RCI Hospitality Posts Preliminary Q3 Results, Stock Up

RCI Hospitality Holdings, Inc. RICK provided an update on its business for the third quarter of fiscal 2024. The company expects to release fiscal third-quarter numbers tentatively before Aug 8, 2024.

Following the results, the stock moved up 14.6% during trading hours on Jul 11. Positive investor sentiments were witnessed as the company revealed to increase its share repurchase program by $25 million. The move aligns with the management's strategic emphasis on operational efficiency, cost reduction and maximizing shareholder returns.

Preliminary Revenue Results

During the fiscal third quarter, the company reported total sales of $75.5 million, down 1.5% year over year.  During the quarter, the company's same-store sales d 1.5% year over year.

During the quarter, sales from Nightclubs came in at $62.4 million, rising 5.9% from the fiscal second quarter and 1.7% year over year. The upside was primarily backed by contributions from two new and reformatted clubs and 1.7% same-store sales growth. This was partially offset by the temporary closure of three clubs undergoing conversion from BYOB to liquor service.

Sales from Bombshells restaurants in the fiscal third quarter came in at $13.1 million, down 8.9% from the year-ago quarter's levels. The downside was mainly due to a fall in same-store sales (down 16.2% year over year). However, this was partially offset by an uptick in locations outside of comparable sales, including Bombshells in San Antonio and Stafford in Texas and Cherry Creek Food Hall & Brewery in Greenwood Village with its Bombshells Kitchen.

Other Updates

Year to date, the company has opened two new locations — Bombshells Stafford and PT's Centerfold in Lubbock. It also transformed existing spaces, such as converting unused areas into new club formats like the Chicas Locas BYOB club alongside the existing Chicas Locas Dallas liquor club.

The company rebranded three Texas clubs from BYOB to liquor and reopened them as Baby Dolls Abilene in April 2024 and Dallas Showclub and Chicas Locas Harlingen in June 2024. Currently, RICK is actively working on launching five additional locations — Rick's Cabaret & Steakhouse in Central City; Bombshells in Denver, Lubbock and Rowlett; and Baby Dolls West Fort Worth.

The company's proactive approach and focus on core business strategies are aimed at optimizing underperforming locations and efficiently completing ongoing projects. It formally withdrew its application to operate casinos from the Colorado Division of Gaming. The company stated plans to open Rick's Cabaret & Steakhouse in Central City without gambling operations and pursue the sale of surplus properties.

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The stock has declined 12.1% in the past three months against the industry's 9.1% growth.

Zacks Rank & Key Picks

RCI Hospitality currently has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:

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The consensus estimate for AGS's 2024 sales and earnings per share suggests growth of 7.7% and 5,200%, respectively, from the year-ago levels.

Adtalem Global Education Inc. ATGE currently carries a Zacks Rank #2 (Buy). ATGE has a trailing four-quarter earnings surprise of 18.8%, on average. The stock has surged 82.8% in the past year.

The Zacks Consensus Estimate for ATGE's fiscal 2025 sales and EPS indicates an increase of 5.3% and 16.6%, respectively, from year-ago levels.

Royal Caribbean Cruises Ltd. RCL currently carries a Zacks Rank #2. RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 64.4% in the past year.

The Zacks Consensus Estimate for RCL's 2024 sales and EPS calls for growth of 16.9% and 64%, respectively, from the year-ago levels.

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