Playboy Enterprises (PLA), publisher of the eponymous highfalutin nudie mag, today reported a first-quarter loss of $1 million, a vast improvement over the loss of $13.7 million in the first quarter of 2009.
The results included a $1.1-million restructuring and impairment charge. In the first quarter of 2009, the company recorded a similar one-off charge of $8.7 million.
Revenue fell 15% year over year to $52.1 million, mostly because of “changes implemented to improve the profitability of Playboy magazine,” the company said.
The company’s Print/Digital unit, which includes the magazine, recorded a loss of $1.1 million, narrower than the $3.6 million loss recorded a year ago. Declining Web subscription sales contributed to a $1 million decline in digital revenue, leaving that number at $8.3 million.
CEO Scott Flanders offered his comments in a statement:
The extensive cost-reduction initiatives implemented over the last 18 months were responsible for the improved first quarter results and contributed to the significant narrowing of losses in our domestic magazine, the increase in Entertainment Group operating margins and the Licensing Group returning to its highest level of profitability since mid-2008.
Flanders also said that Playboy intends to become a brand-management company and outsource some of its operations to other companies, noting that the company’s licensing segment is its most profitable. He said 2010 would be a “transitional year” and the benefits of the new strategy would be more apparent in 2011.
Shares were gaining 2.6% at $4.36 in midday trading.
Press release after the jump.
CHICAGO, Thursday, May 6, 2010 — Playboy Enterprises, Inc. (PEI) (NYSE: PLA, PLAA) today announced a net loss for the first quarter ended March 31, 2010, of $1.0 million, or $0.03 per basic and diluted share, which compares to a net loss of $13.7 million, or $0.41 per basic and diluted share, in the same period last year. The 2010 first quarter included restructuring and impairment charges of $1.1 million, or $0.03 per basic and diluted share, versus restructuring and impairment charges that totaled $8.7 million, or $0.26 per basic and diluted share, in the same period last year.
First quarter segment income was $3.2 million, a $4.5 million improvement from the $1.3 million segment loss reported in the 2009 first quarter. Improved results in all three business groups as well as lower Corporate expense contributed to the year-over-year improvement. Revenues declined to $52.1 million from the $61.6 million in the same time periods, as anticipated, primarily reflecting changes implemented to improve the profitability of Playboy magazine.
PEI Chief Executive Officer Scott Flanders said: “We are clearly making progress in our efforts to more effectively monetize the Playboy brand and return the company to sustained profitability. The extensive cost-reduction initiatives implemented over the last 18 months were responsible for the improved first quarter results and contributed to the significant narrowing of losses in our domestic magazine, the increase in Entertainment Group operating margins and the Licensing Group returning to its highest level of profitability since mid-2008. All of these improvements occurred against a backdrop of lingering economic weakness globally and continuing secular challenges, particularly in the print and TV industries.
“With expenses better under control, we are focusing our energies on effectively executing our business strategy,” Flanders said. “Our goal is to transition Playboy to a brand management company, and our first priority is to outsource, partner or license those of our operations that can be more efficiently handled by other companies. Already we have completed two major deals, and we are pleased with what we are seeing from our partners thus far. The outsourcing model not only streamlines our organization, it also allows us to reduce our focus to strengthening our core competencies and to growing the high-margin, high-potential businesses that we will continue to operate.