Friday, December 11, 2009
Playboy Facing Bankruptcy?
By Shawn Chandok
We have all heard of the famous entrepreneur Huff Heffner and how he is considered probably one of the world’s luckiest men alive. However, even with his glamour filled life, the economic recession of 2008 has impacted him tremendously.
Currently the CEO of Playboy is Jerome Kern, who replaced Hugh Heffner’s daughter Christine Hefner. Last year Playboy reported a $13.7 million dollar loss during their first quarter. It was stated that this loss is 3x the loss they took during the same time in 2008 which was $4.2 million. Ever since the financial crisis, Playboy has taken several initiatives to reduce costs and avoid bankruptcy. “In October 2008, Playboy laid off over a quarter of its workforce, axed its DVD business and its New York office and consequently merged its print and online operations to reduce costs significantly.” Billionaire and bachelor Hugh Heffner said he is considering selling the famous company and ending his dynasty under graphic magazines. One of the major reasons for the continuing downfall of Playboy includes the failure of its outsourced ecommerce operations. In addition to the lack of magazine sales, revenue was down more than 20% last year totaling $78.5 million. This is a perfect example of how outsourcing may not be suitable for all companies.