PLBY Group Inc. saw its share price decrease following the release of third quarter financials last month despite narrowing its net loss.
The Westwood-based sexual wellness, style and apparel company that publishes Playboy magazine online and operates website Playboy.com saw a 25% drop between the close of the stock of 68 cents on Nov. 9 and the close the following day of 51 cents.
But since then, the stock has been recovering. It closed at 53 cents on Nov. 30.
The stock has been trading below $1 a share since Sept. 22 when it closed at 87 cents. On Nov. 3, the company received a letter from Nasdaq indicating that it was at risk of being delisted since its share price was below $1 for 30 consecutive days. The company was granted an initial period of 180 days to regain compliance with Nasdaq rules.
Then on Nov. 9, the company reported after the market closed a net loss of $15.1 million (-20 cents a share) for the quarter ending Sept. 30, compared with a net loss of $265 million (-$5.65) in the same period of the previous year. Revenue decreased by 27% from the third quarter of the prior year to $33.3 million.
Playboy said the lower net loss was largely driven by $277 million of noncash asset impairments related to the write down of goodwill, trademarks and other assets recorded in the third quarter of last year, while there were only impairments of $7.7 million in the third quarter of this year.
Selling assets
Ben Kohn, chief executive of PLBY Group, said in a statement from a release about the third quarter financials that the company continued to make significant progress toward restructuring its operations as it moves to a capital light model.
The move to that model included the sale of its Lovers business and the signing of contracts with two auction houses to sell off the company’s art and memorabilia collection, Kohn said.
Lovers is a chain of sexual wellness stores in five states that was acquired by Playboy in early 2021. The chain was sold for $13.5 million in cash on Nov. 6 to LV Holding LLC, an affiliate of Flynt Management Group LLC in Century City.
“Now that we have closed Lovers, we will increase focus on exploring strategic alternatives for (lingerie brand and retailer) Honey Birdette,” Kohn said. “As we are not currently convinced about selling 100% of that business in today’s market, we are looking at ways to maximize the potential growth of Honey Birdette without burdening our balance sheet.”
During a conference call with analysts to discuss third quarter financials, Kohn was specifically asked about Honey Birdette by Jason Tilchen with Canaccord Genuity Group Inc.
Tilchen asked about the different factors Kohn was weighing as he thinks about that asset and how it fits into Playboy’s broader platform going forward.
Kohn said the company was making operational improvements to the subsidiary, including a 10% price increase to be started in the fourth quarter and go through the second quarter of next year.
“We have not raised prices in the last two years,” Kohn said.
It is also changing its strategy on free shipping and its expedited shipping policies, as well as taking other cost saving measures, he added.
“Given the macro environment right now from M&A and especially on the retail side, we don’t think it’s the right time to maximize shareholder value by selling (Honey Birdette),” Kohn said. “However, we are looking at strategic alternatives and are pursuing partnerships where we might be able to bring in a partner to help us grow the business without using cash from our balance sheet.”
Playboy acquired the Sydney, Australia-based retailer in June 2021 for $333 million.
