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Playboy Reveals Losses As It Seeks To Go Public


Playboy face mask for sale on Yandy.com.
Playboy face mask for sale on Yandy.com.

(Filed Under wholesale Lingerie News). Playboy Enterprises Inc. revealed it lost $6.203 million in the first six months of 2020 on revenue of $66.3 million. The figures were included in an SEC filing by Mountain Crest Acquisition Corp., the public company with which Playboy is planning to merge.

Playboy also reported a loss of $14.197 million in the first six months last year on revenue of $38.1 million. Sales in the first half of 2020 were bolstered by Playboy’s acquisition, on the last day of 2019, of Yandy.com, a retailer of intimate apparel and “sexual wellness” products.

The extent of Yandy’s contribution to Playboy’s revenue in 2020 was not revealed in the “Investor Update” filed with the SEC ( https://www.sec.gov/Archives/edgar/data/1803914/000110465920116294/tm2033762d2_ex99-1.htm). But Yandy’s impact on the business is probably significant.

Prior to its acquisition, privately held Yandy only hinted publicly about its total sales. For example, a company press release in April, 2016 claimed it had sold “roughly 2.8 million pieces of intimate apparel totaling over $75 million in the last two years alone.” And a Forbes magazine estimate in October 2015 put its annual sales for that year at $50 million.

In the latest filing, Playboy showed a loss for the full year 2019 of $23.576 million on revenue of $78.1 million. For the full year 2020, which will include Yandy’s contribution, the company is projecting revenue of $137.0 million. But it did not reveal its net income or loss projection for 2020.

It was earlier stated that Mountain Crest is assuming “debt outstanding of approximately $142 million,” as part of the merger deal, and in the latest financial release Playboy reported $14.225 million in interest expense in 2019, and $6.656 million in interest expense in the first half of 2020.

On October 1st Playboy announced it was planning to merge with Mountain Crest, a recently established public company. Once completed, Playboy will have access to the $58.5 million that Mountain Crest has already raised. In addition, Mountain Crest has signed “agreements with institutional and accredited investors for the purchase of $50 million” of shares. It is expected that Mountain Crest will be renamed and will continue as a public company trading under the ticker PLBY. Existing Playboy shareholders, led by current CEO Ben Kohn, will control 66% of the shares. The total of over $100 million in capital the company will have available “will enable us to accelerate our product development and go-to-market strategies and to more rapidly build our direct to consumer capabilities,” according to Kohn.

In the latest release, Kohn focused his comments on the company’s adjusted EBITDA rather than net income projections. “We are now targeting revenue of $137 million and adjusted EBITDA of $28 million in 2020, and are well on our way to reaching these goals, with adjusted EBITDA of $14.3 million for the first six months of the year.”

The release boasted that “Playboy is one of the largest and most recognizable lifestyle brands in the world, with more than $3B in global consumer spend against the brand across 180 countries. Building upon almost seven decades of groundbreaking media, entertainment, hospitality and social advocacy, Playboy today reaches millions of consumers around the world with products and services across four major categories.” These include sexual wellness; apparel and accessories; gaming and lifestyle; and beauty and grooming.

In a podcast for Wharton Business Daily in early October, Kohn discussed Playboy’s past performance and plans for the future.

“So what Yandy brought us was over two and a half million customers. And they brought us an infrastructure, really, in our road map to go direct to consumer that we needed.” Since taking over Yandy “we’ve grown that business over 35% this year to date. And there’s a lot more room for growth there.”

“Yandy today is fully integrated into Playboy. They are managing our e-comm and fulfillment operations. And that was something we had historically outsourced.” He added, “about 75% of the audience on Yandy is female.”

As a result of the Yandy acquisition, “In 2020 about 50% of our revenue today is direct to consumer. We’re looking to expand that.”

The other side to the Playboy revenue stream is licensing. “Pac Sun and Missguideds are collabs that we do and we’ll continue to do,” he noted. In a press release in October he revealed that those two relationships, which launched in 2018, “are projected to achieve over $50M in retail sales across the US and UK this year.”

In the podcast he added, “internationally we don’t have a core expertise today to sell products directly to consumers. And so licensing will play a big component internationally especially when I think about Asia, China — mainland China, and Southeast Asia. And it’s also by product category. So in apparel and accessories we don’t have a core expertise, per se, but we know the brand works there. In the other areas, and especially what I would say is in the western world, we’re very focused on the direct to consumer model.”

Kohn claimed that “in China we are the leading men’s fashion brand. Right? So we have 2,500 brick and mortar stores, 1,000 e-com stores, and we sell everything from a kid’s deal that we just signed for kid’s clothing to men’s suits, shirts, leather goods, sneakers, jeans, you name it. It’s a fashion business.” He continued: “so the way to think about us domestically, for how we’re positioned in China, is think about Hugo Boss, think about Tommy Hilfiger. That’s really what the brand is internationally.”

Across all categories, he revealed, Playboy has “over $400 million today of forward book minimum guarantees in licensing” through 2029. “And that assumes we don’t renew with any existing licensee or we don’t expand into new geographies or categories. Even though our historical renewal rate with licensees has been in excess of 95%.”

One area Kohn won’t touch: “We don’t have any plans to bring back print and what existed.” — NM

A full transcript of the podcast can be found on the SEC website: https://www.sec.gov/Archives/edgar/data/1803914/000110465920113573/tm2032844d1_defa14a.htm


more wholesale Lingerie News >>

Published 10-22-2020 by Nick Monjo

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