PLBY Group Inc.’s acquisition of Australian luxury lingerie brand Honey Birdette Tuesday will add a respected brand to its portfolio, along with expertise in the intimates business, and help extend the parent of Playboy’s director-to-consumer business, Canaccord said Tuesday.
Honey Birdette chalked up revenue of about $73 million in fiscal 2020, up 40% from the year-earlier period and not far off the roughly $90 million generated by the Playboy parent’s direct-to-consumer business in the same time frame, said Canaccord analyst Austin Moldow.
Honey Birdette has 60 physical stores, mostly in Australia, with a few in the U.S. and the U.K. It’s planning to open new stores in New York, Miami and Dallas, among other cities, in the coming years to complement its online business.
“Honey Birdette has been known for some provocative and innovative marketing and sales campaigns, like its anti-Valentine’s Day ad campaign and strategy for private appointments during the height of the pandemic, highlighting the benefit of an omnichannel operation within the intimates space,” Moldow wrote in a note to clients.
The scantily clad women in the Valentine’s Day ad irked Australian parents, as did an ad campaign involving images of women in BDSM-chokers that appeared in stores at malls.
Still, “an acquisition like this would be in-line with PLBY’s prior comments and plans,” he added. Moldow rates PLBY a buy and has a $52 price target that is about 26% above its current price.
Most of the market share gains in the intimates space are coming from digital-first brands, he wrote, as they encroach on a space formerly dominated by L Brands’
That company’s share has roughly halved in the last 10 years from 30% previously. The second-biggest player is American Eagle’s
Aerie, followed by ThirdLove, a digitally native brand that has about $100 million in revenue. Yet another digital brand, AdoreMe, is thought to be not far behind that figure, said the analyst.
“We think adding Honey Birdette’s team and expertise would give PLBY the capacity to create Playboy branded intimates apparel and accessories,” he wrote.
Playboy said earlier it is paying about $333 million in cash and stock for Honey Birdette and that Eloise Monaghan, founder and managing director, would continue to run the business.
PLBY Group Chief Executive Ben Kohn told the Wall Street Journal the company believes it’s a billion-dollar-revenue opportunity and that it expects strong growth in Europe, including Russia, and other territories.
Playboy returned to public markets last year, using a pandemic-friendly vehicle, a merger with a special purpose acquisition corporation, or SPAC, called Mountain Crest Acquisition Corp. SPACs, or blank-check companies, raise money through an initial public offering and then seek to acquire a business, or businesses. They became highly popular in 2020 and chalked up record numbers of deals and funds raised.
The company had spent 11 years as a private company under its late founder, Hugh Hefner. Playboy is very different today to what it was during the peak years of the 1960s and 1970s, and has shut down most of its legacy media businesses. The company started as a magazine published out of late founder Hugh Hefner’s Chicago apartment before growing to include a global licensing business and television networks.
The company today focuses on four categories: sexual wellness, including products such as condoms; style and apparel; gaming and lifestyle; and beauty and grooming. It no longer publishes images of fully nude women and has become popular in conservative China, where its bunny logo is licensed for a range of goods.