The
Company
recognizes
sales
at
the
point
of
purchase
when
the
customer
takes
possession
of
the
merchandise
and
pays
for
the
purchase,
generally
with
cash
or
credit.
Sales
from
purchases
made
with
Cato
credit,
gift
cards
and
layaway
sales
from
stores
are
also
recorded
when
the
customer
takes
possession of
the merchandise. E-commerce
sales are
recorded when the
risk of
loss is
transferred to the
customer.
Gift cards
are recorded
as deferred
revenue until they
are redeemed
or forfeited.
Gift cards
do
not have expiration dates. Layaway transactions are recorded as
deferred revenue until the customer takes
possession or
forfeits the
merchandise. A
provision is
made for
estimated merchandise
returns based
on
sales
volumes
and
the
Company’s
experience;
actual
returns
have
not
varied
materially
from
historical
amounts.
A
provision
is
made
for
estimated
write-offs
associated
with
sales
made
with
the
Company’s
proprietary credit
card. In
addition, a
provision is
made for
estimated rewards
cards issued
to customers
based
on
their
purchases
with
the
Company’s
propriety
credit
card.
The
rewards
cards
issued
by
the
Company have
a 90-day
expiration.
Amounts related
to shipping
and handling
billed to
customers in
a
sales
transaction
are
classified
as
Other
revenue
and
the
costs
related
to
shipping product
to
customers
(billed and accrued) are classified as Cost of goods sold.
The Company
offers its
own proprietary
credit card
to customers.
All credit
activity is
performed by
the
Company’s
wholly-owned subsidiaries.
No
ne
of the
credit card
receivables are
secured.
The
Company
estimated customer credit losses of $
207,000
215,000
for the periods ended May 2, 2026 and May 3,
2025,
respectively,
on
sales purchased
using the
Company’s
proprietary credit
card
of
$
5.2
$
5.4
million for the periods ended May 2, 2026 and May 3, 2025, respectively.
The
following
table
provides
information
about
receivables
and
contract
liabilities
from
contracts
with
customers (in thousands):