RCI Hospitality Holdings Announces Strong 3Q24 Sales And Strategic Moves

Thursday, July 11, 2024

RCI Hospitality Holdings, Inc. (Nasdaq: RICK) released its sales report for the fiscal third quarter ended June 30, 2024, excluding non-core operations pending final closure. Full financial results for 3Q24 are anticipated by August 8, 2024. The company also announced a fresh share buyback authorization, withdrawal of casino license applications in Colorado, and an update post-Hurricane Beryl.

For Nightclubs, total sales reached $62.4 million, marking a 0.7% increase from the prior year’s quarter. This rise was driven by a 1.7% growth in same-store sales and the addition of two newly revamped clubs, partially offset by temporary closures of three clubs transitioning from BYOB to liquor. Compared to 2Q24, Nightclubs sales rose by 5.9%.

Bombshells reported total sales of $13.1 million, reflecting an 8.9% decline year-over-year. This was mainly due to a 16.2% decrease in same-store sales, partly offset by contributions from three non-SSS locations: Bombshells in San Antonio and Stafford (Texas), and Cherry Creek Food Hall & Brewery in Greenwood Village (CO) featuring Bombshells Kitchen. Compared to 2Q24, Bombshells sales increased by 2.7%.

Regarding corporate actions, RCI’s Board of Directors has approved an additional $25.0 million for share repurchases under the buyback program. Furthermore, the company formally withdrew its applications to operate casinos in Colorado, focusing instead on launching Rick’s Cabaret & Steakhouse in Central City without gambling and divesting surplus properties.

In the aftermath of Hurricane Beryl, operations swiftly resumed with four Bombshells reopening on Monday, a fifth on Tuesday, and a nightclub on Wednesday in the greater Houston area. Restoration efforts continue for the remaining clubs and Bombshells awaiting power restoration, with minor property damages being addressed, not expected to disrupt ongoing operations.

Eric Langan, President & CEO of RCI, commented: “As we said on our last conference call, we are going ‘back to basics,’ focusing on the core tenets of our capital allocation strategy, to concentrate on our core businesses, generate higher sales, cut costs, optimize underperforming locations, finish projects as fast and efficiently as possible, and buy back shares.”

“To that end, we’re pleased to report our first quarterly increase in Nightclubs same-store sales since 2Q23 and the initial success of our current club reformatting program. We’re also pleased to see Bombshells total sales increase sequentially. This reflects changes initiated mid-February. Clubs and restaurants also benefited from a strong pro sports playoff line-up, partially offset by temporary closures due to severe weather in Texas and South Florida.”

“To date in FY24, we have opened two new locations—Bombshells Stafford (TX) in November 2023 and PT’s Centerfold in Lubbock (TX) in March 2024. We expanded a location in June 2024, creating ‘two clubs in one,’ adding a Chicas Locas BYOB club in unused space in the same building as the Chicas Locas Dallas (TX) liquor club. We also reformatted three Texas clubs from BYOB to liquor, reopening them as Baby Dolls Abilene in April 2024 and Dallas Showclub and Chicas Locas Harlingen in June 2024. We continue to work on opening five more locations: Rick’s Cabaret & Steakhouse in Central City (CO); Bombshells Denver (CO), Lubbock (TX) and Rowlett (TX); and Baby Dolls West Fort Worth (TX).”

Sales from Clubs and Restaurants ($ in Millions)

3Q24 Sales Performance

9M24 Sales Performance

Notes:

The sales figures for Nightclubs and Bombshells mentioned above exclude revenues from non-core operations, such as third-party rents, and revenues from RCI’s Other segment.

Throughout this report, terms like “RCI Hospitality Holdings, Inc.,” “company,” “we,” “our,” and similar expressions refer to RCI and/or its subsidiaries, unless otherwise specified by the context.