Pinstripes, Inc. ((PNST)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Pinstripes, Inc. reflected a dual-sided sentiment, highlighting both positive strides and notable challenges. While the company is making headway in profitability and cost management, concerns linger over liquidity and declining comparable store sales. The overall tone was cautiously optimistic, with management acknowledging hurdles that need to be addressed.
Strong Venue-Level EBITDA Margins
Pinstripes, Inc. reported significant achievements in venue-level EBITDA margins, reaching over 19%. This milestone marked the company’s most profitable corporate quarter in two years, with an adjusted EBITDA of $2.7 million underscoring this success.
Revenue Growth
The company experienced a 10.4% increase in total revenue, totaling $35.5 million compared to the previous year. This growth was driven by a 10.5% rise in food and beverage revenues and a 10.3% uptick in recreation revenues, showcasing robust performance across its core offerings.
Cost Reduction Initiatives
Pinstripes implemented effective cost reduction strategies, achieving $10 million in annualized savings at the store level and $4 million in SG&A reductions. These savings have been fully realized and are evident in the company’s profit and loss statements.
New Store Openings
Continuing its expansion strategy, Pinstripes opened a new venue in Walnut Creek, California, marking its 18th location. The company also plans to open additional venues in Coral Gables and Jacksonville, indicating ongoing growth ambitions.
Negative Comp Growth
The company faced challenges with negative comparable sales trends, initially in the mid- to high-teens, which later improved to a negative 7% range. This improvement came after adjustments in marketing and promotional strategies.
Liquidity Concerns
Despite positive developments, liquidity remains a concern, with cash and cash equivalents at $2.4 million and a debt of $114 million. This financial strain has prompted the company to explore strategic alternatives to bolster liquidity.
Challenges in Marketing Adjustments
Initial marketing adjustments backfired, negatively impacting business performance and contributing to comp declines. However, subsequent corrections have shown improvements, suggesting that the company is learning and adapting.
CEO Transition
The announcement of CFO Tony Querciagrossa’s departure marks a critical phase in financial leadership continuity. This transition could pose challenges as the company navigates through its current hurdles.
Forward-Looking Guidance
Looking ahead, Pinstripes anticipates continued profitability improvements, with venue-level EBITDA margins exceeding 19% in the third quarter of fiscal 2025. Despite initial challenges with same-store sales, the company expects to stabilize and potentially improve its financial performance, supported by strategic marketing adjustments and cost management efforts.
In summary, Pinstripes, Inc.’s earnings call painted a picture of a company on the brink of overcoming significant challenges while capitalizing on areas of growth and efficiency. The balance between positive financial metrics and pressing liquidity issues will be pivotal as the company strides forward.
