Tommy Hilfiger Among New EVINE Investors

Company touts $10 million “strategic investment” from designer, others.

Can celebrity designer Tommy Hilfiger give Eden Prairie-based EVINE Live Inc. a business boost?
 
On Wednesday evening, the television-shopping channel announced an agreement to sell $10 million of stock to investors including three high-profile apparel and entertainment industry executives, including Hilfiger. In a statement, the company characterized the deal as a “strategic investment.”
 
Hilfiger is founder and principal designer for Tommy Hilfiger, the iconic global apparel company. EVINE also disclosed that the investors include Morris Goldfarb, chairman and CEO of G-III Apparel Group, and Tommy Mottola, who served as chairman and CEO of Sony Music Entertainment for 15 years.
 
In 2014, global sales for the Tommy Hilfiger brand were $6.7 billion. For its most recent fiscal year the publicly traded, New York-based G-III Apparel Group reported a net profit of $114.3 million on sales of $2.3 billion.
 
As part of the deal, both Hilfiger and Mottola will serve as “advisors” to EVINE.
 
In a statement, EVINE CEO Bob Rosenblatt said, “This investment will help us accelerate our brand building opportunities as well as strengthen our balance sheet.”
 
The company’s announcement included a comment from Hilfiger who said, “I believe EVINE has the competencies to become the bridge between bricks and mortar and e-commerce for today’s consumer. I look forward to bringing vision and relationships in the celebrity world to this team to help transform its growth path.”
 
Investors appeared encouraged by the news. In early afternoon trading today, EVINE’s stock was up about 9 percent to $2.11 per share.
 
It’s been another challenging year of transition and executive shuffling for EVINE. The former ValueVision Media Inc. has consistently been a money-losing operation and ranks a distant third place in its industry behind QVC and the Home Shopping Network.
 
Mark Bozek resigned as EVINE’s CEO in February after only 19 months at the helm. Bozek became CEO after activist investors won a proxy battle with the company in June 2014.
 
The company has several new executives in place. After Bozek’s exit, then-board chairman Rosenblatt was tapped as interim CEO. In mid-August, EVINE announced that Rosenblatt had been named permanent CEO.
 
Also in August, the company named Sunil Verma as its Chief Digital Officer. In May the company named Michael Henry as its senior vice president and Chief Merchandising Officer. Henry’s resume includes working for Home Shopping Network.
 
Today EVINE’s stock is trading at less than half of where it stood when activist investors targeted the company. On June 17, 2014 – the day before the annual meeting when activists prevailed — the company’s stock closed at $4.68 per share.
 
On Wednesday, EVINE’s stock closed at $1.93 per share, giving the company a market capitalization of $110.6 million. The company’s stock was trading for less than a dollar per share for much of February and March.
 
For its fiscal 2015, which ended on January 30, EVINE reported a net loss of $12.3 million on revenue of $693.3 million. The company’s sales were actually up 2.8 percent from the previous year, but its losses were wider. In 2014, the company reported a net loss of $1.4 million.
 
But for the company’s second quarter this year – May through July – EVINE reported that revenues declined 2 percent to $157.1 million and posted a net loss of $2 million.
 
The company’s forecast for the full year calls for “low single digit revenue growth.”