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Related Party Transactions
9 Months Ended
Oct. 30, 2020
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 10. RELATED PARTY TRANSACTIONS

 

According to statements on Schedule 13D filed with the SEC by ESL, ESL beneficially owns significant portions of both the Company's outstanding shares of common stock and while it was publicly traded, owned a significant portion of the common stock of Sears Holdings Corporation. Therefore, Sears Holdings Corporation, 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 interest of Transform Holdco and therefore considers that entity to be a related party as well.

 

Sourcing

 

The Company contracted with a subsidiary of Sears Holdings, which became a subsidiary of Transform Holdco, to provide agreed upon buying agency services, on a non-exclusive basis, in foreign territories from where the Company purchases merchandise. The Company’s contract for these services expired on June 30, 2020.  

 

These services, primarily based upon quantities purchased, include quality-control functions, regulatory compliance, product claims management and new vendor selection and setup assistance.  There was no expense from these services for the 13 weeks ended October 30, 2020.  The expense from these services for the 13 weeks ended November 1, 2019 was $3.2 million.  Total expense from these services for the 39 weeks ended October 30, 2020 and November 1, 2019 was $2.2 million and $6.2 million respectively.  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 Operations.