Quarterly report pursuant to Section 13 or 15(d)

Business Segments and Sales by Product Group

v3.20.2
Business Segments and Sales by Product Group
 9 Months Ended
Oct. 31, 2020
Segment Reporting [Abstract]  
Business Segments and Sales by Product Group
Business Segments and Sales by Product Group
During the fourth quarter of fiscal 2019, the Company changed its reportable segments into two reporting segments: “ShopHQ” and “Emerging.” In light of recent strategic shifts in the Company's emerging businesses, the Company's Chief Executive Officer, the chief operating decision maker, began reviewing operating results of the Emerging segment separately from its core business, ShopHQ. The chief operating decision maker is the Company's Chief Executive Officer and Interim Chief Financial Officer. These segments reflect the way the Company's chief operating decision maker evaluates the Company's business performance and manages its operations. All of Company's sales are made to customers residing in the United States.
The Company does not allocate assets between the segments for its internal management purposes, and as such, they are not presented here. There were no significant inter-segment sales or transfers during the third quarters and first nine months of fiscal 2020 and fiscal 2019. The Company allocates corporate support costs (such as finance, human resources, warehouse management and legal) to its operating segments based on their estimated usage and based on how the Company manages the business. The Company has recast its segment results for all periods presented to conform to the new segment structure.
ShopHQ
The ShopHQ segment encompasses the Company's nationally distributed shopping entertainment network. ShopHQ sells and distributes its products to consumers through its video commerce television, online website and mobile platforms.
Emerging
The Emerging segment consists of the Company's developing business models. This segment includes the Company's Media Commerce Services, which includes creative and interactive services and third-party logistics services (i3PL). The Emerging segment also encompasses ShopHQHealth, ShopBulldogTV and recently acquired businesses, J.W. Hulme and Float Left. ShopHQHealth is a health and wellness focused network that offers a robust assortment of products and services dedicated to addressing the physical, spiritual and mental health needs of its customers. ShopBulldogTV is a niche television shopping network geared towards male consumers. J.W. Hulme is a business specializing in artisan-crafted leather products, including handbags and luggage. J.W. Hulme products are distributed primarily through jwhulme.com, retails stores, and programming on ShopHQ. Float Left is a business comprised of connected TVs, video-based content, application development and distribution, including technical consulting services, software development and maintenance related to video distribution.
Net Sales by Segment and Significant Product Groups
 
 
Three-Month Periods Ended
 
Nine-Month Periods Ended
 
 
October 31,
2020
 
November 2,
2019
 
October 31,
2020
 
November 2,
2019
 
 
(in thousands)
ShopHQ
 
 
 
 
 
 
 
 
Net merchandise sales by category:
 
 
 
 
 
 
 
 
Jewelry & Watches
 
$
36,744

 
$
46,530

 
$
115,204

 
$
155,398

Home & Consumer Electronics
 
14,805

 
23,705

 
39,947

 
70,272

Beauty & Wellness
 
31,105

 
18,844

 
98,539

 
63,806

Fashion & Accessories
 
9,787

 
13,896

 
33,462

 
52,350

All other (primarily shipping & handling revenue)
 
11,841

 
11,060

 
31,599

 
33,756

Total ShopHQ
 
104,282

 
114,035

 
318,751

 
375,582

Emerging
 
4,743

 
1,124

 
10,623

 
2,601

Consolidated net sales
 
$
109,025

 
$
115,159

 
$
329,374

 
$
378,183


Performance Measures by Segment
 
 
Three-Month Periods Ended
 
Nine-Month Periods Ended
 
 
October 31,
2020
 
November 2,
2019
 
October 31,
2020
 
November 2,
2019
 
 
(in thousands)
Gross profit
 
 
 
 
 
 
 
 
ShopHQ
 
$
38,801

 
$
41,490

 
$
118,487

 
$
126,338

Emerging
 
2,013

 
96

 
$
4,176

 
$
267

Consolidated gross profit
 
$
40,814

 
$
41,586

 
$
122,663

 
$
126,605

 
 
 
 
 
 
 
 
 
Operating loss
 
 
 
 
 
 
 
 
ShopHQ
 
$
(2,443
)
 
$
(5,284
)
 
$
(2,498
)
 
$
(32,326
)
Emerging
 
(952
)
 
(533
)
 
(4,061
)
 
(2,945
)
Consolidated operating loss
 
$
(3,395
)
 
$
(5,817
)
 
$
(6,559
)
 
$
(35,271
)
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
ShopHQ (a)
 
$
8,758

 
$
2,865

 
$
19,176

 
$
8,150

Emerging
 
194

 
187

 
521

 
1,042

Consolidated depreciation and amortization
 
$
8,952

 
$
3,052

 
$
19,697

 
$
9,192

(a) Includes distribution facility depreciation of $975,000 and $999,000 for the three-month periods ended October 31, 2020 and November 2, 2019 and $2,997,000 and $2,958,000 for the nine-month periods ended October 31, 2020 and November 2, 2019. Distribution facility depreciation is included as a component of cost of sales within the accompanying condensed consolidated statements of operations.