Accounts Payable, Accrued Expenses and Other Current Liabilities

9 Months Ended

Nov. 02, 2019

Accounts Payable, Accrued Expenses and Other Current Liabilities

Accounts Payable, Accrued Expenses and Other Current Liabilities

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

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

	November 2,		February 2,
	2019		2019
Accounts payable	$	138,034	$	183,039
Accrued compensation		50,905		64,192
Accrued freight and duty		22,201		20,787
Accrued sales taxes		19,900		18,354
Accrued catalog costs		15,570		10,276
Accrued occupancy		12,525		10,839
Accrued professional fees		4,516		2,050
Other accrued expenses		25,286		10,960
Total accounts payable and accrued expenses	$	288,937	$	320,497

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

	November 2,		February 2,
	2019		2019
Promissory note on asset under construction	$	30,000	$	—
Current portion of debt		21,760		892
Allowance for sales returns		19,807		19,821
Unredeemed gift card and merchandise credit liability		18,749		17,192
Finance lease liabilities		8,755		9,184
Product recall reserve		2,301		7,767
Other current liabilities		5,060		3,881
Provision for legal settlement (1)		—		50,000
Federal tax payable		—		719
Total other current liabilities	$	106,432	$	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 November 2, 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 November 2, 2019 and November 3, 2018, the Company recognized $5.1 million and $5.9 million, respectively, of revenue related to previous deferrals related to its gift cards and merchandise credits. During the nine months ended November 2, 2019 and November 3, 2018, the Company recognized $14.4 million and $15.6 million, respectively, of revenue related to previous deferrals related to its gift cards and merchandise credits. During the three months ended November 2, 2019 and November 3, 2018, the Company recorded gift card breakage of $0.5 million and $0.4 million, respectively. During the nine months ended November 2, 2019 and November 3, 2018, the Company recorded gift card breakage of $1.3 million and $1.2 million, respectively. The Company expects that approximately 70% of the remaining gift card and merchandise credit liabilities as of November 2, 2019 will be recognized within the next twelve months as the gift cards are redeemed by customers.