Playboy Eyes Clubs in Latin America, CEO Says
Playboy Enterprises Inc., publisher of the namesake magazine, is looking toward overseas growth in Latin America, China and India, including new clubs in Brazil, its chief executive said.
“The local Brazilian culture is more open toward sexuality,” Chief Executive Officer Scott Flanders said yesterday in a telephone interview. “In those environments, the Playboy brand has its strongest resonance.” Opening clubs there is “a real priority,” he said.
Playboy, based in Chicago, is seeking partners to increase revenue from licensed goods, expand branded clubs and casinos and develop new television programming that appeals to both sexes. The moves are part of a restructuring plan that will deliver a profit in 2011, Flanders said.
The company is in talks with a “handful” of potential partners to open more clubs in Latin America. It is also in discussions with a local operator in China’s Macau that could open a club within a year.
Flanders listed Rio de Janeiro and Sao Paulo as potential cities in Brazil, the site of its top-performing international magazine. He declined to give a timeframe for any openings. Playboy will add clubs in Cancun, Mexico, and Florida this year.
Flanders, 53, spoke after the company said its fourth- quarter net loss shrank to $27.8 million, or 83 cents a share, including $28.6 million for expenses such as job cuts. A year earlier, Playboy posted a loss of $146.8 million, or $4.40 a share, including $157.2 million in impairment and other costs.
Earlier today, Playboy said it signed an exclusive agreement in Asia with IMG Licensing Worldwide to expand licensing of apparel, accessories and other products.
While Playboy isn’t in talks for similar agreements elsewhere, Flanders said he expects that the pact will “significantly increase” Playboy’s licensing business in Asia, eventually leading IMG to “broaden that relationship throughout the rest of the world.”
The agreement will help the brand grow in India and China, Flanders said, where its clothing appeals to both men and women, in contrast to the U.S., where women are the primary customers.
The company also will try to attract more viewers with new TV programming by adding more story lines that will appeal to couples, Flanders said.
Playboy’s market value shrank as circulation plunged at the namesake magazine started by Hugh Hefner in 1953, leaving the company vulnerable to shareholder pressure to sell itself.
“Playboy’s brand is ubiquitous, and it is well known that the stock has underperformed its potential, so the company does draw interest on a consistent basis,” Flanders said.
Iconix Brand Group Inc., based in New York, decided in December to halt acquisition discussions with the company after determining it would be too complicated to divest, shut down or find partners for Playboy units it didn’t want to operate, according to two people familiar with the matter.
Playboy fell 13 cents, or 3.8 percent, to $3.34 at 4:15 p.m. in New York Stock Exchange composite trading. The shares gained 48 percent last year on sale talks.
Partnerships will help the company operate more efficiently, Flanders said, in a model similar to that of Iconix, which owns brands such as London Fog and Danskin and licenses them through retailers and manufacturers.
“What’s different is, we generate content, where they just buy and leverage brands at retail,” Flanders said. As Playboy concludes new partnerships, “we will look more like Iconix in the future.”
Shareholders “will be richly rewarded for staying the course with us for the long term,” he said.
Flanders declined to comment on sale talks.