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Beate Uhse Banking on 3D Porn, Lifestyle Products for Rebound

 Beate Uhse Banking on 3D Porn, Lifestyle Products for Rebound
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Sep 7, 2010 9:00 AM PDT    Text size: 
FLENSBURG, Germany — European adult retail giant Beate Uhse AG is banking on 3D porn and lifestyle products to bolster the company’s slumping sales.

A report on Bloomberg said Chief Operating Officer Serge van der Hooft is fighting the proliferation of free porn that has hurt the DVD business by releasing films like New Sensations’ “Octopussy.”

“We will definitely invest in this business,” the 33-year-old executive said in an interview at the company’s Dutch wholesale center in Almere.

“The sale of erotic movies on DVD fell within a few years from top to flop because of the surprisingly fast emergence of free porn on the Internet,” van der Hooft said.

The move to embrace 3D porn is part of Beate Uhse’s goal to stem four years of declining sales. The report said the retailer has been barely profitable since 2006 and forecasts a loss in 2010. It is also introducing products such as bath towels and skin creams and may close some outlets and sell assets, van der Hooft said.

Profit margins for hardcore movies – a major seller for company – have declined to 17 percent of revenue last year from about 75 percent 15 years ago and one-third in 2006. Van der Hooft said that consumers will no longer spend the $127 for a film as they did some 10 years ago.

The 3D version of “Octopussy” went on sale last month in Beate Uhse stores and outlets which the company supplies as a wholesaler at prices ranging from $75 to $100 depending on location.

Beate Uhse’s 3D business is in a test phase, according to van der Hooft. “We need to see how people will react to things coming at them in a 3D porn movie,” he said.

But pushing 3D movies isn’t the company’s only strategy as novelties have also been affected by the Internet.

The sex-shop chain has 258 stores in 11 European countries and will add lifestyle products to its line to bolster falling sales of erotic toys and clothing.

The need to introduce new products has been hastened by increased competition in the company’s traditional markets. The report said that Royal Philips Electronics NV, Europe’s biggest consumer electronics maker, started selling vibrators last year. And clothiers including Hennes & Mauritz AB and Inditex SA’s Zara chain are selling “sexy lingerie,” according to Klaus Kraenzle, an analyst at GSC Research in Dusseldorf.

The company has also introduced private porn marketplace on its German website that allows amateurs to upload and sell content while Beate Uhse earns a service fee.

“This may all come too late now as Beate Uhse might not have the strength to finance the turnaround,” Kraenzle said. The analyst has a “sell” recommendation on the shares of the company that have lost 97 percent of their value since the end of 2003, slashing the company’s market value to 33 million euros ($42 million).

Although company sales have stabilized this summer, according to van de Hooft, the executive admitted that he’s unable to predict whether the company will profit next year. “A turnaround is a Herculean task and I doubt that Beate Uhse will be successful just with nice new DVDs or lifestyle products that one can buy elsewhere,” Kraenzle said. “These days the Internet brings all kind of content for free and sexy clothes are available at any other retailer.”

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