Improved Q1 for Playboy

CHICAGO: Playboy Enterprises has narrowed its net loss from $13.7 million in Q1 2009 to $1 million, despite a fall in revenues from $61.6 million to $52.1 million.

The 2010 first quarter included restructuring and impairment charges of $1.1 million, versus $8.7 million in restructuring and impairment charges last year.

“We are clearly making progress in our efforts to more effectively monetize the Playboy brand and return the company to sustained profitability,” said Scott Flanders, the CEO of Playboy Enterprises. “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."

He continued: "With expenses better under control, we are focusing our energies on effectively executing our business strategy. 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.”

Flanders concluded: "We believe that 2010 will be a transitional year and that the true benefits of our strategy will be more fully evident next year. Revenues are expected to decline this year, primarily due to changes at Playboy magazine, but segment income and operating margins should improve. We believe that licensing, our most profitable business, will record solid revenue and profit growth, although the media businesses will remain challenged, showing only marginal improvement over last year.”

The entertainment group’s segment income grew by 21 percent to $3.6 million. U.S. TV revenues were stable at $13.4 million, while international TV revenues fell 12 percent to $10 million.