PLBY Group CEO Ben Kohn has confirmed the company is preparing to sell off Honey Birdette - the Australian lingerie retailer it acquired for USD$333 million in 2021.
Kohn shared the news at a business conference earlier this month.
“Long-term, Honey Birdette doesn’t belong as part of this company, and at the right time, we will sell it,” Kohn confirmed. “But right now, the business is performing very well.
“We talked about that in our Q3 results - the month of October - we’ve seen those trends continue, and we’ve also made other operational improvements. But we’re focused on Playboy and really returning that to the experiential lifestyle brand that it was.”
The news comes as Honey Birdette recorded revenue losses throughout 2023. In the third quarter of 2023, the lingerie brand recorded a US$4.1 million loss in sales - or AU$6.23 million.
It also comes as PLBY Group began consolidating its assets by selling off two of its other subsidiaries - sexual wellness brand Lovers and another lingerie brand Yandy.
Until the commencement of a sale, Kohn said he and the team are re-evaluating opening new stores in 2024 given Honey Birdette’s performance.
“Honey Birdette had a tough first half of the year, but the improvements we’ve made are there,” he said. “We’re seeing the results from it. And at the right time, we will sell a part or all of that asset.”
According to Kohn, when it bought the business back in August of 2021, Honey Birdette had a ton of inventory on order by the previous owner, driving long lead times on inventory. The other key challenge was that, once the deal was signed, many Australian states went back into lockdown.
“And so, in ‘22, we had to discount, because we had to move that inventory out,” Kohn said. “Looking at ‘23, and then moving into 24, we have considerably cut down the number of days that we're on sale, really focusing on improving margin.
“In Q3 [2023], we announced that we had increased gross margin by 300bps, which is a lot when you look at the overall revenue for the business.”
Kohn said that since then, PLBY Group made other changes to the Honey Birdette business. This includes changing its shipping policies to now charge customers for faster shipping - what Americans call ‘expedited’ shipping.
“Basically, everyone was qualifying - based on the average order size, which in the US is like $280 - for expedited free shipping,” Kohn said. “We've now discontinued that and charge for expedited shipping.”
The company also changed its return policy and put a 10% increase on all prices.
“As labour has gone up over the past few years, we have not raised prices. And so we just instituted a 10% price increase. Because our tagging is done to the factory, that takes a while to roll in. And so you'll start to see that rolling in now through June of this year.”
According to Kohn, 42% of the brand’s trade comes from Australia, where the bulk of its retail stores are. The United States is the brand’s key market by a small margin, at 45%. Other international trade makes up the rest.
Kohn also revealed that 60% of Honey Birdette’s overall revenue comes from online sales.
“What is really interesting when you look at the retail footprint - every time we opened a retail store, we actually saw an uplift in e-commerce in that geography,” Kohn said.
Honey Birdette also sees 30% earnings before interest, tax, depreciation and amortisation (EBITDA) margins for stores, and each new store carries a rough cost of $700,000 to build, according to Kohn.
PLBY Group is a global pleasure and leisure company across media, products and experiences. Its key brand is Playboy, with a large portion of its revenue coming from licensing.