Revenue Recognition and Receivables

9 Months Ended

Oct. 30, 2021

Revenue Recognition and Receivables

Revenue Recognition and Receivables

3.    Revenue Recognition and Receivables: Our revenue consists of direct to consumer sales, including our retail store, e-commerce and restaurant operations, and wholesale sales, as well as royalty income, which is included in royalties and other income in our consolidated statements of operations. We recognize revenue when performance obligations under the terms of the contracts with our customers are satisfied. Our accounting policies related to revenue recognition for each type of contract with customers, including a description of the related performance obligations, return rights, allowances, discounts, credit terms, credit losses and other information, is described in the significant accounting policies described in our Fiscal 2020 Form 10-K.

The table below quantifies net sales by distribution channel (in thousands) for each period presented.

	Third Quarter				First Nine Months
	Fiscal 2021		Fiscal 2020		Fiscal 2021		Fiscal 2020
Retail	$	92,579	$	47,415	$	319,493	$	134,701
E-commerce		82,402		66,135		261,393		226,618
Restaurant		19,748		12,214		70,784		32,505
Wholesale		52,658		49,221		189,133		132,768
Other		342		150		1,360		874
Net sales	$	247,729	$	175,135	$	842,163	$	527,466

In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to some of our wholesale customers for certain products. As of October 30, 2021, January 30, 2021 and October 31, 2020, reserve balances recorded as a reduction to receivables related to these items were $5 million, $6 million and $8 million, respectively.

As of October 30, 2021, January 30, 2021 and October 31, 2020, our provision for credit losses related to receivables included in our consolidated balance sheets was $2 million, $3 million and $3 million, respectively. In the First Nine Months of Fiscal 2021, provisions for credit losses expense included in our consolidated statement of operations was a credit of $1 million and write-offs of credit losses was $0 million. In the First Nine Months of Fiscal 2020, provisions for credit losses expense included in our consolidated statement of operations was $4 million and write-offs of credit losses was $2 million.

Substantially all amounts recognized in receivables, net represent trade receivables related to contracts with customers. In addition to trade and other receivables, tenant allowances due from landlord of $0 million, $2 million and $3 million are included in receivables, net in our consolidated balance sheet as of October 30, 2021, January 30, 2021 and October 31, 2020, respectively. As of October 30, 2021, January 30, 2021 and October 31, 2020, prepaid

expenses and other current assets included $3 million, $4 million and $3 million, respectively, representing the estimated value of inventory for expected direct to consumer and wholesale sales returns.

An estimated sales return liability of $7 million, $7 million and $6 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of October 30, 2021, January 30, 2021 and October 31, 2020, respectively. Contract liabilities for gift cards purchased by consumers and merchandise credits received by customers but not yet redeemed, less any breakage income recognized to date, is included in accrued expenses and other liabilities in our consolidated balance sheet and totaled $14 million, $13 million and $12 million as of October 30, 2021, January 30, 2021, and October 31, 2020, respectively.