Revenue Recognition and Receivables

3 Months Ended

Apr. 30, 2022

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 operating 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 is described in the significant accounting policies described in our Fiscal 2021 Form 10-K.

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

	First Quarter
	Fiscal 2022		Fiscal 2021
Retail	$	136,080	$	91,280
E-commerce		96,473		74,238
Restaurant		30,885		25,208
Wholesale		88,616		74,453
Other		527		583
Net sales	$	352,581	$	265,762

As of April 30, 2022, January 29, 2022 and May 1, 2021, prepaid expenses and other current assets included $5 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 $14 million, $11 million and $12 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of April 30, 2022, January 29, 2022 and May 1, 2021, respectively.

Substantially all amounts recognized in receivables, net represent trade receivables related to contracts with customers. In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to and accept returns from certain of our wholesale customers for certain products. As of April 30, 2022, January 29, 2022 and May 1, 2021, reserve balances recorded as a reduction to receivables related to these items were $5 million, $3 million and $6 million, respectively. As of April 30, 2022, January 29, 2022 and May 1, 2021, our provision for credit losses related to receivables included in our consolidated balance sheets was $1 million, $1 million and $2 million, respectively. In both the First Quarter of Fiscal 2022 and the First Quarter of Fiscal 2021, provisions for credit losses expense included in our consolidated statement of operations and the write-offs of credit losses was less than $1 million.

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 $15 million, $16 million and $13 million as of April 30, 2022, January 29, 2022, and May 1, 2021, respectively.