CarParts.com, Inc. Revenue Disclosure
Revenue Recognition
The Company recognizes revenue from product sales and shipping revenues, net of promotional discounts and return allowances, when the following revenue recognition criteria are met: a contract has been identified, separate performance obligations are identified, the transaction price is determined, the transaction price is allocated to separate performance obligations and revenue is recognized upon satisfying each performance obligation. The Company transfers the risk of loss or damage upon shipment, therefore, revenue from product sales is recognized when it is shipped to the customer. Return allowances, which reduce product revenue by the Company’s best estimate of expected product returns, are estimated using historical experience.
The Company evaluates the criteria of ASC 606 - Revenue Recognition Principal Agent Considerations in determining whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. Generally, when the Company is primarily responsible for fulfilling the promise to provide a specified good or service, the Company is subject to inventory risk before the good or service has been transferred to a customer and the Company has discretion in establishing the price, revenue is recorded at gross.
Payments received prior to the delivery of goods to customers are recorded as deferred revenue in other current liabilities in the consolidated balance sheets.
The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include current discount offers, such as percentage discounts off current purchases and other similar offers. Current discount offers, when accepted by the Company’s customers, are treated as a reduction to the purchase price of the related transaction.
Sales discounts are recorded in the period in which the related sale is recognized. Sales return allowances are estimated based on historical amounts and are recorded upon recognizing the related sales. Credits are issued to customers for returned products.
No customer accounted for more than 10% of the Company’s net sales.
The following table provides an analysis of the allowance for sales returns and the allowance for expected credit losses (in thousands):
Charged to | ||||||||||||
Balance at | Revenue, | Balance at | ||||||||||
Beginning | Cost or | End of | ||||||||||
| of Period | | Expenses | | Deductions | | Period | |||||
Fifty-Three Weeks Ended January 3, 2026 |
| |
| |
| |
| | ||||
Allowance for sales returns | $ | 2,888 | $ | 39,425 | $ | (40,103) | $ | 2,210 | ||||
Allowance for expected credit losses |
| 69 |
| 142 |
| (98) |
| 113 | ||||
Fifty-Two Weeks Ended December 28, 2024 |
| |
| |
| | ||||||
Allowance for sales returns | $ | 3,191 | $ | 42,542 | $ | (42,845) | $ | 2,888 | ||||
Allowance for expected credit losses |
| 1 |
| 144 |
| (76) |
| 69 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 5, 2026 | Showing above |
| 2024 | Mar 26, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 2, 2022 | |
| 2017 | Mar 14, 2018 | |
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.