Express 2014 Annual Report Download - page 40

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Description of Policy Judgments and Uncertainties
Effect if Actual Results Differ
from Assumptions
Returns Reserve
We recognize retail sales at the time
the customer takes possession of the
merchandise. We reserve for sales
returns through estimates based on
historical experience and various
other assumptions that management
believes to be reasonable.
Our accounting methodology for
estimating our returns reserve
contains uncertainties because it
requires management to make
assumptions that merchandise
returns in the future will follow
the pattern of returns in prior
periods. Our estimates for these
items are based primarily on
historical transaction experience.
We have not made any material
changes in the accounting
methodology used to determine
returns reserve over the past three
years.
We have no reason to believe that
there will be a material change in
the future estimates or
assumptions we use to measure
our returns reserve. However, if
actual results are not consistent
with our estimates or
assumptions, we may be exposed
to losses or gains that could be
material.
A 100 basis point change in the
rate of returns as of January 31,
2015 would not have had a
material impact on pre-tax
income.
36