Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Use of Significant Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of the Company’s assets, liabilities, revenues, and expenses, as well as the disclosures relating to contingent assets and liabilities at the date of the consolidated financial statements. Significant areas requiring the use of management estimates include the valuation of inventories, accounts receivable valuation allowances, sales return allowances, and the useful lives of assets for depreciation or amortization. Actual results could differ from these estimates. The Company revises its estimates and assumptions as new information becomes available. Cash and Cash Equivalents Cash and cash equivalents represent cash on hand, deposits with financial institutions, and investments with an original maturity of three months or less. Investments Short-term investments consist of investments with a maturity within one year of the balance sheet date. As of February 3, 2018 , these investments consisted of a certificate of deposit, municipal securities, U.S. and non-U.S. corporate debt securities, and commercial paper. As of January 28, 2017 , short-term investments consisted of a certificate of deposit with a maturity of one year and a one-time option to accelerate maturity to 31 days without penalty. Long-term investments consist of investments with a maturity of greater than one year from the balance sheet date. As of February 3, 2018 , these investments consisted of municipal securities, U.S. and non-U.S. corporate debt securities, and U.S. treasury securities. The Company did not have long-term investments as of January 28, 2017 . The Company’s objective with respect to these investments is to earn a higher rate of return, relative to deposit accounts, on funds that are otherwise not anticipated to be required to meet liquidity needs in the near term while maintaining a low level of investment risk. Refer to Note 14 herein for additional information regarding the Company's investments. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. Appropriate consideration is given to obsolescence, excess quantities, and other factors, including the popularity of a pattern or product, in evaluating net realizable value. The Company's inventory consists solely of finished goods. Property, Plant, and Equipment Property, plant, and equipment are carried at cost and depreciated or amortized over the following estimated useful lives using the straight-line method: Buildings and building improvements .............................................. 39.5 years Land improvements ........................................................................... 5 – 15 years Furniture and fixtures, and leasehold improvements ........................ 3 – 10 years Equipment ......................................................................................... 7 years Vehicles ............................................................................................. 5 years Computer equipment and software ................................................... 3 – 5 years Leasehold improvements are amortized over the shorter of the life of the asset or the lease term. Lease terms typically range from three to ten years. When a decision is made to abandon property, plant, and equipment prior to the end of the previously estimated useful life, depreciation or amortization estimates are revised to reflect the use of the asset over the shortened estimated useful life. At the time of disposal, the cost of assets sold or retired and the related accumulated depreciation or amortization are removed from the accounts and any resulting loss is included in the Consolidated Statements of Income. Property, plant, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The reviews are conducted at the lowest identifiable level of cash flows. If the estimated undiscounted future cash flows related to the property, plant, and equipment are less than the carrying value, the Company recognizes a loss equal to the difference between the carrying value and the fair value, as further defined below in “Fair Value of Financial Instruments.” Routine maintenance and repair costs are expensed as incurred. The Company capitalizes certain costs incurred in connection with acquiring, modifying, and installing internal-use software. Capitalized costs are included in property, plant, and equipment and are amortized over three to five years . Software costs that do not meet capitalization criteria are expensed as incurred. Revenue Recognition and Accounts Receivable Revenue from the sale of the Company’s products is recognized upon customer receipt of the product when collection of the associated receivables is reasonably assured, persuasive evidence of an arrangement exists, the sales price is fixed and determinable, and ownership and risk of loss have been transferred to the customer, which, for e-commerce and most Indirect sales, reflects an adjustment for shipments that customers have not yet received. The adjustment of these shipments is based on actual delivery dates to the customer. Included in net revenues are product sales to Direct and Indirect customers, including amounts billed to customers for shipping fees. Costs related to shipping of product are classified in cost of sales in the Consolidated Statements of Income. Net revenues exclude sales taxes collected from customers and remitted to governmental authorities. Historical experience provides the Company the ability to reasonably estimate the amount of product sales that customers will return. Product returns are often resalable through the Company’s annual outlet sale or other channels. Additionally, the Company reserves for customer allowances for certain Indirect retailers based upon various contract terms and other potential product credits granted to Indirect retailers. The returns and credits reserve and the related activity for each fiscal year presented were as follows (in thousands): Balance at Beginning of Year Provision Charged to Net Revenues Allowances Taken / Written Off Balance at End of Year Fiscal year ended February 3, 2018 $ 5,360 $ 23,504 $ (26,169 ) $ 2,695 Fiscal year ended January 28, 2017 2,317 32,905 (29,862 ) 5,360 Fiscal year ended January 30, 2016 2,173 25,707 (25,563 ) 2,317 The Company establishes an allowance for doubtful accounts based on historical experience and customer-specific identification and believes that collections of receivables, net of the allowance for doubtful accounts, are reasonably assured. The allowance for doubtful accounts was approximately $0.9 million and $0.6 million as of February 3, 2018 , and January 28, 2017 , respectively. The Company sells gift cards with no expiration dates to customers and does not charge administrative fees on unused gift cards. Gift cards issued by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. In addition, the Company recognizes revenue on unredeemed gift cards when the likelihood of the gift card being redeemed is remote and there is no legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions. The Company determines the gift card breakage rate based on historical redemption patterns. The Company recorded $0.3 million of revenue related to gift card breakage during each of the fiscal years ended February 3, 2018 , January 28, 2017 , and January 30, 2016 . Gift card breakage is included in net revenues in the Consolidated Statements of Income, as well as Direct segment net revenues. Cost of Sales Cost of sales includes material and labor costs, freight, inventory shrinkage, operating lease costs, duty, and other operating expenses, including depreciation of the Company’s distribution center and equipment. Costs and related expenses to purchase and distribute the products are recorded as cost of sales when the related revenues are recognized. Operating Leases and Tenant-Improvement Allowances The Company has leases that contain rent holidays and predetermined, fixed escalations of minimum rentals. For each of these leases, the Company recognizes the related rent expense on a straight-line basis commencing on the date of initial possession of the leased property. The Company records the difference between the recognized rent expense and the amount payable under the lease as a deferred rent liability. As of February 3, 2018 and January 28, 2017 , deferred rent liability was $12.9 million and $12.7 million , respectively, and is included within long-term liabilities on the Consolidated Balance Sheets. The Company receives tenant-improvement allowances from some of the landlords of its leased properties. These allowances generally are in the form of cash received by the Company from its landlords as part of the negotiated lease terms. The Company records each tenant-improvement allowance as a deferred credit and amortizes the allowance on a straight-line basis as a reduction to rent expense over the term of the lease, commencing on the possession date. As of February 3, 2018 and January 28, 2017 , the deferred lease credit liability was $14.6 million and $15.8 million , respectively. Of this, $2.4 million is included within other accrued liabilities as of February 3, 2018 and January 28, 2017 and $12.2 million and $13.4 million is included within long-term liabilities on the Consolidated Balance Sheets as of February 3, 2018 and January 28, 2017 , respectively. Store Pre-Opening, Occupancy, and Operating Costs The Company charges costs associated with the opening of new stores to selling, general, and administrative expenses as incurred. Selling, general, and administrative expenses also include store operating costs, store employee compensation, and store occupancy and supply costs. Stock-Based Compensation The Company accounts for stock-based compensation using the fair-value recognition provisions of Accounting Standards Codification 718, Stock Compensation . Under these provisions, for its awards of restricted stock and restricted-stock units, the Company recognizes stock-based compensation expense in an amount equal to the fair market value of the underlying stock on the grant date of the respective award. The Company recognizes this expense, net of estimated forfeitures, on a straight-line basis over the requisite service period. Other Income and Advertising Costs The Company expenses advertising costs at the time the promotion first appears in media, in stores, or on the website, and includes those costs in selling, general, and administrative expenses in the Consolidated Statements of Income. The Company classifies the related recovery of a portion of such costs from Indirect retailers as other income in the Consolidated Statements of Income. Total advertising expense was as follows (in thousands): Fiscal year ended February 3, 2018 $ 26,953 Fiscal year ended January 28, 2017 32,222 Fiscal year ended January 30, 2016 33,392 Total recovery from Indirect retailers was as follows (in thousands): Fiscal year ended February 3, 2018 $ 367 Fiscal year ended January 28, 2017 1,000 Fiscal year ended January 30, 2016 2,180 Debt-Issuance Costs Unamortized debt-issuance costs totaled $0.5 million as of February 3, 2018 , and $0.6 million as of January 28, 2017 , and are included in other assets on the Consolidated Balance Sheets. Fiscal 2018 included $0.1 million of additional debt-issuance costs for Amendment No. 2 to the second amended and restated credit agreement which is being amortized over the remaining term of the agreement. Refer to Note 4 herein for additional information. Amortization expense of $0.2 million is included in interest expense in the Consolidated Statements of Income for each of the fiscal years ended February 3, 2018 , January 28, 2017 , and January 30, 2016 . Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date: • Level 1 – Quoted prices in active markets for identical assets or liabilities; • Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; • Level 3 – Unobservable inputs based on the Company’s own assumptions. The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement. The carrying amounts reflected on the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, other current assets, and accounts payable as of February 3, 2018 and January 28, 2017 , approximated their fair values. The following table details the fair value measurements of the Company's investments as of February 3, 2018 and January 28, 2017 (in thousands): Level 1 Level 2 Level 3 February 3, 2018 January 28, 2017 February 3, 2018 January 28, 2017 February 3, 2018 January 28, 2017 Cash equivalents (1) $ 1,889 $ — $ 4,058 $ — $ — $ — Short-term investments: Certificate of deposit — — 25,032 30,152 — — Municipal securities — — 12,942 — — — U.S. corporate debt securities — — 8,727 — — — Non-U.S. corporate debt securities — — 6,451 — — — Commercial paper — — 998 — — — Long-term investments: Municipal securities — — 5,098 — — — U.S. corporate debt securities — — 4,543 — — — U.S. treasury securities 3,099 — — — — — Non-U.S. corporate debt securities — — 2,775 — — — (1) Cash equivalents include commercial paper, a money market fund, and municipal securities that have a maturity of three months or less at the date of purchase. Due to their short maturity, the Company believes the carrying value approximates fair value. The Company has certain assets that are measured on a non-recurring basis under circumstances and events described in Note 3 herein. The categorization of the framework to price these assets are within Level 3 due to the subjective nature of unobservable inputs. Income Taxes The Company accrues income taxes payable or refundable and recognizes deferred tax assets and liabilities based on differences between the book and tax bases of assets and liabilities. The Company measures deferred tax assets and liabilities using enacted rates in effect for the years in which the differences are expected to reverse, and recognizes the effect of a change in enacted rates in the period of enactment. As such, the Company recognized additional income tax expense of $2.1 million during fiscal 2018 upon the enactment of the Tax Cuts and Jobs Act. Refer to Note 5 herein for additional information. The Company establishes liabilities for uncertain positions taken or expected to be taken in income tax returns, using a more-likely-than-not recognition threshold. The Company includes in income tax expense any interest and penalties related to uncertain tax positions. Recently Issued Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This guidance requires companies to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard allows for either a full retrospective or a modified retrospective transition method. In August 2015, the FASB issued ASU 2015-14 to defer the effective date of ASU 2014-09 for all entities by one year to annual periods beginning after December 15, 2017, including interim periods within that reporting period, which for the Company is February 4, 2018 (the beginning of the Company's fiscal 2019). Earlier application is permitted as of the original effective date, annual reporting periods beginning after December 2016, including interim periods within that reporting period. The Company has completed its assessment regarding the impact of the adoption of the standard on its consolidated financial statements and determined that the standard will impact the Company's adjustments to revenue for shipments not yet received, recognition of revenue for unredeemed gift cards, and recognition of licensing revenue. The Company will no longer adjust revenue for shipments not yet received at each reporting period as it will recognize revenue as control is passed to the customer. It was determined that control is passed to the customer upon shipment, consistent with when legal title is passed. This will accelerate the recognition of revenue at each reporting period compared to the Company's historical practice. Revenue for unredeemed gift cards will be estimated and recognized based on the historical patterns of gift card redemption. Historically, the Company recognized revenue for gift card breakage when the likelihood of the customer exercising their remaining rights became remote. This will accelerate the recognition of gift card breakage revenue at each reporting period compared to the Company's historical practice. Revenue associated with contractually guaranteed minimum royalties in sales-based royalty arrangements will be recognized straight-line over the remaining license period once determined that the minimum sales level will not be achieved. Historically, the Company recognized any excess of the guaranteed minimum royalty over the actual royalties earned at the end of the license period. The Company will adopt the standard in the first quarter of fiscal 2019 using the modified retrospective method with a cumulative adjustment to beginning retained earnings. The Company expects this cumulative adjustment and the future impact to the Company's Consolidated Balance Sheets and Consolidated Statements of Income to be immaterial. In February 2016, the FASB issued ASU 2016-02, Leases, which increases transparency and comparability among organizations by requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and disclosing key information about leasing arrangements. This guidance is effective for interim and annual periods beginning on or after December 15, 2018. The Company has operating leases at all of its retail stores; therefore, the adoption of this standard will result in a material increase of assets and liabilities on the Company's Consolidated Balance Sheets. The Company is continuing to evaluate the impact on its consolidated results of operations and cash flows. |