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Related Party Agreements and Transactions | 12 Months Ended
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Jan. 31, 2020
Related Party Transactions [Abstract] |
Related Party Agreements and Transactions | NOTE 11. RELATED PARTY AGREEMENTS AND TRANSACTIONS According to statements on Schedule 13D filed with the SEC by ESL, ESL beneficially owns significant portions of both the Company's and Sears Holdings’ outstanding shares of common stock. Therefore, Sears Holdings, the Company's former parent company, is considered a related party. On February 11, 2019, Transform Holdco acquired from Sears Holdings substantially all of the go-forward retail footprint and other assets and component businesses of Sears Holdings as a going concern. The Company believes that ESL holds a significant portion of the membership interests of Transform Holdco and therefore consider that entity to be a related party as well. In connection with and subsequent to the Separation, the Company entered into various agreements with Sears Holdings which, among other things, (i) governed specified aspects of the Company's relationship following the Separation, especially with regards to the Lands’ End Shops at Sears, and (ii) established terms pursuant to which subsidiaries of Sears Holdings provided services to the Company. Some of these agreements have been assumed by and assigned to Transform Holdco in connection with the proceedings related to the Sears Filing. All Lands’ End Shops at Sears closed by January 31, 2020 and accordingly there will be no further rent or retail operations transactions with Sears Holdings or Transform Holdco in Fiscal 2020. The components of the transactions between the Company and Sears Holdings or Transform Holdco in Fiscal 2019, Fiscal 2018 and Fiscal 2017, which exclude pass-through payments to or from third parties, are as follows. Lands' End Shops at Sears Related party costs charged by Sears Holdings or Transform Holdco to the Company related to Lands' End Shops at Sears were as follows:
(in thousands) |  | Fiscal 2019 |  |  | Fiscal 2018 |  |  | Fiscal 2017 |
Rent, CAM and occupancy costs |  | $ | 3,768 |  |  | $ | 14,798 |  |  | $ | 22,084 |
Retail services, store labor |  |  | 3,396 |  |  |  | 13,719 |  |  |  | 21,934 |
Financial services and payment processing |  |  | 385 |  |  |  | 1,644 |  |  |  | 2,455 |
Supply chain costs |  |  | 119 |  |  |  | 465 |  |  |  | 741 |
Total expenses |  | $ | 7,668 |  |  | $ | 30,626 |  |  | $ | 47,214 |
Number of Lands’ End Shops at Sears at period end (1) |  |  | — |  |  |  | 49 |  |  |  | 174 |
(1) | During Fiscal 2019, Fiscal 2018 and Fiscal 2017, 49, 125 and 42 Lands' End Shops at Sears were closed, respectively.
General Corporate Services Related party costs charged by Sears Holdings or Transform Holdco to the Company for general corporate services were as follows:
(in thousands) |  | Fiscal 2019 |  |  | Fiscal 2018 |  |  | Fiscal 2017 |
Sourcing |  | $ | 7,456 |  |  | $ | 7,530 |  |  | $ | 10,243 |
Shop Your Way Loyalty Program |  |  | 108 |  |  |  | 933 |  |  |  | 1,119 |
Shared services |  |  | 176 |  |  |  | 190 |  |  |  | 176 |
Total expenses, net |  | $ | 7,740 |  |  | $ | 8,653 |  |  | $ | 11,538 |
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. The Company's contract under which it receives sourcing services from an affiliate of Sears Holdings runs through June 30, 2020. 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 Consolidated Statements of Operations. Use of Intellectual Property or Services Related party revenue charged by the Company to Sears Holdings for the use of intellectual property or services is as follows:
(in thousands) |  | Fiscal 2019 |  |  | Fiscal 2018 |  |  | Fiscal 2017 |
Call center services |  | $ | — |  |  | $ | — |  |  | $ | 1,160 |
Lands' End business outfitters revenue |  |  | 4 |  |  |  | 845 |  |  |  | 1,045 |
Credit card revenue |  |  | 375 |  |  |  | 709 |  |  |  | 980 |
Royalty income |  |  | 142 |  |  |  | 189 |  |  |  | 213 |
Gift card revenue |  |  | (14 | ) |  |  | (17 | ) |  |  | (32 | )
Total income |  | $ | 507 |  |  | $ | 1,726 |  |  | $ | 3,366 |
Additional Related Party Balance Sheet Information Following the Sears Filing, the Company began netting payables due to Sears Holdings or Transform Holdco, as applicable, against receivables due from Sears Holdings or Transform Holdco if and as allowed under its contracts. As a result, receivables and payables have been netted and are presented as a net receivable balance in Accounts receivable, net in the Consolidated Balance Sheets. These amounts were immaterial as of January 31, 2020 and February 1, 2019. In the third quarter Fiscal 2018, the Company recorded a non-cash charge of $2.6 million in Other expense, net, in the Consolidated Statement of Operations to reflect a reserve relating to pre-Separation UTBs (including penalties and interest) for which Sears Holdings Corporation indemnified the Company under a Tax Sharing Agreement entered into in connection with the Separation, the recovery of which had become uncertain as a result of the Sears Filing. Sears Holdings rejected the Tax Sharing Agreement, per an order approved on April 4, 2019. There was not an indemnification receivable as of January 31, 2020 and February 1, 2019.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 + Details
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