13. Revenue

Revenue Recognition

The Company’s primary source of revenue is derived from the sale of clothing and accessories to its customers with the Company’s performance obligations satisfied immediately when the customer pays for their purchase and receives the merchandise. Sales taxes collected by the Company from customers are excluded from revenue. Revenue from layaway sales is recognized at the point in time when the merchandise is paid for and control of the goods is transferred to the customer, thereby satisfying the Company’s performance obligation. Non-refundable layaway service fees are recognized in revenue when collected by the Company from customers. The Company defers revenue from the sale of gift cards and recognizes the associated revenue upon the redemption of the cards by customers to purchase merchandise.

Sales Returns

The Company allows customers to return merchandise for up to thirty days after the date of sale. Expected refunds to customers are recorded based on estimated margin using historical return information. The refund liability for merchandise returns is included in “Accrued expenses” on the condensed consolidated balance sheet and totaled $0.4 million and $0.3 million as of November 2, 2019 and February 2, 2019, respectively. The corresponding asset for the recoverable cost of expected refunds is included in “Prepaid and other current assets” and totaled $0.3 million and $0.2 million as of November 2, 2019 and February 2, 2019, respectively.

Disaggregation of Revenue

The Company’s retail operations represent a single operating segment based on the way the Company manages its business. Operating decisions and resource allocation decisions are made at the Company level in order to maintain a consistent retail store presentation. The Company’s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers.

In the following table, the Company’s revenue from contracts with customers is disaggregated by major product line. The percentage of net sales related to each classification of its merchandise assortment for the thirty-nine and thirteen week periods ended November 2, 2019 and November 3, 2018 was approximately:


	Thirty-Nine Weeks Ended				Thirteen Weeks Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Accessories	33	%	32	%	33	%	33	%
Ladies'	23	%	23	%	21	%	21	%
Children's	22	%	23	%	24	%	24	%
Men's	16	%	17	%	16	%	16	%
Home	6	%	5	%	6	%	6	%