Is The Devil Wears Prada Really Cursed?Reuters has a strange article about what it calls "The Curse of The Devil Wears Prada." According to the Luxury Institute, the U.S. economy is not doing so well: the middle class and near rich (defined as those who have a net worth of $1 million to $5 million) is starting to spend less on luxury items, which is not good for retailers.
So what, you might ask, does that have to do with the film The Devil Wears Prada? Apparently, there were about a zillion product placements in that film (because the budget was small) and every company featured in the film has seen its stock price slump -- from Starbucks to Tiffany's.
Our old economics professors would be horrified. Just because Starbucks' stock price has dropped since the opening of the movie certainly doesn't mean that the movie is somehow cursed. That's just sloppy analysis. Clearly, the stock price has slumped because celebrity Starbucks sightings have been markedly down in the last month. When is the last time we saw Mary Kate and Ashley clutching a frappucino in their tiny little hands as they leave the popular coffee emporium? Or picture of Britney Spears, clutching her favorite Starbucks beverage to her chest as she runs errands with the new manny? The only pictures we see of Britney lately are of her spitting her gum out of a car window as she goes through the drive-thru window of McDonalds. No photos of Britney drinking Venti Coffee Frappucino With Whipped Cream = slumping Starbucks stock. This is basic Econ 101.Among the "Devil" brands, shares of Philips-Van Heusen and Smith & Wollensky have declined about 20 percent since May 1, while shares of Tiffany & Co. have fallen 11 percent. The Standard & Poor's 500 Index has dropped 5.3 percent in the same period. Barnes & Noble shares have lost more than a quarter of their value since May 1.
Even a high flyer like Starbucks has not escaped the Prada curse -- or at least was not helped by placement in the movie. Shares dropped 11 percent in the past week after it announced June sales growth of 6 percent at coffee shops open at least 13 months, against expectations of as much as 8 percent. Another of the darlings of the stock market in recent years, luxury handbag retailer Coach Inc., fell about 27 percent since a March peak.
Posted on July 17, 2006