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mysteryman

Ricks Cabaert Inc. latest Quarterly Report

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Well I am not going to rehash what I already stated in response to Seeking Alphas article, so head on over and read. I am sure you will agree with my response if you are working in this industry unlike those who just review stocks of this industry.

http://seekingalpha.com/article/1221...comment-407939

Here is my response:

Same sales flat, no more acqusitions means sales are not going to continue to climb. Stocks value have fallen from 24.00 a share to 3.00 a share, cap rate is now below 30 million down from 150 million a year ago.

CEO Eric is trying to get the PUT options to be pushed back since the company needs to make up the difference on shares given at 23.0 to 25.00 a share for the clubs purchased. Well when your stock is valued at 3.00 a share thats a 20.00 or more that Ricks has to pay out of its pocket instead of the open market.

CEO Eric has demostrated once again his management team is lacking and unable to control its clubs.

Ricks Dallas converted to XTC after surrendering its liquor license. This makes no sense at all after paying over 9 million for business and property. A liquor license allows a club to generate over 50% of its sales and profits since this is the major stream of income for a club. Now that this club is called XTC it is a BYOB. Sure the door fees will be 20.00 per person and its th largest BYOB in the state of Texas currently.

This will all change because if Silver City Cabaret in Dallas changes to BYOB it will be the largest BYOB in Texas and in Dallas. This club is better located easier access and has a better following then Ricks/XTC. Ricks needs to be concerned since CEO Eric stated in previous Vcall said that Dallas Ricks has a debt service of $300,000.00 a month. Thats a big nut to crack!

Looking at Las Vegas I can see where CEO Eric is getting terrible advice from his management team. The Las Vegas club since take over has lost 70% of its income, which was before the economy really started to show major signs of decline in Las Vegas. The reason for the loss was no experienced management from other markets entering the Las Vegas market and ignoring the contracted consultant Dennis DeGori. Ricks is now involved in a lawsuit with Dennis Degori for breach of contract.

Currently Ricks Las Vegas is bleeding the company dry every day it is open. It was a bad acquisition done based on Ego not business sense. CEO Eric stated the company has decided that all advertising towards tourism will be cancelled. Day shift will end. The main focus is now on local customers, not tourists. To be blunt, this is insane! 37.5 million tourists came to Las Vegas in 2008. Current local population of Las Vegas is 552,000 and dropping daily. Which is easier to get a customer from, 37.5 million or 552,000? Las Vegas has been hit hard by housing foreclosures, and high unemployment, which is in the top 5 of the nation.

Ricks has major management problems at all levels of its company and it needs to be delt with ASAP. This is all demonstrated in its lack of fixing its problems at clubs and even deciding which ones to close so to stop the bleeding. Last Quarter report CEO Eric was saying closig a few clubs would be a one time hit and needs to be done. Well why one quarter later no closings and still major bleeding continues?

Ricks has to decide about closing or selling clubs in San Antonio, Austin, Houston, Dallas, and Las Vegas.

Once again I am stating the fact that the only thing holding this house of cards up is the revenue from Tootsies Miami and Ricks NYC locations. How much longer can this contnue?

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Updated 03-01-2009 at 10:24 AM by mysteryman

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Comments

  1. Melonie's Avatar
    a far more interesting statistic is that net profit margin has fallen to 4.56%, that cash flow is negative, and that a significant amount of existing corporate debt needs to be rolled over this year ... meaning that any significant drop in customer spending may quickly put Ricks underwater !

    I wouldn't touch this stock with YOUR 10 foot pole !
  2. mysteryman's Avatar
    Its funny I cannot get the author of the seeking alpha article to respond to my response like he has done in the past making a positive spin out of my negatives.. This time I think he has been painted into a corner.

    Currently Ricks is trading well below 3.00 a share and its cap rate has now dropped to 23 Million.
  3. 1st_samurai's Avatar
    As an update, March 2009 was the best time to buy RICK stock!
  4. mysteryman's Avatar
    I have delt with Ricks stock since 2003 around 2.45 a share. In Dec 28 2007 was its peak at 28.25 was the end of the climb. After that the gig was up and Ricks slid into the pits of hell!

    The company is so over rated and over pumped on hipe its not funny. The stock is not worth crap in my opinion because only two clubs actually produce a real cash flow while the rest make cash flow but not profit. Mis-management and waste runs out of control.

    So reality 2003-2005 was the buy time and sell was 2008. This company is going to eventually be shown for what it really is and then it will fade away finally!