Evine Live's turnaround CEO is out as profits continue to fall

When the home shopping network formerly known as ShopHQ celebrates its "first birthday bash" as Evine Live this weekend, it will do so without the man who rebranded it.

Mark Bozek, who took over the reins of the Eden Prairie-based company in June 2014 after a proxy fight, has stepped down as chief executive, the company said Monday.

The move comes as Bozek has been working to breathe new life into a marginally profitable company that is a distant third-place competitor in a landscape dominated by the twin titans of QVC and HSN.

In the last year and a half, Bozek diversified Evine's portfolio beyond watches and jewelry to include more faster-selling though lower-margin goods, such as items for the home and kitchen. He also focused the company on launching new exclusive brands with celebrity partners such as Paula Deen and Vanessa Williams.

But in the process, Evine's profit margins eroded. Its stock price dropped to under $1 last week from about $5 when Bozek took over the company. And on Monday, Evine's stock sank 30 percent to close at 66 cents a share after the company reported the executive changes and revealed that its fourth-quarter gross profit margin would be less than a year ago.

Bob Rosenblatt, Evine's board chairman, will take over as interim CEO while the company searches for a permanent successor.

Rosenblatt, 58, was one of several new directors backed by dissident shareholders, led by the Clinton Group investment firm, who took control nearly two years ago and installed Bozek as chief executive in a turnaround attempt.

"Evine Live could not be better positioned for the future," Rosenblatt said in a statement. "We will bring an even greater focus and discipline to Evine Live's merchandising strategy, margin profile, and execution to deliver profitable growth and shareholder value."

In his interim role, Rosenblatt will receive an annual salary of $625,000 as well as other benefits. He will also be reimbursed for temporary housing and weekly commuting expenses from New York until a permanent CEO is secured.

In addition, Russell Nuce, whom Bozek brought in to be Evine's chief strategy officer, is leaving the company. Bozek and Nuce are longtime business partners.

The Evine name came from a previous business venture of the two. Evine Live was previously known by consumers as ShopHQ and its former corporate name was ValueVision.

In a securities filing, Evine said both Bozek and Nuce resigned on Sunday. "There was no material disagreement" between the company and the two executives related to the company's operations, policies or practices, the document said.

Mark Argento, an analyst with Lake Street Capital Markets, credited Bozek with laying a lot of the groundwork to improve the company.

"The strategy was sound," he said. "But retail turnarounds always take longer than anticipated. That was the case here."

Perhaps Bozek tried to do too much too quickly, he added. But the bigger issue was that the strategy couldn't help but hurt Evine's margins in the short term, which is a hard pill for Wall Street to swallow.

Just last week, Bozek was promoting the anniversary of Evine's Live rebranding, which it will celebrate over Valentine's weekend with a host of new exclusive products and other new brands.

"Our first year as Evine Live has been a transformative one," Bozek said in a statement released last Thursday. "A year ago we began debuting many new and exciting brands such as Beekman 1802, Consult Beaute, Paula Deen, Todd English, Nancy O'Dell and Nicole Curtis Home, among others, as part of our strategy of diversifying our product mix. We expect these brands as well as the new brands we will premiere this spring will allow us to continue to effectively execute this strategy."