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Revenue
 9 Months Ended
Oct. 27, 2023
Revenue from Contract with Customer [Abstract]  
Revenue

NOTE 14. REVENUE

 

Revenue includes sales of merchandise and delivery revenue related to merchandise sold. Substantially all of the Company’s revenue is recognized when control of product passes to customers, which for the U.S. eCommerce, International, Outfitters and Third Party distribution channels is when the merchandise is received by the customer and for the Retail distribution channel is at the time of sale in the store. The Company recognizes revenue, including shipping and handling fees billed to customers, in the amount expected to be received when control of the Company’s products transfers to customers, and is presented net of various forms of promotions, which range from contractually fixed percentage price reductions to sales returns, discounts, and other incentives that may vary in amount. Variable amounts are estimated based on an analysis of historical experience and adjusted as better estimates become available.

 

The Company’s revenue is disaggregated by distribution channel and geographic location. Revenue by distribution channel is presented in Note 13, Segment Reporting. Revenue by geographic location was:

 

 

 

13 Weeks Ended

 

 

39 Weeks Ended

 

(in thousands)

 

October 27, 2023

 

 

October 28, 2022

 

 

October 27, 2023

 

 

October 28, 2022

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

294,103

 

 

$

327,780

 

 

$

871,160

 

 

$

893,205

 

Europe

 

 

26,693

 

 

 

28,946

 

 

 

75,875

 

 

 

94,386

 

Asia (1)

 

 

119

 

 

 

9,620

 

 

 

405

 

 

 

26,059

 

Other

 

 

3,820

 

 

 

4,637

 

 

 

10,216

 

 

 

12,176

 

Total Net revenue

 

$

324,735

 

 

$

370,983

 

 

$

957,656

 

 

$

1,025,826

 
(1)
The 13 weeks and 39 weeks ended October 28, 2022 includes Net revenue of $9.5 million and $25.5 million, respectively, from the Japan eCommerce distribution channel. See Note 9, Lands’ End Japan Closure.

 

 

Contract Liabilities

 

Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in Net revenue in the Condensed Consolidated Statements of Operations. The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer, which is reported in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets, as well as amounts recognized through Net revenue for each period presented. The majority of deferred revenue as of October 27, 2023 is expected to be recognized in Net revenue in the fiscal quarter ending February 2, 2024, as products are delivered to customers.

 

 

13 Weeks Ended

 

 

39 Weeks Ended

 

(in thousands)

 

October 27, 2023

 

 

October 28, 2022

 

 

October 27, 2023

 

 

October 28, 2022

 

Deferred revenue beginning of period

 

$

8,081

 

 

$

9,757

 

 

$

7,484

 

 

$

8,560

 

Deferred revenue recognized in period

 

 

(7,867

)

 

 

(9,543

)

 

 

(7,270

)

 

 

(8,346

)

Revenue deferred in period

 

 

13,586

 

 

 

13,198

 

 

 

13,586

 

 

 

13,198

 

Deferred revenue end of period

 

$

13,800

 

 

$

13,412

 

 

$

13,800

 

 

$

13,412

 

 

Revenue from gift cards is recognized (i) when the gift card is redeemed by the customer for merchandise, or (ii) as gift card breakage, an estimate of gift cards which will not be redeemed where the Company does not have a legal obligation to remit the value of the unredeemed gift cards to the relevant jurisdictions. Gift card breakage is recorded within Net revenue in the Condensed Consolidated Statements of Operations. Prior to their redemption, gift cards are recorded as a liability and included within Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards:

 

 

13 Weeks Ended

 

 

39 Weeks Ended

 

(in thousands)

 

October 27, 2023

 

 

October 28, 2022

 

 

October 27, 2023

 

 

October 28, 2022

 

Balance as of beginning of period

 

$

33,556

 

 

$

31,444

 

 

$

33,029

 

 

$

33,070

 

Gift cards sold

 

 

14,275

 

 

 

15,075

 

 

 

43,062

 

 

 

46,745

 

Gift cards redeemed

 

 

(13,168

)

 

 

(15,033

)

 

 

(39,851

)

 

 

(47,746

)

Gift card breakage

 

 

(921

)

 

 

(466

)

 

 

(2,498

)

 

 

(1,049

)

Balance as of end of period

 

$

33,742

 

 

$

31,020

 

 

$

33,742

 

 

$

31,020

 

 

Refund Liabilities

 

Refund liabilities, primarily associated with product sales returns and retrospective volume rebates, represent variable consideration and are estimated and recorded as a reduction to Net revenue based on historical experience. As of October 27, 2023, October 28, 2022 and January 27, 2023, $22.0 million, $23.6 million and $25.0 million, respectively, of refund liabilities, primarily associated with product returns, were reported in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. An asset for product returns is recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.