UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):   November 22, 2016

EVINE Live Inc.
(Exact name of registrant as specified in its charter)
 
Minnesota	001-37495	41-1673770	
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)	
 
6740 Shady Oak Road
Eden Prairie, Minnesota 55344-3433
(Address of principal executive offices)
 
(952) 943-6000
(Registrant’s telephone number, including area code)
 
Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

	Item 2.02.	Results of Operations.	
 
On November 22, 2016, EVINE Live Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended October 29, 2016. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
 
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 (as amended, the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in that filing.

	Item 9.01.	Financial Statements and Exhibits.	
 
	(d)	Exhibits.	
 
The following exhibit is being furnished with this Current Report on Form 8-K.
 
	Exhibit Number	Description	
 
	99.1	Press Release issued November 22, 2016 (furnished)	

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.
 
Date:  November 22, 2016	EVINE LIVE INC.	 	

 	By:	/s/ Damon Schramm	 	
 	 	Damon Schramm
Senior Vice President, General Counsel and Secretary	

 
 
EXHIBIT INDEX
 
	Exhibit Number	Description	
 
	99.1	Press Release issued November 22, 2016 (furnished)	

 

 
Exhibit 99.1
 
Evine Live Inc. Reports Third Quarter 2016 Results
 
Disciplined Merchandising Mix and Expense Control Drives 33% EPS Improvement
 
MINNEAPOLIS, MN – November 22, 2016 – Evine Live Inc. (“Evine”) (NASDAQ: EVLV) today announced results for the third quarter ended October 29, 2016. The company posted quarterly net sales of $152 million, continuing its progress on the strategy of driving toward sustained profitability this fiscal year. Net loss for the quarter was $3.9 million, a 25% improvement year-over-year, with adjusted EBITDA of a positive $2.5 million, a 1,400% improvement year-over-year. Gross profit as a percentage of sales increased 210 basis points to 36.6% compared to 34.5% in the third quarter of last year.
 
“I’m pleased with our progress as we continue to improve profitability through a disciplined merchandising mix that prioritizes contribution margin,” said CEO Bob Rosenblatt. “For consecutive quarters, we have been expanding our gross margin rate, improving our cash position, lowering our net loss and improving our EPS by refining our mix of compelling merchandise, focusing on our most successful product categories, and engaging our valued customers via a personal shopping experience.”
 
Fiscal Year 2016 Third Quarter Highlights
 
	·	Net sales were $152 million, a 7% decrease year-over-year.	
 
	·	Gross profit as a percentage of sales increased 210 basis points to 36.6%.	
 
	·	Net loss was $3.9 million, a 25% improvement year-over-year.	
 
	·	Adjusted EBITDA was $2.5 million, a 1,400% improvement year-over-year.	
 
	·	EPS was ($0.06), a 33% improvement year-over-year.	
 
	·	Total Cash, including restricted cash, was $40 million.	
 
Rosenblatt continued, “I am also proud of the progress we made this quarter toward our 2017 revenue growth strategy that centers on gathering a world-class team to help us cultivate our products, attract the right new customers based on their digital lifetime value, and create a culture that can drive sustainable revenue growth. This progress includes filling out our executive management team with the recent hire of Lori Riley, SVP, Chief Human Resources Officer; launching new high quality beauty brands, like Sirot and CoverFx; launching new fixed programming blocks like Paula Deen on location in Savannah, Georgia, and attracting leading industry advisors to help us bring new brands, products and personalities to our business, as we have done with Tommy Hilfiger and Tommy Mottola.”
 
 1   

SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except average price points and EPS)
 
 	 	 	Q3 2016 10/29/2016	 	Q3 2015 10/31/2015	 	Change	 	YTD 2016 10/29/2016	 	YTD 2015 10/31/2015	 	Change	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Sales	 	$	151.6	 	$	162.3	 	(7%)	 	$	475.7	 	$	481.8	 	(1%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross Margin %	 	 	36.6%	 	 	34.5%	 	210 bps	 	 	37.1%	 	 	35.7%	 	140 bps	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	$	2.5	 	$	0.2	 	1,396%	 	$	9.8	 	$	4.3	 	129%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Loss	 	$	(3.9)	 	$	(5.2)	 	25%	 	$	(10.8)	 	$	(13.0)	 	17%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EPS	 	$	(0.06)	 	$	(0.09)	 	33%	 	$	(0.19)	 	$	(0.23)	 	17%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net Shipped Units (000s)	 	 	2,253	 	 	2,282	 	(1%)	 	 	7,131	 	 	6,946	 	3%	
 	Average Selling Price (ASP)	 	$	60	 	$	65	 	(8%)	 	$	59	 	$	63	 	(6%)	
 	Return Rate %	 	 	20.5%	 	 	18.9%	 	160 bps	 	 	19.8%	 	 	20.2%	 	(40 bps)	
 	Online Net Sales %	 	 	49.0%	 	 	46.0%	 	300 bps	 	 	48.6%	 	 	45.7%	 	290 bps	
 	Total Customers - 12 Month Rolling (000s)	 	 	1,429	 	 	1,446	 	(1%)	 	 	N/A	 	 	N/A	 	N/A	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
% of Net Sales by Category	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Jewelry & Watches	 	 	42%	 	 	36%	 	 	 	 	42%	 	 	41%	 	 	
 	Home & Consumer Electronics	 	 	25%	 	 	33%	 	 	 	 	23%	 	 	27%	 	 	
 	Beauty	 	 	14%	 	 	13%	 	 	 	 	15%	 	 	14%	 	 	
 	Fashion & Accessories	 	 	19%	 	 	18%	 	 	 	 	20%	 	 	18%	 	 	
 	Total	 	 	100%	 	 	100%	 	 	 	 	100%	 	 	100%	 	 	
 
Third Quarter 2016 Results
 
	·	Wearable categories, which include Jewelry & Watches, Fashion & Accessories, and Beauty, posted strong revenue performance, and together grew by 3%. The growth in wearables was offset by a 66% decline in the Consumer Electronics category.	
 
	·	Return rate for the quarter was 20.5%; an increase of 160 basis points year-over-year, driven by product mix shifts.	
 
	·	Gross profit as a percentage of sales increased 210 basis points to 36.6%, also driven by product mix shifts. Gross profit dollars decreased 0.9% to $55.4 million.	
 
	·	Net loss was $3.9 million, a 25% improvement year-over-year and Adjusted EBITDA increased 1,400% to a positive $2.5 million. These results were primarily attributable to a 4% operating expense reduction of $2.7 million year-over-year, driven primarily by lower content distribution costs and decreased accrued incentive compensation, which were partially offset by higher expenses in marketing, and higher variable expenses resulting from increased credit costs and increased labor costs in customer solutions and fulfillment center.	
 
	·	EPS for the fiscal 2016 third quarter improved to ($0.06), which includes $0.6 million in executive and management transition costs and $0.2 million in distribution facility consolidation and technology upgrade costs. EPS for the fiscal 2015 third quarter was ($0.09), which included $0.8 million in executive and management transition costs, $0.1 million in costs associated with the implementation of the Shareholder Rights Plan, and $0.3 million in distribution facility consolidation and technology upgrade costs.	

 2   

Liquidity and Capital Resources
 
As of October 29, 2016, total cash, including restricted cash, was $40.1 million, compared to $40.1 million at the end of the second quarter of fiscal 2016. The Company also had an additional $16.2 million of unused availability on its revolving credit facility with PNC Bank at the end of the third quarter 2016.
 
Strategic Investment in Evine
 
As announced on September 14, 2016, the Company executed a definitive agreement to sell $10 million of common stock at $1.68 per share to investors (“Investors”) that included, among others, Mr. Tommy Hilfiger, Mr. Morris Goldfarb and Mr. Tommy Mottola. This initial investment closed on September 19, 2016 and resulted in 5,952,381 shares sold to the Investors. Other details were provided in Form 8-K filings with the SEC on September 15, 2016 and November 4, 2016.
 
2016 Outlook
 
The Company expects revenue in the fourth quarter to be negative low to mid-single digits on a year-over-year basis. We expect Adjusted EBITDA to increase in the fourth quarter on both a sequential and year-over-year basis.
 
Conference Call
 
A conference call and webcast to discuss the Company’s third quarter earnings will be held at 8:30 a.m. Eastern Time on Tuesday, November 22, 2016:
 
AUDIO WEBCAST LINK: http://event.on24.com/wcc/r/1212123/4462CF2FF40534845EAD22D0F0F3B135
 
TELEPHONE: 1-877-407-9039 (domestic) or 201-689-8470 (international)
 
Please visit www.evine.com/ir for more investor information and to review an updated investor deck.

 3   

About Evine Live Inc.
 
Evine Live Inc. (NASDAQ:EVLV) operates Evine, a digital commerce company that offers a compelling mix of proprietary and name brands directly to consumers in an engaging and informative shopping experience via television, online and on mobile. Evine reaches approximately 87 million cable and satellite television homes 24 hours a day with entertaining content in a comprehensive digital shopping experience.
 
Please visit www.evine.com/ir for more investor information.
 
Contacts

Media:
Dawn Zaremba
Evine Live Inc.
press@evine.com
(952) 943-6043

Investors:
Michael Porter
Evine Live Inc.
mporter@evine.com
(952) 943-6517

 4   

EVINE Live Inc.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
 
 	 	October 29,	 	 	January 30,	 	
 	 	2016	 	 	2016	 	
 	 	(Unaudited)	 	 	 	 	
 	 	 	 	 	 	 	
ASSETS	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash	 	$	39,680	 	 	$	11,897	 	
Restricted cash and investments	 	 	450	 	 	 	450	 	
Accounts receivable, net	 	 	89,588	 	 	 	114,949	 	
Inventories	 	 	81,187	 	 	 	65,840	 	
Prepaid expenses and other	 	 	5,257	 	 	 	5,913	 	
Total current assets	 	 	216,162	 	 	 	199,049	 	
Property and equipment, net	 	 	51,464	 	 	 	52,629	 	
FCC broadcasting license	 	 	12,000	 	 	 	12,000	 	
Other assets	 	 	1,609	 	 	 	1,819	 	
 	 	$	281,235	 	 	$	265,497	 	
 	 	 	 	 	 	 	 	 	
 LIABILITIES AND SHAREHOLDERS’ EQUITY	 	
 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Accounts payable	 	$	78,504	 	 	$	77,779	 	
Accrued liabilities	 	 	36,367	 	 	 	35,342	 	
Current portion of long term credit facilities	 	 	2,993	 	 	 	2,143	 	
Deferred revenue	 	 	85	 	 	 	85	 	
Total current liabilities	 	 	117,949	 	 	 	115,349	 	
 	 	 	 	 	 	 	 	 	
Deferred revenue	 	 	100	 	 	 	164	 	
Deferred tax liability	 	 	3,326	 	 	 	2,734	 	
Long term credit facilities	 	 	83,122	 	 	 	70,271	 	
Total liabilities	 	 	204,497	 	 	 	188,518	 	
 	 	 	 	 	 	 	 	 	
Commitments and contingencies	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Shareholders’ equity:	 	 	 	 	 	 	 	 	
Preferred stock, $.01 par value, 400,000 shares authorized;	 	 	 	 	 	 	 	 	
zero shares issued and outstanding	 	 	-	 	 	 	-	 	
Common stock, $.01 par value, 100,000,000 shares authorized;	 	 	 	 	 	 	 	 	
57,335,381 and 57,170,245 shares issued and outstanding	 	 	635	 	 	 	571	 	
 	 	 	 	 	 	 	 	 	
Additional paid-in capital	 	 	434,061	 	 	 	423,574	 	
 	 	 	 	 	 	 	 	 	
Accumulated deficit	 	 	(357,958	)	 	 	(347,166	)	
Total shareholders’ equity	 	 	76,738	 	 	 	76,979	 	
 	 	$	281,235	 	 	$	265,497	 	
 
 5   

EVINE Live Inc.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
 
 	 	For the Three-Month
Periods Ended	 	 	For the Nine-Month
Periods Ended	 	
 	 	October 29,	 	 	October 31,	 	 	October 29,	 	 	October 31,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
Net sales	 	$	151,636	 	 	$	162,258	 	 	$	475,695	 	 	$	481,770	 	
Cost of sales	 	 	96,205	 	 	 	106,348	 	 	 	298,988	 	 	 	309,699	 	
Gross profit	 	 	55,431	 	 	 	55,910	 	 	 	176,707	 	 	 	172,071	 	
Margin %	 	 	36.6	%	 	 	34.5	%	 	 	37.1	%	 	 	35.7	%	
Operating expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Distribution and selling	 	 	49,161	 	 	 	51,038	 	 	 	154,191	 	 	 	153,194	 	
General and administrative	 	 	5,690	 	 	 	5,975	 	 	 	17,337	 	 	 	18,078	 	
Depreciation and amortization	 	 	1,941	 	 	 	2,131	 	 	 	6,025	 	 	 	6,369	 	
Executive and management transition costs	 	 	568	 	 	 	754	 	 	 	4,411	 	 	 	3,549	 	
Distribution facility consolidation and technology upgrade costs	 	 	150	 	 	 	294	 	 	 	530	 	 	 	1,266	 	
Total operating expense	 	 	57,510	 	 	 	60,192	 	 	 	182,494	 	 	 	182,456	 	
Operating loss	 	 	(2,079	)	 	 	(4,282	)	 	 	(5,787	)	 	 	(10,385	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	 	3	 	 	 	2	 	 	 	7	 	 	 	6	 	
Interest expense	 	 	(1,586	)	 	 	(690	)	 	 	(4,397	)	 	 	(1,957	)	
Total other expense	 	 	(1,583	)	 	 	(688	)	 	 	(4,390	)	 	 	(1,951	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	 	 	(3,662	)	 	 	(4,970	)	 	 	(10,177	)	 	 	(12,336	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax provision	 	 	(205	)	 	 	(205	)	 	 	(615	)	 	 	(615	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(3,867	)	 	$	(5,175	)	 	$	(10,792	)	 	$	(12,951	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss per common share	 	$	(0.06	)	 	$	(0.09	)	 	$	(0.19	)	 	$	(0.23	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss per common share—assuming dilution	 	$	(0.06	)	 	$	(0.09	)	 	$	(0.19	)	 	$	(0.23	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	60,513,215	 	 	 	57,125,435	 	 	 	58,317,681	 	 	 	56,952,952	 	
Diluted	 	 	60,513,215	 	 	 	57,125,435	 	 	 	58,317,681	 	 	 	56,952,952	 	

 6   

EVINE Live Inc.
AND SUBSIDIARIES
Reconciliation of Adjusted EBITDA to Net Loss
(Unaudited)
 
 	 	For the Three-Month
Periods Ended	 	 	For the Nine-Month
Periods Ended	 	
 	 	October 29,	 	 	October 31,	 	 	October 29,	 	 	October 31,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA (000’s)	 	$	2,529	 	 	$	169	 	 	$	9,790	 	 	$	4,279	 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Executive and management transition costs	 	 	(568	)	 	 	(754	)	 	 	(4,411	)	 	 	(3,549	)	
Distribution facility consolidation and technology upgrade costs	 	 	(150	)	 	 	(294	)	 	 	(530	)	 	 	(1,266	)	
Shareholder Rights Plan costs	 	 	-	 	 	 	(82	)	 	 	-	 	 	 	(446	)	
Non-cash share-based compensation	 	 	(797	)	 	 	(762	)	 	 	(1,432	)	 	 	(2,138	)	
EBITDA (as defined)	 	 	1,014	 	 	 	(1,723	)	 	 	3,417	 	 	 	(3,120	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
A reconciliation of EBITDA to net loss is as follows:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (as defined)	 	 	1,014	 	 	 	(1,723	)	 	 	3,417	 	 	 	(3,120	)	
Adjustments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	(3,093	)	 	 	(2,559	)	 	 	(9,204	)	 	 	(7,265	)	
Interest income	 	 	3	 	 	 	2	 	 	 	7	 	 	 	6	 	
Interest expense	 	 	(1,586	)	 	 	(690	)	 	 	(4,397	)	 	 	(1,957	)	
Income taxes	 	 	(205	)	 	 	(205	)	 	 	(615	)	 	 	(615	)	
Net loss	 	$	(3,867	)	 	$	(5,175	)	 	$	(10,792	)	 	$	(12,951	)	

Adjusted EBITDA
 
EBITDA represents net income (loss) for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes. The Company defines Adjusted EBITDA as EBITDA excluding non-operating gains (losses); executive and management transition costs; distribution facility consolidation and technology upgrade costs; Shareholder Rights Plan costs and non-cash share-based compensation expense. The Company has included the term “Adjusted EBITDA” in our EBITDA reconciliation in order to adequately assess the operating performance of our television and online businesses and in order to maintain comparability to our analyst’s coverage and financial guidance, when given. Management believes that the term Adjusted EBITDA allows investors to make a more meaningful comparison between our business operating results over different periods of time with those of other similar companies. In addition, management uses Adjusted EBITDA as a metric to evaluate operating performance under the Company’s management and executive incentive compensation programs. Adjusted EBITDA should not be construed as an alternative to operating income (loss), net income (loss) or to cash flows from operating activities as determined in accordance with generally accepted accounting principles and should not be construed as a measure of liquidity. Adjusted EBITDA may not be comparable to similarly entitled measures reported by other companies. The Company has included a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, in this release. 

 7   

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
 
This document may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict, hope, should, plan, will or similar expressions. Any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. These statements are based on management’s current expectations and accordingly are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein due to various important factors, including (but not limited to): consumer preferences, spending and debt levels; the general economic and credit environment; interest rates; seasonal variations in consumer purchasing activities; the ability to achieve the most effective product category mixes to maximize sales and margin objectives; competitive pressures on sales; pricing and gross sales margins; the level of cable and satellite distribution for our programming and the associated fees or estimated cost savings from contract renegotiations; our ability to establish and maintain acceptable commercial terms with third-party vendors and other third parties with whom we have contractual relationships, and to successfully manage key vendor relationships and develop key partnerships and proprietary and exclusive brands; our ability to manage our operating expenses successfully and our working capital levels; our ability to remain compliant with our credit facilities covenants; customer acceptance of our branding strategy and our repositioning as a digital commerce company; the market demand for television station sales; changes to our management and information systems infrastructure; challenges to our data and information security; changes in governmental or regulatory requirements; including without limitation, regulations of the Federal Communications Commission, and adverse outcomes from regulatory proceedings; litigation or governmental proceedings affecting our operations; significant public events that are difficult to predict, or other significant television-covering events causing an interruption of television coverage or that directly compete with the viewership of our programming; our ability to obtain and retain key executives and employees; our ability to attract new customers and retain existing customers; changes in shipping costs; our ability to offer new or innovative products and customer acceptance of the same; changes in customers viewing habits of television programming; and the risks identified under “Risk Factors” in our recently filed Form 10-K and any additional risk factors identified in our periodic reports since the date of such Form 10-K. More detailed information about those factors is set forth in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this announcement. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.
 
 8