc. PLAY is likely to benefit from store expansions, remodeling efforts and digital initiatives. Also, the emphasis on pricing adjustments bodes well. However, dismal comps and an uncertain macroeconomic environment are a concern.Let us discuss the factors highlighting why investors should retain the stock now.
Growth Catalysts
Expansion Efforts: Dave & Buster's continues to pursue a disciplined new store-growth strategy in new and existing markets, given the broad appeal of its brand. In the fiscal 2023, the company opened 16 new stores, including 11 Dave & Buster's outlets and five Main Events venues. Following the openings, the company reported solid performances in regard to the same. The company stated an extensive pipeline of new units for opening in the upcoming years. To this end, the company enhanced its strategy for opening new units to better seize immediate demand by utilizing its loyalty database to gather more relevant data about new customers and markets. This optimization is forecasted to improve frequency management and generate greater returns on capital invested in new stores.Remodeling Initiative: The company emphasizes updating the layout and appearance of its D&B stores to boost foot traffic and overall productivity. It also uses technology to support guest engagement and introduces fresh entertainment options to attract customers for walk-in and particular event business.Remodels have shown promising financial results in initial tests, particularly in Friendswood, Texas, exceeding expectations. The company has initiated eight test remodels and reported strong feedback with respect to the same. Following the testing and financial observations, the company intends a planned rollout of the remodel program to the remaining D&B locations in 2024 and beyond. It intends to adhere to a stage gate process focused on achieving a 20% or higher return threshold. The company intends to remodel 40 to 45 stores in fiscal 2024.Sales Building Initiatives: PLAY has been actively exploring and experimenting with pricing adjustments across its gaming ecosystem, gaining valuable insights from various tests conducted in different regions. In the fourth quarter of fiscal 2023, the company reported significant progress in implementing a new games pricing strategy with nationwide trials. In mid-February 2024, the company introduced tiered point-of-sale pricing adjustments for the Power Card to optimize purchase amounts and chip allocations, considering regional variations across Dave & Buster's stores. The advancements demonstrate proactive management of entertainment pricing while maintaining a compelling value proposition, paving a path for growth in the upcoming periods. The company is optimistic and anticipates the adjustments to boost entertainment sales in the fiscal 2024 substantially.