PLBY Group has recorded US$2.3 million (A$3.48 million) of impairment charges related to certain Honey Birdette right-of-use assets and related leasehold improvements in the fourth quarter of 2023.
An impairment charge refers to an asset that has lost value over a certain timeframe - usually related to intangible assets such as trade names.
Honey Birdette’s latest impairment charge came as the lingerie retailer recorded a 13 per cent drop year-over-year in sales to US$72.9 million in the full year 2023.
In the fourth quarter, Honey Birdette revenue returned to black with a 14 per cent increase in sales to US$20.4 million.
For PLBY Group overall - which also includes its global Playboy licensing brand - net loss from continuing operations for the year ending 2023 was US$186.4 million, down from a net loss of US$250.7 million in 2022.
The lower loss in 2023 was largely driven by US$283.5 million of non-cash asset impairments related to the write-down of goodwill, trademarks and other assets recorded in 2022, PLBY Group claimed, while there was only US$154.9 million of impairments in 2023.
As of December 31, 2022, PLBY Group’s goodwill was US$123.2 million, or approximately 22 per cent of its total consolidated assets, while trademarks and other intangible assets represented approximately US$236.1 million, or approximately 43 per cent of its total consolidated assets.
Citing further impacts to revenue - including declines in consumer demand and discontinued operations following sold-off brands Lovers and Yandy - PLBY Group recorded non-cash asset impairment charges related to the write-down of goodwill of US$66.7 million in the second quarter of 2023, indefinite-lived trademarks of US$65.5 million, and trade names of US$5.1 million.
In the fourth quarter, PLBY Group recorded US$5.8 million of additional non-cash impairment charges related to its trademarks and US$2.3 million of impairment charges related to certain Honey Birdette right-of-use assets and related leasehold improvements.
By year end, goodwill was US$54.9 million, or approximately 16 per cent of its total consolidated assets; trademarks and other intangible assets were US$157.9 million, or approximately 47 per cent of its total consolidated assets; and right-of-use assets were US$25.3 million, or approximately 8 per cent of its total consolidated assets.
“There can be no assurance that any future downturn in the business of any of our segments, or a continued decrease in our market capitalization, will not result in a further write-down of goodwill or other intangibles,” PLBY Group declared in its 2023 full-year report.
“We will review our goodwill, trademarks, right-of-use assets, digital assets and other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
“Any write-down of intangible assets resulting from future periodic evaluations could, as applicable, have a material effect on our financial results.”
Through Honey Birdette, PLBY Group has over 15,000 square feet of leased office and warehouse space in Sydney, Australia.
As of 2023 year end, Honey Birdette operated 62 retail stores across Australia, the United States and the United Kingdom, ranging in size between approximately 400 and 1,200 square feet per location.