Revenue Recognition and Receivables

3 Months Ended

May 01, 2021

Revenue Recognition and Receivables

Revenue Recognition and Receivables

3.    Revenue Recognition and Receivables: Our revenue consists of direct to consumer sales, including our retail store, e-commerce and restaurant operations, and wholesale sales, as well as royalty income, which is included in royalties and other income in our consolidated statements of operations. We recognize revenue when performance obligations under the terms of the contracts with our customers are satisfied. Our accounting policies related to revenue recognition for each type of contract with customers, including a description of the related performance obligations, return rights, allowances, discounts, credit terms, credit losses and other information, is described in the significant accounting policies described in our Fiscal 2020 Form 10-K.

The table below quantifies the amount of net sales by distribution channel (in thousands) for each period presented.

	First Quarter
	Fiscal 2021		Fiscal 2020
Retail	$	91,280	$	45,503
E-commerce		74,238		53,694
Restaurant		25,208		11,763
Wholesale		74,453		49,058
Other		583		325
Net sales	$	265,762	$	160,343

In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to some of our wholesale customers for certain products. As of May 1, 2021, January 30, 2021 and May 2, 2020, reserve balances recorded as a reduction to receivables related to these items were $6 million, $6 million and $9 million, respectively.

As of May 1, 2021, January 30, 2021 and May 2, 2020, our provision for credit losses related to receivables included in our consolidated balance sheets was $2 million, $3 million and $3 million, respectively. In the First Quarter of Fiscal 2021, provisions for credit losses expense included in our consolidated statement of operations was $0 million and write-offs of credit losses was $0 million. In the First Quarter of Fiscal 2020, provisions for credit losses expense included in our consolidated statement of operations was $2 million and write-offs of credit losses was $0 million.

Substantially all amounts recognized in receivables, net represent trade receivables related to contracts with customers. In addition to trade and other receivables, tenant allowances due from landlord of $3 million, $2 million and $2 million are included in receivables, net in our consolidated balance sheet as of May 1, 2021, January 30, 2021 and May 2, 2020, respectively. As of May 1, 2021, January 30, 2021 and May 2, 2020, prepaid expenses and other current assets included $4 million, $4 million and $4 million, respectively, representing the estimated value of inventory for expected direct to consumer and wholesale sales returns.

An estimated sales return liability of $12 million, $7 million and $5 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of May 1, 2021, January 30, 2021 and May 2, 2020, respectively. Contract liabilities for gift cards purchased by consumers and merchandise credits received by customers but not yet redeemed, less any breakage income recognized to date, is included in accrued expenses and other liabilities in our consolidated balance sheet and totaled $13 million, $13 million and $12 million as of May 1, 2021, January 30, 2021, and May 2, 2020, respectively.