Revenue Recognition

3 Months Ended

Apr. 30, 2022

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

Revenue RecognitionAccounts receivable, net from revenue-generating activities were $100 million as of April 30, 2022, $101 million as of January 29, 2022 and $74 million as of May 1, 2021. Accounts receivable primarily relate to amounts due from the Company's franchise, license and wholesale partners. Under these arrangements, payment terms are typically 60 to 90 days.

The Company records deferred revenue when cash payments are received in advance of transfer of control of goods or services. Deferred revenue primarily relates to gift cards, loyalty and credit card programs and direct channel shipments, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue was $238 million as of April 30, 2022, $258 million as of January 29, 2022 and $230 million as of May 1, 2021. The Company recognized $81 million as revenue in the first quarter of 2022 from amounts recorded as deferred revenue at the beginning of the year. As of April 30, 2022, the Company recorded deferred revenue of $217 million within Accrued Expenses and Other, and $21 million within Other Long-term Liabilities on the Consolidated and Combined Balance Sheet.

The following table provides a disaggregation of Net Sales for the first quarter of 2022 and 2021:

	First Quarter
	2022		2021
	(in millions)
Stores – North America	$	931	$	933
Direct	421		521
International (a)	132		100
Total Net Sales	$	1,484	$	1,554

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(a)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.

In April 2022, the Company launched a new co-branded credit card in which customers can earn points on purchases of company product as well as on purchases outside of the Company. The co-branded credit card is in addition to the Company's existing U.S. private label credit card.

The Company recognized Net Sales of $26 million and $28 million for the first quarter of 2022 and 2021, respectively, related to revenue earned in connection with its credit card arrangements.

The Company’s international net sales include sales from company-operated stores, royalty revenue from franchise and license arrangements, wholesale revenues and direct sales shipped internationally. Certain of these sales are subject to the impact of fluctuations in foreign currency. The Company’s net sales outside of the U.S. totaled $184 million and $163 million for the first quarter of 2022 and 2021, respectively.