NOTE 11 – REVENUE RECOGNITION:
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
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.
None
of
the
credit
card
receivables
are
secured.
The
Company
estimated customer credit losses
of $
206,000
414,000
for the three
and six months
ended August 1,
2026,
respectively,
compared
to
$
227,000
442,000
for
the
three
and
six
months
ended
August
2,
2025,
respectively.
Sales
purchased
on
the
Company’s
proprietary
credit
card
for
the
three
and
six
months
ended
August
1,
2026
were
$
5.1
10.3
million,
respectively,
compared
to
$
5.7
million and $
11.1
million for the three and six months ended August 2, 2025, respectively.
The
following
table
provides
information
about
receivables
and
contract
liabilities
from
contracts
with
customers (in thousands):