(Filed Under wholesale Lingerie News). Playboy has entered an agreement to acquire Honey Birdette, a lingerie and adult products company founded in 2006 with 50 stores in Australia, seven in the U.S. and three in the U.K.
“Honey Birdette expects approximately $73 million of revenue and approximately $28 million of EBITDA for the twelve months ending June 30, 2021, representing growth of over 40% and over 95%, respectively, over the prior year period,” according to Playboy CEO Ben Kohn.
The purchase price is a combination of approximately $238 million in cash “which we can currently fund from our existing cash on our balance sheet” and “$95 million in Playboy shares.” By comparison, in March, when Playboy acquired 41 Lovers stores located in five U.S. states, it paid approximately $25 million in cash for the chain it said at the time it “expected to contribute approximately $45 million of revenue over the next twelve months.” And it paid $13.1 million (for “substantially all of the assets and liabilities, excluding outstanding borrowings”) to acquire Yandy.com on the last day of 2019. That year Yandy recorded a net loss of $19.8 million on sales of $43.1 million.
During a call with analysts to discuss the Honey Birdette deal, Kohn speculated “if they are able to replicate the success, they have seen in Australia here in the United States, we think the brand could generate over $500 million annually, just in the United States on their existing product base of lingerie and bedroom accessories, not including the new categories they are launching.” He added, “today, only 24% and 10% of revenue comes from the U.S. and UK, respectively. And in the U.S. has achieved over a 150% compounded annual growth rates over the last three years.” Based on the percentages he cites, current U.S. sales are about $17.5 million.
Kohn explained in the announcement, “our plan is two-fold: to leverage PLBY Group and the Playboy brand’s global operations to accelerate Honey Birdette’s expansion into new territories and product categories, and to take advantage of Honey Birdette’s superior product design, sourcing and direct-to-consumer capabilities to accelerate our Playboy-branded lingerie, loungewear, swimwear, and sexual wellness go-to-market plans targeting the masstige consumer. This acquisition is expected to further our mission to become the leading pleasure and leisure lifestyle platform and our commitment to deliver long-term value to our shareholders.”
The Honey Birdette website offers a wide variety of dramatic and brightly colored bras and lingerie as well as pricey sex toys. We saw many bras retailing in the $100-$120 (U.S.) range. For example, the Christine Yellow bra, featuring “tropical embroidery, sheer crystal tulle, shimmering lurex and luxe picot trims” that is “topped with sparkling pink crystals and soft yellow mesh” sells for $120. The neon colored Saskia Magenta three piece set retails from $255. CFO Lance Barton noted that “a majority of the suppliers are based in China, but some of the stuff like the lace in particular is sourced in Switzerland.” The companion “Whitney Unicorn Venus Lilac” vibrator is offered for $170.
During the call Kohn noted that “all of Honey products are designed in-house, and the company works with European fabric houses and globally technicians to offer the highest quality lingerie and apparel. The company started with lingerie and expanded into bedroom accessories, and intends to soon launch swimwear in two weeks at Miami Swim along with loungewear and everyday essentials later this year.”
Kohn emphasized that Playboy will be “picking up their full design team, which is based in Australia,” adding that Honey Birdette founder El Monaghan “is actually in the process of moving to the United States later this year and we will be also hiring people here as we look to rapidly expand the launch of what will be a much higher-end Playboy or Playmate lingerie, swimwear business moving forward.” The current Honey Birdette design staff is comprised of nine.
Kohn emphasized that the deal “expands our addressable market. So, Honey Birdette will be priced at a higher price point than Playboy lingerie, obviously luxury versus what we deem to be masstige for Playboy.”
Honey Birdette opened a Las Vegas store “a few weeks ago to great success,” said Kohn, and the brand will be “opening new stores in the USA later this year in Dallas, Miami and Scottsdale,” as well as New York. He added that long term “you can think about 15, maybe 20 stores.”
As have executives at both Aerie and Soma, Kohn pointed to “the data that there’s a direct correlation between the store opening and the growth in that market from an e-commerce perspective. And so, selectively, we will continue to open further states -- further stores as we know it lifts the overall growth or the overall buy.”
At the same time Kohn emphasized the balance between physical stores and the internet. “Honey Birdette operates a direct-to-consumer, omni-channel model, which -- with more than 50% of the revenue coming online and growing over 67% year-over-year.” —NM
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