03:13 PM EST, 11/25/2024 (MT Newswires) -- Dave & Buster's Entertainment (PLAY) faces ongoing same-store sales and traffic pressures, driven by a challenging macroeconomic environment and reduced consumer spending, UBS Securities said in a note on Monday.

However, effective cost management initiatives are helping mitigate profitability challenges, according to the note.

UBS projects a 6.0% decline in Q3 same-store sales, reflecting pressures in food & beverage and entertainment categories due to a difficult macroeconomic backdrop and constrained consumer spending.

The brokerage models adjusted earnings before interest, taxes, depreciation, and amortization margins at 16.8%, slightly ahead of the 16.7% consensus, driven by pricing actions and labor efficiencies. Despite sales deleverage, the company's profitability benefits from these measures.

The focus will shift to Q4 trends and the impact of efforts to boost same-store sales, including pricing adjustments, new food offerings launched in August, strong gains at remodeled units, and improved digital marketing.

UBS expects a 4% decline in same-store sales during Q4 and 1.4% growth for fiscal 2025, in line with consensus estimates.

The firm has a neutral rating on Dave & Buster's stock with a price target of $35.

Shares of Dave & Buster's Entertainment were up more than 8% in recent trading.

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