REVENUES

12 Months Ended

Jan. 29, 2022

REVENUES

REVENUES

2.   REVENUES

Disaggregation of Revenues

The following table disaggregates revenue by segment and major source for 2021, 2020 and 2019:

	2021
					Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total
Retail stores	$	1,494,595	$	59,269	$	—	$	1,553,864
Landed wholesale - e-commerce - drop ship (1)		—		93,783		(2,427)		91,356
E-commerce - Company websites (1)		251,823		189,564		—		441,387
Total direct-to-consumer sales	$	1,746,418	$	342,616	$	(2,427)	$	2,086,607
First-cost wholesale - e-commerce (1)		—		3,011		—		3,011
Landed wholesale - e-commerce (1)		—		154,184		—		154,184
Landed wholesale - other		—		468,436		(49,263)		419,173
First-cost wholesale		—		100,467		—		100,467
Licensing and royalty		1,010		12,138		—		13,148
Other (2)		863		151		—		1,014
Total net sales	$	1,748,291	$	1,081,003	$	(51,690)	$	2,777,604

	2020
					Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total
Retail stores	$	983,669	$	52,796	$	—	$	1,036,465
Landed wholesale - e-commerce - drop ship (1)		—		87,226		(4,192)		83,034
E-commerce - Company websites (1)		279,353		149,090		—		428,443
Total direct-to-consumer sales	$	1,263,022	$	289,112	$	(4,192)	$	1,547,942
First-cost wholesale - e-commerce (1)		—		1,249		—		1,249
Landed wholesale - e-commerce (1)		—		124,548		—		124,548
Landed wholesale - other		—		408,752		(44,770)		363,982
First-cost wholesale		—		69,172		—		69,172
Licensing and royalty		—		9,478		—		9,478
Other (2)		529		170		—		699
Net sales	$	1,263,551	$	902,481	$	(48,962)	$	2,117,070

	2019
					Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total
Retail stores	$	1,427,473	$	154,549	$	—	$	1,582,022
Landed wholesale - e-commerce - drop ship (1)		—		93,249		—		93,249
E-commerce - Company websites (1)		159,724		145,897		—		305,621
Total direct-to-consumer sales	$	1,587,197	$	393,695	$	—	$	1,980,892
First-cost wholesale - e-commerce (1)		—		2,204		—		2,204
Landed wholesale - e-commerce (1)		—		190,536		—		190,536
Landed wholesale - other		—		708,262		(72,955)		635,307
First-cost wholesale		—		96,021		—		96,021
Licensing and royalty		—		15,469		—		15,469
Other (2)		860		273		—		1,133
Net sales	$	1,588,057	$	1,406,460	$	(72,955)	$	2,921,562

(1) Collectively referred to as "e-commerce" below

(2) Includes breakage revenue from unredeemed gift cards

Retail stores

Traditionally, the majority of the Company’s revenue is generated from retail sales where control is transferred and revenue is recognized at the point of sale. Retail sales are recorded net of estimated returns and exclude sales tax. The Company records a returns reserve and a corresponding return asset for expected returns of merchandise.

Retail sales to members of the Company’s loyalty programs, including the Famously You Rewards program, include two performance obligations: the sale of merchandise and the delivery of points that may be redeemed for future purchases. The transaction price is allocated to the separate performance obligations based on the relative stand-alone selling price. The stand-alone selling price for the points is estimated using the retail value of the merchandise earned, adjusted for estimated breakage based upon historical redemption patterns. The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired.

Landed wholesale

Landed sales are wholesale sales in which the merchandise is shipped directly to the customer from the Company’s warehouses. Many customers that purchase footwear on a landed basis arrange their own transportation of merchandise and, with limited exceptions, control is transferred at the time of shipment.

First-cost wholesale

First-cost sales are wholesale sales in which the Company purchases merchandise from an international factory that manufactures the product and subsequently sells to a customer at an overseas port. Revenue is recognized at the time the merchandise is delivered to the customer’s designated freight forwarder and control is transferred to the customer.

E-commerce

The Company also generates revenue from sales on websites maintained by the Company that are shipped from the Company’s distribution centers or retail stores directly to the consumer, picked up directly by the consumer from the Company’s stores and e-commerce sales from the Company’s wholesale customers’ websites that are fulfilled on a drop-ship or first cost basis (collectively referred to as "e-commerce"). The Company transfers control and recognizes revenue for merchandise sold that is shipped directly to an individual consumer upon delivery to the consumer.

Licensing and royalty

The Company has license agreements with third parties allowing them to sell the Company’s branded product, or other merchandise that uses the Company’s owned or licensed brand names. These license agreements provide the licensee access to the Company’s symbolic intellectual property, and revenue is therefore recognized over the license term. For

royalty contracts that do not have guaranteed minimums, the Company recognizes revenue as the licensee’s sales occur. For royalty contracts that have guaranteed minimums, revenue for the guaranteed minimum is recognized on a straight-line basis during the term, until such time that the cumulative royalties exceed the total minimum guarantee. Up-front payments are recognized over the contractual term to which the guaranteed minimum relates.

The Company also licenses its Famous Footwear trade name and logo to a third-party financial institution to offer Famous Footwear-branded credit cards to its consumers. The Company receives royalties based upon cardholder spending, which is recognized as licensing revenue at the time when the credit card is used.

Contract Balances

Revenue is recorded at the transaction price, net of estimates for variable consideration for which reserves are established, including returns, allowances and discounts. Variable consideration is estimated using the expected value method and given the large number of contracts with similar characteristics, the portfolio approach is applied to determine the variable consideration for each revenue stream. Reserves for projected returns are based on historical patterns and current expectations.

Information about significant contract balances from contracts with customers is as follows:

($ thousands)	January 29, 2022		January 30, 2021
Customer allowances and discounts	$	20,328	$	17,043
Loyalty programs liability		18,814		13,986
Returns reserve		12,468		11,040
Gift card liability		6,804		6,091

Changes in contract balances with customers generally reflect differences in relative sales volume for the period presented. In addition, during 2021, the loyalty programs liability increased $36.3 million due to points and material rights earned on purchases and decreased $31.5 million due to expirations and redemptions.  During 2020, the loyalty programs liability increased $26.4 million due to points and material rights earned on purchases and decreased $28.8 million due to expirations and redemptions.

Allowance for Expected Credit Losses

The following table summarizes the activity in the Company’s allowance for expected credit losses for 2021 and 2020:

($ thousands)	2021		2020
Balance, beginning of period	$	14,928	$	1,813
Adjustment upon adoption of ASU 2016-13		—		2,521
Provision/adjustment for expected credit losses (1)		(2,242)		10,575
Uncollectible accounts written off, net of recoveries		(3,085)		19
Balance, end of period	$	9,601	$	14,928

(1) The Company’s provision/adjustment for expected credit losses for 2020 was higher than in 2021 as a result of the COVID-19 pandemic and its impact on the financial condition of several of the Company’s wholesale customers.