Michael Goode

Sex May Sell, But Is It Profitable?

Regicider -- the problem with the trading down is that none of Rick's online properties are dominant. Why would I go to CouplesTouch.com when I can go to Adult Friend Finder (although I wouldn't go to either). While I will admit to not having experienced the joys of strip clubbery, in a recession people will run out of money (strip clubs are expensive). People may not stop going but they will cut back, and that is what will kill profitability.

Sex May Sell, But Is It Profitable?

@b3rkut -- so you think that strip clubs are as addictive as alcohol and cigarettes? I doubt that--in a recession people will trade down to cheaper options, like the internet.

The whole point about Rick's is that branding is not as useful to it as it is with Wal-Mart. Of course it is not like the staffing firms. But my bet is that it is just as vulnerable to a recession as they are. If I turn out to be wrong about Rick's the most likely reason would be that its management is better at dealing with regulation than its competitors. Regulation is one of the areas in which there are huge economies of scale (eg., having experienced lawyers on staff).

I will revisit these companies in the future and we will see who was right.