Revenue Recognition
Accounts receivable, net from revenue-generating activities were $66 million as of January 31, 2026 and $81 million as of February 1, 2025. These accounts receivable primarily relate to amounts due from the Company’s franchise, license and wholesale partners. Under these arrangements, payment terms are typically 45 to 75 days.
The Company records deferred revenue when cash payments are received in advance of transfer of control of goods or services. Deferred revenue primarily relates to gift cards, loyalty points and rewards, and direct channel shipments not received by the customer, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue, which is recorded within Accrued Expenses and Other on the Consolidated Balance Sheets, was $223 million as of January 31, 2026 and $197 million as
of February 1, 2025. The Company recognized $125 million as revenue in 2025 from amounts recorded as deferred revenue at the beginning of the Company’s fiscal year.
The following table provides a disaggregation of Net Sales for 2025, 2024 and 2023:
| | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| (in millions) |
| Stores - U.S. and Canada (a) | $ | 5,582 | | | $ | 5,534 | | | $ | 5,507 | |
| Direct - U.S. and Canada | 1,395 | | | 1,474 | | | 1,582 | |
| International (b) | 314 | | | 299 | | | 340 | |
| Total Net Sales | $ | 7,291 | | | $ | 7,307 | | | $ | 7,429 | |
_______________(a)Results include fulfilled buy online pick up in store orders.
(b)Results include royalties associated with franchised stores and wholesale sales.
The Company’s Net Sales outside of the U.S. include sales from Company-operated stores and its e-commerce site in Canada, royalties associated with franchised stores and wholesale sales. Certain of these sales are subject to the impact of fluctuations in foreign currency. The Company’s Net Sales outside of the U.S. totaled $707 million in 2025, $691 million in 2024 and $723 million in 2023.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.