Wednesday, July 12, 2023
With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
3Q23 Club and Restaurant Sales. RCI reported sales for the Nightclubs and Bombshells restaurants of $76.4 million for the fiscal third quarter ended June 30th. This is an 8.9% y-o-y increase, driven by acquisitions which was partially offset by a decline in Same Store Sales across both segments. We had projected full revenue for the quarter of $77.7 million and consensus was $77.6 million. Recall the $76.4 million does not include non-core operations, which typically can add some $0.5-$1.0 million to the final quarterly total.
Nightclubs. Revenue rose 14.1%, y-o-y, or $7.7 million, to $62.0 million, driven by acquisitions and two reopened/reformatted clubs, which added $13.3 million of revenue combined. Segment SSS declined 7.3%, the first SSS decline in nine quarters. While the Nightclub business is recession resistant, the sharp SSS decline is surprising. In the most recent quarters, management had noted some localized weakness but no discernable, overall softness in the business. Openings of new and remodeled clubs should benefit 4Q23.
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