Evine 2Q Sales Down 5 Percent, To $149 Million

August 24, 2017

Evine became the third home shopping network to see its sales drop in the second quarter, with them dipping roughly 5 percent to $149 million, the company said Wednesday.

Evine also has a net loss of $2 million, flat year-over-year, and with adjusted EBITDA of $3.5 million.


QVC’s parent, Liberty Interactive Corp., already reported reported that the No. 1 home shopping network saw its second-quarter revenue drop 4 percent, to $1.37 billion. And HSN suffered a 4 percent drop in its second-quarter sales, to $532.2 million.

“This second quarter is the final quarter of expected revenue decline, which was related to the year-long re-balancing of our consumer-electronics mix of business that began in April of last year,” Evine CEO Bob Rosenblatt said in a canned statement.

“This re-balancing was an important step to position our merchandising offering for long-term profitable growth and we accomplished it while again delivering on our quarterly EPS [earnings per share] guidance.”

Rosenblatt then crowed about some launches that the network has coming up.

“When we combine this progress with the launch of more than 10 million high-definition homes and the launch of our high-definition signal in September, we believe the second half of fiscal 2017 is positioned well to deliver solid, profitable growth,” he said.

Evine’s top-performing category in the quarter was home, which increased 9 percent year-over-year.

Consumer electronics, which declined again as a result of management’s reduction of lower-margin merchandise, declined 8 percent. The so-called “wearables” group decreased collectively by 8 percent, driven by continued pressure in watches.

The return rate for the quarter was 19 percent, an improvement of 70 basis points year-over-year.

Gross profit as a percentage of sales decreased 20 basis points to 38 percent year-over-year, driven primarily by mix pressure from the home category. Gross profit dollars decreased 6 percent to $56.5 million year-over-year.

Operating expense decreased $3.1 million to $57 million, a 5 percent decrease, driven by reduced distribution and selling expenses.

“It is clear that there is a sea change occurring throughout the retail landscape,” Rosenblatt said.

“All retailers, be it online or those with a significant bricks-and-mortar presence, continue to try to find better and differentiated ways to connect with the consumer. We believe interactive video commerce messaged to the consumer, based on the delivery platform used, whether that be through social, or traditional eCommerce, in concert with the data and predictive analytics available, marks the next significant growth curve,” he said.

“When I look out two to three years from now,there will be two types of retailers: Those whose models are based on price, selling commoditized products available on multiple platforms, and those whose models are based on product exclusivity and the customer experience. Our goal is to be a leader in the latter category.”

“Interactive video is the cornerstone of our digital commerce company that is driving business opportunities in all digital platforms and business models, from mobile to social, from laptop to television, and from merchandising business models to web service business models. We plan to do this while engaging with all types of customers, from millennials to baby boomers and to both women and men. A significant portion of the population will continue to purchase product from a curated assortment that facilitates the opportunity of discovery. We believe interactive video commerce at scale, an expertise we have continued to refine over many years, gives us an unfair advantage in delivering that experience.”


Ex-QVC Exec Indicted for $1 Million Fraud, Kickbacks

August 11, 2017

QVC is in the news again, in an embarrassing light again. First there was that lawsuit that an ex-female exec filed against a high-end dating service. On Thursday, one of the home shopping network’s ex-execs was indicted on charged of defrauding the channel of more than $500,000 and taking kickbacks from vendors.

Philly.com did a detailed story, linked here.


This greedy chuckle head, whose $239,000 salary apparently wasn’t enough, gypped QVC, charging for luxury hotel stays and spa treatments when two vendors were actually footing those bills. He also got botox and $28,000 custom tables for his digs using his illegal gains. Some of this happened when the guy, James Falkowski, was in L.A. for the red-carpet event that QVC had to tie-in with the Oscars.

We found the press release on the indictment, so we decided to publish it so you could see exacty what the D.A. had to say about the charges.


Former QVC Director Charged In Million-Dollar Fraud Scheme Involving Hollywood PR Agency and NYC Production Company

PHILADELPHIA – James D. Falkowski, a/k/a “Jamie Falkowski,” 42, of Buffalo, New York, was charged by indictment1, unsealed today, with eleven counts of wire fraud, eleven counts of mail fraud, and one count of conspiracy, announced Acting United States Attorney Louis D. Lappen.

According to the indictment, Falkowski – while working as a QVC Director responsible for enhancing QVC’s brand and reputation in the entertainment and fashion industries – engaged in a multi-layered fraud scheme that enabled him to live a luxury lifestyle through fraud.

Falkowski allegedly used a variety of methods to fraudulently obtain from QVC over $1,000,000 worth of money, goods and services, all without QVC’s knowledge or approval.

Specifically, the indictment alleges that Falkowski fraudulently caused QVC to pay for: hundreds of thousands of dollars of his personal expenses, including Falkowski’s first-class travel, luxury hotel and resort stays, spa treatments, upscale restaurants, luxury clothing, luxury accessories, and botox treatment; approximately $200,000 in private luxury chauffeur rides for himself and his friends and associates; approximately $70,000 in payments to his personal vendors and creditors, including over $28,000 in payments to a custom furniture maker for two tables for Falkowski’s Philadelphia apartment; and approximately $59,500 in pre-paid American Express, Tom Ford, and Barney’s New York gift cards that he used for himself.

Falkowski also entered into fraudulent kickback arrangements with two separate QVC vendors, who collectively paid Falkowski approximately $240,000 as his cut of the kickback arrangement.

Allegedly, Falkowski fraudulently abused QVC’s product requisition process to shower his friends and associates with at least tens of thousands of dollars’ worth of QVC products, all at QVC’s expense.

The indictment alleges that Falkowski caused QVC to hire Los Angeles-based PR firm “The Steinberg Group,” d/b/a “dOMAIN” (“TSG”), to serve as QVC’s outside PR agency.
After QVC hired TSG, Falkowski allegedly used TSG to “launder” hundreds of thousands of dollars of his personal expenses.

Falkowski did this by causing TSG to reimburse him directly for his personal expenses, but after paying Falkowski in the dollar amounts he commanded, TSG subsequently obtained reimbursement from QVC by issuing fraudulent invoices to QVC often written at Falkowski’s direction and, in certain instances, written by Falkowski himself.

Those fraudulent invoices, by design, did not reveal to QVC the true nature of Falkowski’s expenses.

Falkowski also caused TSG to reimburse him for expenses that he also submitted directly to QVC for reimbursement, thus causing QVC to unknowingly repay him multiple times for the same expenses.

And, in some instances, Falkowski allegedly created entirely fake invoices and bills for submission to QVC to hide the true costs of his expenses from QVC.

Falkowski also allegedly used a second QVC vendor, “SPEC Entertainment,” d/b/a “CS Global” (“SPEC”), to fraudulently alter invoices that SPEC submitted to QVC to hide the true costs of Falkowski’s expenses – including by reducing the cost of Falkowski’s luxury hotel charges on invoices submitted to QVC by tens of thousands of dollars, and by artificially inflating an event invoice to cover Falkowski’s personal vacation to the Turks and Caicos Islands.

Separately, the indictment alleges that Falkowski entered into fraudulent kickback arrangements with TSG and SPEC – both of which Falkowski caused QVC to hire, and both of whose relationships with QVC Falkowski controlled.

Regarding TSG, Falkowski allegedly instructed TSG’s President and TSG’s General Counsel how to become a QVC “vendor representative” and earn royalties from QVC.
Falkowski thereafter secretly assisted TSG leadership in negotiating against QVC – his own employer – by providing TSG with QVC’s proprietary contractual information, which enabled TSG leadership to negotiate for, and obtain, a larger royalty percentage over a longer period of time from QVC.

In return, TSG leadership secretly cut Falkowski into the deal, and made him their “silent partner” – agreeing to pay Falkowski a kickback of fifty percent (50%) on all royalty payments received from QVC, as well as for funds received from a separate deal related to product sold by a QVC competitor.

After Falkowski was terminated by QVC, Falkowski allegedly sent a private email to TSG’s President and TSG’s General Counsel, stating: “Let’s be clear of a few things: [. . . ] You have a better deal [at QVC] than any other rep because of me solely. [ ] we do not have any contract between us of our deal JUST [TSG President’s] word that we split things 50/50 always. This was because of the complications while I was at QVC.”

TSG, which did business as “Domain Miami LLC” for its royalty deal with QVC, earned hundreds of thousands of dollars in royalties from QVC pursuant to the deal negotiated with Falkowski’s secret assistance, of which TSG kicked back approximately $160,981.73 to Falkowski as his share of their fraudulent deal.

Falkowski also allegedly entered into a similar fraudulent kickback arrangement with SPEC, pursuant to which he instructed SPEC how to serve as a QVC vendor representative, and in turn was secretly cut into the deal by SPEC as a one-third (33%) partner. SPEC earned hundreds of thousands of dollars in royalties from QVC, of which it kicked back approximately $81,571.23 to Falkowski as his share of their fraudulent deal.

If convicted of all charges, Falkowski faces a potential advisory sentencing guideline range of 108-135 months in prison, three years of supervised release, a possible fine, and a $2,300 special assessment. Restitution may also be ordered.

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney James Petkun.

Ex-QVC Exec Sues $150,000 Dating Service

August 10, 2017

Thanks to Steve Bryant for tipping us off to this one, and it’s a doozy.

A former top QVC executive has filed a very unusual lawsuit, seeking damages from a high-end dating service that she claimed did her wrong. The case settled quickly, but the suit was an eye-popper.

A lot of paper’s did stories on the short-lived litigation, but we’ll give you this detailed account from Philly.com. It’s a great read.


Darlene Daggett, QVC’s former president for U.S. commerce, alleges that she got rooked when she paid $150,000 to Kelleher International to find her a mate. Alas, like many of us know first-hand, it’s tough out there in the dating world for baby-boomer women.

“Kelleher’s ‘highly screened’ matches for Daggett included men who were married, mentally unstable, physically ill, pathological liars, serial Lotharios, stalkers, convicted felons, and men unwilling or unable to travel and/or the subject of professional sanctions,” according to the suit.

We’ll let you in on a little secret. Kelleher advertises in Phoenix magazine, which we subscribe to. Many years ago, when we were heading out to AZ, we called the dating service to get information about it.

When we heard the fees, which were out of this world, we quickly got off the phone – you know, like you do when you ask to see a piece of jewelry and its so pricey your eyeballs almost fall out of their sockets. And then you slink out of the store with your tail between your legs?

Anyway, if you ever feel bad about your dating life, just reread the story about Daggett’s lawsuit and you’ll feel much better.

Catherine Zeta-Jones Debuts ‘Casa’ Line On QVC

August 10, 2017

We’ve just what you’ve been waiting for: a celebrity doing a product line for a home shopping network.

Now it’s Catherine Zeta-Jones, who InStyle magazine had the scoop on. It reported that the sultry actress is launching a home collection, Casa Zeta-Jones, on QVC on Sept. 28. You know what they say, mi casa es su casa.


The article notes that Zeta-Jones had some bona fides, in that she is the daughter of a seamstress.

“I can’t wait for everyone to see Casa Zeta-Jones,” she said in a statement to InStyle. “I am thrilled to bring my home and bedding line to QVC. This is a project I have been passionate about and working on for years now, and I am delighted to share it with QVC customers.

The line will include towels, bedding, rugs, and table linens, “all of which will take inspiration from the actress’s Welsh heritage,” according to InStyle.

QVC’s Second-Quarter Sales Dip 4 Percent

August 10, 2017

Like HSN, which it will soon own, QVC had a tough second quarter.

QVC’s parent, Liberty Interactive Corp., this week reported that the No. 1 home shopping network saw its second-quarter revenue drop 4 percent, to $1.37 billion, year over year.

QVC “experienced year-over-year revenue declines in all categories except home,” Liberty reported. As for the 4 percent drop, it was “inclusive of an estimated 1 percent negative impact from system outage in second quarter that resulted in shipment backlog into third quarter.” That was news to us.

QVC’s operating income, a key measure, dipped 5 percent, to $225 million.

“Operating income margin and adjusted OIBDA margin performance primarily reflect lower bad debt, higher product margins and higher credit card income, partially offset by higher bonus expense, warehouse costs and depreciation,” according to Liberty.

Similarly, HSN recently suffered a 4 percent drop in its second-quarter sales, to $532.2 million.

The numbers we just provided are for domestic QVC alone, not for the stable of home shopping channels that it has across the globe.

“QVC had a solid Q2, with revenue performance similar to Q1 and improved adjusted OIBDA margins,” Liberty Interactive President and CEO Greg Maffei said in a canned statement. “We were thrilled to announce the acquisition of HSNi, which will enhance QVC’s position as the leading global video eCommerce retailer.”

QVC honcho Mike George crowed about the performance of the international networks, but not the U.S. one.

“We were pleased to generate strong margin expansion in the second quarter due to our focus on cost controls and avoidance of excessive promotional activity,” George said in his canned statement.

“We are executing on a number of strategies that we expect to restore healthy growth, with a particular focus on greater diversity and newness in our assortments. We were delighted with the strong performance of our International segment, which was led by QVC Japan. We look forward to welcoming the HSNi team to the QVC family with the completion of the acquisition in the fourth quarter, which we believe will be accretive to all of our stakeholders.”

Evine To Report 2Q Results Aug. 23

August 4, 2017

Evine will release its second-quarter earnings Aug. 23 before the market opens at roughly 6 a.m. CEO Bob Rosenblatt and Chief Financial Officer Tim Peterman will hold a conference call at 8:30 a.m. to review the results.

Those interested in participating in the conference call should dial 1-877-407-9039 or 1-201-689-8470 (international) at least five minutes prior to the call.

There will be a simultaneous audio webcast available at the following link:


A replay of the conference call will also be hosted on the company’s website for a limited time.

HSN 2Q Sales Dip 4 Percent, To $532.2 Million

August 4, 2017

Looks like the second quarter another was a tough one for home shopping networks.

On Thursday HSN reported that its net sales for the quarter were $532.2 million, a 4 percent drop from the prior year. Sales grew in wellness and home, offset by decreases in electronics, beauty and jewelry.

The earnings press release talked about Liberty Interactive Corp.’s pending acquisition of HSN.

“We continue to focus on building our proprietary product pipeline which we believe will ultimately lead to growth in the business,” HSN Inc. Chief Financial Officer Rod Little said in a canned statement. “The continued strength of digital sales, and mobile sales in particular, has been very encouraging with digital sales now representing 55% of our total revenue. Mobile, which we see as our flagship, continues to be our fastest growing sales channel and a source of new customer acquisition.”

“As we prepare for the pending acquisition by Liberty, we remain committed to our strategies to improve performance both in the short and long term,” he said. “Our key priorities remain: acquiring and retaining customers via a robust and relevant product portfolio, optimizing our digital platforms and improving efficiencies throughout the business, all to drive consistent shareholder value creation.”

The No. 2 home shopping network said shipping revenue decline primarily due to the August 2016 changes in the standard shipping rates and increased promotions. The average price point decreased 7 percent, while units shipped increased 2 percent largely due to changes in product mix, according to the press release.

Gross profit decreased 5 percent to $186.8 million. Gross profit rate decreased 30 basis points to 35.1 percent, primarily due to a decrease in shipping revenue and higher shipping and fulfillment costs, partially offset by higher product margins and lower inventory reserves due to a change in accounting estimate.

The increase in shipping and fulfillment costs was primarily due to annual outbound rate increases and implementation costs associated with HSN’s ongoing supply-chain optimization initiative, the network said.

Operating expenses increased 4 percent to $147.6 million driven by about $3.7 million in transaction costs related to the merger agreement, an increase in employee-related costs, higher costs incurred as part of the supply-chain O initiative and an increase in bad debt expense, partially offset by lower stock-based compensation expense primarily due to the departure of CEO Mindy Grossman during the quarter.

Excluding non-cash charges and transaction costs, operating expenses increased 4 percent and were 25.6 percent as a percentage of net sales compared to 23.5 percent in the prior year.

Operating income decreased $15.9 million, or 29 percent, to $39.2 million. Adjusted EBITDA decreased $15.8 million, or 24 percent, to $50.5 million. The supply-chain implementation resulted in an additional $2.9 million of costs in the second quarter, which impacted gross profit and operating expenses.

QVC Mourns The Passing Of Kenneth Jay Lane

July 21, 2017

Our thanks to the readers who pointed out that jewelry designer Kenneth Jay Lane, whose baubles were sold on QVC, passed away this week.

The obit that The New York Times wrote had the headline “Kenneth Jay Lane, Jewelry Designer Who Made a Fortune Faking It, Dies at 85.”

We have to take issue with saying that Lane did “fake” jewelry, even though according to The Times that’s how he referred to his creations. After all, they were jewelry, just what was once called costume jewelry, but is now referred to as fashion jewelry. But we digress.

QVC mourned Lane’s passing on its Facebook page.

“We are saddened to learn of the passing of QVC’s own Kenneth Jay Lane<' the home shopping channel posted. "He will be greatly missed by all who knew him, but his legacy will live on through his designs. We are thankful to have spent more than 20 years with Kenneth as a part of our QVC family, and our thoughts & prayers are with his loved ones during this difficult time."


Anyway, he was a talent who will be missed.

HSN, QVC’s Parent To Report 2Q Earnings

July 15, 2017

HSN Inc., about to be swallowed up by QVC’s parent company, as well as that parent, Liberty Interactive Corp., will be releasing their second-quarter results early next month, both companies announced this week.

HSN will report its second-quarter earnings Aug. 3 at 8 a.m., before the market opens.

Chief Financial Officer Rod Little; Bill Brand, chief marketing officer of HSNi and president of HSN; and Judy Schmeling, chief operating officer of HSNi and president of Cornerstone Brands, “who together constitute the Office of the CEO,” will hold a conference call at 9 a.m. to review these results.

Those interested in participating in the conference call should dial 877-307-0246 or 224-357-2394 at least five minutes prior to the call. There will also be a simultaneous audio webcast available via the company’s website at http://www.hsni.com.

A replay of the conference call can be accessed until Aug. 17 by dialing 855-859-2056 or 404-537-3406, plus the pass code 54744987 and it will also be hosted on the company’s website for a limited time.

Liberty Interactive President and CEO Greg Maffei will host a conference call to discuss results for the second quarter Aug. 8, at 2:30 p.m.

Following prepared remarks, the company will host a brief Q&A session during which management will accept questions regarding both Liberty Interactive Corporation and Liberty TripAdvisor Holdings.

Maffei may discuss the financial performance and outlook of both companies, as well as the proposed acquisition of HSN.

The second-quarter earnings conference call will be broadcast live via the internet. All interested participants should visit the Liberty website at http://www.libertyinteractive.com/events to register for the webcast.

Links to the press release and replays of the call will also be available on the website, and the conference call will be archived ror one year after appropriate filings have been made with the SEC.

What Does HSN’s Sale To QVC’s Parent Mean?

July 10, 2017

We’ve been busy at work, and in addition to that we wanted time to mull over Liberty Interactive Corp.’s purchase of HSN Inc. before we blogged in more detail about it.

For some reason we couldn’t find the conference call that Liberty and HSN honchos held on the deal last week, even though it was supposed to be archived on John Malone’s fiefdom’s website. But we did finally read through the slide-show presentation that went with the call.


First of all, the initial press release on QVC’s parent paying $2.1 billion for HSN was unclear, in that it did not spell out that there were no plans to merge the nation’s two largest home shopping networks. The investor slide presentation did bring clarity, saying that QVC and HSN will be maintained as distinct brands, which means five channels — QVC, QVC2, BeautyiQ, HSN and HSN2.

The goal is to preserve the “unique identities, cultures and customer following” for the networks.

But at the same time, according to the presentation, the plan is to “optimize five U.S.- based networks (QVC, QVC2, BeautyiQ, HSN, HSN2) and create complementary programming.”

Okey-dokey. Sounds a little contradictory to us.

The other goals are, straight from the presentation, to:

Collaborate on best-in-class digital platforms (mobile, personalization, social, marketing) and next-gen shopping innovations

Extend HSN’s Shop by Remote platform to QVC

Strengthen brand portfolios

Extend top HSN brands to QVC International and Zulily,

Leverage Zulily as brand feeder with younger customers, utilize QVC global development

Explore cross-marketing opportunities to better engage existing and potential customers

Share best practices and tools, leverage top talent and create new professional-growth opportunities

Pursue integration opportunities to enable combined company to operate more efficiently,
fund innovation and enhance customer value, including:

Combining technology platforms where appropriate

Leveraging enhanced scale of supply chain and customer service networks

Eliminating redundant corporate and support services

Reducing costs through purchasing synergies

So we can expect to see HSN brands expand globally and pop up on QVC’s numerous international channels.

There were some very interesting additional facts in the presentation, as well. QVC has 8 million customers, and 6 million of them don’t shop at HSN today, according to Liberty. We find that hard to believe, since we shop at both nets and Evine as well, but that’s what they said. HSN has 5 million customers.

By cross-marketing, QVC can try to get some of HSN’s customers to shop with it.

QVC has 29 on-air hosts, while HSN has 24, just FYI.

And of course, whenever one company buys another one there is always talk of synergies, which basically means people are going to lose their jobs. In this acquisition, there’s a lot of places where QVC and HSN have overlap and where cost-cutting can happen. A lot of it may be behind the scenes, however.

For example, cable networks have what are called affiliates sales departments, the executives and sales reps who negotiate the contracts for QVC and HSN to get carried on your cable system or by your DBS provider, be it Comcast or DirecTV. You won’t need two affiliate sales departments to handle that function.

And with QVC and HSN under one roof, whoever survives in affiliate sales will now have a bundle of five networks it can bring to cable companies. Just like a Discovery Communications with its many networks or a Viacom, the QVC-HSN affiliate sales reps can tell a Comcast that if it carries smaller startup channels like BeautyIQ, it will get a better deal on the larger channels, QVC and HSN.

There are other “synergies.” Some vendors supply goods to several home shopping networks. One of our readers recently reported that she had ordered bedding from Paula Deen’s line on Evine, but when the order came it was Northern Lights, as we recall, which is sold by QVC. The point is that one manufacturer is making items for both channels.

Vendors who manufacture goods for QVC and HSN might get squeezed, with Liberty trying to negotiate much cheaper deals because it has leverage as a major customer of such companies.

The big advantage of this merger, as everyone and their mother has pointed out, is that this will increase QVC’s and HSN’s scale as digital players, putting them in a better position to compete against giant Amazon. The digital sales of both those home shopping channels have soared over the past few years, and with distribution centers and those of their sister companies, Zulily and Cornerstone, they gain traction against the big “A.”

HSN and its Cornerstone unit have warehouses in cities such as Piney Flats, Tenn., Fontana, Calif., Roanoke, Va., Monroe, Ohio, and Scottsdale, Ariz.

For QVC and Zulily, there are fulfillment centers Rocky Mount, N.C., Florence, S.C., Suffolk, Va., Ontario, Calif., Lancaster and Bethlehem, Penn., McCarran, Nev., and Lockborne, Ohio.

Liberty needs a lot of distribution points to beat Amazon at its own quick-delivery game, but are all the above too many? We’ll see.

Liberty crowed about HSN in its presentation, saying that it brings a “rich legacy of innovation” to the QVC Group.

Liberty cited HSN’s “highly engaging programming and events, including movie tie-
Ins” and “American Dreams entrepreneur search series.”

There was also a shout-out to HSN’s leading brands, including Joy Mangano’s
Ingenious Designs, Andrew Lessman’s ProCaps Laboratories, IMAN Global Chic, Jennifer Flavin Stallone’s Serious Skincare, Wolfgang Puck Kitchen, Diane Gilman
Fashion and the Concierge Collection.

QVC’s top honcho, Mike George, will ride herd over the new and larger QVC Group.
But what will happen with the top management at HSN?

Former CEO Mindy Grossman has flown the coop, already starting her new gig at Oprah Winfrey’s Weight Watchers. Bill Brand is a very talented HSN honcho, and we hope he’s in line for a promotion to fill Grossman’s high-heels.