RCI Hospitality's CEO and CFO Step Down Following Share Buyback from Democratic Senator's Son at 50% Premium Amid Tax Fraud and Bribery Allegations
Management Changes: RCI Hospitality Holdings Inc. announced the resignation of CEO Eric Langan and CFO Bradley Chhay, appointing Travis Reese and Albert Molina as interim leaders, amidst ongoing legal and regulatory challenges.
Stock Buyback Announcement: The management change follows a $30 million stock buyback from hedge fund ADW Capital Partners, acquiring shares at a 50% premium, raising concerns about potential legal complications due to the fund's ownership ties.
Legal Troubles: The company and several executives face serious allegations, including multi-million dollar tax fraud and bribery, with claims of bribing a tax auditor to evade significant sales taxes.
Stock Performance: RCI's stock has plummeted 74.52% since its peak in January 2023, reflecting investor concerns over its legal issues, with shares closing at $24.36 following the management shake-up.
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RCI Hospitality (RICK) Reports $70.3M Q1 Sales with Strong Nightclub Performance
- Total Sales Growth: RCI Hospitality reported total sales of $70.3 million for Q1 of fiscal 2026, with nightclubs generating $61.9 million, indicating stable performance in the market.
- New Club Contributions: Five newly opened nightclubs contributed $4.9 million in sales, while same-store sales from 52 clubs produced $57.0 million, showcasing the success of new business expansions.
- Bombshells Restaurant Performance: Bombshells reported quarterly sales of $8.4 million, with two new locations generating $1.8 million and nine same-store locations achieving $6.6 million, despite a $1.2 million sales reduction from four underperforming locations closed last year.
- Market Challenges and Opportunities: Although sales were impacted in October and November due to customer uncertainty from the U.S. government shutdown, RCI still achieved year-over-year growth in higher-margin club service revenues in Q1, demonstrating resilience in adversity.
RCI Hospitality Announces Preliminary Q4 Results
Q4 Revenue and Expansion: RCI Hospitality reported Q4 revenue of $70.9 million, successfully opened Bombshells in Lubbock, TX, and expanded operations at Rick's Cabaret & Steakhouse in Central City, CO.
Share Repurchase and Sales: The company repurchased 72,739 common shares for $2.7 million and sold a small club in Harlingen, TX for $600,000 cash, with a lease starting January 1, 2026.
New Partnerships and Acquisitions: RCI entered a partnership with Jonathan Joseph, selling 49% of Rick's Cabaret Austin for $1.8 million, and acquired 821,000 shares from ADW Capital Partners.
Management Changes and Stock Performance: RCI appointed Reese as interim President and CEO and Molina as interim CFO, while shares fell following Q4 and FY25 club and restaurant sales results.
