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With Playboy's iconic magazine now gone, the Bunny company is shifting into sexual wellness and making a big bet on brick-and-mortar retail even as it amps up its ecommerce division.
Playboy Enterprises announced the $25 million purchase of the retail chain "Lovers" earlier this week. The media and lifestyle company folded its print publication last year, and went public via SPAC last month.
Playboy expects the chain to generate $45 million over the next year. Lovers has 41 locations across five states, which sell lingerie, intimacy and wellness products.
The acquisition of Lovers is a big step into the wellness space — Playboy had launched a CBD line last year, but this is the company's first acquisition after going public. On Wednesday, a day after the announcement, shares fell 4%, an even sharper drop than the overall Nasdaq slide of 2.7%.
The Beverly Hills-based company is now focused on four sectors: sexual wellness, fashion, gaming and beauty. Its bunny logo can be seen on its gaming YouTube channel, on Missguided loungewear and on its furniture collaborations with Wayfair. Playboy will also be rolling out its own branded products which will be offered at Lovers locations and online.
"Sexual wellness is still very heavy brick-and-mortar, because people can go in, get educated," said Ben Kohn, chief executive of Playboy Enterprises. "[They] can experience products by touching them and holding them. And we think that's an important distribution channel today."
According to Kohn, sexual wellness retail is still 70% in-store purchases, despite the rise in ecommerce. The company's direct-to-consumer sales helped it grow revenue by 78% for the first nine months of 2020, compared with the previous year.
But Lovers is also building out its ecommerce front. The company recently hired Kevin Diamond, former head of global ecommerce at the troubled Forever 21, as its chief digital officer.
"The sexual wellness space is something that has become mainstream over the last five years — it's a $240 billion industry today projected to grow to $400 billion by 2024," Kohn said.
Editor's note: this story has been updated to reflect the Nasdaq close.