Revenue (Notes)

9 Months Ended

Nov. 02, 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
	November 2, 2019									November 3, 2018
Merchandise Category	Department Stores			Off-price Stores			Total Company			Department Stores		Off-price Stores			Total Company
Women’s	$	100,929		$	27,834		$	128,763		$	94,732	$	19,934		$	114,666
Men’s	48,849			13,287			62,136			43,954		11,230			55,184
Children's	34,779			13,130			47,909			29,682		10,635			40,317
Apparel	184,557			54,251			238,808			168,368		41,799			210,167
Footwear	40,650			6,096			46,746			44,400		4,594			48,994
Accessories	18,830			4,281			23,111			17,823		4,863			22,686
Cosmetics/Fragrances	24,071			3,051			27,122			27,822		2,620			30,442
Home/Gifts	34,663			23,955			58,618			15,972		17,918			33,890
Other	4,242			717			4,959			693		156			849
Non-apparel	122,456			38,100			160,556			106,710		30,151			136,861
Revenue adjustments not allocated (a)	(6		)	(56		)	(62		)	183		(111		)	72
Net sales	$	307,007		$	92,295		$	399,302		$	275,261	$	71,839		$	347,100
(a) Includes adjustments related to deferred revenue, estimated sales returns, breakage income, shipping and miscellaneous revenues, which are not allocated to merchandise categories.

	Nine Months Ended
	November 2, 2019									November 3, 2018
Merchandise Category	Department Stores			Off-price Stores			Total Company			Department Stores			Off-price Stores			Total Company
Women’s	$	285,183		$	73,649		$	358,832		$	315,428		$	59,165		$	374,593
Men’s	137,539			33,335			170,874			138,414			27,688			166,102
Children's	85,115			32,880			117,995			88,160			26,261			114,421
Apparel	507,837			139,864			647,701			542,002			113,114			655,116
Footwear	120,148			17,267			137,415			134,024			13,918			147,942
Accessories	53,532			12,490			66,022			55,121			13,118			68,239
Cosmetics/Fragrances	79,128			8,720			87,848			90,295			7,530			97,825
Home/Gifts	80,528			64,516			145,044			35,766			51,740			87,506
Other	11,929			2,220			14,149			5,697			1,587			7,284
Non-apparel	345,265			105,213			450,478			320,903			87,893			408,796
Revenue adjustments not allocated (a)	(2,265		)	(1,026		)	(3,291		)	(2,986		)	(303		)	(3,289		)
Net sales	$	850,837		$	244,051		$	1,094,888		$	859,919		$	200,704		$	1,060,623
(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):

	November 2, 2019		February 2, 2019		November 3, 2018
Gift cards and merchandise credits, net	$	8,835	$	12,433	$	9,756
Loyalty program rewards, net	6,065		1,484		5,540
Merchandise fulfillment liability	657		488		1,180
Total contract liabilities	$	15,557	$	14,405	$	16,476

    

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

	Three Months Ended						Nine Months Ended
	November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018
Beginning balance	$	15,765		$	15,119		$	14,405		$	13,474
Net sales recognized during the period from amounts included in contract liability balances at the beginning of the period	(7,209		)	(6,574		)	(7,775		)	(7,396		)
Current period additions to contract liability balances included in contract liability balances at the end of the period	7,001			7,931			8,927			10,398
Ending balance	$	15,557		$	16,476		$	15,557		$	16,476

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 $4.0 million as of November 2, 2019, February 2, 2019 and November 3, 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				Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Upfront payments recognized in credit income	$	469	$	438	$	1,344	$	1,313

As of November 2, 2019, deferred revenue of $6.5 million remained to be amortized.