ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

3 Months Ended

May 04, 2024

ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

NOTE 6—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following:

	MAY 4,		FEBRUARY 3,
	2024		2024
	(in thousands)
Accounts payable	$	208,608	$	192,345
Accrued compensation		56,039		43,840
Accrued sales and use tax		28,211		26,823
Accrued occupancy		28,010		29,144
Accrued freight and duty		17,180		14,333
Accrued legal settlements(1)		16,504		16,704
Excise tax payable on share repurchases		11,988		11,988
Accrued professional fees		6,140		5,754
Accrued legal contingencies(1)		2,433		2,795
Accrued interest		1,897		1,343
Other accrued expenses		30,484		21,516
Total accounts payable and accrued expenses	$	407,494	$	366,585

(1) Refer to Note 16—Commitments and Contingencies.

Reorganization

We implemented a restructuring on March 24, 2023 that included workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth. The workforce reduction associated with the initiative included the elimination of numerous leadership and other positions throughout the organization, which affected approximately 440 roles. The reorganization was completed during the first quarter of fiscal 2023. During the three months ended April 29, 2023, we incurred total charges relating to the reorganization of $7.6 million consisting primarily of severance costs and related taxes. As of February 3, 2024, we had an immaterial amount accrued within accounts payable and accrued expenses on the condensed consolidated balance sheets related to the reorganization, all of which was paid during the first quarter of fiscal 2024.

Other current liabilities consist of the following:

	MAY 4,		FEBRUARY 3,
	2024		2024
	(in thousands)
Current portion of term loans	$	25,000	$	25,000
Allowance for sales returns		20,953		19,588
Unredeemed gift card and merchandise credit liability		20,588		24,720
Finance lease liabilities		15,209		14,668
Federal tax payable		—		5,561
Other current liabilities		3,863		6,576
Total other current liabilities	$	85,613	$	96,113

Contract Liabilities

We defer revenue associated with merchandise delivered via the home-delivery channel. We expect that substantially all of the deferred revenue and customer deposits as of May 4, 2024 will be recognized within the next six months as the performance obligations are satisfied. In addition, we defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards. During both the three months ended May 4, 2024 and April 29, 2023, we recognized $6.1 million of revenue related to previous deferrals related to our gift cards. We expect that approximately 75 percent of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers.

Supplier Finance Program

We facilitate a voluntary supply chain financing program (the “Financing Program”) with a third-party financial institution (the “Bank”) to provide participating suppliers with the opportunity to receive early payment on invoices, net of a discount charged to the supplier by the Bank. As of May 4, 2024 and February 3, 2024, supplier invoices that have been confirmed as valid under the Financing Program included in accounts payable and accrued expenses on the condensed consolidated balance sheets were $41 million and $28 million, respectively.