ShopHQ Sales Crater In First Quarter, Down 27%

ShopHQ’s net sales took a huge tumble in the fiscal first quarter.

Revenue in the quarter ended May 2 was $95.8 million, a 27% nosedive from $131.5 million in the same year-ago period, according to a 10-Q the home shopping network filed Tuesday with the Securities and Exchange Commission.

ShopHQ saw a net loss of $6.8 million, which was an improvement over the $21 million loss it posted a year ago.

Jewelry and watch sales in the quarter dropped 23%, to $39.4 million from $51.4 million.

“The $12 million decrease in jewelry & watches was primarily due to reduced productivity (sales per on-air minute) from a declining customer file during the first quarter of fiscal 2020, primarily in jewelry,” according the the filing.

“The decrease was partially offset by increased airtime of 7% in the first quarter of fiscal 2020,” the filing said. “Jewelry & watches continues to be our most productive category. The shifts in airtime resulted from our continued merchandise strategy to increase higher contribution margin categories, such as jewelry & watches and beauty & wellness, and decrease our home and fashion & accessories categories, starting in the first quarter of fiscal 2019.”

This is also from the filing:

The Company experienced a decline in net sales and a decline in its active customer file during the first quarter of fiscal 2020, and fiscal years 2019, 2018 and 2017 and a corresponding decrease in the Company’s profitability.

The Company has taken or is taking the following steps to enhance its operations and liquidity position: entered into a private placement securities purchase agreement in which the Company received gross proceeds of $6.0 million during the first quarter of fiscal 2019; entered into a common stock and warrant purchase agreement with gross proceeds of $4.0 million to close in the first half of fiscal 2020; implemented a reduction in overhead costs totaling $22 million in expected annualized savings for the reductions made during fiscal 2019 and $16 million in expected annualized savings for the reductions made during the first quarter of fiscal 2020, primarily driven by a reduction in the Company’s work force; negotiated improved payment terms with the Company’s inventory vendors; planned a reduction in capital expenditures compared to prior years; renegotiating with the Company’s major cable and satellite distributors to reduce service costs and improve payment terms; and managing the Company’s inventory receipts in fiscal2020 to reduce inventory on hand.

The Company’s ability to fund operations and capital expenditures in the future will be dependent on its ability to generate cash flow from operations,maintain or improve margins, decrease the rate of decline in its sales and to use available funds from its PNC Credit Facility.

The Company’s ability to borrow funds is dependent on its ability to maintain an adequate borrowing base and its ability to meet its credit facility’s covenants. Accordingly, if the Company does not generate sufficient cash flow from operations to fund its working capital needs, planned capital expenditures and meet credit facility covenants, and its cash reserves are depleted, the Company may need to take further actions that are within the Company’s control, such as further reductions or delays in capital investments, additional reductions to the Company’s workforce, reducing or delaying strategic investments or other actions.

Additionally, the COVID-19 outbreak continues in both the U.S. and globally and is adversely affecting the economy, financial markets and has negatively impacted, and may continue to impact demand for our merchandise.

QVC Warns The Homeshoppingista To Stop Returning Items, Or Else!

Let’s see how public opinion falls on this issue.

We just got a letter, apparently our second warning is five years, from QVC warning that we are returning too many items. Truth be told, we have returned a lot of stuff — boots that don’t fit, bras that don’t fit, some makeup we don’t like, jewelry that doesn’t pass muster when we see it in person.

“Most recently, between 04/01/19 and 03/31/20, you returned 72% of your total purchases of 29 items, which continues to far exceed the typical return rate of our customers,” the letter says.

No doubt.

What the letter doesn’t say, and which gets our goat, is that we have purchased thousands of dollars of merchandise during the past few DECADES at the No. 1 home shopping channel. Not for nuthin’, as we say in Jersey, but we guess that money spent in the past doesn’t matter to QVC anymore.

The letter advises us that to ensure we are “delighted with each and every purchase,” watch on-air presentations, look at QVC.com, check out customer reviews and check sizing charts. We do most of the above.

We already wrote about the letter on Facebook, and some snook commented to the effect that of course we are going to get kicked off QVC, with so many returns.

Baloney. We don’t buy food or makeup, use 90% of it up, and return it. Believe us, it’s usually pretty easy to get us to part with our money. We really want to keep those cute sandals that we got on sale, or as a TSV, but they just don’t fit.

We have to laugh when we hear QVC’s chippy hosts talk about the network’s wonderful 30-day return policy, but not the fact that you cannot dare return too many items.

“We want to continue to offer our customers the best value without introducing a more stringent return policy,” the letter says. “To do so, we need to ask you to please reduce the number of items you return immediately. If you’re unable to do this, we will unfortunately have to close your QVC customer account.”

Since we returned a pricey Jai cuff on Saturday, before we got QVC’s warning letter, we guess the odds of us getting cut off are pretty good.

Designer of HSN’s Roberto By RFM Jewelry Line Dies of Cancer At Age 48

With all the horrors going on right now, we have to report some more sad and bad news from the home shopping world. HSN jewelry vendor Roberto Faraone Mennella died Thursday at age 48 of cancer.

The name may not be immediately familiar to you, but Mennella was the partner of Amedeo Scognamiglio. Amedeo was perhaps best known on HSN for the gorgeous, and very reasonably priced cameo jewelry, he brought to the home shopping channel. His family had been involved in cameo making.

But Amedeo and Roberto, both Italians, also appeared on HSN selling a line of very beautifully designed, fluid sterling silver jewelry on the channel. That line was called Roberto by RFM.

Roberto was incredibly handsome, charming and obviously talented. Amedeo is very outgoing, gregarious and funny.

According to an obituary in WWD, the two men were former boyfriends and current business partners. We never knew this, but apparently they were featured in the show “Sex And The City” when stylist Patricia Field learned about them.

https://wwd.com/eye/people/jewelry-designer-roberto-faraone-mennella-dies-at-1203646874/

The WWD obit also mentioned that the two designers sold their pieces on HSN in the United States and QVC Internationally.

So sorry to hear this news.