Playboy owner buys Honey Birdette for $443m

Once a global porn magazine powerhouse, Playboy's pivot into retail and brand merchandising has been bolstered this week with the planned US$333 million (AUD$443 million) acquisition of founder-led Australian lingerie retailer Honey Birdette.

Shares in Playboy's owner PLBY Group Inc (NASDAQ: PLBY) rose 3.56 per cent yesterday on the news it would acquire the racy Sydney-based company for a mix of US$238 million (AUD$316.7 million) cash and US$95 million (AUD$26.4 million) worth of shares.

The stock consideration represents around 6 per cent of PLBY shares on issue that will be given to Honey Birdette's leading shareholders Brett Blundy, Ray Itaoui and co-founder Eloise Monaghan.

"When I founded Honey Birdette 15 years ago, my ambition was to build a brand for women, by women; a brand that would serve as a platform for confidence and sexual and body empowerment," says Monaghan, who is also managing director of the company.

"I am immensely proud of everything we've accomplished with 60 thriving stores across three countries powered by 350 fierce female ambassadors.

"Today is a momentous and proud day for the Honey Birdette team as we enter into partnership with one of the world's most iconic brands and the lifestyle platform it represents. I'm thrilled to join Ben and the whole PLBY Group team on a mission to build a lifestyle of pleasure for all."

Following launches in London and Los Angeles in 2016 and 2018 respectively, Honey Birdette is now focused on expanding its retail footprint across the US, UK and Europe, with flagship stores set to open in the coming months in Dallas, Miami and New York.

In addition to regularly released lingerie collections featuring exclusive designs and embroidery, the high-end brand is soon releasing new loungewear, swimwear and essentials collections.

"We are extremely excited to welcome Honey Birdette to PLBY Group," says PLBY Group chief executive officer Ben Kohn.

"We strongly believe in the power of brands, and are thrilled by Honey Birdette's potential to become a multi-billion-dollar luxury lifestyle franchise.

"I've been enormously impressed by Eloise and the rest of the Honey Birdette team and the organic, rapid growth they've driven."

For more than five years Kohn has been attempting to turn the multinational around, having narrowed PLBY's 2020 losses to $5 million, driven by increased merchandising, cross-selling, and influencer marketing programs that leverage the brand's intellectual property and global fan base.

In March this year PLBY acquired sexual wellness retailer Lovers for US$25 million (AUD$33.2 million), but the Honey Birdette acquisition marks a significant step up with the Australian group expecting US$73 million of revenue (AUD$97 million) and approximately US$28 million (AUD$37 million) of EBITDA.

This signifies revenue and profit growth rates of 40 per cent and 95 per cent respectively.

Honey Birdette's EBITDA is more or less on par with PLBY's adjusted EBITDA last year, although the US-based giant is worth almost AUD$2 billion.

Kohn's says the strategy with the deal will be two-fold, firstly leveraging the Playboy brand's global operations to accelerate Honey Birdette's expansion into new territories and product categories, and to "take advantage of Honey Birdette's superior product design, sourcing and direct-to-consumer capabilities" to accelerate Playboy-branded lingerie, loungewear, swimwear, and sexual wellness go-to-market plans targeting the masstige consumer.

"This acquisition is expected to further our mission to become the leading pleasure and leisure lifestyle platform and our commitment to deliver long-term value to our shareholders," he says.

Honey Birdette has not been shy of controversy in recent years with former employees taking aim at the retailer alleging poor working conditions, while it has also been the target of activism from conservative women's rights group Collective Shout, which just last month also had City Beach in its sights following the release of its new range of Playboy-branded clothing.