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 our core business, ShopHQ. The chief operating decision maker is our 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 our internal management purposes, and as such, they are not presented here. There was no significant inter-segment sales or transfers during the first quarters of fiscal 2020 and fiscal 2019. The Company allocates corporate support costs (such as finance, human resources, warehouse management and legal) to our 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 Services, which includes creative and interactive services and third-party logistics services. The Emerging segment also encompasses the Bulldog Shopping Network and recently acquired businesses, J.W. Hulme and Float Left. Bulldog Shopping Network 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
	May 2, 2020		May 4, 2019
	(in thousands)
ShopHQ
Net merchandise sales by category:
Jewelry & Watches	$	39,402	$	51,428
Home & Consumer Electronics	18,490		24,027
Beauty & Wellness	15,140		21,981
Fashion & Accessories	12,724		22,354
All other (primarily shipping & handling revenue)	8,043		11,009
Total ShopHQ	93,799		130,799
Emerging	2,035		722
Consolidated net sales	$	95,834	$	131,521

Performance Measures by Segment




	Three-Month Periods Ended
	May 2, 2020			May 4, 2019
	(in thousands)
Gross profit
ShopHQ	$	34,955		$	37,179
Emerging	602			114
Consolidated gross profit	$	35,557		$	37,293

Operating loss
ShopHQ	$	(3,803	)	$	(19,264	)
Emerging	(1,832		)	(886		)
Consolidated operating loss	$	(5,635	)	$	(20,150	)

Depreciation and amortization
ShopHQ	$	2,740		$	2,602
Emerging	165			27
Consolidated depreciation and amortization	$	2,905		$	2,629