Revenue Recognition

6 Months Ended

Jul. 30, 2022

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

Revenue Recognition

Accounts receivable, net from revenue-generating activities were $101 million as of July 30, 2022, $101 million as of January 29, 2022 and $73 million as of July 31, 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 July 30, 2022, $258 million as of January 29, 2022 and $219 million as of July 31, 2021. The Company recognized $105 million as revenue year-to-date 2022 from amounts recorded as deferred revenue at the beginning of the year. As of July 30, 2022, the Company recorded deferred revenue of $218 million within Accrued Expenses and Other, and $20 million within Other Long-term Liabilities on the Consolidated and Combined Balance Sheet.

The following table provides a disaggregation of Net Sales for the second quarter and year-to-date 2022 and 2021:

	Second Quarter				Year-to-Date
	2022		2021		2022		2021
	(in millions)
Stores – North America	$	968	$	1,037	$	1,900	$	1,970
Direct	414		469		834		990
International (a)	139		108		271		208
Total Net Sales	$	1,521	$	1,614	$	3,005	$	3,168

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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 through 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 $30 million and $31 million for the second quarter of 2022 and 2021, respectively, related to revenue earned in connection with its credit card arrangements. The Company recognized Net Sales of $57 million and $59 million year-to-date 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 $199 million and $167 million for the second quarter of 2022 and 2021, respectively. The Company’s net sales outside of the U.S. totaled $383 million and $330 million year-to-date 2022 and 2021, respectively.