A Bowlero executive publicly addressed the sprawling federal discrimination probe the company is facing for the first time Wednesday after it reported another quarter of what it called record-breaking growth.
Brett Parker, the company's outgoing chief financial officer and longtime No. 2 to CEO Thomas Shannon, was asked about the investigation during an earnings call. The question came about a week after CNBC revealed authorities want to settle the investigation for $60 million.
"There's been quite a bit of noise related to the EEOC review that's been pending here. It seemed to grab quite a bit of media attention in the last week. Want to see if there is anything that you wanted to comment on that," Jeremy Scott Hamblin, an analyst with Craig-Hallum Capital Group, asked Parker.
Parker responded by saying the claims included in CNBC's reporting are "entirely false," and "we deny them in the strongest terms."
"We have nothing to hide. We have fully cooperated and provided information to document — and documents to the EEOC throughout this whole process," said Parker.
"Our own thorough investigation into the claims also has not substantiated any evidence of wrongdoing or any violation of our policies prohibiting any form of employment discrimination," he said.
Parker went on to say the company "does not tolerate discriminatory or demeaning context." He insisted "these are the facts," which is why the company has fought so hard to have the claims thrown out.
"Whatever the outcome is, it will not materially impact our business or distract us from executing against our strategic priorities. Our latest earnings results that we're talking about now reflect our unwavering focus and commitment to excellence," he said.
"At the end of the day, we stand by our positive workplace culture, we stand by our visionary leader, and we stand by our track record of cultivating exceptional talent. And beyond that, there's not much we can say."
Bowlero's fiscal third-quarter revenue in the three months that ended April 2 was $316 million, up 22% year over year, but its net loss widened to $32 million, a 78% jump compared to the year-earlier period. The loss was driven by an $87 million expense associated with a revaluation of earnout shares.
The third quarter is historically the company's strongest, and executives noted during an earnings call the latest quarter was its strongest ever. However, Bowlero's stock plummeted when the markets opened Thursday morning and it closed nearly 17% lower.
During its earnings call, the company said it had benefited from post-pandemic demand in restaurants and entertainment and its strong year-over-year growth is expected to normalize as consumers cut spending.
Further, in its quarterly securities filing, Bowlero noted its disclosure controls and procedures were not effective because of a material weakness related to its accounting processes.
The disclosure prompted three law firms to open investigations into Bowlero for potential securities violations, press releases sent by the firms state. Stockholders were encouraged to contact the firms. Bowlero didn't return a request for comment on the matter.
Bowlero faces dozens of claims
Last week, Bowlero's stock dropped as much as 9% in intraday trading after CNBC published an investigation that revealed new details about a sprawling investigation the U.S. Equal Employment Opportunity Commission has been conducting into the company's employment practices. The stock closed about 4% lower that day.
Parker's comments mark the first time a Bowlero executive has publicly addressed the EEOC's probe, which has been ongoing since 2016.
When CNBC reached out to Bowlero prior to publishing a report about the probe, the company refused to make its executives available for an interview. It only communicated through its attorneys and an outside press representative. At times, discussions around reporting the confidential settlement negotiations became antagonistic when the outside press representative intimated a CNBC reporter could be arrested for publishing the information, underscoring the seriousness of the claims.
The case involves at least 73 former employees who claim they were fired based on their age, or out of retaliation, according to securities filings.
The EEOC has found reasonable cause in 55 of those cases, which sparked a larger pattern or practice probe — a type of investigation the agency initiates in cases where systemic issues of discrimination could be occurring.
The agency has found reasonable cause that Bowlero has engaged in a pattern or practice of discrimination since at least 2013, which coincides with its expansion from a small chain to a national powerhouse with 329 locations.
Bowlero's CEO is accused of directing staff to fire aging employees and replace them with candidates perceived as young and hip, former employees told the EEOC.
Among staff, the top executive was also known to make condescending jokes about women, offhand remarks that were "racially motivated" and negative comments about LGBTQ people, the affidavit says. Some female employees didn't openly disclose their marital status or their pregnancies out of fear of losing their jobs, a former HR employee told the EEOC.
Bowlero's lawyers previously called every allegation against Shannon "meritless."
While it is not uncommon for a company, especially one of Bowlero's size, to face an EEOC complaint from a former employee, it is rare for the EEOC to determine reasonable cause.
In all of fiscal 2021, the most recent data available, the agency found reasonable cause in just 2.8% of the thousands of age-discrimination charges it received.
The EEOC recently attempted to settle the charges for $60 million, but negotiations fell apart when Bowlero countered with $500,000, according to attorney Daniel Dowe, who represents more than 70 former employees with claims against the company.
The case is now expected to go to court, where Bowlero could face even steeper fines, experts said previously.