NOTE 5—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following (in thousands):


	May 4,		February 2,
	2019		2019

Accounts payable	$	176,069	$	183,039
Accrued compensation		35,688		64,192
Accrued freight and duty		19,948		20,787
Accrued sales taxes		19,901		18,354
Accrued occupancy		10,786		10,839
Accrued catalog costs		8,546		10,276
Accrued professional fees		3,974		2,050
Other accrued expenses		14,234		10,960
Total accounts payable and accrued expenses	$	289,146	$	320,497

Other current liabilities consist of the following (in thousands):


	May 4,		February 2,
	2019		2019

Provision for legal settlement (1)	$	60,073	$	50,000
Allowance for sales returns		21,056		19,821
Unredeemed gift card and merchandise credit liability		17,582		17,192
Current portion of debt		19,351		892
Finance lease liabilities		7,716		9,184
Federal and state tax payable		7,827		—
Product recall reserve		5,819		7,767
Other current liabilities		4,269		4,600
Total other current liabilities	$	143,693	$	109,456

(1)

Refer to Note 15—Commitments and Contingencies.

Contract Liabilities

The Company defers revenue associated with merchandise delivered via the home-delivery channel. The Company expects that substantially all of the deferred revenue, customer deposits and deferred membership fees as of May 4, 2019 will be recognized within the next six months as the performance obligations are satisfied.

In addition, the Company defers revenue when cash payments are received in advance of performance for unsatisfied obligations related to its gift cards and merchandise credits. During the three months ended May 4, 2019, the Company recognized $4.7 million of revenue related to previous deferrals related to its gift cards and merchandise credits and recorded gift card breakage of $0.4 million. The Company expects that approximately 70% of the remaining gift card and merchandise credit liabilities as of May 4, 2019 will be recognized within the next twelve months as the gift cards are redeemed by customers.