Playboy Sues E-Commerce Manager

Playboy.com has filed a lawsuit again its e-commerce management company, N.J.-based eFashion Solutions, for a breach in contract.

According to documents filed last week obtained by Crain’s Chicago Business, Playboy hired eFashion in January 2008 to manage, plan, market and fulfill orders for its online and catalog sales. The online and catalog operations were transferred to eFashion by March 2008, the suit said.

Playboy now says that eFashion Solutions is attempting break its contract, and is petitioning to have eFashion pay damages and honor its business agreement until Playboy finds a suitable replacement company.

eFashion wanted to end this business relationship on July 1—the same day Scott Flanders will ascend to his Playboy post as chief executive—claiming that it was Playboy, in fact, that breached the contract terms.

A Playboy spokesperson declined comment, saying that the company does not discuss pending litigation.

But in the court documents, Playboy said that its e-commerce and catalog division generated $17 million in sales in 2007; under eFashion’s management, the revenue projection was between $4 million and $5 million.

While Playboy’s fastest-growing and most profitable segment is its licensing business, Flanders told FOLIO: in a recent Q+A, the loss of eFashion as manager of Playboy’s Bunny Shop “will irreparably harm Playboy, forcing Playboy to shut down its e-commerce and catalog business,” the suit said.

In its Q1 2008 earnings call transcript, Playboy CFO and EVP Linda Havard said that the company’s operating results “included nearly $600,000 in restructuring charges primarily related to the outsourcing of our e-commerce business to eFashion Solutions” and that Playboy did “not expect additional charges related to this deal.”

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