ShopHQ Owner iMedia Brands Files for Bankruptcy
Over its 30-plus years in business, Eden Prairie-based iMedia Brands – owner of television shopping channel ShopHQ – has lived through enormous changes in technology and consumer shopping habits, but the latest round of inflation has driven it to bankruptcy.
On Thursday, the company filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the District of Delaware. In a declaration before the court, the company said it has seen revenue drop as shoppers pulled back on spending.
“In fiscal 2021, after consecutive years of declining revenue, the Company benefited from a growth in revenue as a result of the Covid-19 pandemic, which led to an increase in home shopping activity,” said iMedia chief transformation officer James Alt in the declaration. “Over the past two years, however, the Debtors believe that inflationary pressures have altered consumer behaviors and reduced discretionary at home spending.”
That led to an operating loss of $41.4 million for the first nine months of 2022, compared to an operating loss of $11.6 million for the same period in the prior year. iMedia has “continued to experience significant sales declines into 2023 on a year-over-year basis which have reduced receipts and, by extension, operating cashflow,” Alt noted.
For their part, iMedia execs are working on several “strategic alternatives” in the face of bankruptcy, including a potential acquisition. The company said it’s “actively engaged with a potential acquirer for their operations as a going concern.” That deal is expected to be finalized “in the very near term.”
In attempts to stay relevant in a changing retail landscape, iMedia has carried out a number of acquisitions of its own over the years. In late 2019, the company acquired St. Paul-based leather goods company J.W Hulme. A little less than two years later, iMedia acquired Plymouth-based women’s retailer Christopher & Banks and even featured its products on ShopHQ.
Still, those two brands generated a fraction of iMedia’s total revenue. In the court declaration, iMedia noted that Christopher & Banks and J.W. Hulme created about 8% of the company’s total revenue. Most of iMedia’s money came from its “entertainment division,” which includes ShopHQ and a few other channels. The declaration noted that iMedia sells to customers in the U.S., Canada, Germany, and Austria.
Alt said that “an orderly transition into Chapter 11 is critical to the viability” of the company.
