Playboy Stock Rises on Lingerie Retailer Acquisition

Shares of PLBY Group (NASDAQ: PLBY) rose as much as 12% on Tuesday morning after the company announced it will acquire Honey Birdette, a growing lingerie retailer based in Australia. This is the second acquisition since the company completed its merger with special purpose acquisition company (SPAC) Mountain Crest Acquisition Corp in February.

As of 11:50 a.m. EDT, the stock was up 7%.

Building the sexual wellness business

The iconic adult entertainment company said that it will pay $333 million in a cash-and-stock deal for Honey Birdette. That price tag consists of $238 million in cash and 2.2 million PLBY Group shares worth an estimated $95 million. P

LBY Group will fund the cash portion with existing cash on its balance sheet without needing to take on any additional debt. The deal is expected to close in the third quarter.

The company has been aggressively expanding its retail footprint in the United States and Europe. Currently, Honey Birdette has 50 stores in Australia, 7 in the United States, and 3 in the United Kingdom. In addition to retail locations, Honey Birdette has also been growing with its direct-to-consumer omni-channel distribution model.

Honey Birdette has been growing at a compound annual growth rate (CAGR) of over 30% in recent years. The company expects to report trailing-12-month (TTM) revenue of $73 million for the year ending June 30, with EBITDA of $28 million.

The transaction will strengthen PLBY Group’s sourcing and product design prowess, according to PLBY Group. 

PLBY Group has been expanding its sexual wellness business and says that Honey Birdette will accelerate growth in that segment. Other acquired brands within PLBY’s sexual wellness strategy include Yandy and Lovers, deals that closed in February 2020 and March 2021, respectively. Sexual wellness revenue jumped by 2.5x in 2020.

“Our plan is two-fold: to leverage PLBY Group and 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 our Playboy-branded lingerie, loungewear, swimwear, and sexual wellness go-to-market plans targeting the masstige consumer,” PLBY CEO Ben Kohn said in a statement. “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.”

Targeting younger consumers

While the Playboy brand is globally recognized, it is generally associated with older demographics. The company has been trying to reposition itself and reinvigorate its image for younger consumers, emphasizing female empowerment and modern gender roles.

Honey Birdette’s customer base skews heavily towards younger, engaged, and affluent consumers. Over half of the company’s consumers are under 34, and repeat purchases comprise over 60% of total revenue. Approximately 57% of Honey Birdette customers are female, while male consumers often purchase gifts and represent the other 43%.

PLBY Group sees an opportunity to help Honey Birdette expand faster across geographical markets while introducing new product categories.

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