The two-year experiment in overhauling shopping channel Evine Live (formerly ShopHQ) has stumbled, with the company jettisoning its CEO and laying off 45 workers in an effort to get back on track.
Activist hedge fund The Clinton Group took over in June 2014 with a board slate containing big-name TV and retail executives, including reality-TV pioneer Thom Beers. Former HSN CEO Mark Bozek became CEO and moved quickly to change the product mix and bring in reality-style programming.
Dallas Mavericks owner and Shark Tank star Mark Cuban’s program American Dream worked, and analysts have said the strategy was sound but needed more time to take hold. With declining margins, anemic profits and a plunging stock price, Wall Street and the company weren’t willing to wait.
“It was surgical,” chairman and interim CEO Bob Rosenblatt said of the job cuts on a call with analysts about quarterly results.
The board removed Bozek in February; chief strategy officer Russell Nuce also left. Evine’s stock price has plunged 94% since the takeover, to 41 cents each from $7. Its stock closed at 82 cents on March 23, the same day the company said it was notified by NASDAQ that it faced a possible delisting for violating the exchange’s requirement that its stock trade above $1 per share. Evine has been below $1 for 30 consecutive days; it has 180 days to bring the stock back into compliance by trading above $1 for 10 consecutive days.
In the fourth quarter, Evine revenue rose 5% to $212 million, but cash flow was down 29% to just $4.9 million. For the full year, revenue was up 3% to $693 million, while cash flow plunged 60% to $9.2 million.
Evine is a distant third among shopping channels, with QVC in the lead with $8.7 billion in 2015 sales, followed by HSN with $3.7 billion.
Rosenblatt said in a statement he believes the solution is to bring “greater focus and discipline to Evine Live’s merchandising strategy, margin profile and execution to deliver profitable growth and shareholder value.” Time will tell if that strategy is enough.