(Filed Under wholesale Lingerie News). Playboy lost $5 million on sales of $42.7 million in the quarter ended March 31, compared to a loss of $2.4 million on sales of $31.8 million in the same quarter last year.
Playboy stated last night that the loss was “largely due to a $13.8 million year-over-year increase in selling and administrative expenses as the company incurred $6.3 million of non-recurring items related to the closing of its recent business combination, including a $2.7 million increase in stock-based compensation expense. Additionally, the company had increased costs related to M&A transaction expenses, ongoing costs attributable to acquired businesses, and expenses associated with being a newly public company.”
In February Playboy announced it was acquiring the chain of 41 Lovers stores, which it said at the time would add about $45 million in additional annual revenue. That provided a bump to sales in the first period.
Commenting on the results, CEO Ben Kohn: “Our strong first quarter financial performance reflects the exciting growth potential of our direct-to-consumer business, which experienced triple digit revenue growth year-over-year as we successfully increased merchandising, cross-selling, and influencer marketing programs. I’m especially pleased with our results considering we continue to experience short-term, industry-wide supply chain disruptions leading to out-of-stocks on select items. We’re also thrilled by the recent performance of our first NFT art drop, a symbol of the infinite product experiences we can build off the back of our iconic flagship brand and rich archive.”
During a presentation with analysts to discuss the quarter, Kohn revealed that the “first NFT art drop that took place just last week, generat[ed] almost $1 million in sales in 24 hours.” He added, “it was so encouraging as these six original new pieces speak to the infinite possibilities of what can be created from our priceless archive. And all of this require taking no inventory and no capital risk.”
He continued during the talk, “One of our major priorities is launching our owned and operated product collections and we’ve been very encouraged by the success of our recent in-house designed apparel lines, including our monthly cover collection drops, our Valentine’s Day line, our Spring, our Natural collection as well as our cross-divisional collections, such as our Playboy and Yandy spring and swim lines.”
“We are also now capturing consumer spend from our collaborations on our owned and operated sites, which in Q1 featured high profile partnerships, such as Hatton Labs jewelry, Olympia Le-Tan accessories and of course high performing collections from our partners at PacSun and Missguided. I often get the question, who is the Playboy consumer today? And I think that’s answered perfectly by who is spending money with us directly on our site. Nearly 80% of our consumers are under the age of 44, roughly 65% are under 34 and 55% of our e-commerce revenue in the first quarter came from female consumers.”
Speaking about possible future acquisitions, Kohn said, “We have demonstrated our team is uniquely positioned to source and execute accretive deals and move swiftly to integrate operations. Over the past few months, our M&A pipeline has only increased and, to the extent, we can use M&A to accelerate our growth strategy through attractive economics, we expect to close additional deals this year.”
One recent initiative involved a jet. In an April SEC filing the company reported it was acquiring a Bombardier model BD-700-1A10 for $12 million. It mimics the black “Big Bunny” DC-9 with rabbit head logo that Hugh Hefner flew around in starting in the early 1970’s. Said Kohn: “We are deep in development of our higher end Big Bunny lifestyle apparel and accessory collection, leveraging the iconic Big Bunny Playboy plane and simultaneously developing a unique go-to-market content, experiential and influencer strategy that we believe only the Playboy brand can drive.”
During the presentation, Playboy’s chief brand officer and president of corporate strategy, Rachel Webber, said the firm is planning to use the plane as “a small flying mansion, engaging an influential crowd on a flight and also taking them to” various live events. The Big Bunny product line is planned “to roll out in Q4 of this year.”
“Our selection will contain a mix of fashion, travel accessories and other lifestyle products targeting the cool older sister or brother of our mainstream Playboy consumer,” she continued. “In a sense, we envision the constant presence of the Big Bunny as an always-on marketing campaign for that upscale product line as well as serving as a halo for everything we do across the Playboy universe.”
Playboy complained that its quarter could have been better. Said CFO Lance Barton, “Despite all of the strength, we believe the direct-to-consumer revenue would have been even higher in the first quarter, were it not for the continued supply chain disruptions that we’ve talked about. On average roughly 15% of Yandy’s top selling products were out of stock during Q1 due to congestion at the port that has limited our supplier’s ability to adhere to our restocking schedules. These disruptions have persisted into the second quarter but as the ports continue to clear out, we see this issue being remedied and we expect our out-of-stock to return to more normal levels, most likely by the third quarter.”
An important shift for Playboy will be to move some of its income away from licensing for its U.S. direct to consumer business. “Our goal is to capture a 100 cents on the dollar spent by consumers on our apparel, sexual wellness and other lifestyle products versus $0.05 to $0.06 captured through previous licensing partnerships,” said Kohn. — NM
A complete transcript of the presentation can be found here: https://seekingalpha.com/article/4428136-plby-group-inc-plby-ceo-ben-kohn-on-q1-2021-results-earnings-call-transcript
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