Posts Tagged ‘The Clinton Group’

New Sheriff In Town At ShopHQ, Boots Should Be Shaking

June 25, 2014

So ShopHQ’s dissident shareholders have succeeded in their quest, and dethroned CEO Keith Stewart. The new sheriff in town is Mark Bozek, a former HSN chief. Now what?

In their many regulatory filings and letters to shareholders, The Clinton Group made it clear it was unhappy with ShopHQ’s product mix. We don’t think you’ll be seeing hours and hours — and days — of Invicta watches in the near future.

Meet Mark Bozek

Meet Mark Bozek

The Clinton Group told other shareholders that it didn’t make sense to sell merchandize that consumers can readily purchase in a brick-and-mortar store.

Next, the president of ShopHQ under Stewart, Bob Ayd, should probably be sending his resume out, unless he has a prior relationship with Bozek that we don’t know about.

The dissidents also criticized the No. 3 home shopping network’s location in remote, and freezing, Minneapolis. The network will likely open up, at the very least, an office in Manhattan.

If we were a ShopHQ vendor, we’d be worried right now. We don’t have the sales figures to know how Chuck Clemency or Paul Deasy’s jewelry sells, but the new ShopHQ leadership will give it a close look, we’re sure.

The Clinton talked about creating proprietary brands, but we assume they will want to launch their own. We don’t know how loyal they will be to the old ones.

And as for the network’s hosts, we suspect Bozek will give them a close look to decide if they should stay or not.

Here’s the 411 on Bozek:

Mr. Bozek is the former CEO of Home Shopping Network (HSN). Mr. Bozek generated over $6 billion in sales and $1 billion in profits while managing 6,000 employees at HSN. Mr. Bozek transformed HSN’s merchandising through innovation and strategic leadership.

Mr. Bozek built multiple $100+ million proprietary brands while running the company, including Ingenious Designs. He also was responsible for the development and growth of HSN’s current top selling brands including Andrew Lessman, Diane Gilman, Wolfgang Puck and Serious Skin Care.

In 1998, Bozek launched He grew this online business to over $100 million in 18 months. Mr. Bozek was also responsible for the international launches of HSN in Japan, Europe and China.

Mr. Bozek’s merchandising and media success began as a producer at Fox Television and then as a Senior Vice President at QVC. Mr. Bozek was at Fox Television at its inception in 1998, where he was a three-time Emmy nominee. Bozek has previously served as a director of Sykes Enterprises.

Beers, HSN And QVC Alums Elected To ShopHQ Board

June 22, 2014

It’s official: The man who produced “Deadliest Catch” and the former head of HSN are now on ShopHQ’s board.

Reality TV guru Thom Beers and Ex-HSN chief Mark Bozek are among four members of a dissident stockholder group that were elected to replace half ShopHQ’s board last week.

ShopHQ filed an 8-K with the Securities and Exchange Commission Friday listing the results of the vote.

The Clinton Group, which has been waging a battle to replace ShopHQ’s management, including CEO Keith Stewart, managed to get not only Beers and Bozek elected, but also QVC alum Fred Siegel and Robert Rosenblatt, a veteran of Tommy Hilfiger and HSN.

It should make for some interesting times at the No. 3 home shopping network.

Dissidents Replace Half Of ShopHQ’s Board, Post Says

June 20, 2014

ShopHQ’s dissident shareholder group made inroads into the home shopping network’s board this week, the New York Post reported Thursday.

The Clinton Group, following a proxy battle, claims that ShopHQ stockholders voted in four of its slate of six board nominees, the Post reported. That means that the 8-member board will be split between the Clinton Group and current management, with each having four seats.

The dissidents, who were looking to oust ShopHQ CEO Keith Stewart, were thwarted in their attempt to gain control of the board by Comcast Corp., the 800-pound gorilla cable company, the Post said.

Comcast, which owns a 14 percent stake in the No. 3 home shopping network, threw its support behind the board incumbents.

ShopHQ told the Post that the votes for the board members are still being counted.

Group Wants To Meet ShopHQ Stockholders, And Get Their Votes

June 16, 2014

Here’s a new one on us: ShopHQ’s dissident shareholder group is holding a meet-and-greet for the network’s employees and vendors. And folks, the Clinton Group wants your votes!

In its latest missive the Clinton Group, which is seeking to oust ShopHQ’s current management, is making it very easy for shareholders to vote for its slate of board nominees instead of Keith Stewart’s crew.

“Meet the Clinton Group team at the Minneapolis Marriott Southwest in Minnetonka, Minnesota, on Tuesday, June 17 from 5 to 7 pm at Stacy’s Grill, where they can fill out a ballot or drop one off,” the feisty shareholders said.

In a press release, the Clinton Group also called for ShopHQ “to assure its vendors and employees that they can exercise their voting rights at the Company’s upcoming June 18 annual meeting without fear of reprisal.”

That was followed by these words from the head of the dissident shareholders.

“We are disturbed that we have heard from multiple employees and vendors that they are afraid to vote their shares for us because they fear management will retaliate against them,” Gregory Taxin, President of Clinton Group, said in a statement. “We believe every shareholder is entitled to vote without coercion and we welcome the participation of the Company’s employees and vendors in this process.”

Clinton Group’s nominees have committed that they will not treat any employee or vendor who votes against the nominees differently than employees and vendors who side with the Clinton Group, in the event the Clinton Group nominees are elected, according to the press release.

“The Company’s management and Board should assure the Company’s valuable employees and vendors that they may freely exercise their voting rights without fear of retaliation,” Taxin said. “In my opinion, anything less is an abuse of corporate position and inconsistent with Mr. Stewart’s June 12 email to employees.”

Employees and vendors were told that they can vote shares held at brokerage firms online and anonymously in favor of the Clinton Group nominees by using the “control number” on the GOLD proxy card. Employees and vendors with “registered” shares can scan and email those ballots to Clinton Group (

Alternatively, employees and vendors can come to the company’s annual meeting to vote (on June 18 at 9 AM at headquarters). Or they can come to the Stacy’s Grill. We hear Thom Beers is buying!

Dissident Shareholders Say ShopHQ CEO Has ‘Gone Fishing’

June 13, 2014

The Clinton Group, the dissident ShopHQ shareholder group, said that “business as usual” is not good enough for the network anymore.

The Clinton Group blasted ShopHQ CEO Keith Stewart for — among other things — having no plan for the network, and even for once showing up late to meet a Wall Street analyst because he was too busy fishing.

Here is the group’s letter to stockholders Thursday.

To Our Fellow Shareholders of ValueVision:

Clinton Group, Inc. and the funds we manage (the “Clinton Group”) are investors in ValueVision Media Inc. (“ValueVision” or the “Company”). We believe the Company can be great. We also believe that a change in the Board of Directors is required if the Company is going to fulfill its potential.

So, we have nominated six independent professionals to serve on the Board. With the Company’s annual meeting coming up next week, we are asking you to please vote for our nominees on the Gold proxy card. Information on our nominees and our views can be found at

The Company’s existing Board and executive team have done a lot of things in response to our call for change. They hired six professional services firms, first to “defend” themselves against our efforts to convene a special meeting of shareholders and then to “defend” their track records.

They have produced a lengthy proxy statement, at least three slide presentations, a video, a full-color brochure and more letters than I can count. They have sent executives around the country to meet with investors and increased their own severance payouts in the event they lose this proxy fight. They have presented historical performance data in a favorable way to show progress and cleverly started and stopped charts and comparisons to indicate out-performance.

(This morning they have decided to compare the Company’s current performance to that during the nadir of the financial crisis in 2008, when the Company hired and fired a CEO within six months, its cable distribution was threatened with imminent cancellations and an investment banker failed to sell the Company, all while the economy melted; we are unimpressed with such a comparison.)

They have attacked us and one of the independent proxy advisory firms that dared to judge them inadequate. They have even suggested, this morning, that they are not receiving shareholder support because shareholders are not “informed.” In all, they have spent more than $3 million of shareholder money in these efforts.

But there is one thing they have not done: They have not articulated a plan that even aims for excellence.

Indeed, nowhere in the hundreds of pages they have produced is even the suggestion that ValueVision can someday be as good a commercial enterprise as its rivals, HSN and QVC. There is, in short, a palpable lack of imagination, confidence, inspiration, ambition and vision, in our view.

We believe ValueVision has the ability to rival its competitors, to challenge their market share, to grow significantly and to create meaningful upside for shareholders. We do not, however, believe these things will happen with a team in charge that has lost ground to HSN and QVC during the last five or six years, giving up substantial market share and under-performing competitors’ stock market gains.

Not only does the current team seemingly slink from the suggestion that ValueVision can be great, it does not even offer a single significant dimension – customer counts, penetration rates, revenue per home, customer engagement, thought leadership, management quality, diversity of vendor relationships, social media interaction, online or mobile platform functionality, product assortment, programming diversity, or proprietary product development – on which the team believes it beats or can beat its rivals.

Without the drive to lead the competition in even one of these areas, there is little hope the Company can match or overtake its rivals. No, the current team appears resigned to remain in a distant third place.

We had hoped that even if we failed to win this proxy contest, at least our challenge of the current business plan would serve as a wake-up call for management. Alas, it does not appear so. As Keith Stewart wrote to the employees on June 5, “It is business as usual at ShopHQ.”

“As usual”, for ShopHQ, is a rather unique method of operating a business. On May 1, Mr. Stewart had an 11 AM appointment with a sell-side research analyst who was considering picking up coverage of the Company. We are told that Mr. Stewart showed up some thirty minutes late and apologized by saying he was “fishing” and did not want to leave the lake because the “fish were biting.”

And, of course, because May 1 was a Thursday, if it was like most Thursdays, many on the management team left in the early afternoon to catch their flights back home – to Pennsylvania, Florida, Texas and the other places where as many as 10 senior managers spend their Fridays (and many Mondays). Usual for ValueVision is quite unusual.

Sadly, this proxy contest does not seem to have been a wake-up call for the incumbent team. But even if had, even if the high-priced advisors management has engaged – the investment bank, the two law firms, the public relations firm, the investor relations firm, the executive recruiter and the proxy solicitor – or, dare we suggest, the executive team itself, had been inspired to develop and articulate an ambitious business plan for the Company during this proxy fight, would such a plan have credibility with investors?

After all, the current team has missed nearly every public projection they have made. Revenue of $1 billion? Not close. EBITDA margins of 10%. Nope. Product mix closer to that of the competitors? No. Sales per home back to 2006 levels? No way. Penetration rates growing to half of the competitors’ rate? Not achieved.

Without so much as recognition of the under performance and the need for a concrete plan, we believe the team is unlikely to break its disappointing pattern of anemic performance.

We believe such under performance likely affects the shareholders more than the Board. Since 2004, the independent directors, combined, have bought less than $1 million of stock. (Our nominees have put more money to work in the last year in buying the Company’s stock, through a special purpose vehicle, than all the incumbent independent directors combined over the last 10 years.) With more than 69% of the directors’ pay coming in the form of cash last year (and with total compensation being twice the average of comparably sized companies), the performance of the business and stock affects the public shareholders much more than it affects the directors.

Perhaps this is why the directors are content to leave in place a Chief Executive Officer under whose leadership the stock has underperformed its rivals, the major market index and various sector indexes since January 2010. How long will they wait to make a change?

We believe the Company can be great. So do our nominees. They have developed a strategy and plan, subject of course to learning more if they are elected, to exploit the Company’s uncommon access to the television screens of 87 million American homes.

They believe that with proprietary brands (i.e. brands that are unavailable elsewhere) and products that are truly exclusive to ValueVision, engaging programming and a diverse schedule, the Company can attract new audiences, sell more goods, generate substantial profits and perform well for shareholders.

Both management and our nominees put their respective plans, and their track records and backgrounds, in front of the two leading proxy advisory firms. Both firms took days to analyze the information and wrote lengthy, detailed reports. Both of them reached the same conclusion: Shareholders should not vote for the incumbents.

Instead, both concluded, new directors from our slate of nominees should be elected to help the Company grow and create value for shareholders. Both recommended that shareholders vote on the Gold proxy card. Glass Lewis, one of these firms, said we had made a “compelling case for significant change at the board level.” ISS, the other firm, wrote that “change at the board level is warranted”.

Glass Lewis concluded, succinctly:

[Clinton Group] has offered a detailed and comprehensive plan for the Company, one that appears sound and compelling. … [S]upport for [the Clinton Group] nominees is likely to result in a superior outcome for ValueVision shareholders than what might reasonably be expected from shareholders’ continued endorsement of the incumbents, in light of the Company’s track record for the last five years.

Seemingly left without anything to say on the merits, and having failed to win the support of these respected independent proxy advisory firms, ValueVision has taken the rogue’s way out: attack the messenger. The Company has attacked ISS and, of course, it has attacked us. Don’t be distracted. This proxy fight is about ValueVision’s performance. Not ISS and not us.

We own a significant amount of ValueVision stock, though admittedly less than we once owned. We reduced our position because the Company rejected (on what we regard as specious grounds) our two attempts to call a special meeting of shareholders and we were not comfortable owning so much stock under the present leadership.

We care today more than ever about making sure the Company is in good hands. Our judgment on investments and board nominees (another subject of ValueVision’s attacks) has proven profitable for our investors and the stocks in which we have invested have outperformed the relevant indexes. Have a look, if you care, at the stock price results after the proxy fight at Stillwater Mining or the board appointments with which we were involved at Dillard’s, Red Robin Gourmet Burgers, Radian Group, Abraxas, Digital Generation or NutriSystem.

(The Company likes to focus on Wet Seal, one of a dozen companies at which we have helped to place directors; Wet Seal, like all teen apparel retailers, has been hard hit by macro headwinds, unlike the strong tailwinds in home shopping that ValueVision would have you ignore.)

But this contest is not about us. The Clinton Group (and our employees) will not be on the Board of ValueVision no matter what the outcome of the annual meeting. But shareholders do have a choice.

You can choose the “business as usual” incumbent directors – some technology and health care CFOs, an insurance company executive, a web advertising sales executive and such – or our proposed nominees, veterans of the home shopping business (from HSN and QVC), retail (Bloomingdale’s and Saks), television production (Freemantle North America) and entertainment (Sony Music). We believe that for the years to come, our nominees are a better choice to lead the strategy and oversee management of the Company.

Of one thing we are confident: with the team we have proposed as directors, business will not be “usual”.

Instead, our nominees will insist on an executive team that works every day (from the headquarters) to develop the business and increase shareholder value. No fishing trips while potential business partners wait. There will be a focus on innovation and catching up – and then leap-frogging – the competition.

The business will evolve quickly, with the addition of new vendors, proprietary brands and programming approaches that will not cost a lot, but which will have, we believe, a major impact on the bottom line. The look-and-feel of the channel and Company will finally emerge from the 1990s and have a modern, interactive, clean and inviting look.

The culture inside the company will change too: Gone will be the million-dollar per year, three-day-a-week executives that have understandably bred resentment and loathing. Gone too will be the coarse language and oppressive, imperial leadership culture that we have heard so much about from present and former employees.

We know buried inside of ValueVision are the assets, skills, and creativity required to spawn the next leader in omni-channel retailing; our nominees relish the opportunity to mold those assets into a Company of which we can all be proud. We cannot expect gains, however, without change.

So, vote for change. If you too think ValueVision can be better than it is, please vote the Gold card and vote for our nominees.

Thank you for your consideration,

Gregory P. Taxin

Pamela McCoy’s E-Mail On Botox Parties, Etc., At ShopHQ

June 13, 2014

This is what we call a show stopper: Former ShopHQ host Pamela McCoy’s email in support of the dissident shareholders who are trying to oust management at the the No. 3 home shopping network.

Here is her email to The Clinton Group:

From: Pamela McCoy

Sent: Wednesday, June 11, 2014 8:14 AM


Subject: Concerned voice

Dear Mr Taxin,

I’d like to take a moment to introduce myself. My name is Pamela McCoy. My husband Wes and I were two of the first employees chosen to help start a new shopping channel – ValueVision.

We were with the network for almost 20 years as hosts. I also developed a line of clothing that was highly successful and branded exclusively for the network.

Pamela McCoy

Pamela McCoy

I was at ValueVision to celebrate the first $5000 day as well as the first $1 million hour. A year and a half ago circumstances dictated that I move to another network. However, I maintain a very close relationship with many of the employees there. More than a dozen have called me in the last few months to express their frustrations and to seek my advice. They all share a fear of speaking out (or speaking directly to you) out of concern for losing jobs.

I am convinced that the abuse to which the employees are subjected to would make headlines if it were exposed and it breaks my heart to see what this network has become in the past five years.

The way the employees are treated is deplorable. Despicable things like hosts being told they were not sexy enough and were encouraged to have plastic surgery. Hosts are given mandatory readings, including books such as “Younger Next Year for Women” and “How Not To Look Old: Fast and Effortless Ways to Look 10 Years Younger, 10 Pounds Lighter, 10 Times Better” by Charla Krupp.

One very talented host left the company when she felt pressured to have Botox. The network actually organized “Botox parties” in an effort to make it easier for them.

There are certain department heads that are so verbally abusive that some employees I know are literally afraid to go to work. Many have sought counseling.

With the current management team, the language used in meetings was often vulgar and misogynistic. This behavior was never present with any prior management team and would never be tolerated at a major network or broadcasting company.

It is painful to hear what is happening and not be In a position to help. As a former senior employee and current stock holder I feel a strong sense of responsibility to this company. That is why I am reaching out to you.

The shift in culture at ShopHQ presents itself as coarse and demeaning. Many talented and valuable employees and vendors have already left and I fear more will follow. The turnover rate for employees in key departments is alarming. The need for change is apparent to many.

I am voting for a change. I am voting gold. I am voting for the Clinton Group. I know you can make this the successful company it was meant to be and a place that encourages creativity as well as productivity. Many employees have asked me to expressed their gratitude and appreciate all of your efforts.

Please feel free to share this e-mail with any other investors.

Best Regards,

Pamela McCoy

Here is another email, this one from a current ShopHQ employee.

From: Anonymous

Sent: Wednesday, June 11, 2014 9:07 AM


Subject: ShopHQ

To Greg –

As I mentioned on the phone, I am currently an employee of ValueVision and am fearful that speaking out will cost me my job. Thank you for agreeing to keep my name confidential.

Shop is a strange working environment – very much like Mad Men. The management is group is abusive and employees are in fear of them. They are not here for the full week. Nancy and Carol leave on Thursday afternoon together, Bob and Annette are out of here too Thursday afternoon. No one from senior management is around on Friday, except for Keith.

Because they aren’t around we are asked to do five days of work in the 3 or 4 days when they are here. There is a heightened sense of urgency when they are in town and its creates havoc on people’s schedules.

I think the biggest problem, though, is that the senior people do not have the skill to take the company any further. The company is basically a dumping ground for people who were fired from QVC. The CMO is stuck in the weeds, picking colors for items and not trusting her team. Bob is old school and not up on trends.

Vendors are used and tossed aside, sometimes losing hundreds of thousands of dollars, and this sort of churn and burn has led to a real backlash in the vendor community.

The strategy seems to evolve day-to-day and there is no plan for the company to march to. We have no real corporate strategy or vision, which is different than other places I have worked. I believe the company is going nowhere very fast and so do the other employees.

The management team appears stuck in a time warp, both in their management style and in their knowledge of the industry. They beat people up here and people leave constantly.

I have never seen turnover like this. One of the senior people was forced as part of a settlement to take a 3 month sabbatical because he had been so abusive to people. He’s back. The annual surveys about senior management are so horrific.

I think if there are not changes soon, there will be an empty parking lot. There is a lot of opportunity but things need to change. I am a shareholder and I want to grow the stock.

Not a bunch of happy campers, we fear.

Pam McCoy Claims Botox Pressure At ShopHQ

June 12, 2014

ShopHQ’s dissident shareholders have a new forum to dish their dirt: The New York Post. And former host Pamela McCoy is sticking it to the network’s CEO Keith Stewart, claiming management held Botox parties for hosts and encouraged them to get plastic surgery.

Pamela McCoy

Pamela McCoy

According to the Post story, McCoy will be voting her shares of ShopHQ for the slate of directors that’s been nominated by The Clinton Group, which aims to oust Stewart and his crew.

McCoy now sells a diamond jewelry line on Jewelry Television, and though she denies it, she looks like she had Botox or plastic surgery after she left ShopHQ with her husband and fellow host, Wes.

Any way, the details of her accusations — which ShopHQ denies — are in the Post story.

We missed it earlier this week, but the Post did another story on the shareholder battle at the network. The tabloid seems to think that The Clinton Group will succeed in getting control of the company. We’re not so sure.

ShopHQ Dissident Shareholders Seek Support Of Employees

June 11, 2014

ShopHQ’s dissident shareholder group, which is trying to oust the network’s current management, Tuesday sent a letter to employees seeking their support.

June 10, 2014

To ValueVision Employees:

The Clinton Group, Inc. and the various funds it manages is one of the largest owners of ValueVision Media. We are enthusiastic about the Company’s prospects and a proud owner of the stock.

As you probably know, we are seeking to replace a majority of the sitting Board of Directors with independent professionals that we believe can help chart a better course for the Company, as well as its owners, customers and employees. In eight days, at the ValueVision Annual Meeting, the shareholders (including many of you) will decide which group of individuals will oversee the strategy and operations of the business as members of the Company’s Board of Directors. The Board is also responsible for deciding who should run the Company on a day-to-day basis as members of the executive team.

I am writing to thank you for your hard work and dedication to the Company. Without you, there would be no ShopHQ. I know that for many of you, the position you hold at ShopHQ isn’t just a job, it is an integral part of your life. We have heard from many of you about your desire to see the Company grow and prosper; please know that our goals in this regard are aligned. We too believe in a bigger, better, more profitable ValueVision and one that is a good employer, good member of the community and good business.

No one knows, yet, how this election will turn out. But I want to assure you that our nominees – the people who we believe should be on the Board – have read the emails and letters we have received and talked with some of your colleagues. We are well aware of some of the complaints and operational issues at the Company.

The nominees, if they are elected, look forward to helping to instill a culture that addresses the problems to which we have been alerted and create a ValueVision in which the senior executive team works as hard as everyone else, respects all employees and strives for greatness. Our nominees will not tolerate part-time executives, nor ones that believe swearing and belittling is a form of effective management. Greatness in business, as in all human affairs, requires thoughtfulness and empathy, and a healthy dose of humility.

We encourage you to vote your stock. You know the Company better than almost anyone. So, decide for yourself whether change is necessary. If you think it is, please review our proxy material (available at and see if we are offering the sort of change you think will help to make ValueVision great. We would be honored to receive your vote. Use the GOLD card to vote for our nominees.

I would be delighted to answer any questions or field any concerns. You can reach me directly at or 212-825-0400. I assure you any such communications will be held strictly in confidence as will any votes you cast through your broker or bank.

Thank you again for your dedication to ValueVision. Together, we can build a fantastic company.


Gregory P. Taxin

ShopHQ Near Bankruptcy When Keith Stewart Joined, Network Claims

June 11, 2014

Geez, we wish ShopHQ and it rowdy shareholders would stop going back and forth with each other. There were a flurry of filings with the Securities and Exchange Commission Tuesday.

First, ShopHQ management lodged more responses to The Clinton Group, the dissidents shareholders who are trying to oust Keith Stewart and his cohorts.

We’re putting the full link here and will also post some of ShopHQ’s (i.e. ValueVision’s) comments.


The interests of the Board and management team are closely aligned with shareholders’ interests. Collectively, your Board and management team are the second largest shareholder of ValueVision, with an ownership of 12.6% of the Company’s outstanding common stock. Specifically:

• ValueVision’s Chief Executive Officer, Keith Stewart, personally beneficially owns 5.3% of the Company’s common stock. Mr. Stewart purchased approximately 1.6 million of these shares in the open market with his personal funds; and

• ValueVision’s other directors and officers beneficially own 7.3% of the Company’s common stock.

When your Board appointed Keith Stewart as CEO in January 2009, ValueVision was on the brink of bankruptcy. Mr. Stewart’s initial mandate as CEO was to form a new vision for the Company and to lead the turnaround of ValueVision. Since Mr. Stewart’s appointment as CEO, ValueVision’s share price has increased by 848%. In addition, ValueVision’s share price has increased 169% since August 2012, when Mr. Stewart announced that the Company had returned to growth.

The ValueVision Board and management team, with their collective 12.6% ownership position, are strongly incentivized to continue executing on ValueVision’s winning strategy to drive further shareholder value creation.

In contrast, despite a sustained campaign to give its nominees control of ValueVision’s Board, Clinton has dramatically decreased its holdings in ValueVision shares.


An engaged and growing customer base of over 1.4 million shoppers – an increase of approximately 22% year-over-year – is a part of ValueVision’s foundation for long-term, sustainable growth. ValueVision’s management team, working closely with the Board, has implemented meaningful changes over the past five years that are yielding results and that we believe will deliver great value in the future. Specifically, we have focused on four key growth strategies:

1. Broaden and diversify our compelling mix of merchandising to attract customers and drive repeat purchases;

2. Expand and enhance our TV distribution platform to reach more potential viewers and to convert a greater number into active customers;

3. Be a “Watch & Shop” anytime, anywhere experience, with multiple customer touch-points, including online and mobile; and

4. Optimize our customer experience across the business to support the growth and maintenance of an expanding customer base.

ValueVision shareholders have benefited from our efforts, including the transformation of a consistently (and substantially) cash-flow-negative business into a growing enterprise with eight quarters of consecutive increases in sales and positive Adjusted EBTIDA. Through our successful implementation of the Company’s strategy, ValueVision’s Board and management team have:

• Grown the customer base to over 1.4 million today vs. 754,000 in 2008;

• Launched the ShopHQ multichannel shopping destination brand;

• Reduced the average selling price by 54% since 2008 to reach a broader customer demographic;

• Developed secure and convenient Internet and mobile access, leading the industry in Internet sales penetration;

• Dramatically improved the customer experience, service and satisfaction levels, as evidenced by a 54 NPS rating in 2013 vs. 36 NPS in 2011;

• Streamlined companywide operations by reducing return rates to 22% in 2013 from 31% in 2008, reducing transaction costs per unit by 49% since 2008 and reducing TV distribution cost per household by 38% since 2008;

• Improved the quality and reach of the Company’s TV distribution footprint while significantly reducing its cost, delivering annual rate savings of $55 million; and

• Enhanced the strength and flexibility of ValueVision’s balance sheet by repaying $53 million in preferred stock obligations, replacing high-interest debt obligations with a $75 million, cost effective credit facility with PNC bank, resulting in lower interest expense and stronger balance sheet condition.

These successful initiatives confirm, in our view, that we have the right Board – with its deep experience and significant skills in areas critical to our business – to continue to oversee the development and implementation of the Company’s strategy. In addition, ValueVision’s management team, headed by Mr. Stewart, is made up of world-class leadership with extensive, relevant industry experience. We believe we have the right team in place to continue executing our strategy and create even greater shareholder value.


In contrast to the performance of your Board and management team, we believe the recent track record of Clinton and three of its nominees in retail and eCommerce should raise serious questions and concerns for shareholders.

In campaigns where Clinton attempted to obtain or obtained a board seat, the target’s median total shareholder return underperformed the Russell 2000 by 6.8% after 500 or fewer trading days post activist campaign announcement. In campaigns where Clinton was successful in gaining a board seat, the target’s median total shareholder return was even worse, underperforming the Russell 2000 by 13.2% after 500 or fewer trading days post activist campaign announcement.1

Clinton Group’s poor performance at retailers such as The Wet Seal, Inc. (“Wet Seal”) demonstrates a severe lack of understanding of the basics of retail strategy, in our view. As noted by a Wet Seal analyst:

“Noted activist investor, Clinton Group, accumulated a 7% position in WTSL and began agitating for change in spring 2012…We believe the proxy battle distracted management from running the business resulting in comps accelerating to the downside.” – Jeremy Hamblin & Peter Mahon, Dougherty & Company, August 12, 2013

In reality, following the appointment of Clinton’s nominees to the Wet Seal Board, the Company’s stock price declined by 72%, as of June 9, 2014, resulting in $206 million in shareholder value destruction. Are you willing to risk the same at your company, and to your investment?

Clinton has compared ValueVision to “other eCommerce companies” and says it has a multi-platform “retail theater” strategy in mind as the secret ingredient of superior value creation. ValueVision shareholders, however, should know that three of Clinton’s nominees, Thomas Beers, Fred Siegel and Mark Bozek, appear to have a lackluster recent track record in eCommerce retail and their production of “retail theater” appears to have never made it to the stage.

In 2012, Mr. Bozek announced the launch of eVine, after raising money from investors and enlisting fellow Clinton nominees, Thomas Beers and Fred Siegel, among others, as advisors. Two years later eVine, described in the media as a “web-only shopping platform” has a website that does not appear to sell anything.

Shareholders should ask themselves: Is a vote for the Clinton nominees a vote for experimenting with the same strategy at ValueVision, only using your money? If Clinton succeeds in getting its nominees elected, they will have the ability to use your company, at your expense, as a testing ground to see if they can get it right.


• In Our View, Clinton Continues to Misunderstand or Misrepresent ValueVision’s Programming and Merchandising Strategy and Has Failed to Offer New or Unique Merchandising Ideas

THE FACTS: ValueVision continues to broaden its product mix from the Jewelry & Watch category toward other product areas that appeal to a larger consumer base, including Fashion & Accessories, Beauty, Health & Fitness, and Home & Consumer Electronics. Since 2008, we have invested in our core and emerging product categories while shifting the merchandise mix of Jewelry & Watch from 56% of total sales to 43% of total sales in 2013.

At the same time, we have invested in our emerging categories of Fashion & Accessories, Beauty, Health & Fitness, and Home & Consumer Electronics, which typically attract more new customers and increase purchase frequency. We have always been open to new ideas and value-creating strategies and we now offer greater product diversity and a broader assortment to our customers than at any other time in the Company’s history.

• Clinton Continues to Make Inaccurate Claims About ValueVision’s Proprietary Brands

THE FACTS: ValueVision has developed a growing selection of proprietary brands, including Home brands Cozelle Linens, North Shore Linens, Cook’s Tradition Cookware, Cook’s Companion and Grand Suites; Fashion brands Kate and Mallory, OSO Casuals, Geneology, Addressing Woman, Glitterscape and Affinity for Knits; and Jewelry brands Gem Treasures, NYC II, Adair, Gems En Vogue II, Brilliante, Portofino, Diamond Treasures, Toscana, Dine Spirit, Gem Insider and Passage to Israel.

Clinton’s claim that ValueVision has just two proprietary brands is false. We believe this inability to get the facts straight calls into question the accuracy of other claims Clinton makes about proprietary brands at QVC and HSN. ValueVision’s successful proprietary brand strategy is a value driver with revenue from proprietary brands growing 67% in the last two fiscal years, increasing from 17% of our product mix in fiscal 2011 to 25% in fiscal 2013.

• Clinton Dismisses the Company’s Value-Enhancing EBITDA Improvements Since 2012 as Solely Attributable to “Essentially Inevitable” Reduced Cable and Satellite Fees

THE FACTS: ValueVision’s EBITDA improvement has been driven by a number of factors, including broader product mix, improved channel positioning, more compelling programming as well as the closely negotiated and important management achievement of reducing cable and satellite fees. ValueVision’s customer base has grown by 132% since 2008 and customers now purchase 35% more frequently. Since the second quarter of 2012, ValueVision’s revenue has grown nearly three times faster than the competition.

So there!

ShopHQ, Cinton Group Spar Over Critical Research Report

June 8, 2014

ShopHQ’s dissident shareholders have gotten some support from a third party, but the home shopping network pooh-poohed the report.

The Clinton Group Inc. said Friday that a research firm, ISS Proxy Advisory Services, has recommended yesterday that ShopHQ stockholders support change in the composition of the home shopping network’s board by voting on the GOLD proxy card (namely, Clinton’s nominees) at this year’s annual meeting.

ISS advises about 1700 institutional investors, pension funds and mutual funds across the globe on annual and special meeting votes.

ShopHQ quickly issued its own press release dissing ISS’s findings.

In its report, ISS noted that Clinton Group had “made a case for change at the board level [and] provided the outline of a strategic plan which appears to address the most significant failures identified in the course of this proxy contest.”

Therefore, ISS recommended that its clients vote for none of the incumbent directors and instead vote for the Clinton Group’s slate.

“We are pleased that ISS recognizes the importance of change at ValueVision (ShopHQ’s corporate name,” Clinton Group President Gregory Taxin said in a canned statement. “ValueVision has a terrific opportunity to build a profitable and valuable business. We believe that new directors can help ensure ValueVision takes full advantage of this opportunity and creates significant value for shareholders.”

ISS’ research report also said:

Clearly, ValueVision is not monetizing its distribution as effectively [as HSN and QVC]. … The disconnect in household monetization appears to be driven by ValueVision’s misaligned merchandise mix, a lack of proprietary brands and outdated programming.

ValueVision has been shifting product mix over the past several years, but the change has been slow and the company missed its own commitments for greater category shift by 2013.

[A]nother factor lowering ValueVision’s per household monetization compared to peers is its product mix that relies heavily on nationally available brands. … A reliance on nationally available brands does not appear to be a long-term viable strategy.”

[L]ooking at the programming [schedule] … it is easy to see why QVC and HSN are attracting more viewers to [their] more differentiated, diversified and engaging content. … [T]he company needs to diversify and create more engaging programming and programming personalities.

In order for ValueVision to generate significant operating leverage off its high percentage of fixed costs, the company needs to increase revenues through improved household monetization.

According to ISS, the Clinton Group “has laid out a plan to create proprietary brands, improve product mix and develop creative programming, which appears needed at ValueVision.”

The company’s annual meeting will be held on June 18.

So what did ShopHQ have to say about all this?

We strongly believe that ISS reached the wrong conclusion in failing to recommend that shareholders elect ALL of ValueVision’s eight, highly qualified director nominees.

We believe that shareholders should seriously question ISS’s report due to numerous material errors and omissions:

In its very first “Key Takeaway,” ISS overstates Clinton’s share ownership by no less than 250%;

ISS fails to disclose that Clinton, during the course of its campaign to take control of ValueVision’s Board, has reduced its ownership position from a peak of 5.9% to 4.0% of the Company’s outstanding shares, according to its latest filings;

Despite acknowledging that ValueVision stock, under the current Board and management team, has outperformed HSN and QVC by 120.6 and 90.7 percentage points respectively, since August 15, 2012, ISS recommends giving 50% of the Board seats to a dissident shareholder that owns only 4% of the Company’s shares, which is substantially less than the Company’s CEO;

ISS incorrectly states that ValueVision has only two proprietary brands, when in fact ValueVision has over 20 proprietary brands, reflecting approximately 25% of total sales, and made this fact clear to ISS;

ISS makes claims for the qualifications of the Clinton nominees it recommends, despite the fact that three of these nominees’ — Messrs. Bozek, Beers and Siegel — most recent experience in eCommerce was leading a startup called Evine that, despite launching more than two years ago, consists of only a single page that lacks any shopping functionality; and

ISS ignores Clinton’s materially dismal performances at other retailers, particularly their most recent experience at Wet Seal, which demonstrates a severe lack of understanding around the basics of retail strategy.

In considering which directors are better qualified to preserve and increase value, shareholders should seriously question ISS’s recommendation to give 50% board control to a dissident shareholder that owns substantially fewer shares than the Company’s CEO, and has been steadily selling down its position since it first publicly announced its campaign. In addition, shareholders should consider that neither ISS nor any of its analysts have any experience in eCommerce or the Company’s business.

We also question the basis for the analysis supporting ISS’s conclusion about “needed change” in proprietary brands, product mix and programming. In fact, revenue from ValueVision’s more than 20 proprietary brands grew 67% in the last two fiscal years, and now represents approximately 25% of our product mix in fiscal 2013.

The ISS report raises questions as to how sharehholders can be expected to rely on an ISS recommendation that, in its very first “Key Takeaway,” materially overstates Clinton’s share ownership.

For the record, as noted in many of Clinton’s and ValueVision’s filings, letters and press releases, Clinton does not, and has never, owned 10% of ValueVision’s shares. This is either an egregious mistake by ISS, or an indication that Clinton is still working in concert with Cannell Capital, which would be a violation of the SEC disclosure rules.

We note that Cannell Capital, which had previously formed a 13-D group with Clinton, filed a letter criticizing the Company earlier this week. Shareholders should question whether ISS is making its recommendation based on flawed facts or on information that has not been disclosed to other shareholders.

The election of Clinton’s nominees could disrupt the progress to date of creating greater value for shareholders, derailing the Company’s progress and momentum. We urge ValueVision shareholders to support the Board that is committed to enhancing value for all shareholders.

For example, ValueVision’s Board and management team have transformed the Company over the past five years through the continued successful execution of ValueVision’s strategy, and are continuing to deliver positive results.

Significantly diversified and broadened its merchandise offerings;

Reduced the average selling price to enable customer growth;

Increased customer count from approximately 754,000 in 2008 to 1.4 million customers now;

Increased net sales by 6% and net units shipped by 28% in the first quarter of 2014 alone;

Reduced the cost per home over the last six years from $1.72 to $1.12;

Dramatically improved the customer experience and satisfaction levels;

Streamlined company-wide operations;

Enhanced fulfillment and customer service capabilities;

Improved the quality of the Company’s TV distribution footprint while significantly reducing the cost; and

Enhanced the stability and flexibility of ValueVision’s balance sheet, resulting in stronger financial performance.

Even ISS acknowledges that ValueVision’s record of delivering shareholder value is superior. Listen to what the independent experts are saying about ValueVision. All sell-side analysts that cover ValueVision have a BUY rating post Q1 2014 earnings1:

“Improvements in recent quarters appear to be driven by greater depth of SKUs in each category, thereby reducing concentration risk in product offerings. Broader product assortments are driving customer growth — YOY customer growth has trended from 7% in Q1, 22% in Q2, 20% in Q3, and 30% in Q4 to 19% in Q1. A bigger customer base increases the likelihood of sustainable long-term revenue growth, which is the driver of VVTV’s decision to lower ASPs by emphasizing products that appeal to a larger audience.” – Dougherty & Company on May 22, 2014

“The company will leverage the sales growth more in F2015 and experience very high earnings growth. We think the long-term investment thesis is intact which is that the company can grow revenue by reducing ASP, increasing transactions and the higher revenue will leverage largely fixed operating expenses leading to strong earnings growth. With ample price appreciation potential to our new price target, we are maintaining our BUY rating.” – Feltl and Company on May 22, 2014

“VVTV reported solid Q1 results… As evidence that the strategy to broaden the merchandise assortment and lower average prices is working, new customer acquisition was up 19% in Q1, paving the way for strong revenue growth in future quarters. ShopHQ has several brands and partnerships slated to launch this year: notably, a partnership featuring Shark Tank’s Mark Cuban that is being worked on for the summer.” – Craig-Hallum on May 22, 2014

“Mobile continues to grow — underscoring this mega trend in consumer behavior. We note that eCommerce sales in total were about 45% of the company’s total revenues, of which 32% (or 14% of the company’s total revenues) were conducted via a mobile device. Mobile strategies put into place last year are paying off in driving penetration via mobile. For this year, the company intends to continue these enhancements aimed at driving customer engagement and purchase frequency.” – Piper Jaffray on May 21.

The Clinton Group pooh-poohed all that.

“I read with interest ValueVision’s press release today in which the Company expresses its view that ISS does not understand the Company or its industry,” Taxin said.

“While shooting the messenger is always tempting, it is completely unwarranted in this instance. The ISS lead analyst, a CFA charter holder and former media and advertising research analyst for Lazard and Citibank, is eminently qualified to understand, and did understand, the issues in this important proxy contest.”