The Michaels Companies, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

REVENUE RECOGNITION

REVENUE RECOGNITION

9 Months Ended

Oct. 31, 2020

3. REVENUE RECOGNITION

Our revenue is primarily associated with sales of merchandise to customers within our stores, customers utilizing our e-commerce platforms and through Darice. Revenue from sales of our merchandise is recognized when the customer takes possession of the merchandise. Payment for our retail sales is typically due at the time of the sale.

Customer Receivables

As of October 31, 2020, February 1, 2020 and November 2, 2019, receivables from customers, which consist primarily of trade receivables related to Darice, were approximately $6.1 million, $13.3 million and $18.0 million, respectively, and are included in accounts receivable, net in the consolidated balance sheets.

Gift Cards

The gift card liability is included in accrued liabilities and other in the consolidated balance sheets. The following table includes activity related to gift cards (in thousands):


	13 Weeks Ended				39 Weeks Ended
	October 31,		November 2,		October 31,		November 2,
	2020		2019		2020		2019
Balance at beginning of period	$	60,123	$	55,764	$	64,130	$	61,071
Issuance of gift cards		12,784		11,878		31,095		36,343
Revenue recognized ⁽¹⁾		(12,980)		(12,300)		(35,199)		(41,715)
Gift card breakage		(621)		(724)		(720)		(1,081)
Balance at end of period	$	59,306	$	54,618	$	59,306	$	54,618

(1)

Revenue recognized from the beginning liability during the third quarters of fiscal 2020 and fiscal 2019 totaled $6.5 million and $6.9 million, respectively. Revenue recognized from the beginning liability during the first nine months of fiscal 2020 and fiscal 2019 totaled $16.3 million and $19.4 million, respectively.