Company Quick10K Filing
Sportsman's Warehouse
Price5.19 EPS0
Shares44 P/E21
MCap226 P/FCF4
Net Debt20 EBIT20
TEV246 TEV/EBIT12
TTM 2019-11-02, in MM, except price, ratios
10-Q 2020-08-01 Filed 2020-09-04
10-Q 2020-05-02 Filed 2020-06-05
10-K 2020-02-01 Filed 2020-04-09
10-Q 2019-11-02 Filed 2019-12-06
10-Q 2019-08-03 Filed 2019-08-30
10-Q 2019-05-04 Filed 2019-05-31
10-K 2019-02-02 Filed 2019-03-29
10-Q 2018-11-03 Filed 2018-11-29
10-Q 2018-08-04 Filed 2018-08-24
10-Q 2018-05-05 Filed 2018-05-25
10-K 2018-02-03 Filed 2018-03-29
10-Q 2017-10-28 Filed 2017-11-17
10-Q 2017-07-29 Filed 2017-08-18
10-Q 2017-04-29 Filed 2017-05-19
10-K 2017-01-28 Filed 2017-03-24
10-Q 2016-10-29 Filed 2016-11-18
10-Q 2016-07-30 Filed 2016-08-19
10-Q 2016-04-30 Filed 2016-05-25
10-K 2016-01-30 Filed 2016-03-24
10-Q 2015-10-31 Filed 2015-11-20
10-Q 2015-08-01 Filed 2015-08-28
10-Q 2015-05-02 Filed 2015-05-29
10-K 2015-01-31 Filed 2015-04-02
10-Q 2014-11-01 Filed 2014-12-05
10-Q 2014-08-02 Filed 2014-09-12
10-Q 2014-05-03 Filed 2014-06-11
8-K 2020-09-02 Earnings, Exhibits
8-K 2020-07-06 Accountant, Exhibits
8-K 2020-06-05
8-K 2020-06-04
8-K 2020-04-03
8-K 2020-03-26
8-K 2020-01-10
8-K 2020-01-09
8-K 2019-12-18
8-K 2019-12-04
8-K 2019-10-17
8-K 2019-09-28
8-K 2019-09-13
8-K 2019-09-12
8-K 2019-08-28
8-K 2019-06-07
8-K 2019-06-03
8-K 2019-05-30
8-K 2019-04-08
8-K 2019-03-25
8-K 2019-03-07
8-K 2019-01-14
8-K 2019-01-10
8-K 2018-11-28
8-K 2018-11-01
8-K 2018-08-23
8-K 2018-07-23
8-K 2018-07-18
8-K 2018-05-29
8-K 2018-05-24
8-K 2018-05-24
8-K 2018-05-17
8-K 2018-03-28
8-K 2018-03-13

SPWH 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 5. Other Information
Item 6. Exhibits
EX-31.1 spwh-20200801xex31d1.htm
EX-31.2 spwh-20200801xex31d2.htm
EX-32.1 spwh-20200801xex32d1.htm

Sportsman's Warehouse Earnings 2020-08-01

Balance SheetIncome StatementCash Flow
67552938323791-552014201620182020
Assets, Equity
2451941439241-102014201620182020
Rev, G Profit, Net Income
35205-10-25-402014201620182020
Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 1, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-36401

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

39-1975614

(State or other jurisdiction
of incorporation or organization)

(I.R.S. Employer
Identification No.)

1475 West 9000 South, Suite A, West Jordan, Utah

84088

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (801566-6681

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $.01 par value

SPWH

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

    

Large accelerated filer

    

Accelerated filer

    

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of September 4, 2020, the registrant had 43,607,267 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

TABLE OF CONTENTS

 

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited):

4

Condensed Consolidated Balance Sheets

4

Condensed Consolidated Statements of Operations

5

Condensed Consolidated Statement of Stockholders’ Equity

6

Condensed Consolidated Statements of Cash Flows

7

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

30

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 5.

Other Information

31

Item 6.

Exhibits

32

Signatures

33

We operate on a fiscal calendar that, in a given fiscal year, consists of the 52- or 53-week period ending on the Saturday closest to January 31st. Our fiscal second quarters ended August 1, 2020 and August 3, 2019 both consisted of 13 weeks and are referred to herein as the second quarter of fiscal year 2020 and the second quarter of fiscal year 2019, respectively. Fiscal year 2020 contains 52 weeks of operations and will end on January 30, 2021. Fiscal year 2019 contained 52 weeks of operations ended on February 1, 2020.

Table of Contents

References throughout this document to “Sportsman’s Warehouse,” “we,” “us,” and “our” refer to Sportsman’s Warehouse Holdings, Inc. and its subsidiaries, and references to “Holdings” refer to Sportsman’s Warehouse Holdings, Inc. excluding its subsidiaries.

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “10-Q”) contains statements that constitute forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995. These statements concern our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition, which are subject to risks and uncertainties. All statements other than statements of historical fact included in this 10-Q are forward-looking statements. These statements may include words such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “should,” “target,” “will,” “would” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events or trends. For example, all statements we make relating to our plans and objectives for future operations, growth or initiatives and strategies are forward-looking statements.

These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors is very difficult, and we cannot anticipate all factors that could affect our actual results.

All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to:

the impact of COVID-19 pandemic and measures intended to reduce its spread on our operations;
our ability to integrate the ten stores we recently acquired from Dick’s Sporting Goods;
our retail-based business model and the impact of general economic conditions and economic and financial uncertainties on consumer spending;
current and future government regulations, in particular regulations relating to the sale of firearms and ammunition;
our concentration of stores in the Western United States;
the highly fragmented and competitive industry in which we operate and the potential for increased competition;
changes in consumer demands, including regional preferences, which we may not be able to identify and respond to in a timely manner;
our entrance into new markets or operations in existing markets, which may not be successful; and
remediation of identified material weaknesses in our internal control over financial reporting.

The above is not a complete list of factors or events that could cause actual results to differ from our expectations, and we cannot predict all of them. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements disclosed under “Part I. Item 1A. Risk Factors,” appearing in our Annual Report on Form 10-K for the fiscal year ended February 1, 2019 and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this 10-Q, as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, including subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and public communications. You should evaluate all forward-looking statements made in this 10-Q and otherwise in the context of these risks and uncertainties.

2

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Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on any forward-looking statements we make. These forward-looking statements speak only as of the date of this 10-Q and are not guarantees of future performance or developments and involve known and unknown risks, uncertainties and other factors that are in many cases beyond our control. Except as required by law, we undertake no obligation to update or revise any forward-looking statements publicly, whether as a result of new information, future developments or otherwise.

3

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Amounts in Thousands, Except Per Share Data

(unaudited)

August 1,

February 1,

    

2020

    

2020

 

Assets

Current assets:

Cash

$

12,288

$

1,685

Accounts receivable, net

551

904

Merchandise inventories

296,765

275,505

Income tax receivable

812

Prepaid expenses and other

16,469

12,732

Total current assets

326,073

291,638

Operating lease right of use asset

223,602

224,520

Property and equipment, net

95,402

98,767

Goodwill

1,496

1,496

Definite lived intangibles, net

207

220

Total assets

$

646,780

$

616,641

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

128,054

$

38,157

Accrued expenses

98,764

70,118

Income taxes payable

7,291

Operating lease liability, current

35,854

34,487

Revolving line of credit

2,858

116,078

Current portion of long-term debt, net of discount and debt issuance costs

5,936

Total current liabilities

272,821

264,776

Long-term liabilities:

Long-term debt, net of discount, debt issuance costs, and current portion

15,901

23,781

Deferred income taxes

3,470

562

Operating lease liability, noncurrent

211,851

217,254

Total long-term liabilities

231,222

241,597

Total liabilities

504,043

506,373

Commitments and contingencies

Stockholders' equity:

Preferred stock, $.01 par value; 20,000 shares authorized; 0 shares issued and outstanding

Common stock, $.01 par value; 100,000 shares authorized; 43,591 and 43,296 shares issued and outstanding, respectively

436

433

Additional paid-in capital

87,941

86,806

Accumulated earnings

54,360

23,029

Total stockholders' equity

142,737

110,268

Total liabilities and stockholders' equity

$

646,780

$

616,641

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Amounts in Thousands Except Per Share Data

(unaudited)

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 1,

August 3,

August 1,

August 3,

2020

2019

2020

2019

Net sales

$

380,989

$

211,766

$

627,824

$

385,783

Cost of goods sold

251,896

138,544

423,957

258,388

Gross profit

129,093

73,222

203,867

127,395

Selling, general, and administrative expenses

83,606

63,460

158,825

122,990

Income from operations

45,487

9,762

45,042

4,405

Interest expense

1,017

2,353

2,551

4,458

Income (loss) before income taxes

44,470

7,409

42,491

(53)

Income tax expense (benefit)

12,009

1,911

11,160

(92)

Net income

$

32,461

$

5,498

$

31,331

$

39

Earnings per share:

Basic

$

0.75

$

0.13

$

0.72

$

0.00

Diluted

$

0.73

$

0.13

$

0.71

$

0.00

Weighted average shares outstanding:

Basic

43,537

43,130

43,430

43,065

Diluted

44,368

43,155

44,098

43,090

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

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SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Amounts in Thousands

(unaudited)

For the Thirteen Weeks Ended August 1, 2020 and August 3, 2019

Common Stock

Restricted nonvoting
common stock

Additional
paid-in-
capital

Accumulated
(deficit) earnings

Total
stockholders'
equity

    

Shares

    

Amount

    

Shares

    

Amount

    

Amount

    

Amount

    

Amount

Balance at May 4, 2019

43,174

$

432

$

$

84,753

$

(2,645)

$

82,540

Vesting of restricted stock units

2

Issuance of common stock for cash per employee stock purchase plan

54

175

175

Stock based compensation

494

494

Net income

5,498

5,498

Balance at August 3, 2019

43,230

$

432

$

$

85,422

$

2,853

$

88,707

Balance at May 2, 2020

43,551

$

436

$

$

86,850

$

21,899

$

109,185

Issuance of common stock for cash per employee stock purchase plan

40

273

273

Stock based compensation

818

818

Net income

32,461

32,461

Balance at August 1, 2020

43,591

$

436

$

$

87,941

$

54,360

$

142,737

For the Twenty-Six Weeks Ended August 1, 2020 and August 3, 2019

Common Stock

Restricted nonvoting
common stock

Additional
paid-in-
capital

Accumulated
(deficit) earnings

Total
stockholders'
equity

    

Shares

    

Amount

    

Shares

    

Amount

    

Amount

    

Amount

    

Amount

Balance at February 2, 2019

42,978

$

430

$

$

84,671

$

(6,441)

$

78,660

Impact of change for ASC 842 adoption

9,255

9,255

Vesting of restricted stock units

198

2

(2)

Payment of withholdings on restricted stock units

(369)

(369)

Issuance of common stock for cash per employee stock purchase plan

54

174

174

Stock based compensation

948

948

Net income

39

39

Balance at August 3, 2019

43,230

$

432

$

$

85,422

$

2,853

$

88,707

Balance at February 1, 2020

43,296

$

433

$

$

86,806

$

23,029

$

110,268

Vesting of restricted stock units

255

3

(3)

Payment of withholdings on restricted stock units

(689)

(689)

Issuance of common stock for cash per employee stock purchase plan

40

273

273

Stock based compensation

1,554

1,554

Net income

31,331

31,331

Balance at August 1, 2020

43,591

$

436

$

$

87,941

$

54,360

$

142,737


The accompanying notes are an integral part of these condensed consolidated financial statements

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SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Amounts in Thousands

(unaudited)

Twenty-Six Weeks Ended

August 1,

August 3,

    

2020

2019

Cash flows from operating activities:

Net income

$

31,331

$

39

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property and equipment

10,670

9,245

Amortization and write-off of discount on debt and deferred financing fees

311

170

Amortization of definite lived intangible

10

13

Loss (gain) on asset dispositions

803

(311)

Noncash lease expense

13,787

14,002

Deferred income taxes

2,908

307

Stock-based compensation

1,554

948

Change in operating assets and liabilities, net of amounts acquired:

Accounts receivable, net

353

10

Operating lease liabilities

(15,807)

(14,895)

Merchandise inventories

(16,943)

(12,710)

Prepaid expenses and other

(3,863)

634

Accounts payable

87,665

39,040

Accrued expenses

24,866

1,860

Income taxes payable and receivable

8,103

(2,918)

Net cash provided by operating activities

145,748

35,434

Cash flows from investing activities:

Purchase of property and equipment, net of amounts acquired

(8,579)

(14,761)

Acquisition of Field and Stream stores, net of cash acquired

(3,444)

Proceeds from sale of property and equipment

311

Net cash used in investing activities

(12,023)

(14,450)

Cash flows from financing activities:

Net payments on line of credit

(113,220)

(17,180)

Increase in book overdraft, net

4,512

319

Proceeds from issuance of common stock per employee stock purchase plan

273

174

Payment of withholdings on restricted stock units

(687)

(369)

Principal payments on long-term debt

(14,000)

(4,000)

Net cash used in financing activities

(123,122)

(21,056)

Net change in cash

10,603

(72)

Cash at beginning of period

1,685

1,547

Cash at end of period

$

12,288

$

1,475

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest, net of amounts capitalized

$

2,535

$

4,356

Income taxes, net of refunds

149

2,519

Supplemental schedule of noncash activities:

Noncash change in operating lease right of use asset and operating lease liabilities from

$

11,773

$

14,523

remeasurement of existing leases and addition of new leases

Purchases of property and equipment included in accounts payable and accrued expenses

$

1,531

$

1,571

Payable to seller relating to acquisition of Field and Stream stores

$

1,077

$

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Amounts reported in thousands, except per share data and store count data

(1) Description of Business and Basis of Presentation

Description of Business

Sportsman’s Warehouse Holdings, Inc. (“Holdings”) and its subsidiaries (collectively, the “Company”) operate retail sporting goods stores. As of August 1, 2020, the Company operated 106 stores in 27 states. The Company also operates an e-commerce platform at www.sportsmans.com. The Company’s stores and website are aggregated into one single operating and reportable segment.

Basis of Presentation

The condensed consolidated financial statements included herein are unaudited and have been prepared by management of the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company’s condensed consolidated balance sheet as of February 1, 2020 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments that are, in the opinion of management, necessary to summarize fairly our condensed consolidated financial statements for the periods presented. All of these adjustments are of a normal recurring nature. The results of the fiscal quarter ended August 1, 2020 are not necessarily indicative of the results to be obtained for the year ending January 30, 2021. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020 filed with the SEC on April 9, 2020 (the “Fiscal 2019 Form 10-K”).

Impact of COVID-19 Pandemic

During March 2020, the World Health Organization declared the rapidly growing coronavirus outbreak to be a global pandemic. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States. Beginning in March 2020, the Company reduced store hours to allow sufficient time to restock its shelves and perform additional cleaning, and the Company was also limited the number of customers in its stores at any one time. As of August 1, 2020, the Company has returned to normal operating hours in each of its stores. The Company may again restrict the operations of its stores and its distribution facility if it deems this appropriate or if recommended or mandated by authorities.

(2) Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 to the Company’s Fiscal 2019 Form 10-K. Except for the changes below, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (“Topic 740”)-Simplifying the Accounting for Income Taxes, which removes certain exception to the general principles in Topic 740 and amends existing guidance to improve consistent application. For public entities, ASU 2019-12 is required to be adopted for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements and related disclosures.

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(3) Revenue Recognition

Revenue recognition accounting policy

The Company operates solely as an outdoor retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the United States and online. Generally, all revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Accordingly, the Company implicitly enters into a contract with customers to deliver merchandise inventory at the point of sale. Collectability is reasonably assured since the Company only extends credit for immaterial purchases to certain municipalities.

Substantially all of the Company’s revenue is for single performance obligations for the following distinct items:

Retail store sales

E-commerce sales

Gift cards and loyalty reward program

For performance obligations related to retail store and e-commerce sales contracts, the Company typically transfers control, for retail stores, upon consummation of the sale when the product is paid for and taken by the customer and, for e-commerce sales, when the products are tendered for delivery to the common carrier.

The transaction price for each contract is the stated price on the product, reduced by any stated discounts at that point in time. The Company does not engage in sales of products that attach a future material right which could result in a separate performance obligation for the purchase of goods in the future at a material discount. The implicit point-of-sale contract with the customer, as reflected in the transaction receipt, states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for the Company’s contracts is due in full upon delivery. The customer agrees to a stated price implicit in the contract that does not vary over the contract.

The transaction price relative to sales subject to a right of return reflects the amount of estimated consideration to which the Company expects to be entitled. This amount of variable consideration included in the transaction price, and measurement of net sales, is included in net sales only to the extent that it is probable that there will be no significant reversal in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. The allowance for sales returns is estimated based upon historical experience and a provision for estimated returns is recorded as a reduction in sales in the relevant period. The estimated merchandise inventory cost related to the sales returns is recorded in prepaid expenses and other. The estimated refund liabilities are recorded in accrued expenses. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net sales and earnings in the period such variances become known.

Contract liabilities are recognized primarily for gift card sales and our loyalty reward program. Cash received from the sale of gift cards is recorded as a contract liability in accrued expenses, and the Company recognizes revenue upon the customer’s redemption of the gift card. Gift card breakage is recognized as revenue in proportion to the pattern of customer redemptions by applying a historical breakage rate of 3.5% when no escheat liability to relevant jurisdictions exists. Based upon historical experience, gift cards are predominantly redeemed in the first two years following their issuance date. The Company does not sell or provide gift cards that carry expiration dates.

Accounting Standards Codification (“ASC”) 606 requires the Company to allocate the transaction price between the goods and the loyalty reward points based on the relative stand alone selling price. The Company recognized revenue for the breakage of loyalty reward points as revenue in proportion to the pattern of customer redemption of the points by applying a historical breakage rate of 50% when no escheat liability to relevant jurisdictions exists.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

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Sales returns

The Company allows customers to return items purchased within 30 days provided the merchandise is in resaleable condition with original packaging and the original sales/gift receipt is presented. The Company estimates a reserve for sales returns and records the respective reserve amounts, including a right to return asset when a product is expected to be returned and resold. Historical experience of actual returns and customer return rights are the key factors used in determining the estimated sales returns.

Contract balances

The following table provides information about right of return assets, contract liabilities, and sales return liabilities with customers as of August 1, 2020:

    

August 1, 2020

    

February 1, 2020

Right of return assets, which are included in prepaid expenses and other

$

2,252

$

1,683

Estimated gift card contract liability, net of breakage

(18,176)

(13,575)

Estimated loyalty contract liability, net of breakage

(8,536)

(9,621)

Sales return liabilities, which are included in accrued expenses

(3,361)

(2,512)

For the 13 and 26 weeks ended August 1, 2020, the Company recognized approximately $246 and $522 in gift card breakage and approximately $773 and $1,328 in loyalty reward breakage, respectively. For the 13 and 26 weeks ended August 3, 2019, the Company recognized approximately $215 and $505 in gift card breakage and approximately $350 and $660 in loyalty reward breakage, respectively. For the 13 and 26 weeks ended August 1, 2020, the Company recognized revenue of $1,200 and $5,421 relating to contract liabilities that existed at February 1, 2020.

The current balance of the right of return assets is the expected amount of inventory to be returned that is expected to be resold. The current balance of the contract liabilities primarily relates to the gift card and loyalty reward program liabilities. The Company expects the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions over the next two years. The current balance of sales return liabilities is the expected amount of sales returns from sales that have occurred.

Disaggregation of revenue from contracts with customers

In the following table, revenue from contracts with customers is disaggregated by department. The percentage of net sales related to the Company’s departments for the 13 and 26 weeks ended August 1, 2020 and August 3, 2019, was approximately:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 1,

August 3,

    

August 1,

    

August 3,

Department

    

Product Offerings

    

2020

    

2019

    

2020

    

2019

Camping

Backpacks, camp essentials, canoes and kayaks, coolers, outdoor cooking equipment, sleeping bags, tents and tools

17.1%

19.3%

14.4%

15.9%

Apparel

Camouflage, jackets, hats, outerwear, sportswear, technical gear and work wear

5.6%

7.4%

5.1%

7.7%

Fishing

Bait, electronics, fishing rods, flotation items, fly fishing, lines, lures, reels, tackle and small boats

15.9%

17.5%

13.7%

15.0%

Footwear

Hiking boots, socks, sport sandals, technical footwear, trail shoes, casual shoes, waders and work boots

5.7%

7.3%

5.2%

7.3%

Hunting and Shooting

Ammunition, archery items, ATV accessories, blinds and tree stands, decoys, firearms, reloading equipment and shooting gear

49.1%

41.1%

55.6%

46.6%

Optics, Electronics, Accessories, and Other

Gift items, GPS devices, knives, lighting, optics (e.g. binoculars), two-way radios, and other license revenue, net of revenue discounts

6.6%

7.4%

6.0%

7.5%

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Total

100.0%

100.0%

100.0%

100.0%

(4) Property and Equipment

Property and equipment as of August 1, 2020 and February 1, 2020 were as follows:

August 1,

February 1,

    

2020

    

2020

 

Furniture, fixtures, and equipment

$

87,550

$

84,059

Leasehold improvements

105,213

103,791

Construction in progress

3,542

1,571

Total property and equipment, gross

196,305

189,421

Less accumulated depreciation and amortization

(100,903)

(90,654)

Total property and equipment, net

$

95,402

$

98,767

(5) Accrued Expenses

Accrued expenses consisted of the following as of August 1, 2020 and February 1, 2020:

August 1

February 1,

    

2020

    

2020

Book overdraft

$

20,339

$

15,827

Unearned revenue

32,405

25,705

Accrued payroll and related expenses

21,327

11,436

Sales and use tax payable

8,188

5,169

Accrued construction costs

300

1,112

Other

16,205

10,869

Total accrued expenses

$

98,764

$

70,118

(6) Leases

At the inception of the lease, the Company’s operating leases have certain lease terms of up to 10 years, which typically includes multiple options for the Company to extend the lease which are not reasonably certain and as such are excluded from the measurement of the right of use asset and liability.

The Company determines whether a contract is or contains a lease at contract inception. Beginning in fiscal 2019, operating lease assets and operating lease liabilities are recognized at commencement date based on the present value of remaining fixed lease payments over the lease term. As the rate implicit in the lease is not readily determinable in most of the Company’s leases, it uses its incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The operating lease asset also includes any fixed lease payments made and includes lease incentives and incurred initial direct costs. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. The Company’s lease terms may include options to extend or terminate the lease. Additionally, the Company’s leases do not contain any material residual guarantees or material restrictive covenants.

In the 13 and 26 weeks ended August 1, 2020, the Company recorded a non-cash increase, net of terminations, of $9,623 and $11,773, respectively, to the right of use assets and operating lease liabilities resulting from lease remeasurements from the exercise of lease extension options, acquired leases, and new leases added.

In accordance with ASC 842, total lease expense, including common area maintenance (“CAM”), recorded during the 13 and 26 weeks ended August 1, 2020 was $16,655 and $33,202, respectively.

In accordance with ASC 842, total lease expense, including CAM, recorded during the 13 and 26 weeks ended August 3, 2019 was $14,430 and $28,814, respectively.

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In accordance with ASC 842, other information related to leases was as follows:

Twenty-Six Weeks Ended

August 1,

August 3,

    

2020

2019

Operating cash flows from operating leases

$

(27,313)

$

(23,859)

Cash paid for amounts included in the measurement of lease liabilities - operating leases

(27,313)

(23,859)

As of August 1

As of August 3,

    

2020

2019

Right-of-use assets obtained in exchange for new or remeasured operating lease liabilities

$

13,062

$

14,523

Terminated right-of-use assets and liabilities

(3,202)

Weighted-average remaining lease term - operating leases

6.02

5.93

Weighted-average discount rate - operating leases

8.09%

7.84%

In accordance with ASC 842, maturities of operating lease liabilities as of August 1, 2020 were as follows:

Operating

Year Endings:

Leases

2020 (remainder)

$

32,433

2021

53,189

2022

49,039

2023

44,369

2024

35,953

Thereafter

138,290

Undiscounted cash flows

$

353,273

Reconciliation of lease liabilities:

Present values

$

247,705

Lease liabilities - current

35,854

Lease liabilities - noncurrent

211,851

Lease liabilities - total

$