If good things come to those who wait, ValueVision Media's patience has paid off.
The Eden Prairie company, better known as the TV channel and website ShopNBC, earned $1 million, or 2 cents a share, in the first quarter, its first quarterly profit since 2006.
"We cut costs and managed carefully," said Bill McGrath, chief financial officer, in an interview Wednesday. The firm reduced several lending agreements to one, and expanded its revolving line of credit to $50 million from $40 million. "That allows us to invest in more accounts receivable and to invest in additional people."
ValueVision, which got its start selling jewelry and watches on cable and satellite TV, said it was on the upswing after beating analysts' first-quarter expectations by 1 cent, on revenue of $151.4 million, which beat Wall Street's estimate of $146.8 million. Comcast Corp., which owns NBC Universal, remains ValueVision's largest investor with 14 percent of the company.
At the same time, the Eden Prairie firm said it was striking out on its own by shedding its ShopNBC name, which it had licensed from the TV network for $4 million a year, and becoming ShopHQ on TV and the Internet. The name change will be made gradually by using both the NBC and HQ logos through the end of the year. The company's corporate name will remain ValueVision Media Inc.
Carol Steinberg, the chief operating officer, said the company chose to change its name, and did not attempt to renew its license with NBC.
"The NBC name has no relationship to our organization," Steinberg said. "We think by appending the HQ to our name it will be very easy for customers to understand that we're the headquarters for all things shopping."
McGrath said the company had been able to reduce its costs by signing new, lower-cost contracts for cable and satellite TV firms to carry its shopping TV channel. The company previously had signed long-term contracts at higher rates, and "as those contracts came up for renewal we were able to negotiate competitive market rates," he said.
The company continues to seek better channel positions on pay-TV services. In an era when there are hundreds of pay-TV channels, the channels numbered below 100 are considered to be the most-viewed, McGrath said.
The company has a combined 1.2 million active customers for its TV shopping channel and its website, up 6.6 percent from last year, Steinberg said. In the first quarter, Internet sales accounted for 46.2 percent of total sales, up 0.3 percent from a year ago.
Asked whether the company wanted to shift its sales to its website in the digital age, Steinberg said: "The balance is whatever works for customers. We want to make sure we're available consistently across TV, live phone agents and automated ordering over the Internet. We want the experience to be similar and easy."
The company is also trying to increase its appeal by broadening its product line. What began as an outlet for jewelry and watches has expanded into digital cameras, tablet computers, shoes and beauty products.
"You need a product assortment, and almost all of our products but electronics are unique to us," said President Bob Ayd. What the ShopHQ TV channel brings to retail is the ability to demonstrate products, "which is a tremendous advantage," he said.
"The point is that as we diversify our products we should attract new customers," Ayd said. "We want to be a broad-based retailer, not one that has just two product lines."