Playboy has big plans but Wall Street is unimpressed

Playboy is public once again.
Playboy is public once again.
Image: Reuters/Jorge Silva
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A decade after founder Hugh Hefner took Playboy from public to private again, the company returned to the stock market yesterday.

It was not the most auspicious restart. Shares dropped 2.7%.

Wall Street is evidently not impressed as Playboy tries to write a future very different from its past as the publisher of an iconic men’s magazine. The company is in the midst of a pivot away from some of the pillars its business has relied on, such as media and licensing deals in China, and toward more consumer products, from clothes to home goods to condoms.

Facing tons of online competition in its legacy business of peddling nude images, Playboy instead has focused on launching its own e-commerce channels and acquiring established retailers. Last year, it grabbed up online lingerie retailer Yandy as it restructured its operations. This year it bought the parent company of sexual-wellness chain Lovers, which has 41 stores spread across five US states.

Leading the transition is Ben Kohn, Playboy’s CEO and a managing partner at Rizvi Traverse, the private-equity firm that helped Hefner take Playboy private and became the company’s controlling shareholder. In 2018, the year after Hefner died, Kohn revealed plans to shift Playboy from a media business to a “brand-management company.” By then there was already talk of shuttering the print magazine that has defined Playboy since its founding in 1953. The pandemic forced a decision and Playboy ceased its print run in 2020.

The company still has a substantial business in digital content, but the bulk of its $78 million in revenue in 2019—the most recent full year available—came from licensing, particularly in China, where Playboy has been building its name for more than 25 years. Its licensees in the country run nearly 2,500 brick-and-mortar stores selling Playboy-branded clothes, shoes, and other items. In a filing with the US Securities and Exchange Commission ahead of its listing, the company said it expects more growth in this business as it moves into categories such as grooming products and women’s clothing too.

But it also expects the importance of these sales to shrink as it builds up its sales of consumer goods. At the end of 2019, for instance, licensing in China specifically made up 44.4% of the company’s revenue. By the end of last September, that figure declined to 28% following its purchase of Yandy.

Playboy’s product sales have a long way to go if they’re going to support it, but Kohn feels the opportunity is there.

“People immediately have this preconceived notion that this is a legacy media business, [but] we’ve cut all of that down,” he told Seeking Alpha, an investment news site, in a recent interview. “This is a vibrant, fast-growing consumer-product company.” Direct-to-consumer sales drove its growth in 2020, helping its revenue jump 78% in the nine months through Sept. 30 versus the same period the year before.