Revenue (Notes)

6 Months Ended

Aug. 03, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

REVENUE

Net Sales

We recognize revenue for merchandise sales, net of expected returns and sales tax, at the time of in-store purchase or delivery of the product to our guest. When merchandise is shipped to our guests, we estimate receipt based on historical experience. Revenue is deferred and a liability is established for sales returns based on historical return rates and sales for the return period. We recognize an asset and corresponding adjustment to cost of sales for our right to recover returned merchandise. At each financial reporting date, we assess our estimates of expected returns, refund liabilities and return assets. For merchandise sold in our stores and online, tender is accepted at the point of sale. When we receive payment before the guest has taken possession of the merchandise, the amount received is recorded as deferred revenue until the transaction is complete. Our performance obligations for unfulfilled merchandise orders are typically satisfied within one week. Shipping and handling fees charged to guests relate to fulfillment activities and are included in net sales with the corresponding costs recorded in cost of sales.

We record deferred revenue for the sale of gift cards and merchandise credits issued for returned merchandise, and we recognize revenue in net sales upon redemption. Gift card and merchandise credit redemptions typically occur within 12 months of the date of issuance with the majority redeemed within the first three months. Our gift cards and merchandise credits do not expire. Based on historical redemption rates, a small percentage of gift cards and merchandise credits will never be redeemed. We recognize estimated breakage income for gift cards and merchandise credits that will never be redeemed in proportion to actual historical redemption patterns.

Under our loyalty program, members can accumulate points, based on their spending, toward earning a reward certificate that can be redeemed for future merchandise purchases. Points earned by loyalty members reset to zero at the end of each calendar year. Reward certificates expire 30 days after the date of issuance. We allocate and defer a portion of our sales to reward certificates expected to be earned, based on the relative stand-alone sales transaction price and reward certificate value, and recognize the reward certificate as a net sale when it is redeemed.

The following table presents the composition of net sales by merchandise category (in thousands):

	Three Months Ended
	August 3, 2019									August 4, 2018
Merchandise Category	Department Stores			Off-price Stores			Total Company			Department Stores			Off-price Stores			Total Company
Women’s	$	100,639		$	24,954		$	125,593		$	117,209		$	19,264		$	136,473
Men’s	49,582			11,534			61,116			53,124			8,913			62,037
Children's	25,198			9,870			35,068			29,400			7,530			36,930
Apparel	175,419			46,358			221,777			199,733			35,707			235,440
Footwear	39,227			6,097			45,324			45,141			4,505			49,646
Accessories	17,988			3,865			21,853			18,426			3,889			22,315
Cosmetics/Fragrances	27,188			2,856			30,044			31,287			2,428			33,715
Home/Gifts	25,539			20,708			46,247			10,950			15,939			26,889
Other	2,859			651			3,510			1,039			807			1,846
Non-apparel	112,801			34,177			146,978			106,843			27,568			134,411
Revenue adjustments not allocated (a)	(347		)	(543		)	(890		)	(281		)	(276		)	(557		)
Net sales	$	287,873		$	79,992		$	367,865		$	306,295		$	62,999		$	369,294
(a) Includes adjustments related to deferred revenue, estimated sales returns, breakage income, shipping and miscellaneous revenues, which are not allocated to merchandise categories.

	Six Months Ended
	August 3, 2019									August 4, 2018
Merchandise Category	Department Stores			Off-price Stores			Total Company			Department Stores			Off-price Stores			Total Company
Women’s	$	184,254		$	45,815		$	230,069		$	220,696		$	39,231		$	259,927
Men’s	88,690			20,048			108,738			94,460			16,458			110,918
Children's	50,336			19,750			70,086			58,478			15,626			74,104
Apparel	323,280			85,613			408,893			373,634			71,315			444,949
Footwear	79,498			11,171			90,669			89,624			9,324			98,948
Accessories	34,702			8,209			42,911			37,298			8,255			45,553
Cosmetics/Fragrances	55,057			5,669			60,726			62,473			4,910			67,383
Home/Gifts	45,865			40,561			86,426			19,794			33,822			53,616
Other	7,687			1,503			9,190			5,004			1,431			6,435
Non-apparel	222,809			67,113			289,922			214,193			57,742			271,935
Revenue adjustments not allocated (a)	(2,259		)	(970		)	(3,229		)	(3,169		)	(192		)	(3,361		)
Net sales	$	543,830		$	151,756		$	695,586		$	584,658		$	128,865		$	713,523
(a) Includes adjustments related to deferred revenue, estimated sales returns, breakage income, shipping and miscellaneous revenues, which are not allocated to merchandise categories.

Contract Liabilities

Contract liabilities reflect our performance obligations related to gift cards, merchandise credits, loyalty program rewards and merchandise orders that have not been satisfied as of a given date, and therefore, revenue recognition has been deferred. Contract liabilities (recorded in accrued expenses and other current liabilities) for each period presented were as follows (in thousands):

	August 3, 2019		February 2, 2019		August 4, 2018
Gift cards and merchandise credits, net	$	9,759	$	12,433	$	9,657
Loyalty program rewards, net	5,147		1,484		4,612
Merchandise fulfillment liability	859		488		850
Total contract liabilities	$	15,765	$	14,405	$	15,119

    

The following table summarizes contract liability activity for each period presented (in thousands):

	Three Months Ended						Six Months Ended
	August 3, 2019			August 4, 2018			August 3, 2019			August 4, 2018
Beginning balance	$	14,440		$	14,028		$	14,405		$	13,474
Net sales recognized during the period from amounts included in contract liability balances at the beginning of the period	(5,522		)	(5,484		)	(6,571		)	(6,284		)
Current period additions to contract liability balances included in contract liability balances at the end of the period	6,847			6,575			7,931			7,929
Ending balance	$	15,765		$	15,119		$	15,765		$	15,119

Credit Income

We earn credit income from our private label credit card (“PLCC”) through a profit-sharing arrangement with Comenity Bank, an affiliate of Alliance Data Systems Corporation. Comenity Bank owns the PLCC portfolio and manages the account activation, receivables funding, card authorization, card issuance, statement generation, remittance processing and guest service functions for our PLCC program. We perform certain duties, including electronic processing and transmitting of transaction records, and executing marketing promotions designed to increase card usage. We also accept payments in our stores from cardholders on behalf of Comenity Bank. We receive a monthly net portfolio yield payment from Comenity Bank, and we can potentially earn an annual bonus based upon the performance of the PLCC portfolio. The receivable for credit income, which is recorded in prepaid expenses and other current assets, was $4.5 million, $4.9 million and $4.7 million as of August 3, 2019, February 2, 2019 and August 4, 2018, respectively.

On April 11, 2019, we entered into an amendment to our profit-sharing arrangement with Comenity Bank. The amendment extended the term of the arrangement from July 31, 2021 to July 31, 2024.

We recorded deferred revenue for certain upfront payments received from Comenity Bank associated with the execution of the PLCC agreement. The amounts recognized in credit income related to these upfront payments for each period presented were as follows (in thousands):

	Three Months Ended				Six Months Ended
	August 3, 2019		August 4, 2018		August 3, 2019		August 4, 2018
Upfront payments recognized in credit income	$	250	$	438	$	875	$	875

As of August 3, 2019, deferred revenue of $7.0 million remained to be amortized.