Playboy Announces Second Quarter Losses of $9M

CHICAGOPlayboy Enterprises Inc. on Wednesday announced second quarter losses of nearly $9 million. The losses were the result of a one time restructuring charge of $9.1 million related to the closing of the company's New York office, the company said.

Excluding that charge, the lifestyle brand reported a small income of $0.4 million. In the same period last year, the company reported a net loss of $3.2 million.

According to the press release, Second quarter 2009 segment income was $3.6 million, which compares to a segment loss of $0.3 million in the 2008 second quarter. Increased profits in the Entertainment and Print/Digital businesses combined with lower corporate expense were responsible for the improvement. Year-over-year second quarter revenues declined from $73.4 million last year to $62.2 million in 2009.

"It is clear that the cost-reduction initiatives that we began implementing late last year are responsible for the improvements in both segment income and margins," Playboy's Chief Executive Officer Scott Flanders said. "Our accomplishments were most evident in the Print/Digital and Entertainment segments, which reported significantly increased profitability in the 2009 second quarter compared to last year."

Flanders was hired in June of last year after Christie Hefner, Hugh's daughter, resigned as CEO. Flanders was president and chief executive of Freedom Communications Inc., an Irvine, Calif.-based media company that owns eight television stations and more than 40 daily and weekly newspapers nationwide, including the Orange County Register.

At the time Flanders took the reigns, Playboy was already in the middle of a company-wide retrenchment that included wide scale layoffs, consolidation of departments and the aforementioned closure of the New York office, which had been the hub of the publishing arm of the company.

Rumors had already begin to circulate that the storied company was up for sale, and in February of this year, the company publicly admitted that it was "willing to listen" to offers. In a conference call Tuesday, Flanders declined to comment on the issue of a possible sale, preferring to focus on the company's intentions to build on the success of cost-cutting measures implemented over the past year.

"Efforts to better manage our cost structure while improving our customers' experience will continue," Flanders said. "I believe this company has taken many of the right steps in outsourcing or exiting unprofitable businesses and that those which remain are critical to our future. However, I also believe we can create a more effective operating and financial structure, and our goal is to do just that."

Thursday, PEI was trading around $2.40 a share, down from its 52-week high of $4.99.