Business Segments and Sales by Product Group

9 Months Ended

Oct. 29, 2022

Business Segments and Sales by Product Group

Business Segments and Sales by Product Group

(10)   Business Segments and Sales by Product Group

During fiscal 2021, the Company changed its reportable segments into three reporting segments: entertainment, consumer brands and media commerce services. The Company’s Chief Executive Officer began reviewing operating results of the three segments: entertainment, consumer brands and media commerce services in the fourth quarter of fiscal 2021. These segments reflect the way the senior management and the Company’s chief operating decision makers evaluate the Company’s business performance and manages its operations. The corresponding current and prior period segment disclosures have been recast to reflect the current segment presentation.

Entertainment Segment – The entertainment segment is comprised of its television networks, ShopHQ, ShopBulldogTV, ShopHQHealth, and 1-2-3.tv.

● ShopHQ is the Company’s flagship, nationally distributed shopping entertainment network that offers a mix of proprietary, exclusive, and name-brand merchandise in the categories of Jewelry and Watches, Home, Beauty and Health, and Fashion and Accessories, directly to consumers 24 hours a day, 365 days a year using engaging interactive video.

● ShopBulldogTV, which launched in the fourth quarter of fiscal 2019, is a niche television shopping entertainment network that offers male-oriented products and services to men and to women shopping for men.

● ShopHQHealth, which launched in the second quarter of fiscal 2020, is a niche television shopping entertainment network that offers women and men products and services focused on health and wellness categories such as physical, mental and spiritual health, financial and motivational wellness, weight management and telehealth medical services.

● 1-2-3.tv, which was acquired in November 2021, is the German interactive media company with proprietary live and automated auctions with a mix of products shipped directly to customers homes.

Each entertainment network offers engaging, interactive video programming distributed primarily in linear television through cable and satellite distribution agreements, agreements with telecommunication companies and arrangements with over-the-air broadcast television stations. This interactive programming is also streamed live online on the respective network’s digital commerce platforms that sell products which appear on the Company’s television networks as well as offer an extended assortment of online-only merchandise. These networks’ interactive video is also available on leading social platforms over-the-top (“OTT”) platforms and ConnectedTV platforms (“CTV”) such as Roku, AppleTV, and Samsung connected televisions, mobile devices, including smartphones and tablets.

Consumer Brands Segment – The consumer brands segment is comprised of C&B and JW.

● Christopher & Banks  – The Company’s flagship consumer brand, C&B was founded in 1956 and is a brand that specializes in offering women’s value-priced apparel and accessories that cater to women of all sizes, from petite to missy to plus sizes. Its internally designed, modern and comfortable apparel and accessories provide customers with an exclusive experience. The brand was acquired by us from Hilco Capital in March 2021. C&B’s omni-channel business model includes digital advertising driven online revenue, five brick and mortar retail stores, direct-to-consumer catalogs and a growing wholesaling business driven primarily by C&B’s television programming on our entertainment networks.

● J.W. Hulme Company – JW was founded in 1905 and is an iconic brand offering men and women high quality accessories made by craftswomen and craftsmen the world over. The brand was acquired by the Company in 2019. JW’s omni-channel business model includes one brick and mortar retail stores, direct-to-consumer catalogs, digital advertising driven online revenue and a growing wholesaling business driven primarily by JW’s television programming on our entertainment networks.

Media Commerce Services Segment – The media commerce services segment is comprised of iMedia Digital Services.

● iMedia Digital Services – The Company’s flagship media commerce service brand is iMDS, which is a digital advertising platform specializing in engaging shopping enthusiasts online and in OTT marketplaces. iMDS’s suite of services includes its Retail Media Exchange (“RME”) and value-added services (“VAS”). iMDS’s growth strategy is driven by its ability to differentiate its advertising platform by offering solutions that include our first-party shopping enthusiast data created continually by our entertainment and consumer brand segments. iMDS is primarily comprised of Synacor’s Portal and Advertising business, which the Company acquired in July of 2021. iMDS includes Float Left (“FL”), an OTT SaaS app platform that offers media and consumer brands the digital tools they need to deliver engaging television experiences to their audiences within the OTT and ConnectedTV ecosystems. FL offers custom, natively built solutions for Roku, Fire TV, Apple TV, Web, iOS and Android Mobile, and various smart TVs.

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 first nine months of fiscal 2022 and fiscal 2021.

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.

Net Sales by Segment and Significant Product Groups

	Three Months Ended				Nine Months Ended
	October 29,		October 30,		October 29,		October 30,
	2022		2021		2022		2021
Entertainment:
Jewelry & Watches	$	34,080	$	38,343	$	123,515	$	123,216
Health, Beauty & Wellness		21,269		27,070		66,787		74,773
Home		21,953		15,918		62,887		42,837
Fashion & Accessories		12,774		13,471		50,514		39,591
Other (primarily shipping & handling revenue)		11,074		10,666		37,909		33,080
Total entertainment revenues	$	101,150	$	105,468	$	341,612	$	313,497
Consumer Brands:
Fashion & Accessories	$	9,368	$	11,456	$	29,838	$	24,325
Home		—		1,914		1,807		4,467
Jewelry & Watches		16		75		195		276
Other (primarily shipping & handling revenue)		109		268		781		166
Total consumer brand revenues	$	9,493	$	13,713	$	32,621	$	29,234
Media Commerce Services:
Advertising & Search		12,621		11,500		36,809		14,594
Total media commerce services revenues	$	12,621	$	11,500	$	36,809	$	14,594
Total consolidated revenues	$	123,264	$	130,681	$	411,042	$	357,325

Performance Measures by Segment

					Media
			Consumer		Commerce
	Entertainment		Brands		Services		Consolidated
Three Months Ended October 29, 2022:
Net Sales	$	101,150	$	9,493	$	12,621	$	123,264
Gross Margin		42,649		5,399		3,462		51,510
Operating Income (loss)		(19,271)		2,100		1,906		(15,265)
Three Months Ended October 30, 2021:
Net Sales	$	105,468	$	13,713	$	11,500	$	130,681
Gross Margin		44,396		6,617		3,408		54,421
Operating Income (loss)		(6,824)		364		458		(6,002)
Nine Months Ended October 29, 2022:
Net Sales	$	341,612	$	32,621	$	36,809	$	411,042
Gross Margin		135,080		16,153		10,027		161,260
Operating Income (loss)		(41,395)		6,550		4,226		(30,619)
Nine Months Ended October 30, 2021:
Net Sales	$	313,497	$	29,234	$	14,594	$	357,325
Gross Margin		129,032		14,693		4,689		148,414
Operating Income (loss)		(11,636)		882		331		(10,423)