The full text of the letter from
Dear Fellow ValueVision Shareholder:
At ValueVision's upcoming Annual Meeting of Shareholders, which will be held on
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 WHITEproxy 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
•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
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
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
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
•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
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
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
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
As a result, in
All of ValueVision's Board members were carefully selected by your
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.
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
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.
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
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
Dawn ZarembaShopHQ firstname.lastname@example.org (952) 943-6043 O Tim Lynch/ Jed Repko Joele Frank, Wilkinson Brimmer Katcher (212) 355-4449 Investors: David Collins/ Eric Lentini Catalyst Global LLCvvtv@catalyst-ir.com (212) 924-9800 O (917) 734-0339 M Arthur Crozier/ Scott Winter/ Jonathan Salzberger Innisfree M&A Incorporated(212) 750-5833