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Revenue Recognition
 3 Months Ended
May 02, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Revenue from sales of our merchandise is recognized at the time of sale net of any returns, discounts and percentage-off coupons. Our Ecommerce operation records revenue as online orders are fulfilled and provided to a carrier for delivery from our warehouse or directly from our vendors. Store sales include online orders that are fulfilled and shipped or picked up from our stores. Shipping and handling fees charged to customers are also included in total net sales with corresponding costs recorded as cost of merchandise sold as they are considered a fulfillment cost. Future merchandise returns are estimated based on historical experience. Sales tax collected from customers is not recognized as revenue and is included in accrued expenses and other current liabilities on the Consolidated Balance Sheets until paid. Our shoe department and vintage luxury handbag department inventories are each owned by separate single suppliers under supply agreements. Our commissions from the sales in these areas are included in net sales on the Consolidated Statements of Operations.
We offer gift and merchandise return cards to our customers. Some cards are electronic and none have expiration dates. At the time gift cards are sold, the issuance is recorded as a liability to customers, and no revenue is recognized. At the time merchandise return cards are issued for returned merchandise, the sale is reversed and a liability to customers is recorded. These card liabilities are reduced and sales revenue is recognized when they are redeemed for merchandise. Card liabilities are included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.
Our gift and merchandise return cards may not ultimately be redeemed either in full or partially. We account for this “breakage” of unused amounts as revenue in proportion to the pattern of rights exercised by the customer. Breakage revenue is recorded within other revenue in the Consolidated Statements of Operations. During the 13 weeks ended May 2, 2020 and May 4, 2019, we recognized $0.4 million and $0.6 million, respectively, of breakage revenue on unused gift and merchandise return cards.
Stein Mart Credit Cards
We offer co-branded and private label credit cards under the Stein Mart brand. These cards are issued by Synchrony Bank (“Synchrony”) in accordance with our Amended and Restated Co-Brand and Private Label Credit Card Consumer Program Agreement (the “Agreement”). Synchrony extends credit directly to card holders, provides all servicing for the credit card accounts and bears all risk of credit and fraud losses. On August 21, 2019, we entered into an amendment to our Agreement with Synchrony whereby Synchrony waived its rights to require us to post cash reserves to cure our failure to satisfy one or more of the quarterly financial covenants specified in the Agreement for periods through October 31, 2020 (the “Exemption Period”). As consideration for Synchrony’s entry into this amendment, we agreed to reduce the amount of fees paid to us by Synchrony under the Agreement from September 1, 2019 through the end of the Exemption Period.
We receive royalty revenue from Synchrony based on card usage in our stores and at other retailers for the Stein Mart Mastercard. We also receive revenues for new accounts and gain share based on the profitability of the overall program. Credit card revenue is recorded within other revenue in the Consolidated Statements of Operations. These revenues are recorded as they are earned based on the occurrence of the various program activities and typically represent the majority of other revenue.
Once a card is activated, the card holders are eligible to participate in the Stein Mart SMart Rewards Program, which provides for an incentive to card holders in the form of reward points for certificates (Stein Mart SMart Cash). Through June 9, 2020, certificates were issued in $10 increments, which was equivalent to 1,000 points. Commencing on June 10, 2020, certificates are issued in $5 increments, which is equivalent to 500 points. Points are valued at the stand-alone selling price of the certificates issued. We defer a portion of our revenue for loyalty points earned by customers using the co-branded and private label cards and recognize the revenue as the certificates earned are used to purchase merchandise by our customers.
Certificates may not ultimately be redeemed either in full or partially. We account for this “breakage” of unused amounts as revenue in proportion to the pattern of rights exercised by the customer. Breakage revenue is recorded within other revenue in the Consolidated Statements of Operations. During the 13 weeks ended May 2, 2020 and May 4, 2019, we recognized $2.6 million and $1.9 million, respectively, of breakage revenue on unused credit card reward certificates and points.
Stein Mart card holders also receive special promotional offers and advance notice of in-store sales events.
Multi-tender Loyalty Rewards
Beginning February 20, 2020, in certain regions, we now offer the multi-tender customer to participate in the Stein Mart Rewards Program, which also provides for an incentive to non Stein Mart card holders in the form of reward points for certificates. Certificates are issued in $5 increments, which is equivalent to 500 points. Points are valued at the stand-alone selling price of the certificates issued. We defer a portion of our revenue for multi-tender loyalty points earned by customers using tenders other than the co-branded and private label cards and recognize the revenue as the certificates earned are used to purchase merchandise by our customers.
Certificates may not ultimately be redeemed either in full or partially. We account for this “breakage” of unused amounts as revenue in proportion to the pattern of rights exercised by the customer. Breakage revenue is recorded within other revenue in the Consolidated Statements of Operations. During the 13 weeks ended May 2, 2020, there was no breakage revenue on unused multi-tender reward certificates and points due to the newness of the program.
Revenue
The following table sets forth our revenue by type of contract (in thousands):

13 Weeks Ended
May 2, 2020		13 Weeks Ended
May 4, 2019
Store sales (1)
$122,849  $293,289  
Ecommerce sales (2)
8,871  13,744  
Licensee commissions (3)
2,553  7,124  
Net sales134,273  314,157  
Credit card revenue (4)
817  2,564  
Breakage revenue (5)
3,010  2,538  
Other82  123  
Other revenue3,909  5,225  
Total revenue$138,182  $319,382  
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(1)Store sales are net of any returns, discounts and percentage-off coupons. Store sales include $11.4 million and $3.9 million sales generated online and either shipped from store or picked up in store by our customers for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.
(2)Ecommerce sales are net of any returns, discounts and percentage-off coupons. Ecommerce sales are online orders fulfilled from our warehouse or shipped directly from our vendors.
(3)Licensed department commissions are net of any returns.
(4)Credit card revenue earned from Synchrony programs, partially offset by rewards program costs.
(5)Breakage revenue earned on unused gift and merchandise return cards and unused certificates and loyalty reward points.
The following table sets forth the gross-up of the sales return reserve (in thousands):

 May 2, 2020February 1, 2020May 4, 2019
Reserve for sales returns$(3,652) $(3,763) $(6,286) 
Cost of inventory returns2,576  2,160  3,372  

The following table sets forth the contract liabilities and their relationship to revenue (in thousands):

 May 2, 2020February 1, 2020May 4, 2019
Deferred revenue contracts$(9,032) $(9,424) $(10,617) 
Gift card liability(10,154) (11,488) (9,631) 
Credit card reward liability(5,743) (7,261) (5,510) 
Liability for deferred revenue$(24,929) $(28,173) $(25,758) 
The following table sets forth a rollforward of the amounts included in contract liabilities for the periods presented (in thousands):

 13 Weeks Ended
May 2, 2020		13 Weeks Ended
May 4, 2019
Beginning balance$28,173  $28,846  
Current period gift cards sold and loyalty reward points earned4,261  7,501  
Net sales from redemptions (1)
(4,103) (7,651) 
Breakage and amortization (2)
(3,402) (2,938) 
Ending balance$24,929  $25,758  
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(1)$2.8 million and $4.4 million in net sales from redemptions were included in the beginning balance of contract liabilities for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.
(2)$3.2 million and $2.8 million in breakage and amortization were included in the beginning balance of contract liabilities for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively.