ValueVision Mails Letter to Shareholders
MINNEAPOLIS, MN--(Marketwired - May 12, 2014) - ValueVision
Media, Inc. (NASDAQ: VVTV) ("ValueVision"), a multichannel
electronic retailer via TV, Internet and mobile, today mailed a
letter to its shareholders regarding the slate of nominees and
proposals to be put forth by Clinton Group and its affiliates
("Clinton") at ValueVision's 2014 Annual Meeting of
Shareholders.
The full text of the letter from Randy Ronning, Chairman of the
Board, is below:
May 12, 2014
Dear Fellow ValueVision Shareholder:
At ValueVision's upcoming Annual Meeting of Shareholders, which
will be held on June 18, 2014, you will be asked to make an
important decision regarding the future of your Company.
Clinton Group ("Clinton"), a hedge fund that appears to
beneficially own approximately 4% of ValueVision shares, and that
holds only partially disclosed derivative positions, has launched a
proxy contest in an attempt to take control of 75% of the seats on
ValueVision's Board of Directors. Your vote is important in this
election and we urge you to be sure to vote so that your voice is
heard at this year's Annual Meeting.
SHAREHOLDERS HAVE A CLEAR CHOICE:
- Elect ValueVision's highly qualified and experienced director
nominees to support the continued successful execution of
ValueVision's strategy for creating lasting and sustainable growth
for all shareholders.
- Reject Clinton's campaign to take control of the Company
without paying for it, and with no clear strategy to deliver
shareholder value.
ValueVision's Board has the demonstrated strength, diversity,
experience and qualifications to provide effective and independent
oversight and direction to the Company. ValueVision's Board
consists of eight highly qualified directors, seven of whom are
independent and all of whom possess substantial industry and public
company expertise. Each member of your Board is committed to
delivering superior results and serving the best interests of ALL
ValueVision shareholders.
Clinton is seeking to take control of the ValueVision Board.
Rather than paying for control by acquiring additional shares,
Clinton has actually reduced its beneficial ownership in
ValueVision shares by almost 40% during the course of its
campaign.
Your Board of Directors urges you, our valued shareholders, to
protect the value of your investment by voting the WHITE proxy card to elect the
Company's highly qualified and experienced nominees.
YOUR BOARD AND MANAGEMENT TEAM'S STRATEGY IS DELIVERING IMPROVED
FINANCIAL RESULTS AND DRIVING SHAREHOLDER VALUE
Since the appointment of Keith Stewart, who has over 21 years of
multichannel retailing experience, as Chief Executive Officer in
January 2009, ValueVision's share price has increased by
approximately 869% from $0.52 to $5.04, the closing share price on
May 9, 2014. An investment in ValueVision is worth more than three
times as much as an investment in the Russell 2000 index over the
same period.
Mr. Stewart's initial mandate as CEO was to execute a turnaround
of ValueVision, which at that time had an uncertain future. We
believe real progress has been made and continues to be made to
position the Company for the future. ValueVision's management team,
working closely with the Board of Directors, has:
- Significantly diversified and broadened its merchandise
offerings;
- Reduced the average selling price to enable customer
growth;
- 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.
We have provided clear financial and operating metrics by which
shareholders can measure the progress of the turnaround. Units
shipped have doubled as ValueVision has increased its household
penetration and purchase frequency. For fiscal year 2013 as
compared to fiscal year 2008, net units shipped increased by 132%
from three million to seven million. Over the same period, by
lowering the average price point of our merchandise by 54%, we have
broadened the appeal of our product offerings across 86 million
U.S. homes reached via television and via our online and mobile
digital store front, achieving industry leading Internet sales
penetration.
In addition, distribution costs of our national footprint of
cable and satellite homes decreased to $1.07 per home in fiscal
2013 versus $1.72 per home in fiscal 2008. The Company has also
improved the productivity of its national distribution footprint by
optimizing its network through lower channel positions, the
addition of second channels and better adjacencies. Moreover, our
Adjusted EBITDA was $18 million in fiscal 2013 versus a loss of $51
million in fiscal 2008. We have achieved a 49% reduction in
transaction costs per shipped unit during that timeframe.
Trailing 12 month total active customers increased significantly
to 1,360,000 in fiscal 2013 versus 754,000 in fiscal 2008. Finally,
in 2013, we successfully transitioned the Company's consumer brand
to ShopHQ from ShopNBC, and we are now building our own unique and
compelling brand.
ValueVision is now well positioned to deliver long-term,
sustainable growth and profitability. During our fourth quarter
2013 financial results issued on March 5, 2014, we announced the
seventh consecutive quarter of sales growth and positive adjusted
EBITDA. We believe this strong momentum is a direct result of
our strategy and vision to drive continued improvement in our top
and bottom line financial performance, and our focus on creating a
customer experience and shopping destination that supports the
continued expansion of our growing customer base of more than
1,360,000 customers.
VALUEVISION IS POSITIONED FOR SCALABLE GROWTH, FOCUSED ON OUR
FOUR POINT STRATEGY
- Broaden and Diversify Merchandise Mix With Compelling Product:
We have increased our investment in our core and emerging product
categories, including upscale, luxury, proprietary and national
brands. By expanding and diversifying our product mix, our goal is
to attract, retain and increase the purchase frequency of new and
active customers and to improve our household penetration.
- Expand and Optimize TV Distribution: ValueVision operates a
unique and scalable multichannel retail platform with a highly
leverageable fixed cost base. We continually seek to improve our
channel positioning and adjacencies through lower channel positions
along with the addition of second channels to make our network
easier to find for customers.
- Be a Watch & Shop Anytime, Anywhere Experience: In keeping
pace with consumer shopping behavior, we continue to grow our
internet and mobile business with expanded product assortments and
internet-only merchandise offerings. In addition, we have enhanced
the content and functionality of our Internet, mobile and social
media channels to attract and retain more customers. We launched a
new iPad shopping app in the third quarter of 2013 and enhancements
to our Android and iPad apps were deployed in fourth quarter of
2013. We have seen strong growth in sales from mobile devices and
smart phones as a percentage of total revenue, and continue to
achieve industry leading Internet sales penetration. Our digital
strategy enables our customers to conveniently watch the broadcast,
browse, and purchase product as well as share their thoughts on
ShopHQ products and presentations. We believe this experience
inspires shopping, builds community, and provides consistency
across all channels.
- Grow Customer Base, Purchase Frequency and Retention: Our
broader product offerings, lower average price point and improved
channel positioning have helped us attract new customers and
increase purchase frequency of existing customers. We aim to
continue this trajectory by enhancing our customer experience
through a variety of investments in technology, systems and
improved customer service policies.
CLINTON HAS PRESENTED NO DETAILED PLAN TO ACCELERATE VALUE
CREATION
Clinton has yet to articulate a detailed strategy to improve
upon the results that the ValueVision Board and management team
have achieved. We have repeatedly asked Clinton to share its
proposed strategy since Clinton began its public campaign to unseat
ValueVision's Board six months ago with a now abandoned
solicitation for a Special Meeting. However, Clinton
apparently does not have a strategy, or does not want to share its
strategy before it gains control of the Board and removes
ValueVision's current Chief Executive Officer.
Clinton has provided shareholders with no concrete strategy to
create value and the specific points they have raised are either
already part of the Company's existing strategy or have been
considered (and rejected) within the context of the Company's
overall financial and operational circumstances. This may be a
tacit acknowledgement that the Board and management team's current
strategy is the right strategy to enhance shareholder
value. Either way, Clinton's lack of compelling new ideas is
further evidence that Clinton does not understand our business or
industry. In contrast, ValueVision's continued strong
performance and improved metrics demonstrate that your Board and
management team are successfully executing their strategy to
deliver enhanced results and drive shareholder value.
Changing the majority of ValueVision's Board Members and
replacing the Company's Chief Executive Officer would be very
disruptive to the current momentum achieved by your Company, and it
is particularly risky considering Clinton either has no strategy or
wants you to support its actions without sharing with you what they
would do differently, and why that would work better than the
Company's current strategy, which has resulted in seven successive
quarters of growth.
CLINTON'S RECORD WITH VALUEVISION IS ONE OF INDECISION AND
INCONSISTENCY
Clinton has been emphatic in its demands for control of
ValueVision's Board; however, during the course of its
campaign:
- Clinton abandoned its Special Meeting demand and said it no
longer advocated its own proposals. Without explanation or
warning, after months of dialogue between ValueVision and Clinton,
and after the Company incurred significant expense associated with
preparing for and seeking SEC clearance of the proxy solicitation
materials in connection with a special meeting called solely at
Clinton's request, Clinton announced that it no longer advocated
the proposals it had previously put forth and would not take part
in the meeting.
- Clinton has sold a significant amount of ValueVision shares on
numerous occasions during its campaign, without any explanation for
these sales being offered to ValueVision shareholders. Shareholders
should ask why Clinton has reduced its beneficial ownership in
ValueVision stock by almost 40% during the time in which it has
been attempting to take control of a majority of the seats on
ValueVision's Board.
- Clinton has been inconsistent and "flip-flopped" on the
nominees it is advocating to be placed on the ValueVision Board. As
recently as three months ago, Clinton was still proposing Dorrit M.
Bern and Melissa B. Fisher as nominees "critical" to the future
success of ValueVision, yet weeks later, these nominees were
suddenly swapped out for others. Clinton has never indicated who
they would name as CEO of the Company. This vacuum of proposed
leadership is a significant gap in Clinton's analysis and strategy
of its interests in ValueVision.
Given that Clinton has already significantly sold down its
ownership in ValueVision, shareholders should question whether
Clinton is investing for the long-term, or whether it may decide
that its own best interests are served by selling the rest of its
holdings in ValueVision, whatever the outcome of the proxy contest
Clinton has initiated.
YOUR BOARD HAS MADE EFFORTS TO WORK CONSTRUCTIVELY WITH
CLINTON
The ValueVision Board and management team are open to listening
to and considering the views of all shareholders and have engaged
in numerous discussions with Clinton regarding its various (and
inconsistent) proposals. Because we value the views of ALL our
shareholders, ValueVision scheduled - and filed a preliminary proxy
statement for - a March 14, 2014 Special Meeting of Shareholders
for the sole purpose of providing shareholders with an opportunity
to vote on Clinton's proposals. Importantly, that offer was
made despite ValueVision having no legal obligation to call or hold
such a meeting.
We also attempted, on numerous occasions, to reach a settlement
agreement with Clinton in order to avoid the expense and business
and operational distraction of a proxy contest. However, we were
unable to reach such an agreement despite the compromises we
offered.
ValueVision is encouraged by the support the Company has
received from shareholders in connection with Clinton's Special
Meeting request and looks forward to continuing its dialogue with
shareholders, including at the 2014 Annual Meeting.
VALUEVISION'S BOARD AND MANAGEMENT TEAM ARE COMMITTED TO ACTING
IN THE BEST INTERESTS OF ALL SHAREHOLDERS
Your Nominating and Corporate Governance Committee regularly
reviews the composition of the Board to ensure that it is composed
of both engaged and dedicated directors who have a broad range of
relevant experience. The regularity with which the Board is
refreshed is indicated by the current average director tenure on
the Board of just three and one-half years. Therefore, in response
to the proposed nominees from Clinton, ValueVision formed a
separate Special Nominating Committee to specifically, and on an
expedited basis, review the qualifications of such nominees as well
as seek to further strengthen the Board by adding independent
directors to ensure we have the best leadership to oversee the
successful execution of our strategy.
As a result, in March 2014, we announced the appointment of two
new independent directors: Landel C. Hobbs and Lowell W.
Robinson.
Mr. Hobbs brings 18 years of experience in the media and
telecommunications sectors, including financial, strategic and
operational leadership roles. Most recently, Mr. Hobbs was Chief
Operating Officer of Time Warner Cable, where he led a major
operational reorganization. While at Time Warner, Mr. Hobbs
relaunched Time Warner's commercial line of business in 2009, and
was responsible for Time Warner Cable's rebranding efforts and its
creation of proprietary customer segmentation, pricing architecture
and yield management, which are designed to maximize profits
through the understanding, anticipation and influence of consumer
behavior and demand trends.
Mr. Robinson brings extensive public company experience and a
deep understanding of the Internet, media, consumer and retail
industries. In his career, Mr. Robinson has held senior global
financial leadership positions at Citigroup Inc. and Kraft Foods.
He also has served as a director on the Board of several public
companies, including The Jones Group and International Wire Group,
Inc. In addition, Mr. Robinson has been Chief Financial Officer of
several public companies and has provided transformational
management at both board and operational levels.
Furthermore, in March 2013, we appointed Ms. Jill Botway as an
independent director. Since 2012 Ms. Botway has served as Executive
Vice President and Director of Sales and Marketing for Specific
MediaMySpace, a multiplatform digital media company. In addition,
from 2009 to 2010, Ms. Botway was Chief Executive Officer of WMI
Inc., a multiplatform media services company and since 2010 she has
been a Managing Member at private equity firm Cavu Holdings LLC.
From 2005 to 2009, Ms. Botway was President of Omnicom Media Group
U.S. Strategic Business Units. Before joining Omnicom Ms. Botway
held various executive positions with media companies and practiced
as an attorney.
All of ValueVision's Board members were carefully selected by
your Nominating and Corporate Governance Committee following a
thorough review of their qualifications and were overwhelmingly
re-elected at the June 2013 Annual Meeting of Shareholders with
recommendations for their re-election from proxy advisory services
firms such as ISS and Glass Lewis, with the exception of Mr. Hobbs
and Mr. Robinson, who were appointed to the Board after the June
2013 Annual Meeting.
PROTECT YOUR INVESTMENT - VOTE THE WHITE PROXY CARD TODAY
We urge you to protect your investment by voting the enclosed
WHITE proxy card
today "FOR" all of ValueVision's nominees.
Your vote is extremely important, no matter how many or how few
shares you own. We urge you to vote today by telephone, online or
by signing and dating the enclosed WHITE proxy card and returning
it in the postage-paid envelope provided. Please do not return or
otherwise vote any Gold proxy card sent to you by the dissident
group.
On behalf of the Board of Directors and management team, we
appreciate the continued support of ValueVision shareholders as we
build value together.
Sincerely,
Randy Ronning Chairman of the Board
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
enclosed WHITE proxy card TODAY in the postage-paid envelope
provided. 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.
Advisors Jefferies LLC is acting as financial advisor and
Simpson Thacher & Bartlett LLP and Barnes & Thornburg LLP
are acting as legal advisors to ValueVision.
About ValueVision Media
ValueVision Media, Inc. is 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. ValueVision transitioned its consumer brand
to ShopHQ from ShopNBC in fiscal 2013. ValueVision's television
network reaches over 86 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, 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. Any 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 ANY SUCH 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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