PLBY Group, in its third quarter 2023 earnings call, has revealed that it is considering strategic alternatives for its Honey Birdette brand, including potential partnerships. The company is also shifting its focus towards digital revenue, moving away from gross merchandise volume (GMV) as a key metric.

Key takeaways from the call:

• PLBY Group is considering strategic alternatives for Honey Birdette, including potential partnerships, as it seeks to grow the business without using cash from its balance sheet. The company is not convinced about selling Honey Birdette due to the current macro environment.
• The company is implementing a 10% price increase for Honey Birdette, which will start in the fourth quarter and continue until probably the second quarter of next year. This is the first price increase in two years, amidst rising inflation with wages, product costs, and shipping costs.
• PLBY Group has received an unsolicited offer to buy its intellectual property in China. If the deal proceeds, PLBY Group would not have a China business moving forward but would receive a significant amount of cash. The company is still evaluating the deal.
• The company is shifting its focus towards digital revenue, moving away from gross merchandise volume (GMV) as a key metric. It is not trying to compete with Only Fans and views itself more as  a Neiman Marcus than a Costco (NASDAQ:COST).
• PLBY Group is looking to bring its entire digital ecosystem together into one offering, focusing on membership and creating more opportunities for creators to make money with Playboy than any other platform.

PLBY Group’s CEO Ben Kohn and CFO Marc Crossman hosted the call, discussing the company’s financial projections, operational improvements, and strategic alternatives for Honey Birdette. Kohn reiterated that the company is not looking to sell Honey Birdette at the moment, but is exploring strategic alternatives including partnerships to help grow the business.

The company is also focusing on digital revenue, moving away from gross merchandise volume (GMV) as a key metric. Kohn stated, “We’re not trying to compete with Only Fans. We don’t believe in being Costco at Playboy. We view ourselves more as a Neiman Marcus than a Costco.”

PLBY Group is also evaluating an unsolicited offer to buy its intellectual property in China. If the deal proceeds, PLBY Group would not have a China business moving forward but would receive a significant amount of cash. The company is still evaluating the deal.

PLBY Group (NASDAQ:PLBY) is a global media and lifestyle company and the parent company of Playboy.

With a market cap of 50.54M USD, PLBY Group is navigating through a challenging financial landscape. The company’s P/E Ratio, a key indicator of profitability, stands at -0.09, suggesting that it is not currently turning a profit. This is further emphasized by a negative P/E Ratio of -1.94 for the last twelve months as of Q2 2023.

PLBY Group is operating under a significant debt burden and has been quickly burning through cash. This could potentially influence their decision to evaluate strategic options for Honey Birdette, as they seek to grow the business without further straining their balance sheet.

In addition, the company has been experiencing a declining trend in earnings per share and analysts anticipate a sales decline in the current year. These factors, coupled with a poor return on assets, might be contributing to the company’s shift towards digital revenue as a key metric.