Shares of Dave & Buster's Entertainment (NASDAQ:PLAY) plummeted 12.26% in Tuesday's after-hours trading following the company's disappointing third-quarter earnings report and the unexpected resignation of its CEO.

The popular arcade and restaurant chain reported a significant miss on both revenue and earnings for the quarter ended October 2024. Total revenue fell 3% year-over-year to $453 million, well below analysts' expectations of $463.7 million. Adjusted earnings per share came in at a loss of $0.45, missing estimates of a $0.36 loss.

One of the key factors behind the weak performance was a 7.7% decline in same-store sales, which was worse than the 5.5% drop analysts had projected. Dave & Buster's cited adverse weather trends across some of its key regions and store remodel construction work as contributing factors to the same-store sales decline.

Adding to the negative sentiment, Dave & Buster's announced that CEO Chris Morris has resigned after just over two years in the role. Morris will be replaced on an interim basis by Kevin Sheehan, the company's current board chair, while the search for a permanent CEO is underway.

The dismal results and surprise leadership change raise concerns about Dave & Buster's ability to navigate the challenging economic environment and inflationary pressures weighing on consumer demand. As a leisure and entertainment business, Dave & Buster's is particularly vulnerable to shifts in consumer spending habits during periods of economic uncertainty.