Playboy Enterprises Inc. (NYSE: PLA) said Tuesday it plans to downsize its business structure and expects to record a restructuring charge of approximately $3 million in the 2010 second quarter as a result. It is cutting staff in an effort to save this $3 million as it transitions from a media company into one that primarily licenses the Playboy brand. Spokeswoman Martha Lindeman said the company is not disclosing the number of employees being laid off. At the end of March, Playboy employed 573 people in its Los Angeles and Chicago offices, down from 651 a year ago.
Playboy Chief Executive Scott Flanders said in a statement the company is "aggressively looking" for ways to streamline the organization, consolidate functions, and reduce overhead expense. In December, Playboy was in talks to sell itself to the Iconix Brand Group, Inc. (NASDAQ: ICON), a company that licenses clothing brands such as Joe Boxer, but no deal was reached. Playboy is currently trying to capitalize on its iconic bunny ears logo by signing licensing deals with clothing makers, casinos and clubs as it moves away from its reliance on print advertising from its magazine.
Scott Flanders commented: "Our goal is to transition Playboy to a brand management company and, in so doing, to more cost-effectively monetize our powerful brand and assets… The downsizing announced today is not a reflection of our employees' talents and work ethic, but rather due to the overall change in the company's strategic direction."
Shares fell 19 cents, or 4.4 percent, to close at $4.08 amid a broader market decline. Today, Playboy is currently trading at $4.23, up $0.15 or 3.68%.
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