ShopNBC takes a turn under new leadership

ValueVision Media, which operates upscale home-shopping network ShopNBC, took a hit to its bottom line in the first quarter, as new CEO Rene Aiu works to refocus the company in the midst of a massive slowdown in consumer spending.

She's shifting to more affordably priced products that encourage repeat business from its core customers -- women 35 and older -- instead of the high-priced jewelry and electronics the network has been selling.

"To get back to a really healthy business, you need a really healthy customer base of repeat buyers," said Aiu, who joined the company in March and has more than two decades of experience in TV shopping.

Aiu said ShopNBC's traditional high-end sticker prices will move toward more "entry-level price points."

"That makes impulse [purchases] much more readily attractive," she said.

ValueVision swung to a net loss of $18 million in the quarter ended May 3, compared with a year-ago profit of $34 million. Last year's earnings were buoyed by the company's sale of its equity interest in polo.com, which it sold for a $40 million gain.

First-quarter revenue plunged 17 percent to $156 million in preliminary results released Monday.

Such luxury items aren't striking the fancy of consumers worried about food, fuel and housing costs -- which is why Aiu is embarking on a new strategy, which she outlined in a conference call.

Changes in the merchandise mix accounted for 4 percent of the quarter's sales decline, as aggressive markdowns ended up reducing profit margins, the company said.

ShopNBC still will offer televisions, camcorders and computers, which tend to be one-time purchases that appeal more to men. But airtime devoted to consumer electronics, now about 15 percent, will be reduced, according Frank Elsenbast, the company's chief financial officer. In its place will be more pitches for such items as silver jewelry -- less expensive than gold -- cosmetics and a broader array of clothing and accessories.

Cosmetics, in particular, look to be a future focus because of their high margins and tendency to resist strong consumer headwinds for more discretionary products, Aiu said.