NOTE 12. REVENUE

Revenue includes sales of merchandise and delivery revenue related to merchandise sold. Substantially all of the Company's revenue is recognized when control of product passes to customers, which for the eCommerce and Outfitters channels is when the merchandise is expected to be received by the customer and for the Retail channel is at the time of sale in the store. The Company recognizes revenue, including shipping and handling fees billed to customers, in the amount expected to be received when control of the Company's products transfers to customers, and is presented net of various forms of promotions, which range from contractually-fixed percentage price reductions to sales returns, discounts, and other incentives that may vary in amount. Variable amounts are estimated based on an analysis of historical experience and adjusted as better estimates become available. There were no changes to estimates in Third Quarter 2019.

The Company's revenue is disaggregated by product channel and geographic location. Revenue by product channel is presented in Note 11, Segment Reporting. Revenue by geographic location was:



	13 Weeks Ended				39 Weeks Ended
(in thousands)	November 1, 2019		November 2, 2018		November 1, 2019		November 2, 2018
Net revenue:
United States	$	297,166	$	295,070	$	768,609	$	812,746
Europe	28,344		31,190		87,870		89,287
Asia	9,633		10,273		33,271		35,033
Other	4,880		5,037		10,973		12,274
Total Net revenue	$	340,023	$	341,570	$	900,723	$	949,340

Contract Liabilities

Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in Net revenue in the Condensed Consolidated Statements of Operations. The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer, which is reported in Other current liabilities in the Condensed Consolidated Balance Sheets, as well as amounts recognized through Net revenue for each period presented. The remainder of deferred revenue as of November 1, 2019 is expected to be recognized in Net revenue in the fiscal quarter ending January 31, 2020, as products are delivered to customers.



	13 Weeks Ended						39 Weeks Ended
(in thousands)	November 1, 2019			November 2, 2018			November 1, 2019			November 2, 2018
Deferred Revenue Beginning of Period	$	9,411		$	8,796		$	9,051		$	12,993
Deferred Revenue Recognized in Period	(9,411		)	(8,796		)	(9,051		)	(12,993		)
Revenue Deferred in Period	15,178			22,117			15,178			22,117
Deferred Revenue End of Period	$	15,178		$	22,117		$	15,178		$	22,117

Revenue from gift cards is recognized when (i) the gift card is redeemed by the customer for merchandise, or (ii) as gift card breakage, an estimate of gift cards which will not be redeemed where the Company does not have a legal obligation to remit the value of the unredeemed gift cards to the relevant jurisdictions. Gift card breakage is recorded within Net revenue in the Condensed Consolidated Statements of Operations. Prior to their redemption, gift cards are recorded as a liability, included within Other current liabilities in the Condensed Consolidated Balance Sheets. The total contract liability related to gift cards issued was $20.7 million, $16.0 million and $18.2 million as of November 1, 2019, November 2, 2018 and February 1, 2019, respectively. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards:



	13 Weeks Ended						39 Weeks Ended
(in thousands)	November 1, 2019			November 2, 2018			November 1, 2019			November 2, 2018
Balance as of Beginning of Period	$	20,443		$	16,626		$	18,191		$	19,272
Gift cards sold	17,473			14,790			46,497			40,143
Gift cards redeemed	(17,041		)	(15,258		)	(43,121		)	(41,605		)
Gift card breakage	(171		)	(183		)	(863		)	(1,835		)
Balance as of November 1, 2019	$	20,704		$	15,975		$	20,704		$	15,975

Refund Liabilities

Refund liabilities, primarily associated with product sales returns and retrospective volume rebates, represent variable consideration and are estimated and recorded as a reduction to Net revenue based on historical experience. As of November 1, 2019, November 2, 2018 and February 1, 2019, $22.9 million, $23.7 million and $22.2 million, respectively, of refund liabilities, primarily associated with product returns, were reported in Other current liabilities in the Condensed Consolidated Balance Sheets. An asset for product returns is recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance sheets.