Investing.com -- Shares in Dave & Buster’s (NASDAQ:PLAY) slid in premarket U.S. trading on Thursday after the restaurant and entertainment business reported first-quarter results that missed estimates.
Adjusted net income in the 13 weeks ended on May 5 slipped by more than 37% versus the year ago period to $46.4 million, translating to $1.12 per diluted share, in a sign that customers were choosing to rein in spending on dining out during a time of elevated cost-of-living pressures. Revenue at the Texas-based group also dropped by 1.5% to $588.1 million.
Investing.com forecasts had seen the figures at $1.77 and $618.7 million, respectively.
In a statement, Chief Executive Chris Morris flagged that the company was hit by more than $10 million in "incremental labor and marketing costs" associated with the roll-out of new initiatives, adding that this expense is not projected to be repeated going forward.
Prior year comparisons were also "difficult" due to a "complex macroeconomic environment," Morris noted.
Analysts at UBS said commentary from executives following the earnings highlighted "persistent sales heads [and] margin pressure," with store traffic struggling in particular.
The analysts said the "risk/reward" profile of the firm is "balanced," citing lingering macroeconomic challenges and "limited visibility" into the trajectory of near-term sales.