Rick’s Rising: Strip Clubs Up, Up, Up

Bubble. Local municipalities are going to raise sin taxes to plug budget holes. Rick's earnings will consequently suffer.

Here's the whole release [the 4th paragraph I found interesting: "higher numbers of entertainers" = more gals paying to work at their clubs (probably because of the poor economy.) How long will that bonus source of cash flow continue???]

March 09, 2010 09:00 AM Eastern Time
Rick’s Cabaret International, Inc. Reports Record $7.65 Million Nightclub Sales in February; Same Club Comps Rise 28.2% HOUSTON--(BUSINESS WIRE)--Rick’s Cabaret International, Inc. (NASDAQ: RICK), the nation’s premier operator of upscale gentlemen’s clubs, said sales at its nightclubs in February were $7.65 million, a 34.7 percent increase over sales of $5.58 million in February 2009.

“We had the anticipated positive results during the Super Bowl and Pro Bowl weekends in Miami and the NBA All-Star Game in Dallas, which together contributed an estimated $1 million in additional revenues” .Revenues at clubs open more than 12 months were $7.15 million, a 28.2 percent increase over sales of $5.58 million recorded at those clubs in February 2009.

“We had the anticipated positive results during the Super Bowl and Pro Bowl weekends in Miami and the NBA All-Star Game in Dallas, which together contributed an estimated $1 million in additional revenues,” said Eric Langan, President and CEO of Rick’s Cabaret International. “We are also pleased that we achieved strong results despite severe snowstorms in several markets that often made it difficult for customers to get to our clubs. Aggressive marketing programs in the first quarter have paid off and we are continuing to benefit from them even though marketing spending has been cut dramatically.”

Mr. Langan said that while the company continues to battle the effects of weak economic conditions in certain markets, particularly Philadelphia and Charlotte, the overall trend of the company’s nightclubs reflects higher numbers of entertainers generally and more customers coming to the clubs, who are spending more on drinks and entertainment than they were a year ago.

On February 16, 2010 Rick's Cabaret International, Inc announced it had signed a letter of intent to acquire the outstanding shares of VCG Holding Corp (NASDAQ: VCGH) to form the largest publicly traded operator of upscale gentlemen's clubs in North America. The two companies are working on definitive documents for this transaction.

I still don't see what the big deal is with these glowingly-worded press releases from Rick's. The bubble already burst on this dog in 2008.

google.com

I've owned stock in Rick's and VCG for about 4 years. The Rick's stock went up and VCG went down. The VCG clubs are dumps compared to Rick's and Rick's will have to spent a lot of money fixing them now that they own them.

A lawyer in Minneapolis has filed a class action lawsuit against Rick's contending that the dancers are employees vs independent contractors. This would raise huge issues and costs if they prevail. Start getting big and successful, and there always is somebody to try and knock you down.

Personally, I don't go to the Rick's clubs because they cater to guys spending corporate expense account money instead of their own. I'd much rather go to a small club with reasonably priced extras than Rick's.

Mr. G.: One year ago RICK bottomed at $2.50. It recently went to $15+. Has the economy improved THAT much? Further the CEO exercised a large amount of options at around $2.79 last year, and currently holds about 10% of the share float (which is probably the reason the price has appreciated so much.) He'd be a fool not to realize a 500% gain and sell some. Especially if you believe the economy is on government life support as I do.

The old, all-time high for RICK was apparently just over $27. My point is that before that bust...the stock seemed to meander around at below $10. Sure, it's going back up now, but what long-term forces are in play to keep that trend going...as opposed to it just busting out again?

Mr. G. I agree. I can't see it staying this high unless they acquire a no-bid government contract to supply members of the Armed Forces with 'entertainment'.