PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
In the wake of dismal second quarter sales and replacing its CEO, online retailer ShopNBC has formed a committee to review “strategic alternatives.” The company did not rule out selling the business.
TV and online shopping network ShopNBC’s board of directors has appointed a special committee of independent directors to review strategic alternatives to maximize stockholder value. Selling the business, owned by ValueVision Media Inc., is one option although a statement from ShopNBC says, “there can be no assurance that the review process will result in the announcement or consummation of any sale or other transaction.”
The committee will consist of two current independent directors, George A. Vandeman, who will serve as its chairman, and Robert J. Korkowski. A third independent director is expected to be appointed to the board and will serve on the committee, which has retained Piper Jaffray & Co. as its financial advisor to assist in the process.
ShopNBC has declined to comment on any potential strategic alternatives.
The strategic assessment follows a series of initiatives ShopNBC has undertaken since January to improve its financial performance. First, the company laid off 10% of its salaried workers. Last month, ShopNBC reported a 26% drop in its fiscal second quarter sales from $190.6 million a year ago to $142 million in 2007 that led to the departure of CEO Rene Aiu, who had been on the job less than six months. Aiu was replaced by John Buck, executive chairman of the ShopNBC board, who had served as interim CEO before Aiu was hired.
In its August 10Q filing with the Securities and Exchange Commission, ShopNBC described several ill-fated marketing moves that contributed to falling sales in the first half of 2008. The failed strategy included a substantially revamped product mix. “We began reducing the airtime devoted to high-ticket items such as consumer electronics that drive product sales from one-time customers, but not necessarily repeat business,” ShopNBC says in its filing. “We also ran a significant amount of clearance sales in order to make way for new merchandise reflecting a changed merchandise mix. These changes were a major factor in the sales declines we experienced in the first two quarters.”
ShopNBC also noted that television and Internet sales declined in the first six months of fiscal 2008 “due to decreased shipping and handling revenue resulting from decreased sales in the 2008 period compared to the comparable prior year periods, and reduced revenue associated with our Polo.com fulfillment operations.”
ShopNBC is No. 65 in the Internet Retailer Top 500 Guide. David Witzig, senior director of online marketing and video at ShopNBC spoke in June at the Internet Retailer Conference & Exhibition and his audio-visual presentation is available on CD-ROM.