ShopHQ’s Dissident Group Puts Up Slate To Dethrone Keith Stewart

ShopHQ’s dissident shareholders have renewed their assault on the home shopping network’s current management team, including $1.3 million CEO Keith Stewart, putting up its own slate of directors to oust the incumbents. It looks like a showdown.

On Thursday the Clinton Group filed a proxy statement with the Securities and Exchange Commission with its nominees for ShopHQ’s board — reality TV producer Thom Beers, former HSN head Mark Bozek, Ronald Frasch, record mogul and ex-Mariah Carey hubby Tommy Mottola, Robert Rosenblatt and Fred Siegel.

In pretty brutal language, the Clinton Group skewered Stewart over his tenure at the No. 3 home shopping network.

Keith Stewart in happier days

Keith Stewart in happier days

How do you like these apples, Keith? Here’s a snippet from the SEC filing.

The current Chief Executive Officer, Keith Stewart, was hired by the Company in August 2008 and became Chief Executive Officer in January 2009. In our view, while Mr. Stewart and his executive team have been in place, the business has not grown as projected by the Company nor, in our view, taken sufficient advantage of its opportunities.

During investor presentations in 2009, 2010 and 2011, Mr. Stewart and his team spoke of a future in which the Company would generate $1.1 billion of revenue, or $12 to $13 of revenue per home in which the ValueVision programming was available. However, revenue has not grown to these levels.

Instead, the Company generated just $640 million in revenue in the year ended February 1, 2014 (Fiscal 2013). The Company generated more revenue eight years ago (among other times) when its programming was available in 35% fewer homes.

But in Fiscal 2013 (and throughout Mr. Stewart’s tenure), the Company’s revenue amounted to just $7 per home. On this critical revenue metric, the Company’s current performance is worse than it was during the year Mr. Stewart joined the Company.

And, the Company generated more than $10 of revenue per home in every Fiscal Year from 1999 to 2007, prior to the tenure of nearly all of the current directors and Mr. Stewart.

Moreover, the Company’s current $7 revenue production per home significantly lags behind that of HSN and QVC, the Company’s principal rivals, who generate $24 and $60 of revenue, respectively, per American home in which their programming is available, according to the Company’s latest Management Presentation.6

On measures of profit, the Company has similarly under-achieved its previous performance and its previously announced goals … During Mr. Stewart’s tenure – consisting of 20 reported quarters of earnings – the Company has generated positive net income in just one quarter and has lost a cumulative $145 million. Over the same period, both HSN and QVC have generated significant and increased profits.

And here is what the Clinton Group’s directors plan to do:

* replacing the Chief Executive Officer (namely Stewart)

* changing the mix of merchandise offered to customers, reducing the percentage of merchandise in the jewelry, watch and electronics segments (which have historically been characterized by high selling prices and high return rates), and creating additional vendor relationships with brands and manufacturers in other categories such as beauty, health, fitness, fashion, accessories and home;

* establishing a New York City merchandising presence, enabling greater access to proprietary product from celebrities, musicians, personalities and well-known brands

* broadcasting some live selling events from locations throughout the world, including New York City and Los Angeles, to facilitate the acquisition and development of high margin, proprietary brands and notable, on-air talent

* marketing the SHOP HQ brand and service through public relations, off-asset marketing and through live events, promotions and innovative use of multi-channel, social media

*innovating new programming approaches to distinguish the SHOP HQ brand from those of rivals HSN and QVC (as well as other eCommerce companies), including by adding programming that involves integrated social commerce and cost-effective, shopping-centric entertainment across multiple platforms.

On Friday, ShopHQ shot back with its own SEC filing.

“The Board does not believe the Clinton Group’s nominees or proposals are in the best interests of all of our shareholders and does not endorse any of them,” ShopHQ’s current management said.


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13 Responses to “ShopHQ’s Dissident Group Puts Up Slate To Dethrone Keith Stewart”

  1. StefF Says:

    get charla rines back in there and sales will go up! betcha

  2. AprilD Says:

    HSN and QVC have become awful. I NEVER watch any of their offsite broadcasts and their notable on air talent is a joke. I buy merchandise because of its quality and value, not who’s name is on it. As for these off site sales, all they do is increase the overhead so we pay for it. We pay for all of QVC’s fancy trips and studio. One of the main reasons prices have gone up and quality down at QVC and now HSN is their fancy promotions and guests. We pay for all of that. Remember how QVC used to say part of the reason for their great prices was low overhead. That all disappeared when they built their new studio and did their 50-50 tour. I much prefer ShopHQ and only shop and watch them now. Except for the Invicta circuses of course. If these guys take over goodby tv shopping for me.

    • SUSAN Says:

      I totally agree AprilD with your analysis especially of QVC/HSN. I had high hopes that Mindy Grossman with her Nordstrom’s background would bring some innovation to her channel, but she’s gone the celebrity route too and too many electronic and beauty shows….QVC is getting worse and worse

  3. linda Says:

    Sorry Steff but OMG, Charla was HORRIBLE. That creepy smoker’s voice and couldn’t complete a sentence without UM, UH, UM. GAWD awful dirty fake nails. She was unwatchable!!

    • StefF Says:

      linda, i agree w/smoker’s cough etc. but she could present without hyping and was good at the measurements, etc, which i now notice all channels are trying to do. they all do fake nails, unfortunately; i will say charla had some devoted fans and when she left…well… did the quality of the hosts and the merchandise

  4. carolyn simpson Says:

    when shop hq was value vision, it was great. the hosts and the products were top notch. i cant believe some of the terrible decisions management made regarding merchandise and is doing the same thing. i loathe susan graver and all i see anymore is her overpriced polyester crap.

  5. Angela Says:

    Does Keith get to keep the house the company bought for him when he slimed his way into Eden Prairie? Please pray they get rid of this awful human being. We work our butts off and he treats us like crap. You just don’t imagine how many of us NEVER watch ShopHQ anymore.It’s too embarrassing.

  6. Aiden John Says:

    Dear Linda,

    So many of my colleagues I work with are avid readers of your blog. It’s the only thing out there that has any inside scoop. Its especially tricky when you work in Eden Praire when the CEO acts like Putin and thinks no one cares to see anything other than his constant droning on and on about the recovery being around the corner.
    If anyone knew all the behind the scenes things he is doing now to save his arrogant butt and the other former gang of 8, it would make you puke. But except for Keith and his mob who all just got golden parachutes when they get fired (SOON PLEAESE!!!) the rest of us who work so hard, are petrified. The business practices they are forcing on us are just in ane even for VVTV.

    Linda, I know everyone has opinions and takes sides and all but from someone who still works here and very much needs to keep my job, someone needs to hear what’s happening right now.

    1. They are changing the prices of TTV’s even after they begin airing them at midnight. This has never ever happened before. QVC and HSN have gotten into serious trouble with the FCC when they did that. An its happening with Invicata of all products. Even the loyal watch geeks are up in arms. Ask any of the show hosts how they feel about THAT! You just don’t do that in this business.
    2. And speaking of Invicta. What is the deal?? Whatever the Shop HQ buyer Lubkeman has going on with Eyal, Michael Freidman at Sturhling Watches, and Hyam Fisher is just creepy. I don’t know this for sure but is it allowed when a vendor pays for a shop HQ’s employees vacation?? Why don’t we have a contact with them? They are responsible for like 20% of our total business. They have like 50 hours on air before next Thursday.
    3. I it normal to go into the warehouse and secretly bust up product so it can be returned to the vendor???
    4. Why did the cancel the HR surveys they used to do and share with the employees? Guess why??? Keith and the execs all scored POOR!!

    This is only the tip of the iceberg in what feels like so much seedy stuff going on behind the scenes. God Willing this group will be gone,gone,gone before we go out of business

  7. SUSAN Says:

    It looks like Shop Q wants to turn into QVC which buy their financial reports have eeked out a small margin by increasing their prices and their shipping. QVC’s sales have remained flat for several quarters and only Italy and China seem to be doing well.

    Meanwhile many of QVC’s current customer base is getting bored with their 15 product rotation and are viewing and shopping elsewhere. QVC’s “events” are an embarrassment since they go out of state only to sell most of their same old inventory which they show over and over and over and over. .

    Celebrity products are a joke and normally don’t last long. And their $60 per household is probably due to their emphasis on more expensive products like Dyson vacuums, Dooney handbags, $400 Vitamix blenders, and endless PC’s and tablets which they do an overkill on…….

    QVC does not seem to care about their long time customers and prefers “drive-by” customers who may be channel surfing…..

    Mike George seems to be content to leave QVC USA in status quo mode —even though customers have grown tired of their repetitive products with only show titles changing, which drives their customers crazy especially their weekend lineup.

    Instead Mr. George is ignoring their American audience to concentrate on international markets with France going in 2015, and possible more expansion world wide….One wonders how Shop Q’s rival, QVC is really doing as these international markets are being impacted on their sluggish economies and an unfavorable exchange rate……If I were Shop Q I would not emulate QVC

  8. AprilD Says:

    I just wanted to make two comments about Aiden John’s post. I too worked for an employer that treated employees like crap and it was a cpa firm. They thought of us as supplies and most “professionals” had a 2 year turnover. I finally quit after 10+ years. I did not have another job and the first year was tough. However, I am so glad I did. You can’t pay for your sanity. My other comment is …you do know that if Keith Stewart gets kicked out the company will be moved out of Minnesota. The dissident shareholder’s have promised to get it out of that location. So your job will probably be gone also.

  9. Queen Celeste Says:

    Some fascinating comments. I loved VV and today still order a lot from SHQ because they had and have some really special jewelry lines. I’m really interested to see how this plays out.

  10. Tom Says:

    Miss Moss, do you know when this showdown is supposed to happen? I know it has been pushed out since November. Do they have a set date yet to decide?

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