Here is the latest chapter in the brouhaha between ShopHQ’s dissident shareholders and the beleaguered home shopping network.
On Tuesday ShopHQ, formerly ShopNBC, issued a response to The Clinton Group’s demand for a special meeting of shareholders of ValueVision, i.e. the network.
The group, which is calling for ShopHQ to can CEO Keith Stewart, wants to take control of the network’s board by removing five of it seven current directors. ShopoHq’s management is asking for The Clinton Group to postpone its call for a meeting after the Christmas season.
Here is part of ShopHQ’s response:
As a retailer, ValueVision’s busiest season comes during the holiday season, which is now upon us. The holiday season also coincides with our fourth quarter, which ends on February 2, 2014. It is vitally important for our management team to remain laser focused on executing our company’s strategy in order to maximize value creation for our shareholder base as a whole. We believe that the interests of all of our shareholders are aligned in this goal.
The purpose of this letter is to respectfully ask that you withdraw your request for a special meeting until after the end of the holiday season so that our management can devote its full energy to running the company at this important time.
The request to call a special meeting of shareholders will cause needless distraction for our management team, which we would prefer to remain focused on our business. In the meantime, we would be happy to begin evaluating the candidacy of your proposed directors if you would submit their qualifications and an indication of their willingness to serve to our Corporate Governance and Nominating Committee.
Your colleagues first contacted our management this past September and first spoke with Sean Orr and me on October 21, 2013. We have made ourselves available for continued discussions and have offered to consider candidates you submitted. We believe we have evidenced a willingness to work with you constructively, and we ask that you return the favor, for the benefit of all of ValueVision’s shareholders.
Thank you for your consideration of this request; we hope that after further thought, you will see the value in our position.
Randy S. Ronning
Chairman, Board of Directors
ValueVision’s Board and management team have been and remain focused on the successful execution of the Company’s value-creating strategy, including four key business drivers to enhance performance and profitability:
* Broadening and diversifying product mix and brands to attract new and repeat business,
* Optimizing ValueVision’s TV distribution platform to reach more customers and to deliver greater productivity from the Company’s distribution footprint,
* Improving customer service, systems, responsiveness, content and community to support the growth and retention of the customer base, and
* Building and enhancing the consumer TV, online and telephone experience to create an immersive, compelling “Watch & Shop Anytime, Anywhere” experience.
In January of 2009, Mr. Stewart was installed as Chief Executive Officer with the mandate to execute a turnaround of ValueVision, which at that time had an uncertain future. For the fiscal year ended January 31, 2009, the Company generated an Adjusted EBITDA loss of $51 million.
Mr. Stewart has assembled an entirely new team of retail and multichannel veterans to lead the Company. In addition, the composition of the ValueVision Board was substantially refreshed, including the appointment of four new independent Directors to the seven-member Board in the last two years.
This new Board and management team implemented a restructuring of the company’s operations, its cost structure and its balance sheet, putting it on a solid financial and operating footing. On the most recent trailing twelve month basis, the Company has achieved positive Adjusted EBITDA of over $14 million.
The execution of ValueVision’s turnaround strategy has resulted in the outperformance of the Company’s stock relative to the Russell 2000 index and strong performance relative to peers. Since Keith Stewart’s appointment as CEO in January 2009 through Clinton’s 13D filing on October 30, 2013, the Company’s stock has outperformed the Russell 2000 by almost 800%, and has outperformed it by more than 70% and 115% in the three years and one year prior to Clinton’s filing, respectively.
Furthermore, over the three years and one year prior to Clinton’s filing, the Company’s stock has outperformed its closest publicly-listed peer by 50% and 140%, respectively.
So there, Clinton Group!