Q3 2023 PLBY Group Inc Earnings Call

Good afternoon, everyone and welcome to the T. L. B Y groups third quarter 2023 earnings conference call.

During today's call are Ben Cohen, Chief Executive Officer, and Mark Kaufmann, Chief Financial Officer, and Chief operating Officer.

The company will be hosting a question and answer session today to join the queue to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, while we wait for the queue to Phil I would like to hand, the call over to actually decent loan of ICR.

Thank you operator, good afternoon, I'd like to remind everyone that the information discussed today is qualified in its entirety by the form 8-K and Form 10-Q filing made today by P. L. B Y group, which may be accessed from the Sec's website and tell me why group's website.

Today's call is also being webcast and a replay will be posted to PLT why group's investor Relations website.

Please note that statements made during this call, including financial projections or other statements that are not historical in nature may constitute forward looking statements such statements are made on the basis of kilby labs to use and assumptions regarding future events and business performance at the time. They are made and we do not undertake any obligation to update these statements.

Forward looking statements are subject to risks, which could cause <unk> actual results to differ from its historical results and forecast, including those risks set forth in <unk> filings with the SEC and you should refer to and carefully consider those for more information. This cautionary statement applies to all forward looking statements made during this call.

Do not place undue reliance on any forward looking statements.

During this call T. L. D Y group may refer to non-GAAP financial measures such non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure is available in the earnings release PLT filed with its form 8-K today and in its.

Form 10-Q filed with.

With that I will hand, the call back over to operator to begin the Q&A session operator.

Thank you.

At this time, we will be conducting a question and answer session. As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

And our first question comes from the line of Jason <unk> with Canaccord Genuity. Please proceed with your questions.

Great Good afternoon, and thanks for taking the question.

First off I'm curious you mentioned in a press release that you are not 100% convinced about selling huntingburg debt I'm. Just curious what are some of the different factors you're weighing as you think about that asset and how it fits into your broader platform going forward and maybe what are some of the options beyond continuing.

Is that Youre currently looking at at the moment.

Thanks, Jason Good afternoon, it's Ben.

I think right now.

We are making the operational improvements we've talked about in previous calls to <unk>. As we said today, we are instituting a 10% price increase that will start to start in the fourth quarter.

And it will take us really until probably the second quarter next year or two.

All products, but we have not raised prices in the last two years.

And yet we faced rising inflation with wages product costs and shipping costs. We've also changed our free shipping as well as our expedited shipping policies and we have other cost measures that we're taking.

Given the macro environment right now from M&A, and especially on the retail side.

We don't think its the right time.

To maximize shareholder value by selling that however, we are looking at strategic alternatives.

Our pursuing partnerships.

Where we might be able to bringing a partner to help us grow the business without using cash from our balance sheet.

Yeah.

Great that's really helpful and then.

Just a follow up.

On the licensing business you mentioned in the prepared remarks in the press release about that.

Potentially having a Chinese private equity firm, making an offer for some of the Chinese trademarks I was curious if you could expand a little bit about how that would impact the shape the trajectory of the licensing business in that market going forward.

Sure there is not much I can say at this point.

They can say and we talked about this in the press release as well.

Over the past few months, we've done extensive audits of our old partners.

Both from a legal and financial perspective.

We saw multiple violations and incurable violations of those agreements.

Well as we've talked about previously they haven't.

Partners have not been paying us. So we have decided to terminate a number of them. We have strong interest from some of their subs as well as new partners that might be interested in licensing the brand and at the same time, we received an unsolicited offer to buy our IP.

We are still evaluating that deal and whether that deal makes sense for us or not given the business devaluation, the geopolitical situation et cetera.

In its current format.

Would we would be selling all of our China business, and we would not have a China business moving forward, but in return we would receive a significant amount of cash but again.

It's early in that and we're still evaluating it from a company perspective.

Great that's really helpful and just one last one.

Was wondering if you could make perhaps share some of the and update on some of the key metrics that you've been discussing in regards to the greater platform that you shared a lot about plans to sort of change.

Change that rebranding and also introduce membership to you, but I'm just curious what are some of the underlying trends that youre seeing on recent months yes.

Yes, we're still very happy with where the greater platform is moving forward, we're not going to be talking about <unk>.

Because that is not the metric by which we think we should be judged on what we're going to be talking about is digital revenue I think that we are not to be clear we are not trying to compete with only fans.

We don't believe in being Costco at Playboy I think we view ourselves more as a neiman Marcus than the Costco and so we think we have a way with with the Playboy club, which really from from the <unk>.

The people, we've talked to resonates with people. It makes sense. This is the place to interact.

With graders, but also the addition of membership.

We have ways for creators to make more money with Playboy than any other platform. We're building on an affiliate program, where they can sell memberships and get paid.

You can participate in live events, there is a really unique value proposition for membership and so for us. It's much more about revenue. We also believe with the creator tearing that we've rolled out that only fans that set the market at 80 20, We don't think 80 24, a creator platform split is necessarily relevant.

Or should that be where we are moving forward.

So.

Sorry, not to answer the question directly, but we're going to be focusing on digital revenue moving forward as we are bringing our whole entire digital ecosystem together into one offering.

Great. That's very helpful. Thanks, a lot.

Yeah.

Yes.

And our next question comes from the line of Greg <unk> with Chardan. Please proceed with your question.

Hey, guys. Thanks for taking my question.

Flipping back over to Honeybear debt can you just kind of.

Let us now I mean, what are you seeing in terms of the ability to raise prices you said youre going to be doing it gradually over the next six months.

Where do you think competitively the retail environment in that space as tradition.

Thanks, Greg.

Look I think October is a great example.

Talked about this but in October of 'twenty three versus October 22, which is a month that we had no sales in either either year, we were up 16% year over year.

And so with the right product we are easily seen the demand for that we've also made changes already.

To expedited shipping to free shipping thresholds, we have not seen any impact to consumer demand for the product.

And we believe that.

We have room to raise prices, obviously labor and other costs have gone up.

And when you look at the competitive landscape, we've seen others raise prices, we have not and so that is something that we will start implementing here in the fourth quarter.

And just given how we tag items.

Based on the factories.

Take us until the second quarter to have that across our full product suite.

Okay, and then just one more on honey product can you just remind us what the store base sit that right now where it was last year and if there are any plans for new stores.

Yes, so Greg it's mark.

Right now the store base has got 48 in Australia, We've got 12 in the U S.

And we have three and in the U K and since then we had opened I think a year ago three new stores I've got the exact number for you, but I think that was in the U S.

Yes, Greg I think we would like to open new stores I think that we are committed to becoming a capital light model.

Moving to the capital light model, we talked about.

<unk>.

We don't think Thats, the best use of shareholder capital on our balance sheet, just given our limited resources and the debt.

That we have but we are we are exploring this we set strategic alternatives to potentially bring in a partner.

To help us expand that business.

Not the right time for us to sell a 100% of it after consulting with our advisors based on the macro environment.

Makes sense, okay. Thanks, a lot.

And we have reached the end of the question and answer session differ I will turn the call back over to management for closing remarks.

We appreciate everyone listening and we look forward to talking to you on our next call to discuss full year 2023 results. Thank you.

And this concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

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