Revenue Recognition

6 Months Ended

Jul. 31, 2021

Revenue From Contract With Customer [Abstract]

Revenue Recognition

Note 2 – Revenue Recognition

Net sales — Net sales includes the sale of merchandise, net of returns, shipping revenue, gift card breakage revenue and revenue earned from our private label credit card program and excludes sales taxes.

Sales returns reserve — The Company had a liability of approximately $1.5 million, $2.0 million and $1.3 million reserved for sales returns at July 31, 2021, January 30, 2021 and August 1, 2020, respectively, included in accrued expenses on the condensed

consolidated balance sheets. The related sales return reserve product recovery asset included in prepaid expenses and other current assets on the condensed consolidated balance sheets was approximately $666,000, $850,000 and $542,000 at July 31, 2021, January 30, 2021 and August 1, 2020, respectively.

Deferred e-commerce revenue — Deferred revenue related to e-commerce orders that have been shipped but not estimated to be received by customers included in accrued expenses on the condensed consolidated balance sheets was approximately $1.0 million, $1.2 million and $1.8 million at July 31, 2021, January 30, 2021 and August 1, 2020, respectively. The related contract assets, reflected in inventory on the condensed consolidated balance sheets, totaled approximately $448,000, $530,000 and $871,000 at July 31, 2021, January 30, 2021 and August 1, 2020, respectively.

Gift cards — The Company uses the redemption recognition method to account for breakage for unused gift card amounts where breakage is recognized as gift cards are redeemed for the purchase of goods based upon a historical breakage rate. In these circumstances, to the extent the Company determines there is no requirement for remitting card balances to government agencies under unclaimed property laws, such amounts are recognized in the condensed consolidated statements of operations as a component of net sales.

The table below sets forth selected gift card liability information (in thousands) for the periods indicated:

	July 31, 2021		January 30, 2021		August 1, 2020
Gift card liability, net of estimated breakage (included in accrued expenses)	$	12,802	$	13,408	$	12,169

The table below sets forth selected gift card breakage and redemption information (in thousands) for the periods indicated:

	13-Week Period Ended				26-Week Period Ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Gift card breakage revenue (included in net sales)	$	195	$	190	$	411	$	347
Gift card redemptions recognized in the current period related to amounts included in the gift card contract liability balance as of the prior period		1,411		1,569		3,357		2,962

Customer loyalty program — The Company has a loyalty program called the K-club that was redesigned in fiscal 2020 to allow members to receive points based on qualifying purchases that are converted into certificates that may be redeemed on future purchases. This customer option is a material right and, accordingly, represents a separate performance obligation to the customer under ASC 606 Revenue from Contracts with Customers. The related loyalty program deferred revenue included in accrued expenses on the condensed consolidated balance sheets was approximately $825,000 and $922,000 at July 31, 2021 and January 30, 2021, respectively, compared to none at August 1, 2020.