HOUSTON - RCI Hospitality Holdings, Inc. (NASDAQ:RICK) has disclosed its club and restaurant sales for the fiscal third quarter ending June 30, 2024, with a slight increase in nightclub revenue but a notable decline in its Bombshells restaurant segment.
The company also announced a new $25 million share buyback program, the withdrawal of its Colorado casino license applications, and provided an update on the impact of Hurricane Beryl.
Nightclub sales showed a marginal rise of 0.7% year-over-year, reaching $62.4 million, attributed mainly to a 1.7% same-store sales growth and the opening of two new clubs. This growth was partially offset by the temporary closure of three clubs undergoing reformatting. Compared to the previous quarter, nightclub sales saw a 5.9% increase.
Conversely, Bombshells restaurant sales fell by 8.9% compared to the same quarter last year, totaling $13.1 million. This downturn was due to a significant 16.2% drop in same-store sales, slightly mitigated by the opening of three new locations that were not included in the same-store sales metric. Sequentially, Bombshells sales improved by 2.7% from the second quarter.
The company's board has approved an additional $25 million for share repurchases, reflecting a strategy to enhance shareholder value. RCI also reported the formal withdrawal of its casino license applications in Colorado, choosing instead to proceed with the opening of Rick's Cabaret & Steakhouse without gambling facilities and to divest other non-essential properties.
In the wake of Hurricane Beryl, RCI noted that four Bombshells locations and one club reopened shortly after the storm, with others awaiting power restoration. Minor damage was reported at a couple of properties, but this is not expected to impact operations significantly.
RCI's President & CEO, Eric Langan, expressed satisfaction with the first quarterly increase in Nightclubs same-store sales since the second quarter of 2023 and the initial success of the current club reformatting program. He also noted the sequential sales improvement at Bombshells and attributed these developments to a return to the company's core business strategies.
The full financial results for the third quarter are anticipated to be released by August 8, 2024. This report is based on a press release statement from RCI Hospitality Holdings, Inc.
In other recent news, RCI Hospitality Holdings reported second-quarter fiscal year 2024 revenues of $72.3 million, in line with analyst expectations. The company also announced a potential divestiture of certain Colorado gaming properties due to unforeseen costs and licensing delays. Despite this, RCI Hospitality anticipates the opening of a new steakhouse and club in the fourth fiscal quarter of 2024.
H.C. Wainwright, while maintaining a Buy rating, lowered its price target for RCI Hospitality to $98 from $115. The firm also expects a stronger second half for the company's fiscal year, with improving club and restaurant trends.
In addition, RCI Hospitality has secured a $20 million bank loan to invest in club acquisitions and share buybacks. The company also disclosed during its recent earnings call that it's exploring acquisitions, stock buybacks, and the potential sale of a prime real estate asset in Houston. These are all part of the recent developments in the company's capital allocation strategy.
InvestingPro Insights
RCI Hospitality Holdings, Inc. (NASDAQ:RICK) has navigated through a challenging fiscal third quarter with a mix of strategic maneuvers and financial developments.
The company's slight uptick in nightclub revenue and proactive share buyback program underscore its commitment to driving shareholder value amidst market fluctuations. Here are key insights derived from InvestingPro data and tips that provide a deeper understanding of RCI's current financial health and future outlook:
The company's market capitalization stands at $359.2 million, reflecting the market's valuation of the business. RCI has demonstrated impressive gross profit margins, with the last twelve months as of Q2 2024 showing a remarkable 84.62%, indicating a strong ability to control costs and generate profits from its sales. This is particularly noteworthy in light of the reported decline in its Bombshells restaurant segment.
Investors may find solace in RCI's dividend track record, as the company has not only raised its dividend for 5 consecutive years but has also maintained dividend payments for 9 consecutive years. This consistent return to shareholders is a positive sign, especially when considering the company's recent share buyback announcement.
Still, it is worth noting that the stock has experienced significant volatility and a downward trend in its price, trading near its 52-week low and having taken a notable hit over the last six months. The Relative Strength Index (RSI) suggests the stock is in oversold territory, which could indicate a potential rebound or at least a pause in the downward trajectory, aligning with the company's strategic share repurchase plan.
For those interested in a more comprehensive analysis, there are additional InvestingPro Tips available that can offer further guidance on RCI's performance and projections. To delve deeper into these insights, visit https://www.investing.com/pro/RICK and remember to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 15 additional InvestingPro Tips waiting, investors have a wealth of information at their fingertips to make informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.