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Accounts Payable, Accrued Expenses and Other Current Liabilities
3 Months Ended
Apr. 30, 2022
Accounts Payable, Accrued Expenses and Other Current Liabilities  
Accounts Payable, Accrued Expenses and Other Current Liabilities

NOTE 6—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following:

    

APRIL 30,

    

JANUARY 29,

2022

2022 

(in thousands)

Accounts payable

$

254,537

$

242,035

Accrued compensation

 

54,471

 

96,859

Accrued freight and duty

 

27,339

 

21,888

Accrued sales taxes

 

26,732

 

24,811

Accrued occupancy

 

26,208

 

28,088

Accrued professional fees

 

17,134

 

5,892

Accrued catalog costs

 

7,946

 

4,127

Other accrued expenses

 

14,582

 

18,679

Total accounts payable and accrued expenses

$

428,949

$

442,379

Other current liabilities consist of the following:

    

APRIL 30,

    

JANUARY 29,

2022

2022 

(in thousands)

Unredeemed gift card and merchandise credit liability

$

25,237

$

22,712

Allowance for sales returns

24,709

25,256

Current portion of term loan

20,000

20,000

Finance lease liabilities

15,982

15,511

Current portion of equipment promissory notes

3,875

13,625

Federal and state tax payable(1)

31,364

Other current liabilities

 

17,998

 

18,155

Total other current liabilities

$

107,801

$

146,623

(1)Refer to Note 12—Income Taxes.

Contract Liabilities

We defer revenue associated with merchandise delivered via the home-delivery channel. We expect that substantially all of the deferred revenue and customer deposits as of April 30, 2022 will be recognized within the next six months as the performance obligations are satisfied. Deferred revenue also includes the unrecognized portion of the annual RH Members Program fee. New membership fees are recorded as deferred revenue when collected from customers and recognized as revenue based on expected product revenues over the annual membership period, based on historical trends of sales to members. Membership renewal fees are recorded as deferred revenue when collected from customers and are recognized as revenue on a straight-line basis over the membership period, or one year.

In addition, we defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards. During the three months ended April 30, 2022 and May 1, 2021, we recognized $4.7 million and $4.9 million, respectively, of revenue related to previous deferrals related to our gift cards.

We recognize breakage associated with gift cards proportional to actual gift card redemptions. Breakage of $0.7 million and $0.4 million was recorded in net revenues in the three months ended April 30, 2022 and May 1, 2021, respectively.

We expect that approximately 75% of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers.