Revenue Recognition

9 Months Ended

Oct. 29, 2022

Revenue Recognition [Abstract]

Revenue Recognition

NOTE 11 – REVENUE RECOGNITION:

The Company recognizes sales at the point of purchase when the customer takes possession of the merchandise and pays for the purchase, generally with cash or credit. Sales from purchases made with Cato credit, gift cards and layaway sales from stores are also recorded when the customer takes possession of the merchandise. E-commerce sales are recorded when the risk of loss is transferred to the customer. Gift cards are recorded as deferred revenue until they are redeemed or forfeited. Layaway sales are recorded as deferred revenue until the customer takes possession of, or forfeits, the merchandise. Gift cards do not have expiration dates. A provision is made for estimated merchandise returns based on sales volumes and the Company’s experience; actual returns have not varied materially from historical amounts. A provision is made for estimated write-offs associated with sales made with the Company’s proprietary credit card. Amounts related to shipping and handling billed to customers in a sales transaction are classified as Other revenue and the costs related to shipping product to customers (billed and accrued) are classified as Cost of goods sold.

The Company offers its own proprietary credit card to customers. All credit activity is performed by the Company’s wholly-owned subsidiaries. None of the credit card receivables are secured. During the three

and nine months ended October 29, 2022, the Company estimated customer credit losses of $,89000 and $,261000, respectively, compared to $134,000 and $409,000 for the three and nine months ended October 30, 2021, respectively. Sales purchased on the Company’s proprietary credit card for the three and nine months ended October 29, 2022 were $5.9 million and $17.4 million, respectively, compared to $4.4 million and $13.6 million for the three and nine months ended October 30, 2021, respectively.

The following table provides information about receivables and contract liabilities from contracts with customers (in thousands):

	Balance as of
		October 29, 2022		January 29, 2022
Proprietary Credit Card Receivables, net	$	10,286	$	8,998
Gift Card Liability	$	5,560	$	8,308