Revenue Recognition

6 Months Ended

Jul. 01, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

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

	July 1, 2023		December 31, 2022
Deferred contract assets included in:
Other current assets	$	28,118	$	28,121
Other non-current assets	55,782		55,564
	$	83,900	$	83,685

	July 1, 2023		December 31, 2022
Deferred contract liabilities included in:
Other current liabilities	$	36,132	$	36,335
Other non-current liabilities	71,004		70,999
	$	107,136	$	107,334

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 the Company’s inputs are generally expended evenly throughout the performance period. During the three months ended July 1, 2023 and July 2, 2022, the Company recognized revenue of $10 million and $9 million, respectively, that was included in the deferred contract liability balances at the beginning of the respective periods. During the six months ended July 1, 2023 and July 2, 2022, the Company recognized revenue of $19 million and $18 million, respectively, that was 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 revenues for both the three and six months ended July 1, 2023 and July 2, 2022.

Net sales were as follows (in thousands):

	Three Months Ended				Six Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Retail stores	$	402,145	$	490,820	$	860,808	$	935,157
Online, phone, chat and other	56,644		58,253		124,508		141,046
Total Company	$	458,789	$	549,073	$	985,316	$	1,076,203

Obligation for Sales Returns

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

	Six Months Ended
	July 1, 2023		July 2, 2022
Balance at beginning of year	$	25,594	$	22,368
Additions that reduce net sales	57,849		53,964
Deductions from reserves	(57,967)		(51,676)
Balance at end of period	$	25,476	$	24,656