Honey Birdette Up As Playboy Loss Persists

Lingerie from the new Bella and Lexi collections at Honey Birdette.

In the first quarter, Playboy lost $16.447 million on sales of $28.319 million, compared to a loss of $37.680 million on sales on $35.203 million in the same quarter last year.

Despite the substantial loss, CEO Ben Kohn claimed, “over the past several months, we have stabilized our core business as we have executed on the key goals from 2023, and we can now shift our focus to accelerating growth in our areas of strategic priority. Net loss from continuing operations narrowed 55% and adjusted EBITDA loss narrowed 74% compared to the first quarter of 2023, as costs and expenses were reduced significantly more than revenues. This progress comes even with $5.5 million less revenue from China and $3.5 million less e-commerce revenue in the first quarter of 2024, as compared to the first quarter of 2023.”

Kohn added that the “first quarter 2024 numbers also do not yet include any contribution from the largest new licensing deal we have recently signed for China, which is expected to contribute in the second quarter of 2024.”

“In China, through our joint venture we have entered into multiple new brand licensing agreements, each with shorter terms and achievable minimum guarantees designed to incentivize investment in the brand by licensees while we retain flexibility. The new agreements are highlighted by a five-year license agreement with Guandong Duhan Industrial Co., Ltd., which is required to pay minimum royalties of approximately $37 million (based on current exchange rates) over the term, as well as any excess royalties.”

“At Honey Birdette,” he continued, “we posted a second consecutive quarter of positive sales growth, while expanding gross margins and significantly improving profitability, both year-over-year and sequentially. Specifically, our sales grew 8% quarter-over-quarter and our gross margin expanded from 43% to 52% during the same period. With new momentum based on recent growth, we believe the time is right to actively seek a new partner or owner of the Honey Birdette business that can invest the capital necessary to expand the brand’s presence globally. A sale of all or a portion of the Honey Birdette business would allow us to focus our capital and attention on our key strategic priorities for the year: growing the Playboy brand and de-levering our balance sheet.”

“We continue to believe one of the most powerful tools we have to grow the Playboy brand is our creator platform, The Playboy Club. The scale that we have achieved to date in this business has been fully through word-of-mouth, with very little marketing investment.”

The company explained that “approximately $3.5 million of the decrease” in revenue in the quarter “was attributable to" the Playboy "e-commerce business no longer being operated by the company in 2024, which was in addition to a $5.5 million decline in licensing revenue attributable to the termination of two China licensees in late 2023. These declines were partially offset by higher revenue from Honey Birdette and the company’s creator platform.”

Playboy explained that “direct-to-consumer revenue from continuing operations declined $2.0 million, or 10%, year-over-year to $18.7 million. Revenues from playboy.com e-commerce declined by $3.5 million, as the company transitioned it from an owned-and-operated model to a licensing model, while revenue from Honey Birdette increased by $1.5 million, or 8% year-over-year, to $18.7 million from $17.3 million.”

The company continued that “licensing revenue declined $5.6 million, or 58%, year-over-year to $4.1 million. The decrease is primarily attributable to China and the termination of two of the company’s three largest licensing agreements in late 2023, which management believes the new license agreements will begin to remedy in future periods.”

Finally, “digital subscriptions and content revenue increased 16%, to $5.5 million from $4.7 million in the prior year period. An increase in creator platform revenue more than offset declines in legacy media.”