Revenue

Merchandise sales

We sell merchandise through our brick and mortar and eCommerce sales channels. Revenues are recognized when control of the promised merchandise is transferred to our customers. Within our brick and mortar sales channel, control is transferred at the point of sale. Within our eCommerce sales channel, control is transferred upon delivery of the merchandise to our customers. Shipping revenues associated with the eCommerce channel are recognized upon the completion of the delivery. The revenue recorded reflects the consideration that we expect to receive in exchange for our merchandise. The Company has elected, as an accounting policy, to exclude from the transaction price all taxes assessed by governmental authorities imposed on merchandise sales.

Right of return

As part of our merchandise sales, we offer customers a right of return on merchandise that lapses, after a specified period of time, based on the original purchase date. The Company estimates the amount of sales that may be returned by our customers and records this estimate as a reduction of revenue in the period in which the related revenues are recognized. We utilize historical and industry data to estimate the total return liability. Conversely, the reduction in revenue results in a corresponding reduction in merchandise, buying and occupancy costs which results in a contract asset for the anticipated merchandise returned. The total reduction in revenue from estimated returns was $1.8 million for the period ended November 2, 2019, and $1.2 million for the period ended February 2, 2019. These amounts are included within accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.

Friendship rewards program

The Company established the Friendship Rewards Program as a loyalty program where customers earn points towards future discount certificates based on their purchase activity. We have identified the additional benefits received from this program as a separate performance obligation within a sales contract in the form of the discount certificates earned by customers. Accordingly, we assess any incremental discounts issued to our customers through the program and allocate a portion of the transaction price associated with merchandise sales from loyalty program members to the future discounts earned. The transaction price allocated to future discounts is recorded as deferred revenue until the discounts are used or forfeited. In addition, the Company estimates breakage on the points earned within the program that will not be used by customers for future discounts. The Company estimates breakage based on the historical redemption rate and considers industry trends. Breakage is recorded as a reduction to the deferred revenue associated with the program. As of November 2, 2019, and February 2, 2019, the Company recorded $4.8 million and $3.8 million, respectively, in deferred revenue associated with the program, which is included in accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.

Gift card revenue

The Company sells gift cards to customers which can be redeemed for merchandise within our brick and mortar and eCommerce sales channels. Gift cards are recorded as deferred revenue when issued and are subsequently recorded as revenue upon redemption. The Company estimates breakage related to gift cards when the likelihood of redemption is remote. This estimate utilizes historical trends based on the vintage of the gift card. Breakage on gift cards is recorded as revenue in proportion to the rate of gift card redemptions by vintage. As of November 2, 2019, and February 2, 2019, the Company had $2.2 million and $4.6 million, respectively, of deferred revenue associated with the issuance of gift cards. The deferred gift card revenue is included in accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.

Private label credit card

The Company offers a private label credit card ("PLCC") which bears the Christopher and Banks brand name offered under an agreement with Comenity Bank. Pursuant to this agreement, there are several obligations on behalf of Comenity Bank that impact the recording of revenue.

In connection with extending the term of the agreement, the Company received a signing bonus. We have determined that the benefits associated with signing the agreement are recognized over time throughout its term. This is the most accurate depiction of the transfer of services as the customer receives and consumes the benefits by obtaining and having the ability to use financing through Comenity Bank for purchases within our brick and mortar and eCommerce sales channels throughout the agreement's term. The deferred signing bonus is included in other liabilities and is being recognized in net sales ratably over the term of the contract.

The other revenue based on customer usage of the card is recognized in net sales in the periods in which the related customer transaction occurs. As of November 2, 2019, the Company had $1.4 million recorded as deferred revenue associated with the signing bonus, of which $0.3 million is included in accrued liabilities and other current liabilities and the remaining $1.1 million is included in other non-current liabilities in the Condensed Consolidated Balance Sheets. As of February 2, 2019, the Company had $1.6 million recorded as deferred revenue associated with the signing bonus, of which $0.3 million is included in accrued liabilities and other current liabilities and the remaining $1.3 million is included in other non-current liabilities of the Condensed Consolidated Balance Sheets. The Company recorded $0.1 million and $0.2 million into revenue for the thirteen and thirty-nine-week periods ended November 2, 2019 and November 3, 2018, respectively, associated with the signing bonus.

The Company records revenue associated with royalties received for purchases made using the PLCC. Royalty revenue is recognized based on the total amount to which we have a right to invoice in accordance with the practical expedient included in ASC 606. Accordingly, royalty revenue is recognized in the period in which the related purchases are recognized.

The Company receives a performance bonus based on the total amount of new PLCC accounts that are opened during the year. We have determined that this is a form of variable consideration. Variable consideration is recorded if, in the Company’s judgment, it is probable that a significant future reversal of revenue under the contract will not occur.

Disaggregation of revenue

The following table provides information about disaggregated revenue by sales channel. All revenue illustrated below is included within our one reportable segment.



	Thirteen Weeks Ended							Thirty-nine Weeks Ended
	November 2, 2019			November 3, 2018				November 2, 2019			November 3, 2018
Brick and mortar stores	$	74,483		$	69,245			$	205,130		$	204,015
eCommerce sales	20,098			22,338			¹	55,696			60,348		¹
Other	(520		)	(295		)		(102		)	244
Net sales	$	94,061		$	91,288			$	260,724		$	264,607


⁽¹⁾	Includes approximately $3.6 million and $8.4 million of 2018 revenues for the thirteen and thirty-nine week periods ended, respectively, from orders placed in store and fulfilled from another location. For 2019, similar sales are included in brick and mortar stores.

Amounts included within other revenue relate to revenues earned from our private label credit card, net of any revenue adjustments and accruals.

Contract balances

The following table provides information about contract assets and liabilities from contracts with customers (in thousands):



	Contract Liabilities
	November 2, 2019				February 2, 2019
	Current		Non-Current		Current		Non-Current
Right of return	$	1,771	$	—	$	1,176	$	—
Friendship Rewards Program	4,802		—		3,768		—
Gift card revenue	2,234		—		4,646		—
Private label credit card	274		1,142		274		1,348
Total	$	9,081	$	1,142	$	9,864	$	1,348

The Company recognized revenue of $1.2 million and $0.8 million in the thirteen-week periods ended November 2, 2019 and November 3, 2018, respectively, related to contract liabilities recorded at the beginning of the period. The Company recognized revenue of $3.6 million and $4.0 million in the thirty-nine-week periods ended November 2, 2019 and November 3, 2018, respectively, related to contract liabilities recorded at the beginning of the period. Such revenues were comprised of the redemption and forfeiture of Friendship Rewards Program discount certificates, redemption of gift cards, and amortization of the PLCC signing bonus. As of November 2, 2019, and February 2, 2019, the Company did not have any material contract assets.

For the thirteen and thirty-nine-week periods ended November 2, 2019 and November 3, 2018, the Company did not recognize any revenue resulting from changes in the estimated variable consideration to be received associated with performance obligations satisfied or partially satisfied in prior periods.

Transaction price allocated to remaining performance obligations

The following table includes the estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied as of November 2, 2019:



	Remainder of
	Fiscal 2019		Fiscal 2020		Thereafter
Private label credit card	$	69	$	274	$	1,073
Total	$	69	$	274	$	1,073

Contract Costs

The Company has not incurred any costs to obtain or fulfill a contract.