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Related Party | 3 Months Ended
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Apr. 28, 2017
Related Party Transactions [Abstract] |
Related Party | RELATED PARTY TRANSACTIONS According to statements on Schedule 13D filed with the SEC by ESL on January 6, 2017, ESL beneficially owned significant portions of both the Company's and Sears Holdings Corporation's outstanding shares of common stock. Therefore, Sears Holdings Corporation, the Company's former parent company, is considered a related party. Additionally, in First Quarter 2017, ESL purchased approximately $4.0 million of the Company's outstanding debt at a discount of approximately $1.0 million. Due to the related party relationship, this discount was considered a cancellation of debt under Section 108 of the Internal Revenue Code, triggering additional income tax payments for the Company. As of April 28, 2017 ESL owned a total of $14.7 million of the Company's outstanding debt. In connection with and subsequent to the Separation, the Company entered into various agreements with Sears Holdings which, among other things, (i) govern specified aspects of the Company's relationship following the Separation, especially with regards to the Lands’ End Shops at Sears, and (ii) establish terms pursuant to which subsidiaries of Sears Holdings Corporation are providing services to us. See further descriptions of the transactions in the Company's 2016 Annual Report on Form 10-K and proxy statement filed with the SEC on March 31, 2017. In its annual report on Form 10-K for its fiscal year ended January 28, 2017, Sears Holdings disclosed that its historical operating results indicate substantial doubt exists related to its ability to continue as a going concern. Sears Holdings also disclosed it believes that actions it has taken in the last 12 months and expected benefits from actions to be taken in 2017 are probable to mitigate the substantial doubt raised by its historical operating results and therefore will satisfy its liquidity needs for the 12 months following the issuance of its financial statements. The components of the transactions between the Company and Sears Holdings, which exclude pass-through payments to third parties, are as follows: Lands’ End Shops at Sears Related party costs charged by Sears Holdings to the Company related to Lands’ End Shops at Sears are as follows:
|  | 13 Weeks Ended
(in thousands, except for number of stores) |  | April 28, 2017 |  | April 29, 2016
Rent, CAM and occupancy costs |  | $ | 5,909 |  |  | $ | 6,306 |
Retail services, store labor |  | 5,548 |  |  | 5,946 |
Financial services and payment processing |  | 472 |  |  | 719 |
Supply chain costs |  | 191 |  |  | 315 |
Total expenses |  | $ | 12,120 |  |  | $ | 13,286 |
Number of Lands’ End Shops at Sears at period end |  | 205 |  |  | 225 |
General Corporate Services Related party costs charged by Sears Holdings to the Company for general corporate services are as follows:
|  | 13 Weeks Ended
(in thousands) |  | April 28, 2017 |  | April 29, 2016
Sourcing |  | $ | 2,398 |  |  | $ | 1,372 |
Shop Your Way |  | 377 |  |  | 462 |
Shared services |  | 48 |  |  | 48 |
Total expenses |  | $ | 2,823 |  |  | $ | 1,882 |
Sourcing The Company contracts with a subsidiary of Sears Holdings to provide agreed upon buying agency services, on a non-exclusive basis, in foreign territories from where the Company purchases merchandise. These services, primarily based upon quantities purchased, include quality-control functions, regulatory compliance, product claims management and new vendor selection and setup assistance. During Second Quarter 2016, the Company entered into a new buying agency services agreement with a subsidiary of Sears Holdings and terminated the agreement that was entered into at the time of the Separation. The new agreement provides for a higher commission rate and a higher annual commission minimum, as well as enhanced sourcing services, including for product development, costing analyses, vendor communications, vendor strategy and quality assurance. Certain of these amounts are capitalized into inventory and are expensed through cost of goods sold over the course of inventory turns and included in Cost of sales in the Condensed Consolidated Statements of Comprehensive Operations. Use of Intellectual Property or Services Related party revenue and costs charged by the Company to and from Sears Holdings for the use of intellectual property or services is as follows:
|  | 13 Weeks Ended
(in thousands) |  | April 28, 2017 |  | April 29, 2016
Lands' End business outfitters revenue |  | $ | 271 |  |  | $ | 548 |
Credit card revenue |  | 212 |  |  | 245 |
Royalty income |  | 28 |  |  | 32 |
Gift card (expense) |  | (6 | ) |  | (7 | )
Total income |  | $ | 505 |  |  | $ | 818 |
Call Center Services The Company has entered into a contract with Sears Holdings Management Corporation, a subsidiary of Sears Holdings Corporation, to provide call center services in support of Sears Holdings’ SYW. This income is net of agreed upon costs directly attributable to the Company providing these services. The income is included in Net revenue and costs are included in Selling and administrative expenses in the Condensed Consolidated Statements of Operations. Total call center service income included in Net revenue was $1.2 million and $1.9 million for First Quarter 2017 and First Quarter 2016, respectively. The contract for call center services expired on April 30, 2017. Additional Balance Sheet Information At April 28, 2017, April 29, 2016 and January 27, 2017, the Company included $3.5 million, $4.0 million and $3.7 million in Accounts receivable, net, respectively, and $2.4 million, $2.6 million and $3.1 million in Accounts payable, respectively, in the Condensed Consolidated Balance Sheets to reflect amounts due from and owed to Sears Holdings. At April 28, 2017, April 29, 2016 and January 27, 2017 an $11.6 million, $13.9 million and $11.4 million receivable, respectively, was recorded by the Company in Other assets in the Condensed Consolidated Balance Sheets to reflect the indemnification by Sears Holdings Corporation of the pre-Separation UTBs (including penalties and interest) for which Sears Holdings Corporation is responsible under the Tax Sharing Agreement.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
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