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Sunday July 14, 2024



Dave and Buster's Reports Earnings

Dave and Buster’s Entertainment, Inc. (PLAY) announced its fourth quarter and full year earnings on Tuesday, April 2. The arcade company’s stock rose over 7% after the company reported an increase in sales.

Revenue reached $599.1 million for the fourth quarter. This was a 6% increase from revenue of $563.8 million reported in the same quarter last year and below analysts’ expectations of $602.6 million. For the full year, revenue came in at $2.2 billion, up 12% from $2.0 billion in the previous fiscal year.

“I am pleased with the strong progress we made during the final quarter of fiscal 2023 and the year as a whole, which is a testament to the hard work and dedication of our phenomenal team members,” said Dave and Buster’s CEO, Chris Morris. “Fiscal 2024 is set-up to be a transformative year for our company with the anticipated opening of an additional 15 new domestic stores, the opening of up to four new international D&B units, our continued focus on cost efficiency and Adjusted EBITDA margin improvement and our continued progress on our organic revenue growth initiatives, including our remodels which have outperformed our expectations and in which we are accelerating the portfolio wide roll-out.”

Dave and Buster’s reported quarterly net income of $36.2 million or $0.88 per adjusted share. Last year at this time, the company reported net income of $39.1 million or $0.80 per adjusted share. For the full year, the company reported net income of $126.9 million, a decrease from net income of $137.1 million reported last year.

Dave and Buster’s combined comparable store sales decreased 7% compared to the same time last year but was an increase of 8% compared to the same quarter in 2019. The company’s entertainment segment reported revenue of $378.9 million and food and beverage revenues came in at $220.2 million for the quarter. The company opened six new domestic stores in the quarter for a total of 220 locations by the end of the fourth quarter. During the quarter, the company announced that it entered into an international franchise partnership to develop a couple stores in the Dominican Republic, adding to its existing agreements in six countries.

Dave and Buster’s Entertainment, Inc. (PLAY) shares closed at $64.62, up 3% for the week.

Levi Strauss Releases Earnings Report

Levi Strauss & Co. (LEVI) announced its first quarter financial results on Wednesday, April 3. Despite the denim powerhouse reporting a decrease in revenues, shares rose by 10% following the earnings release.

Levi’s reported revenue of $1.56 billion for the first quarter. This was down 8% from revenue of $1.69 billion in the same quarter last year but above analysts’ expectations of $1.55 billion.

“We started the year strong delivering results above expectations, underscoring the power of the Levi’s brand and the progress we are making on our strategic priorities,” said Levi Strauss & Co. CEO, Michelle Gass. “Both newness and strength in our core offerings are fueling consumer demand and driving meaningful market share gains. The momentum in our global DTC business continues, with DTC up in all segments.”

The company reported a net loss of $10.6 million or $0.03 per adjusted share. This was down from net income of $114.7 million or $0.29 per adjusted share reported during the same quarter last year.

The company’s global direct-to-consumer (DTC) revenue and E-commerce segments saw significant growth, increasing 7% and 13% respectively. Wholesale revenues decreased by 18%, which the company attributed to the $100 million negative shift in wholesale shipments from the U.S. ERP implementation in 2023. Levi’s declared a dividend of $0.12 per share of common stock, payable on May 23, 2024, to the stockholders of record for Class A and Class B common stock on May 9, 2024. The company reaffirmed its fiscal 2024 guidance and expects net revenues to grow between 1% to 3% year-over-year and adjusted earnings per share to be between $1.17 to $1.27.

Levi Strauss & Co. (LEVI) shares ended at $20.55, up 4% for the week.

Lamb Weston Serves Up Quarterly Results

Lamb Weston Holdings, Inc. (LW) announced its third quarter earnings on Thursday, April 4. The Idaho-based company reported lower-than-expected earnings, causing its shares to drop by almost 20% following the report.

The company reported revenue of $1.46 billion during the third quarter. This was up 16% from revenue of $1.25 billion in the same quarter last year but below analysts’ estimates of $1.65 billion.

“The transition to a new enterprise resource planning (ERP) system in North America negatively impacted our financial results in the quarter by more than we expected,” said Lamb Weston CEO, Tom Werner. “The ERP transition temporarily reduced the visibility of finished goods inventories located at distribution centers, which affected our ability to fill customer orders. In turn, this pressured sales volume and margin performance. While we are disappointed with the magnitude of the ERP transition’s effect on the quarter, after implementing systems adjustments and modifying processes, we believe the impact is behind us as our order fulfillment rates have normalized.”

For the quarter, Lamb Weston reported adjusted net income of $146.1 million or $1.01 per adjusted share. This is a decrease from net income of $175.1 million or $1.21 per adjusted share at the same time last year.

The frozen food supplier reported a decrease in net sales for its North American segment which decreased by 12% to $947.5 million. The company’s International segment reported net sales of $510.8 million, increasing 179% from the $182.8 million reported at the same time last year. For Fiscal 2024, the company updated its net sales target and expects net sales to be in the range of $6.54 billion to $6.60 billion. The company also reduced its target for annual net sales to a range of $6.8 billion to $7.0 billion, which reflects the higher-than-expected impact on customer order fulfillment rated resulting from the transition to a new ERP system.

Lamb Weston Holdings, Inc. (LW) shares ended the week at $79.78, down 23% for the week.

The Dow started the week at 39,808 and closed at 38,904 on 4/5. The S&P 500 started the week at 5,258 and closed at 5,204. The NASDAQ started the week at 16,397 and closed at 16,249.

Treasury Yields Vary

U.S. Treasury yields rose throughout the week as investors digested the latest manufacturing data that indicated a possibility of further inflationary pressures ahead. Yields continued to move higher at the end of the week as the latest jobs report showed a resilient job market.

On Monday, the Institute for Supply Management (ISM) released its purchasing managers’ index (PMI) for March indicating growth in the manufacturing industry. This was the first time the reading has indicated growth since September 2022. The PMI measures the change in production levels across the U.S. and is used as an indicator of U.S. economic activity. The PMI for March was 50.3, up from a PMI of 47.8 in February and above economists’ estimates of 48.4.

“If the contraction of manufacturing activity is over, far too soon to say, and price pressures are building in manufacturing, which appears to have been happening for the last three months, then this would have implications for the path for interest rates in 2024,” said senior economic advisor at Brean Capital, Conrad DeQuadros.

The benchmark 10-year Treasury note yield opened the week of April 1 at 4.21% and traded as high as 4.43% on Wednesday. The 30-year Treasury bond opened the week at 4.35% and traded as high as 4.57% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 9,000 to 221,000 for the week ending March 30. Continuing unemployment claims declined by 19,000 to 1.79 million. On Friday, the Bureau of Labor Statistics released its monthly jobs report for March which showed the unemployment rate fell to 3.8% in March, from 3.9% in February. The report also noted an increase of 303,000 jobs in March, well above economists’ forecasts of 205,000.

“The blockbuster 303,000 increase in non-farm payrolls in March supports the Fed’s position that the resilience of the economy means it can take its time with rate cuts, which might now not begin until the second half of this year,” said chief North America economist at Capital Economics, Paul Ashworth.

The 10-year Treasury note yield finished the week of 4/5 at 4.41%, while the 30-year Treasury note yield finished the week at 4.56%.

Mortgage Rates Show Minimal Fluctuation

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, April 4. The survey indicated a slight uptick in 30-year mortgage rates, nearing the 7% mark.

This week, the 30-year fixed rate mortgage averaged 6.82%, up from last week’s average of 6.79%. Last year at this time, the 30-year fixed rate mortgage averaged 6.28%.

The 15-year fixed rate mortgage averaged 6.06% this week, down from 6.11% last week. During the same week last year, the 15-year fixed rate mortgage averaged 5.64%.

“Mortgage rates showed little movement again this week, hovering around 6.8%,” said Freddie Mac’s Chief Economist, Sam Khater. “Since the start of 2024, the 30-year fixed-rate mortgage has not reached 7% but has not dropped below 6.6% either. While incoming economic signals indicate lower rates of inflation, we do not expect rates will decrease meaningfully in the near-term. On the plus side, inventory is improving somewhat, which should help temper home price growth.”

Based on published national averages, the savings rate was 0.47% as of 03/18. The one-year CD averaged 1.81%.

Editor’s Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published April 5, 2024

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