Revenue Recognition

9 Months Ended

Oct. 01, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Deferred contract assets and deferred contract liabilities are included in our condensed consolidated balance sheets as follows (in thousands):

	October 1, 2022		January 1, 2022
Deferred contract assets included in:
Other current assets	$	27,894	$	28,048
Other non-current assets	55,095		49,343
	$	82,989	$	77,391

	October 1, 2022		January 1, 2022
Deferred contract liabilities included in:
Other current liabilities	$	36,160	$	36,490
Other non-current liabilities	70,676		63,680
	$	106,836	$	100,170

The deferred revenue and costs related to SleepIQ® technology are currently recognized on a straight-line basis over the product's estimated life of 4.5 to 5.0 years because our inputs are generally expended evenly throughout the performance period. During the three months ended October 1, 2022 and October 2, 2021, we recognized revenue of $9 million and $8 million, respectively, that were included in the deferred contract liability balances at the beginning of the respective periods. During the nine months ended October 1, 2022 and October 2, 2021, we recognized revenue of $26 million and $22 million, respectively, that were included in the deferred contract liability balances at the beginning of the respective periods.

Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of our revenues for the three and nine months ended October 1, 2022 and 99% and 98% for the three and nine months ended October 2, 2021, respectively.

Net sales were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Retail stores	$	466,632	$	565,939	$	1,401,789	$	1,481,780
Online, phone, chat and other	73,934		74,454		214,980		211,185
Total Company	$	540,566	$	640,393	$	1,616,769	$	1,692,965

Obligation for Sales Returns

The activity in the sales returns liability account was as follows (in thousands):

	Nine Months Ended
	October 1, 2022		October 2, 2021
Balance at beginning of year	$	22,368	$	24,765
Additions that reduce net sales	79,353		69,877
Deductions from reserves	(76,070)		(66,124)
Balance at end of period	$	25,651	$	28,518