ValueVision Strongly Disagrees With ISS Recommendation, Which
Demonstrates ISS's Lack of Knowledge and Understanding of the
Company and Its Industry
Board Recommends Shareholders Protect Their Investment by Voting
the WHITE Proxy Card FOR ValueVision's 8 Highly Qualified Directors
and Their Proven Strategy to Substantially Increase Shareholder
Value
MINNEAPOLIS, MN--(Marketwired - Jun 6, 2014) - ValueVision
Media, Inc. (NASDAQ: VVTV) ("ValueVision" or the "Company"), a
multichannel electronic retailer via TV, Internet and mobile
operating as ShopHQ, today issued the following statement regarding
a June 5, 2014, report by Institutional Shareholder Services (ISS),
strongly disagreeing with its recommendation, which demonstrates
ISS's lack of knowledge and understanding of the Company and its
multichannel retailing industry. The report relates to the election
of directors to the ValueVision Board of Directors at the Company's
2014 Annual Meeting of Shareholders to be held on Wednesday, June
18, 2014:
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 shareholders 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,
2014
ValueVision's shareholders are reminded that their vote is
important, no matter how many or how few shares they own. Whether
or not shareholders plan to attend the Annual Meeting, they have an
opportunity to protect their investment by voting the WHITE proxy
card "FOR" ValueVision's eight highly qualified and experienced
nominees: Jill Botway, John Buck, William Evans, Landel Hobbs, Sean
Orr, Lowell Robinson, Randy Ronning and Keith Stewart.
Advisors Jefferies LLC is acting as financial advisor and
Simpson Thacher & Bartlett LLP and Barnes & Thornburg LLP
are acting as legal advisors to ValueVision.
Your Vote Is Important, No Matter How Many Or How Few Shares You
Own
If you have questions about how to vote your shares, or need
additional assistance, please contact the firm assisting us in the
solicitation of proxies:
INNISFREE M&A INCORPORATED Shareholders Call Toll-Free:
(888) 750-5834 Banks
and Brokers May Call Collect: (212)
750-5833
REMEMBER: We urge you NOT to sign any Gold proxy card
sent to you by Clinton. If you have already done so, you have
every right to change your vote by signing, dating and returning
the WHITE proxy card TODAY. If you hold your shares in
Street-name, your custodian may also enable voting by telephone or
by Internet -- please follow the simple instructions provided on
your WHITE proxy card.
1 Permission to use quotes were neither sought nor obtained.
About ValueVision Media/ShopHQ (www.shophq.com/ir) ValueVision
Media, Inc. operates as ShopHQ, a multichannel retailer that
enables customers to shop and interact via TV, phone, Internet and
mobile in the merchandise categories of Home & Consumer
Electronics, Beauty, Health & Fitness, Fashion &
Accessories, and Jewelry & Watches. The ShopHQ television
network reaches over 87 million cable and satellite homes and is
also available nationwide via live streaming at www.shophq.com.
Please visit www.shophq.com/ir for more investor information.
Forward-Looking Information
This release may contain certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Any statements contained herein that are not statements of
historical fact may be deemed forward-looking statements. These
statements are based on management's current expectations and
accordingly are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the
expectations contained herein due to various important factors,
including (but not limited to): consumer preferences, spending and
debt levels; the general economic and credit environment; interest
rates; seasonal variations in consumer purchasing activities; the
ability to achieve the most effective product category mixes to
maximize sales and margin objectives; competitive pressures on
sales; pricing and gross sales margins; the level of cable and
satellite distribution for our programming and the associated fees;
our ability to establish and maintain acceptable commercial terms
with third-party vendors and other third parties with whom we have
contractual relationships, and to successfully manage key vendor
relationships; our ability to manage our operating expenses
successfully and our working capital levels; our ability to remain
compliant with our long-term credit facility covenants; our ability
to successfully transition our brand name; the market demand for
television station sales; our management and information systems
infrastructure; challenges to our data and information security;
changes in governmental or regulatory requirements; litigation or
governmental proceedings affecting our operations; significant
public events that are difficult to predict, or other significant
television-covering events causing an interruption of television
coverage or that directly compete with the viewership of our
programming; and our ability to obtain and retain key executives
and employees. More detailed information about those factors is set
forth in the Company's filings with the Securities and Exchange
Commission, including the Company's annual report on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K.
You are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date of this announcement.
The Company is under no obligation (and expressly disclaims any
such obligation) to update or alter its forward-looking statements
whether as a result of new information, future events or
otherwise.
Important Information
This release may be deemed to be solicitation material in
respect of the solicitation of proxies from shareholders in
connection with one or more meetings of the Company's shareholders,
including the Company's 2014 Annual Meeting of Shareholders. On May
9, 2014, the Company filed with the Securities and Exchange
Commission ("SEC") a proxy statement and a WHITE proxy card in
connection with the Company's 2014 Annual Meeting of Shareholders.
The Company, its directors and certain of its executive officers
and employees may be deemed to be participants in the solicitation
of proxies from shareholders in connection with the Company's 2014
Annual Meeting of Shareholders. Information concerning the
interests of these directors and executive officers in connection
with the matters to be voted on at the Company's 2014 Annual
Meeting of Shareholders is included in the proxy statement filed by
the Company with the SEC in connection with such meeting. In
addition, the Company files annual, quarterly and special reports,
proxy and information statements, and other information with the
SEC. The proxy statement for the 2014 Annual Meeting of
Shareholders is available, and any other relevant documents and any
other material filed with the SEC concerning the Company will be,
when filed, available, free of charge at the SEC website at
http://www.sec.gov. SHAREHOLDERS ARE URGED TO READ CAREFULLY THE
PROXY STATEMENT FILED BY THE COMPANY AND ANY OTHER RELEVANT
DOCUMENTS FILED WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION WITH RESPECT
TO PARTICIPANTS.
Contacts Media: Dawn Zaremba ShopHQ dzaremba@shophq.com
(952) 943-6043 O Tim
Lynch / Jed Repko Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
Investors: David Collins / Eric Lentini Catalyst Global LLC
vvtv@catalyst-ir.com (212) 924-9800 O
(917) 734-0339 M
Arthur Crozier / Scott Winter / Jonathan Salzberger Innisfree
M&A Incorporated (212) 750-5833
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