(Filed Under wholesale Lingerie News). Playboy reported a loss of $264.7 million in the third quarter, “largely driven by non-cash asset impairment charges related to the write-down of goodwill, trademarks and other assets of $301.9 million.”
During the conference call to discuss the quarter, CFO Lance Barton said the sales for the Playboy brand were up and that “Honey Birdette posted solid growth: revenue was up 34% year-over-year to just over $21 million in the third quarter, and on a constant currency basis revenue grew 41%.” But, he added, “Yandy revenue declined 50% year-over-year in Q3 while Lovers revenue declined 10%.”
Total Playboy company sales rose in the third quarter to $63.624 million (from $58.356 million last year), reflecting the contribution of Honey Birdette, the completion of its acquisition of which it announced on August 10, 2021, half way through the third quarter. In that period last year the company suffered a loss of $7.699 million.
CEO Ben Kohn pointed to the expansion of Honey Birdette, reporting “we opened a new store in Short Hills, New Jersey, and plan to open our Tampa, Florida and Paramus New Jersey stores before the end of the year.” The company expects to have 11 shops by the start of 2023 and CFO Barton noted “We’ve also signed the lease in Boca Raton, Florida with plans to open next summer and are working to land additional suitable locations in the U.S. and Europe, planning to open in the back half of next year.”
The company also opened a 2,300 square foot Playboy pop up store in Los Angeles in mid October, offering a variety of apparel, which it plans to keep open for several months. Kohn said “we are excited to test this elevated mall based pop up as a prototype for permanent brick and mortar locations targeting the Playboy consumer,” adding “the store is off to a great start. In the first few weeks, revenue is comparable to the average Honey Birdette store in the U.S. The current margin for Playboy’s pop up location is also seven percentage points higher than Playboy’s e-commerce margin, and we expect that to increase as we incorporate more of our owned and operated merchandise into the store. We also continue to make great progress developing those higher margin owned and operated products.”
The CEO continued that as “Lovers remain down year-over-year, long-term, we believe Playboy needs to be integrated into or replace Lovers as the brand. We are currently working to our brand new strategy and have launched Playboy pleasure products in Lovers stores. Based on performance, we will begin to solidify our plans to integrate Lovers into Playboy.” He added, “we also launched Honey Birdette sexual wellness products at Lovers stores to great success and we’ll continue to replace third-party products with higher margin owned and operated inventory.”
Playboy acquired Yandy.com at the end of 2019, and the Lovers chain of adult shops in early 2021. Asked during the conference call if Playboy was considering “potential asset sales,” CEO Ben Kohn cautioned, “our goal is to have as many arrows in our quiver as possible,” but admitted, “we will always look at things opportunistically as fiduciaries. But right now, what we’re focused on is consolidating the businesses we have around the brands that we know that work, which are Honey Birdette and Playboy.” He added, “we’ll have to think through Yandy long-term and how that fits into the Playboy ecosystem.”
One asset that Playboy did part with is the Bombardier jet it acquired in early 2021 for $12 million. Kohn bragged during the call about the profit the company generated by selling it for $17.5 million. — NM
The full Playboy conference call transcript can be found here: https://seekingalpha.com/article/4555727-plby-group-inc-plby-q3-2022-earnings-call-transcript
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