RCI Announces Divestiture of Three Underperforming Bombshells

Rhea-AI Summary

RCI Hospitality Holdings (Nasdaq: RICK) announced strategic moves to enhance its Bombshells segment performance by closing two underperforming leased locations in Texas - Bombshells Spring and Bombshells Houston-South. Additionally, the company plans to sell its Bombshells Austin location in Pflugerville. Financial details related to these divestitures will be disclosed in the upcoming fourth quarter and year-end results report, expected by December 16, 2024.

Positive

• Strategic divestiture of underperforming assets to improve segment performance

Negative

• Closure of two Bombshells locations indicates operational challenges in the segment
• Reduction in total revenue-generating locations

Insights

Financial Analyst

The closure of three underperforming Bombshells locations represents a strategic move to optimize RCI's restaurant portfolio and improve overall segment profitability. While specific financial details are pending, this divestiture aligns with common industry practices of pruning underperforming assets. The decision to close two leased locations minimizes ongoing fixed costs, while the planned sale of the Austin location could potentially generate cash to reinvest in better-performing venues.

The Bombshells segment has been a focus area for improvement and these closures signal management's commitment to addressing profitability challenges. With RCI's market cap at $387.5M, streamlining operations by removing underperforming units should help improve margins and return on invested capital. The full financial impact, including potential write-offs and any proceeds from the Austin location sale, will be important details to watch for in the upcoming Q4 results.

HOUSTON, Nov. 5, 2024 /PRNewswire/ -- As part of its aggressive actions to improve the performance of the Bombshells segment, RCI Hospitality Holdings, Inc. (Nasdaq: RICK) announced the decision to permanently close two underperforming leased locations and sell a third. The company said that Bombshells Spring at 21005 Interstate 45 N, Spring, TX, and Bombshells Houston-South at 12810 Gulf Freeway, Houston, TX have been closed and that there are plans to sell Bombshells Austin at 15119 N Interstate Hwy 35, Pflugerville, TX. RCI said it will disclose related financial details when it reports fourth quarter and year end results which are expected by December 16, 2024.

About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (X: @RCIHHinc)

With more than 60 locations, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in adult nightclubs and sports bars-restaurants. See all of our brands at www.rcihospitality.com. 

Forward-Looking Statements

This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the company's actual results to differ materially from those indicated, including, but not limited to, the risks and uncertainties associated with (i) operating and managing an adult entertainment or restaurant business, (ii) the business climates in cities where it operates, (iii) the success or lack thereof in launching and building the company's businesses, (iv) cyber security, (v) conditions relevant to real estate transactions, (vi) the impact of the COVID-19 pandemic, and (vii) numerous other factors such as laws governing the operation of adult entertainment or restaurant businesses, competition and dependence on key personnel. For more detailed discussion of such factors and certain risks and uncertainties, see RCI's annual report on Form 10-K for the year ended September 30, 2023, as well as its other filings with the U.S. Securities and Exchange Commission. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.

Media & Investor Contacts

Gary Fishman and Steven Anreder at 212-532-3232 or gary.fishman@anreder.com and steven.anreder@anreder.com 

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SOURCE RCI Hospitality Holdings, Inc.

FAQ

Which Bombshells locations is RCI Hospitality (RICK) closing in 2024?

RCI Hospitality is closing Bombshells Spring at 21005 Interstate 45 N and Bombshells Houston-South at 12810 Gulf Freeway, while planning to sell Bombshells Austin in Pflugerville.

When will RCI Hospitality (RICK) report the financial impact of Bombshells closures?

RCI Hospitality will disclose the financial details of the Bombshells closures in their fourth quarter and year-end results, expected by December 16, 2024.

Why is RCI Hospitality (RICK) closing some Bombshells locations?

RCI Hospitality is closing these locations as part of aggressive actions to improve the performance of the Bombshells segment, specifically targeting underperforming locations.