BUSINESS SEGMENTS

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

Segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. We determined our segments based on how we manage our business, which, in our view, consists primarily of our Retail and Medici businesses. Our Retail business consists of our Direct and Partner reportable segments. We use gross profit as the measure to determine our reportable segments because there is not discrete financial information available below gross profit for our Direct and Partner segments. As a result, our Medici business is not significant as compared to our Direct and Partner segments and is included in Other. Our Other segment consists of Medici. Although our Direct and Partner segments both relate to our Retail business, we do not combine these segments because they have dissimilar economic characteristics, such as gross profit margins. We do not allocate assets between our segments for our internal management purposes, and as such, they are not presented here. There were no significant inter-segment sales or transfers during the years ended December 31, 2016, 2015 and 2014.

The following table summarizes information about reportable segments for the years ended December 31, 2016, 2015 and 2014 (in thousands):

	Year ended    December 31,
	Direct		Partner		Retail Total		Other			Total
2016
Revenue, net	$	101,578	$	1,683,204	$	1,784,782	$	15,181		$	1,799,963
Cost of goods sold	96,271		1,362,140		1,458,411		10,203			1,468,614
Gross profit	$	5,307	$	321,064	$	326,371	$	4,978		$	331,349
Operating expenses					307,669		16,765			324,434
Interest and other income, net (1)					13,630		—			13,630
Pre-tax income (loss)					32,332		(11,787		)	20,545
Provision (benefit) for income taxes					13,797		(4,500		)	9,297
Net income (loss) (2) (3) (4)					$	18,535	$	(7,287	)	$	11,248
2015
Revenue, net	$	137,783	$	1,518,125	$	1,655,908	$	1,930		$	1,657,838
Cost of goods sold	128,077		1,225,107		1,353,184		—			1,353,184
Gross profit	$	9,706	$	293,018	$	302,724	$	1,930		$	304,654
Operating expenses					296,281		8,907			305,188
Interest and other income, net (1)					3,649		—			3,649
Pre-tax income (loss)					10,092		(6,977		)	3,115
Provision (benefit) for income taxes					3,448		(1,553		)	1,895
Net income (loss) (2) (3) (4)					$	6,644	$	(5,424	)	$	1,220
2014
Revenue, net	$	147,460	$	1,349,643	$	1,497,103	$	—		$	1,497,103
Cost of goods sold	129,253		1,088,791		1,218,044		—			1,218,044
Gross profit	$	18,207	$	260,852	$	279,059	$	—		$	279,059
Operating expenses					267,136		—			267,136
Interest and other income, net (1)					1,282		—			1,282
Pre-tax income					13,205		—			13,205
Provision for income taxes					4,404		—			4,404
Net income (loss) (2) (3) (4)					$	8,801	$	—		$	8,801

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(1)  — The above amounts exclude intercompany transactions eliminated in consolidation, which consist primarily of interest. These amounts were $594,000, $158,000, and $0 for the years ended December 31, 2016, 2015 and 2014, respectively.

(2)  — Net income presented for segment reporting purposes is before any adjustments attributable to noncontrolling interests.

(3)  — The above amounts include Retail depreciation and amortization expense of $26.9 million, $23.6 million and $18.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.

(4)  — The above amounts include Other depreciation and amortization expense of $4.4 million, $1.5 million and $0 for the years ended December 31, 2016, 2015 and 2014, respectively.

Our Direct segment includes revenues, direct costs, and cost allocations associated with sales of inventory we own. Costs for this segment include product costs, freight, warehousing and fulfillment costs, credit card fees and customer service costs.

Our Partner segment includes revenues, direct costs and cost allocations associated with sales of inventory owned by our partners. Costs for this segment include product costs, outbound freight and fulfillment costs, credit card fees and customer service costs.

For the years ended December 31, 2016, 2015 and 2014, substantially all of our sales revenues were attributable to customers in the United States. At December 31, 2016 and 2015, substantially all of our fixed assets were located in the United States.