Archive for November, 2017

Ex-QVC Vendor Esposito Arrested In Pot Case

November 23, 2017

This is sad.

A former QVC jewelry vendor has been charged with selling marijuana to undercover law enforcement agents during a drug-trafficking investigation, according to a Providence TV station.

Prominent Providence jeweler arrested in undercover drug probe

Joseph Esposito, 71, allegedly sold weed and butane oil to an undercover agent numerous times between June and August out of a building where he has his company, Esposito Jewelry Inc., in Providence, Rhode Island.

He was arrested earlier this month and charged with five felony counts of selling pot, two felony counts of intent to deliver marijuana or marijuana oil and one felony count each of conspiracy and possession of marijuana in excess of five kilograms, according to WPRI.

He was released on $5,000 bond.

His arrest came as the result of a probe by Rhode Island State Police and the federales, the U.S. Drug Enforcement Administration.

Esposito had more than jewelry at his company, according to authorities. He allegedly had a indoor marijuana-growing operation at his company,
Esposito’s alleged co-conspirator has a medical-marijuana patient card and a license to grow marijuana.

When they executed a search warrant at Esposito’s building police found 126 pot plants, 33 pounds of marijuana, and “four tubs of marijuana oil,” according to the TV station. They also confiscated more than $60,000.

“Esposito appears to have earned the bulk of his wealth from the jewelry company, a family business that was incorporated in Rhode Island in 1935, about nine years before he was born,” the story says. “At one time, the company’s products were sold on the QVC Shopping Network.”

Esposito’s specialty was sterling silver jewelry that included pendants that would were interchangeable and could be snapped in and out of necklaces.

Evine’s Sales Slip 1% In Third Quarter

November 22, 2017

Not a great third quarter for Evine this year, especially when someone is stalking the company.

The home shopping network posted net sales of $150 million, a roughly 1 percent decrease year-over-year. Management estimates net sales would have increased 1 percent when excluding the estimated $3 million negative sales impact from Hurricanes Harvey and Irma during the quarter.

Evine suffered a net loss of $1.1 million, and an adjusted EBITDA of $3.8 million, a 49 percent improvement year-over-year.

“I am very proud of our Q3 operating results,” CEO Bob Rosenblatt said in a canned statement.

“As our stakeholders know, this is the very beginning of what we call Year Two, the phase in our strategic plan that is focused on delivering revenue and free cash-flow growth. In Year One, we fixed our merchandising mix and significantly improved our balance sheet and profitability. This coming year our plan is to begin scaling our enterprise. In addition, boosted by our recent sale of our Boston television station, we are positioned to deliver positive EPS [earnings per share] for the fiscal year, which would be the first time we have accomplished this since fiscal 2007.”

He added, “We believe our strategy of a thoughtful transition over time into an interactive digital commerce company will drive sustainable revenue growth, EPS growth and multiple expansion growth that will combine to drive significant shareholder value. Specifically, longer term we seek to build and operate multiplatform digital commerce experiences using proprietary technologies that monetize multiple business models.”

The top-performing category in the third quarter was beauty, which rose 10 percent year-over-year. Fashion, home and consumer electronics also increased.

The return rate for the quarter was 19.1 percent, an improvement of 140 basis points year-over-year.

Gross profit as a percentage of sales increased 150 basis points to 38.1 percent year-over-year, driven primarily by improved rates. Gross profit dollars increased 3 percent to $57.3 million. Operating expense remained flat at $58 million.

As of the end of October total cash was $23 million, compared to $22 million at the end of the second quarter. Evine also had an additional $13 million of unused availability on its revolving credit facility with PNC Bank, which gave it total liquidity of about $36 million as of the end of the third quarter.

As previously announced Evine agreed to sell its television station, WWDP, serving the Boston market, for an aggregate of $13.5 million. The transaction includes two agreements with unrelated parties.

The first agreement closed in the third quarter and resulted in the initial receipt of a $2.5 million cash payment. That cash was used to pay down an equal amount of our loan with GACP.

The transaction resulted in an $833,000 net tax benefit related to the reversal of a deferred tax liability that was partially offset by a $221,000 loss related to the early debt extinguishment.

Got that?

The second agreement is expected to close in the fourth quarter following satisfaction of customary closing conditions, including Federal Communications Commission approval.

The financial impact of this transaction, including the complete pay-down of the remaining $3.6 million loan with GACP, is expected to include a $3 million positive impact to net income in the fourth quarter.

“We continue to expect fourth-quarter revenue growth in the mid- to high-single digits,” the network said in a press release Tuesday.

Segel Makes Offer For Evine

November 20, 2017

The folks who are jockeying to acquire Evine put out a press release last week press saying that they will pay a 105 percent premium to buy the home shopping network.

The announcement was released by Marvin Segel, founder of Segel Vision LLC, who claims that the Minnesota-based Evine’s board has rebuffed his two attempts to contact it.

“The board refuses to hear the details of the offer,” he said in a statement,

According to Segel, under the proposed offer Segel Vision would make “an equity purchase of the operating subsidiary at a premium of 105 percent.”

The press release says, “By establishing a total equity value of $175 million for Evine, Segel Vision would, in effect, be paying $2.66 per share” for the company.

“Segel Vision’s financing is bona fide, and in place,” Segel said.

With the acquisition, Segel Vision’s team will merge Evine into Segel’s company Starshop, “an extraordinary millennial-friendly, influencer and celebrity-driven multi-experience shopping App, launched in partnership with SPRINT Mobile Network.”

Say what? What the heck does that mean?

“Acquiring Evine Live will revolutionize the retail industry through a proprietary mix of mobile technology and television broadcast, focusing on a side of the TV shopping business that has been underused by all shopping channels to date,” Starship CEO Jim Morrison — the former president of L’Oréal USA, not the decease singer – said in his statement.

And again we ask, what the hell is he talking about?

“We believe our team has the experience and contacts to focus more productively on nurturing the internet’s most popular influencers to endorse and adopt the products, together with the world’s most recognized celebrities — thus improving top-line growth and net profits,” Morrison said.

“Imagine yesterday’s on-air guests and inventors being enhanced by today’s vloggers and bloggers with millions of followers who trust them. It truly is the perfect storm of retail,” he said. “The 25-year-old TV shopping sales model has got to morph; and with Starshop’s mission to add over-the-top content created by social media influencers, we will literally add 15 million more subscribers to Evine Live’s current viewership on Day One.”

With a fercockt pitch like this, no wonder Evine’s board hasn’t responded.

Segel Vision has retained The Lucas Group, a strategy consulting and private equity investment firm.

In a statement, founder and Chairman Jay Lucas promises “to work with Evine’s board to optimize a transaction price and structure for all parties.”

Lucas added, “We ask that shareholders encourage their board to engage with us and evaluate our proposals in fulfillment of their fiduciary duties to maximize shareholder value. Our group is prepared to negotiate a transaction to purchase Evine Live based on total enterprise value. The premium which we are offering is three times greater than the premium that QVC just paid for HSN; and this, for a company that has had only three profitable quarters in 20-plus years.”

Segel Vision apparently has big plans. In tandem with its proposed merger and acquisition with Evine, Segel Vision claims that Starshop will roll out America’s first and only shopping channel in Spanish, called tuStarshop, which has already launched on mobile and e-commerce in affiliation with tuvisió, an Hispanic social community co-created by Philip Gabbard, who will become tuStarship’s group president and general manager.

“Spanish is the second-largest language in the U.S., yet there is no Spanish-language shopping channel,” Gabbard said. “With 57 million Hispanic households in the U.S., this retail opportunity will fill an obvious void.”

Good luck with that. All such prior efforts to do a Spanish-language home shopping network have failed, we believe. Sometimes there is a “void” for a reason: The concept doesn’t work.

“Following the acquisition, and along with exciting celebrity announcements, four proprietary online technology partnerships will be revealed,” according to the press release.

“With TV, with mobile — in English and Spanish — Starshop will house a new ‘six screen’ technology, and will even change the mobile shopping experience as we know it,” Segel said.

We’re not feeling this, folks.

Evine’s Todd English sued for alleged sexual harassment

November 15, 2017

Guess it was only a matter of time before the sexual-harassment scandals that have hit the film and TV industries, as well as Washington, made their way to the home shopping world. Hello bad-boy chef and restaurateur Todd English, an HSN alum who is now on Evine sell kitchenware.

English is known as a womanizer, with the New York Post’s Page Six gossip column over the years doing stories about him in hot tubs with naked women and such. But this is different.

The Post recently reported that English and staff members of his Plaza Hotel Food Hall in Manhattan are being sued for alleged sexual harassment. That action was filed a few weeks ago by Gabrielle Eubank, according to the tabloid.

And that’s not all, folks.

In August six present and former English employees filed their own sexual-harassment suit, charging that there was a “rape culture” at Food Hall, with male staffers making obscene comments and being “sexually suggestive with pens, cucumbers and bananas,” the Post wrote.

English’s spokesman has no comment for the Post story, which went on to list a number of famous chefs and restaurant owners who have been accused of sexual abuse and harassment by female staff members.

The headline on the story was “Harvey-style sex abuse rampant in NYC dining world: workers.”

HSN Sales Dip 6% In Third Quarter

November 10, 2017

HSN reported its third-quarter earnings this week, and Hurricane Irma took a $13 million chunk out of the channel’s sales.

The No. 2 home shopping network registered a 6 percent decline in its sales, to $536.2 million, but part of that drop was blamed on the hurricane.

HSN closed down its Florida HQ and broadcast live from Nashville during the storm.

“In September, HSN implemented its business continuity plan as a result of the approach of Hurricane Irma,” the company said in its press release.

“HSN closed its headquarters, redeployed critical personnel and relocated its broadcast studios to temporary facilities outside of the storm’s track. These actions resulted in increased operating expenses and limited program effectiveness which we estimate impacted net sales and Adjusted EBITDA by $13 million and $5 million, respectively.”

Here are the other key grafs from the press release.

Digital sales decreased 3 percent while penetration increased 130 basis points to 46.1 percent. Sales decreased in electronics, apparel and accessories and beauty, offset by increases in fitness and home. Shipping revenues declined primarily due to the August 2016 changes in the standard shipping rates. Average price point decreased 6 percent largely due to changes in product mix. Units shipped decreased 2 percent.

Gross profit decreased 5 percent to $181.3 million. Gross profit rate increased 50 basis points to 33.8 percent primarily due to an increase in product margins, partially offset by higher outbound shipping rates and fulfillment costs.

Operating expenses increased 5 percent to $150.3 million driven by increases in employee-related costs and bad debt expense. HSN incurred approximately $1.6 million in expenses related to Hurricane Irma and approximately $0.9 million in allocated transaction costs related to the merger.

Operating income decreased $16 million, or 34 percent, to $31 million. Adjusted EBITDA decreased $15.4 million, or 27 percent, to $42.6 million. The impact of Hurricane Irma on Adjusted EBITDA is estimated to be $5 million. The supply chain optimization implementation resulted in an additional $1.3 million of costs in the third quarter of 2017 which impacted gross profit and operating expenses.

QVC Posts 3% Sales Increase In Third Quarter

November 10, 2017

Holy crow! QVC had a 3 percent revenue increase in the third quarter, to $1.4 billion, its parent company Liberty Interactive Corp. reported Thursday. This is after several quarters when sales were down.

The dominant domestic home shopping networks also posted a 14 percent rise in its operating income.

“QVC had an excellent quarter, growing constant currency revenue and adjusted OIBDA in every market,” Liberty President and CEO Greg Maffei said in a statement. “We made progress on the acquisition of HSN and expect to close in the fourth quarter.”

QVC saw year-over-year gains in the apparel, beauty, accessories and electronics categories in the third quarter.

But the home category was essentially flat and jewelry declined, according to Liberty.

The average selling price declined 4 percent in the quarter, “primarily driven by product mix within the electronics category, as several successful items sold in the quarter carry lower price points than items sold in the prior year,” Liberty said in its press release.

“We are very pleased with our strong results,” QVC President and CEO Mike George said in a statement.

“Our U.S. business returned to growth and our international segment continued its solid momentum,” he said. “Our performance demonstrates our ability to execute our strategic initiatives to improve product freshness and discovery, leverage our commerce content across platforms, increase customer engagement and attract new customers. We remain excited about the pending transaction to acquire HSNi and the formation of the new QVC Group.”

In the quarter QVC’s number of new customers increased 7 percent.

“As noted last quarter, the U.S. business experienced a systems outage late in the second quarter of 2017, which resulted in an estimated 1 percent shift in net revenue to the third quarter,” Liberty said.

HSN Sells 42,000 Copies of Mangano’s Book

November 9, 2017

It looks like the debut of huggable Joy Mangano’s first book on HSN was a humdinger!

Mangano hawked hand-signed copies of her tome, “Inventing Joy,” last Saturday on the No. 2 home shopping network.

She pre-sold more than 42,000 copies leading up to its world launch this week, according to an HSN press release.

“I am so excited to share my journey with everyone!” Mangano said in a canned statement. “‘Inventing Joy’ was years in the making, and now so many people will be able to benefit from my roller coaster of a life story. It makes the unbelievable believable because it really happened! Now it’s your turn.”

The HSN offer included a hand-signed copy of the book, plus free readers with a slipcase, an inspirational book mark with $20 off coupon, a CBS All Access one-month subscription and a two-year subscription to Good Housekeeping magazine.

To coincide with the book’s launch, Mangano partnered with CBS to bring exclusive video content to the network’s subscription streaming service, CBS All Access. The video-series features Mangano and her family.

“The book is an entertaining and binge-worthy read that will unlock the best and brightest version of you,” HSN’s press release says. “And filled with lively anecdotes, catchy principles, and high-octane inspiration, it serves as a powerful and encouraging blueprint for readers who want to live with more success, confidence, and happiness.”

HSN Handbag Alum Sharif Lands At Evine

November 9, 2017

The game of musical chairs at the home shopping networks never ceases to amaze us.

In the latest episode, handbag designer Sharif has moved over to Evine. He left HSN, where he was for years, awhile ago. His line will debut on Evine later this month.

“I’m at the point in my career where I desire to design by my own rules,” Sharif said in a canned statement.

Is that a dig at HSN, we wonder?

“Evine has welcomed me with open arms and provided me the freedom to develop a handbag collection that represents the best of what I have to offer,” he said. “Fans of mine will delight in the unique details and unexpected mixture of materials that come together to create beautiful works of art.”

According to a press release Wednesday, “Once one of the largest handbag brands in the U.S., Sharif designs are showcased in the Esse Purse Museum alongside some of the most iconic handbag designers in the world. His newest collection at Evine will be reminiscent of Sharif’s original masterpieces and incorporate iconic design elements to create unexpected looks and distinctive silhouettes.”

Launching on Evine Nov. 29 and 30, the Sharif Handbag collection will feature “images seen in museums and provide a uniquely artistic quality, yet are extremely functional for everyday use,” according to the press release.

Here is the boilerplate on Sharif:

Sharif was born and raised in Cairo and the son of a leather artisan, so it was only natural that he continued the tradition of working as a leather craftsman. In 1979 he started his eponymous handbag company, Sharif Design Ltd., and quickly developed a reputation for quality and a dedication to his customers. Sharif grew to be the largest handbag brand in the United States in the late 1980’s and he founded the American Leather Accessory Designers guild. Sharif’s designs are in the Esse Purse Museum and he has won numerous awards over the years for his creations.

“We are very excited to welcome Sharif into the Evine family and introduce our customers to his stunning collection of handbags,” Evine CEO Bob Rosenblatt said. “I’ve known Sharif for many years, and have seen first-hand the masterful way in which he designs the pieces within his collection. He is a rebel within the handbag industry and his bags are loved by fans all over the world.”

QVC Denies Shopping Ban For Trashing Hosts

November 2, 2017

QVC says that a Facebook post, which warned customers not to criticize show hosts or risk being banned from shopping on the network for 30 days, is phony.

We blogged about the post earlier this week, and a number of our readers who looked at a screen shot of the warning said it wasn’t kosher.

We reached out to QVC and got a prompt response from a company spokeswoman.

“The ‘QVC Customer Care’ Facebook Page is not owned or moderated by QVC, does not reflect QVC’s social media policies, and was created without QVC’s knowledge or permission,” the spokeswoman said in an email. “The unauthorized use of QVC’s trademarks, name or brand is not permitted, and QVC is currently working directly with Facebook to remedy this situation.”

We thought that such a policy would be nuts, but a number of readers said it was a good idea and that the public shouldn’t be allowed to cruelly trash show hosts on QVC’s social media.