UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended August ~~4, 2018~~3, 2019


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

~~For the transition period from ____to____~~

~~Commission File No. 001-31390~~

~~CHRISTOPHER & BANKS CORPORATION~~

~~(Exact name of registrant as specified in its charter)~~



~~Delaware~~	001-31390	06 - 1195422
(~~State or other jurisdiction of~~	Commission File Number)	(I.R.S. Employer
~~incorporation or organization)~~		Identification No.)

~~2400 Xenium Lane North, Plymouth, Minnesota~~		~~55441~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~

~~Registrant’s telephone number, including area code~~ ~~(763) 551-5000~~(Registrant, State of Incorporation or Organization, Address of Principal Executive Officers and Telephone Number)

~~Not Applicable~~CHRISTOPHER & BANKS CORPORATION

(~~Former name, former address and former fiscal year, if changed since last report)~~a Delaware corporation)

2400 Xenium Lane North

Plymouth, Minnesota 55441

763-551-5000

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. ☒þ YES ☐ NO

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). ☒þ 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 ¨~~(Do not check if a smaller reporting company)~~ý	Smaller reporting company ☒ý
	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 Act). ☐ YES ☒þ NO

Indicate the number of ~~August 31, 2018 there were 38,422,693~~ shares outstanding of each of the ~~registrant's~~issuer's classes of common stock, ~~outstanding.~~as of the last practicable date.

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS



		Page

	PART I
	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss	3
	Condensed Consolidated Statements of Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	46
	Notes to Condensed Consolidated Financial Statements	57

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1315

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2526

Item 4.	Controls and Procedures	2526

	PART II
	OTHER INFORMATION

Item 1.	Legal Proceedings	2526

Item 1A.	Risk Factors	2527

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2628

Item 3.	Defaults Upon Senior Securities	2628

Item 4.	Mine Safety Disclosures	2629

Item 5.	Other Information	2629

Item 6.	Exhibits	2729

SIGNATURES		~~Signatures~~	2830

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in thousands)

~~(unaudited)~~


	August 4, 2018			February 3, 2018
							August 3, 2019			February 2, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	23,114		$	23,077		$	2,242		$	10,239
Accounts receivable	3,508			2,626			3,471			2,767
Merchandise inventories	40,184			41,361			48,718			41,039
Prepaid expenses and other current assets	4,263			2,715			3,894			3,372
Income taxes receivable	218			172			294			268
Total current assets	71,287			69,951			58,619			57,685
Non-current assets:
Property, equipment and improvements, net	38,383			47,773			27,925			31,643
Other non-current assets:
Operating lease assets							121,782			—
Deferred income taxes	597			597			499			499
Other assets	1,213			1,043			668			1,276
Total other non-current assets	1,810			1,640
Total non-current assets							150,874			33,418
Total assets	$	111,480		$	119,364		$	209,493		$	91,103

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	23,689		$	20,825		$	27,098		$	17,834
Short-term borrowings							3,450			—
Current portion of long-term lease liabilities							28,258			—
Accrued salaries, wages and related expenses	5,045			5,309			5,139			4,954
Accrued liabilities and other current liabilities	19,655			26,201			19,507			25,894
Total current liabilities	48,389			52,335			83,452			48,682
Non-current liabilities:
Deferred lease incentives	7,023			7,762			—			6,267
Deferred rent obligations	6,459			6,621
Long-term lease liabilities							111,968			6,661
Other non-current liabilities	9,372			2,237			2,013			8,970
Total non-current liabilities	22,854			16,620			113,981			21,898

Commitments and contingencies	—			—

Stockholders’ equity:
Preferred stock — $0.01 par value, 1,000 shares authorized, none outstanding	—			—			—			—
Common stock — $0.01 par value, 74,000 shares authorized, 48,222 and 47,625 shares issued, and 38,432 and 37,834 shares outstanding at August 4, 2018 and February 3, 2018, respectively	481			475
Common stock — $0.01 par value, 74,000 shares authorized, 48,639 and 48,365 shares issued, and 38,336 and 38,386 shares outstanding at August 3, 2019 and February 2, 2019, respectively							451			481
Additional paid-in capital	128,236			127,652			129,118			128,714
Retained earnings	24,231			34,993			(4,634		)	4,137
Common stock held in treasury, 9,791 shares at cost at August 4, 2018 and February 3, 2018	(112,711		)	(112,711		)
Common stock held in treasury, 10,303 and 9,979 shares at cost at August 3, 2019 and February 2, 2019							(112,875		)	(112,809		)
Total stockholders’ equity	40,237			50,409			12,060			20,523
Total liabilities and stockholders’ equity	$	111,480		$	119,364		$	209,493		$	91,103

See Notes to Condensed Consolidated Financial Statements

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

(amounts in thousands, except per share data)

~~(unaudited)~~


	Thirteen Weeks Ended						Twenty-six Weeks Ended
	August 4,			July 29,			August 4,			July 29,			Thirteen Weeks Ended						Twenty-six Weeks Ended
	2018			2017			2018			2017			August 3,			August 4,			August 3,			August 4,
													2019			2018			2019			2018
Net sales	$	87,418		$	86,618		$	173,319		$	175,173		$	83,443		$	87,418		$	166,663		$	173,319
Merchandise, buying and occupancy costs	62,546			61,990			121,103			120,007			58,969			62,546			116,575			121,103
Gross profit	24,872			24,628			52,216			55,166			24,474			24,872			50,088			52,216
Other operating expenses:
Selling, general and administrative	29,675			29,179			59,422			60,153			27,754			29,675			56,942			59,422
Depreciation and amortization	2,518			3,167			5,334			6,266			2,199			2,518			4,581			5,334
Impairment of store assets	—			93			—			163			311			—			311			—
Total other operating expenses	32,193			32,439			64,756			66,582			30,264			32,193			61,834			64,756
Operating loss	(7,321		)	(7,811		)	(12,540		)	(11,416		)	(5,790		)	(7,321		)	(11,746		)	(12,540		)
Interest expense, net	(42		)	(38		)	(99		)	(69		)	(111		)	(42		)	(267		)	(99		)
Loss before income taxes	(7,363		)	(7,849		)	(12,639		)	(11,485		)	(5,901		)	(7,363		)	(12,013		)	(12,639		)
Income tax provision	63			40			106			92			40			63			80			106
Net loss	$	(7,426	)	$	(7,889	)	$	(12,745	)	$	(11,577	)	$	(5,941	)	$	(7,426	)	$	(12,093	)	$	(12,745	)

Other comprehensive income, net of tax	—			—			—			—			—			—			—			—
Comprehensive loss	$	(7,426	)	$	(7,889	)	$	(12,745	)	$	(11,577	)	$	(5,941	)	$	(7,426	)	$	(12,093	)	$	(12,745	)

Basic loss per share:
Net loss	$	(0.20	)	$	(0.21	)	$	(0.34	)	$	(0.31	)	$	(0.16	)	$	(0.20	)	$	(0.32	)	$	(0.34	)
Basic shares outstanding	37,458			37,156			37,381			37,123			37,440			37,458			37,686			37,381

Diluted loss per share:
Net loss	$	(0.20	)	$	(0.21	)	$	(0.34	)	$	(0.31	)	$	(0.16	)	$	(0.20	)	$	(0.32	)	$	(0.34	)
Diluted shares outstanding	37,458			37,156			37,381			37,123			37,440			37,458			37,686			37,381

See Notes to Condensed Consolidated Financial Statements

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY (UNAUDITED)

(amounts in thousands)

~~(unaudited)~~

Twenty-six Weeks Ended
August 4, 2018 July 29, 2017
Cash flows from operating activities:
Net loss $ (12,745 ) $ (11,577 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 5,334
6,266
Impairment of store assets —
163
Amortization of financing costs 31
31
Deferred lease-related liabilities (486 ) (442 )
Stock-based compensation expense 604
550
Changes in operating assets and liabilities:

Accounts receivable (882 ) (1,284 )
Merchandise inventories 1,178
(5,082 )
Prepaid expenses and other assets (1,579 ) (1,180 )
Income taxes receivable (46 ) 261
Accounts payable 3,021
9,096
Accrued liabilities (5,757 ) (7,872 )
Other liabilities (59 ) 1,793
Net cash used in operating activities (11,386 ) (9,277 )
Cash flows from investing activities:
Purchases of property, equipment and improvements (1,722 ) (3,150 )
Proceeds from sale of assets 13,329
—
Net cash provided by (used in) investing activities 11,607
(3,150 )
Cash flows from financing activities:
Shares redeemed for payroll taxes (13 ) (6 )
Proceeds from short-term borrowings 9,100
—
Payments of short-term borrowings (9,100 ) —
Payments of deferred financing costs (171 ) —
Net cash used in financing activities (184 ) (6 )
Net increase (decrease) in cash and cash equivalents 37
(12,433 )
Cash and cash equivalents at beginning of period 23,077
35,006
Cash and cash equivalents at end of period $ 23,114
$ 22,573
Supplemental cash flow information:
Interest paid $ 100
$ 69
Income taxes paid (refunded) $ 130
$ (251 )
Accrued purchases of equipment and improvements $ 143
$ 219



Thirteen Weeks Ended
	Treasury				Common Stock
	Shares Held	Amount Held			Shares Outstanding		Amount Outstanding			Additional Paid-in Capital			Retained Earnings			Total
May 4, 2019	10,161	$	(112,873	)	38,193		$	463		$	128,964		$	1,307		$	17,861
Total comprehensive loss	—	—			—		—			—			(5,941		)	(5,941		)
Issuance of restricted stock, net of forfeitures	—	—			285		2			(6		)	—			(4		)
Stock-based compensation expense	—	—			—		—			160			—			160
Acquisition of common stock held in treasury, at cost	142	(2		)	(142	)	(14		)	—			—			(16		)
August 3, 2019	10,303	$	(112,875	)	38,336		$	451		$	129,118		$	(4,634	)	$	12,060



Twenty-six Weeks Ended
	Treasury				Common Stock
	Shares Held	Amount Held			Shares Outstanding		Amount Outstanding			Additional Paid-in Capital			Retained Earnings			Total
February 2, 2019	9,979	$	(112,809	)	38,386		$	481		$	128,714		$	4,137		$	20,523
Total comprehensive loss	—	—			—		—			—			(12,093		)	(12,093		)
Issuance of restricted stock, net of forfeitures	—	—			274		2			(9		)	—			(7		)
Stock-based compensation expense	—	—			—		—			413			—			413
Acquisition of common stock held in treasury, at cost	324	(66		)	(324	)	(32		)	—			—			(98		)
Cumulative effect of accounting change	—	—			—		—			—			3,322			3,322
August 3, 2019	10,303	$	(112,875	)	38,336		$	451		$	129,118		$	(4,634	)	$	12,060



Thirteen Weeks Ended
	Treasury				Common Stock
	Shares Held	Amount Held			Shares Outstanding	Amount Outstanding		Additional Paid-in Capital			Retained Earnings			Total
May 5, 2018	9,791	$	(112,711	)	38,078	$	478	$	127,993		$	31,658		$	47,418
Total comprehensive loss	—	—			—	—		—			(7,426		)	(7,426		)
Issuance of restricted stock, net of forfeitures	—	—			354	3		(10		)	—			(7		)
Stock-based compensation expense	—	—			—	—		253			—			253
August 4, 2018	9,791	$	(112,711	)	38,432	$	481	$	128,236		$	24,232		$	40,238



Twenty-six Weeks Ended
	Treasury				Common Stock
	Shares Held	Amount Held			Shares Outstanding	Amount Outstanding		Additional Paid-in Capital			Retained Earnings			Total
February 3, 2018	9,791	$	(112,711	)	37,834	$	475	$	127,652		$	34,993		$	50,409
Total comprehensive loss	—	—			—	—		—			(12,745		)	(12,745		)
Issuance of restricted stock, net of forfeitures	—	—			598	6		(20		)	—			(14		)
Stock-based compensation expense	—	—			—	—		604			—			604
Cumulative effect of accounting change	—	—			—	—		—			1,984			1,984
August 4, 2018	9,791	$	(112,711	)	38,432	$	481	$	128,236		$	24,232		$	40,238

See Notes to Condensed Consolidated Financial Statements

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)



	Twenty-six Weeks Ended
	August 3, 2019			August 4, 2018
Cash flows from operating activities:
Net loss	$	(12,093	)	$	(12,745	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,581			5,334
Impairment of store assets	311			—
Amortization of financing costs	30			31
Lease expense	12,867			—
Deferred lease-related liabilities	—			(486		)
Stock-based compensation expense	413			604
Changes in operating assets and liabilities:
Accounts receivable	(704		)	(882		)
Merchandise inventories	(7,680		)	1,178
Prepaid expenses and other assets	(505		)	(1,579		)
Income taxes receivable	(26		)	(46		)
Accounts payable	9,286			3,021
Accrued liabilities	(2,964		)	(5,757		)
Lease liabilities	(13,634		)	—
Other liabilities	(230		)	(59		)
Net cash used in operating activities	(10,348		)	(11,386		)
Cash flows from investing activities:
Purchases of property, equipment and improvements	(996		)	(1,722		)
Proceeds from sale of assets	—			13,329
Net cash (used in) provided by investing activities	(996		)	11,607
Cash flows from financing activities:
Shares redeemed for payroll taxes	(5		)	(13		)
Proceeds from short-term borrowings	12,650			9,100
Payments of short-term borrowings	(9,200		)	(9,100		)
Payments of deferred financing costs	—			(171		)
Acquisition of common stock held in treasury, at cost	(98		)	—
Net cash provided by (used in) financing activities	3,347			(184		)
Net (decrease) increase in cash and cash equivalents	(7,997		)	37
Cash and cash equivalents at beginning of period	10,239			23,077
Cash and cash equivalents at end of period	$	2,242		$	23,114
Supplemental cash flow information:
Interest paid	$	267		$	100
Income taxes paid	$	198		$	130
Accrued purchases of equipment and improvements	$	98		$	143

See Notes to Condensed Consolidated Financial Statements

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~(unaudited)~~

NOTE 1 — Basis of Presentation

The unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q have been prepared by Christopher & Banks Corporation and its subsidiaries (collectively referred to as “Christopher & Banks”, “the Company”, “we” or “us”) pursuant to the current rules and regulations of the United States ("U.S.") Securities and Exchange ~~Commission.~~Commission ("SEC"). Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been omitted, pursuant to such rules and regulations. These unaudited ~~condensed consolidated financial statements,~~Condensed Consolidated Financial Statements, except the ~~condensed consolidated balance sheet~~Condensed Consolidated Balance Sheet as of February ~~3, 2018~~2, 2019 derived from the Company's audited financial statements, should be read in conjunction with the audited financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended February ~~3, 2018.~~2, 2019.

The results of operations for the interim ~~period~~periods shown in this report are not necessarily indicative of results to be expected for the full fiscal year. In the opinion of management, the information contained herein reflects all adjustments, consisting only of normal adjustments, except as otherwise stated in these notes, considered necessary to present fairly our financial position, results of operations, and cash flows as of August 3, 2019, August 4, 2018 ~~and July 29, 2017~~ and for all periods presented.

Recently issued accounting pronouncements

In ~~February 2016,~~August 2018, the ~~Financial Accounting Standards Board ("FASB")~~FASB issued ~~Accounting Standards Update ("ASU") 2016-02,~~ ~~Leases~~ASU No. 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820)~~, which requires that any lease arrangements longer than twelve months result in an entity recognizing an asset and liability on its balance sheet.~~. The updated guidance improves the disclosure requirements for fair value measurements. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has elected to apply the standard on a prospective basis with an adjustment to retained earnings in the first period of adoption. The Company is currently evaluating the guidance and its impact on our consolidated financial statements and the related internal controls over financial reporting. The Company expects the adoption of this standard will have a material impact on its consolidated balance sheet for recognition of lease-related assets and liabilities. We will adopt the ASU beginning in the first quarter of fiscal 2019.

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~. ASU 2016-18 requires that a statement of cash flows explain the change during the period among the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2017. There was no~~2019. We are currently evaluating the impact of adopting the updated provisions.

Recently adopted accounting pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The Company adopted the new standard, ASC 842, Leases, and all related amendments on February 3, 2019 using the "Comparatives Under 840 Option" for all leases in which we applied the previous standard, ASC 840, Leases, and recognized the effects of applying ASC 842 as a cumulative-effect adjustment to ~~prior year financial statements~~retained earnings as of February 3, 2019. We elected the ~~Company had no restricted cash in prior years. As~~package of ~~August 4, 2018,~~practical expedients permitted under the ~~Company included $1.6 million of restricted cash in cash and cash equivalents~~transition guidance within the ~~statement~~new standard, which among other things, allowed us to carryforward the historical lease classification. In addition, we elected certain practical expedients and accounting policies including the lessee practical expedient to not separate lease components. We made an accounting policy election to keep leases with an initial term of ~~cash flows related~~12 months or less off of the balance sheet. We recognize those lease payments in the Condensed Consolidated Statements of Operations on a straight-line basis over the lease term. Adoption of the standard resulted in the recognition of operating lease assets and operating lease liabilities of $134.9 million and $153.9 million, respectively, as of February 3, 2019. The operating lease asset recorded at adoption of the standard represents the capitalization of operating lease assets and the reclassification of prepaid rent and leasehold acquisition costs, offset by the reclassification of straight-line rent accruals, tenant improvement allowances and vacant space reserves. At adoption, we recorded an adjustment to ~~cash held in escrow in conjunction with~~retained earnings of $3.3 million, which includes the recognition of the deferred gain on the sale-leaseback ~~transaction.~~transaction of our corporate headquarters facility. Additional information and disclosures required by the new standard are contained in Note 9 - Leases.

In ~~May 2014,~~August 2018, the ~~FASB issued ASU 2014-09,~~SEC adopted a final rule under ~~Revenue from Contracts with Customers. The Company adopted ASC 606, Revenue from Contracts with Customers~~SEC Release No. 33-10532, Disclosure Update and all the related amendments (“new revenue standard”) on February 4, 2018 using the modified retrospective method for all contracts. The additional disclosures required by the ASU have been included in Note 6 ~~Revenue. Results for reporting periods beginning February 4, 2018 reflect the application of ASC 606, while the results for prior reporting periods were prepared under the guidance of ASC 605,~~ ~~Revenue Recognition~~Simplification ~~(“previous guidance”). We recorded a net increase to opening equity of $2.0 million as of February 4, 2018 due to~~that amends certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The amendments also expanded the cumulative impact of adopting the new standard, with the impact primarily related to the recognition of gift card breakage. Further, as a result of applying the modified retrospective method, the following adjustments were made to accountsdisclosure requirements on the ~~condensed consolidated balance sheet as~~analysis of ~~February 4, 2018 (in thousands):~~

February 3, 2018 ASC 606 Adjustments February 4, 2018
Balance Sheet
Assets
Merchandise inventories $ 41,361
$ (482 ) $ 40,879
Prepaid expenses and other current assets 2,715
482
3,197

Liabilities

Accrued liabilities and other current liabilities 26,201
(1,983 ) 24,218

Equity

Retained earnings 34,993
1,983
36,976

~~Impact on Financial Statements~~

~~The following tables summarize the impacts of adopting ASC 606 on the Company’s condensed consolidated~~shareholders' equity for interim financial statements, asin which registrants must now analyze changes in shareholders’ equity, in the form of ~~and~~reconciliation, for the ~~thirteen~~current and ~~twenty-six weeks ended August 4, 2018 (in thousands):~~

~~Condensed Consolidated Balance Sheet~~

As reported Balance without adoption of ASC 606
Effect of change
Higher/(lower)
Balance Sheet
Assets
Merchandise inventories $ 40,184
$ 40,781
$ (597 )
Prepaid expenses and other current assets 4,263
3,666
597

Liabilities
Accrued liabilities and other current liabilities 19,655
19,746
(91 )

Equity
Retained earnings 24,231
24,140
91

~~Condensed Consolidated Statement~~comparative year-to-date periods, with subtotals for each interim period. This final rule was effective on November 5, 2018. As of ~~Operations and Comprehensive Loss~~

Thirteen weeks ended August 4, 2018 Twenty-six weeks ended August 4, 2018
As reported Balance without adoption of ASC 606
Effect of change
Higher/(lower)
As reported Balance without adoption of ASC 606
Effect of change
Higher/(lower)
Statement of Operations and Comprehensive Loss
Net sales $ 87,418
$ 87,407
$ 11
$ 173,319
$ 173,228
$ 91
Net loss (7,426 ) (7,437 ) 11
(12,745 ) (12,836 ) 91

Net loss per share:
Basic $ (0.20 ) $ (0.20 ) $ 0.00
$ (0.34 ) $ (0.34 ) $ 0.00
Diluted $ (0.20 ) $ (0.20 ) $ 0.00
$ (0.34 ) $ (0.34 ) $ 0.00
the first quarter of Fiscal 2019, the Company has adopted all relevant disclosure requirements, including the shareholders’ equity interim disclosures.

We reviewed all other significant newly-issued accounting pronouncements and concluded they are either not applicable to our operations or that no material ~~affect~~effect is expected on our consolidated financial statements as a result of future adoption.

NOTE 2 — Revenue

Merchandise sales

We sell merchandise through our brick and mortar and eCommerce sales channels. Revenues are recognized when control of the promised merchandise is transferred to our customers. Within our brick and mortar sales channel, control is transferred at the point of sale. Within our eCommerce sales channel, control is transferred upon delivery of the merchandise to our customers. Shipping revenues associated with the eCommerce channel are recognized upon the completion of the delivery. The revenue recorded reflects the consideration that we expect to receive in exchange for our merchandise. The Company has elected, as an accounting policy, to exclude from the transaction price all taxes assessed by governmental authorities imposed on merchandise sales.

Right of return

As part of our merchandise sales, we offer customers a right of return on merchandise that lapses, after a specified period of time, based on the original purchase date. The Company estimates the amount of sales that may be returned by our customers and records this estimate as a reduction of revenue in the period in which the related revenues are recognized. We utilize historical and industry data to estimate the total return liability. Conversely, the reduction in revenue results in a corresponding reduction in merchandise, buying and occupancy costs which results in a contract asset for the anticipated merchandise returned. The total reduction in revenue from estimated returns was $1.2 million and as of both August 3, 2019 and February 2, 2019, this amount is included within accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.

Friendship rewards program

The Company established the Friendship Rewards Program as a loyalty program where customers earn points towards future discount certificates based on their purchase activity. We have identified the additional benefits received from this program as a separate performance obligation within a sales contract in the form of the discount certificates earned by customers. Accordingly, we assess any incremental discounts issued to our customers through the program and allocate a portion of the transaction price associated with merchandise sales from loyalty program members to the future discounts earned. The transaction price allocated to future discounts is recorded as deferred revenue until the discounts are used or forfeited. In addition, the Company estimates breakage on the points earned within the program that will not be used by customers for future discounts. The Company estimates breakage based on the historical redemption rate and considers industry trends. Breakage is recorded as a reduction to the deferred revenue associated with the program. As of August 3, 2019, and February 2, 2019, the Company recorded $4.2 million and $3.8 million, respectively, in deferred revenue associated with the program, which is included in accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.

Gift card revenue

The Company sells gift cards to customers which can be redeemed for merchandise within our brick and mortar and eCommerce sales channels. Gift cards are recorded as deferred revenue when issued and are subsequently recorded as revenue upon redemption. The Company estimates breakage related to gift cards when the likelihood of redemption is remote. This estimate utilizes historical trends based on the vintage of the gift card. Breakage on gift cards is recorded as revenue in proportion to the rate of gift card redemptions by vintage. As of August 3, 2019, and February 2, 2019, the Company had $2.6 million and $4.6 million, respectively, of deferred revenue associated with the issuance of gift cards. The deferred gift card revenue is included in accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.

Private label credit card

The Company offers a private label credit card ("PLCC") which bears the Christopher and Banks brand name offered under an agreement with Comenity Bank. Pursuant to this agreement, there are several obligations on behalf of Comenity Bank that impact the recording of revenue.

In connection with extending the term of the agreement, the Company received a signing bonus. We have determined that the benefits associated with signing the agreement are recognized over time throughout its term. This is the most accurate depiction of the transfer of services as the customer receives and consumes the benefits by obtaining and having the ability to use financing through Comenity Bank for purchases within our brick and mortar and eCommerce sales channels throughout the agreement's term. The deferred signing bonus is included in other liabilities and is being recognized in net sales ratably over the term of the contract.

The other revenue based on customer usage of the card is recognized in net sales in the periods in which the related customer transaction occurs. As of August 3, 2019 and February 2, 2019, the Company had $1.5 million recorded as deferred revenue associated with the signing bonus, of which $0.3 million is included in accrued liabilities and other current liabilities and the remaining $1.2 million is included in other non-current liabilities in the Condensed Consolidated Balance Sheets. The Company recorded $0.1 million into revenue for the thirteen and twenty-six-week periods ended August 3, 2019 and August 4, 2018, respectively, associated with the signing bonus.

The Company records revenue associated with royalties received for purchases made using the PLCC. Royalty revenue is recognized based on the total amount to which we have a right to invoice in accordance with the practical expedient included in ASC 606. Accordingly, royalty revenue is recognized in the period in which the related purchases are recognized.

The Company receives a performance bonus based on the total amount of new PLCC accounts that are opened during the year. We have determined that this is a form of variable consideration. Variable consideration is recorded if, in the Company’s judgment, it is probable that a significant future reversal of revenue under the contract will not occur.

Disaggregation of revenue

The following table provides information about disaggregated revenue by sales channel. All revenue illustrated below is included within our one reportable segment.



	Thirteen Weeks Ended					Twenty-six Weeks Ended
	August 3, 2019		August 4, 2018			August 3, 2019		August 4, 2018
Brick and mortar stores	$	65,595	$	66,715		$	130,647	$	134,770
eCommerce sales	16,698		19,216		¹	35,598		38,010		¹
Other	1,150		1,487			418		539
Net sales	$	83,443	$	87,418		$	166,663	$	173,319


⁽¹⁾	Includes approximately $2.4 million and $4.7 million of 2018 revenues for the thirteen and twenty-six week periods ended, respectively, from orders placed in store and fulfilled from another location. For 2019, similar sales are included in brick and mortar stores.

Amounts included within other revenue relate to revenues earned from our private label credit card, net of any revenue adjustments and accruals.

Contract balances

The following table provides information about contract assets and liabilities from contracts with customers (in thousands):



	Contract Liabilities
	August 3, 2019				February 2, 2019
	Current		Non-Current		Current		Non-Current
Right of return	$	1,215	$	—	$	1,176	$	—
Friendship Rewards Program	4,169		—		3,768		—
Gift card revenue	2,637		—		4,646		—
Private label credit card	274		1,210		274		1,348
Total	$	8,295	$	1,210	$	9,864	$	1,348

The Company recognized revenue of $1.4 million and $1.5 million in the thirteen-week periods ended August 3, 2019 and August 4, 2018, respectively, related to contract liabilities recorded at the beginning of the period. The Company recognized revenue of $3.1 million and $3.4 million in the twenty-six-week periods ended August 3, 2019 and August 4, 2018, respectively, related to contract liabilities recorded at the beginning of the period. Such revenues were comprised of the redemption and forfeiture of Friendship Rewards Program discount certificates, redemption of gift cards, and amortization of the PLCC signing bonus. As of August 3, 2019, and February 2, 2019, the Company did not have any material contract assets.

For the thirteen and twenty-six-week periods ended August 3, 2019 and August 4, 2018, the Company did not recognize any revenue resulting from changes in the estimated variable consideration to be received associated with performance obligations satisfied or partially satisfied in prior periods.

Transaction price allocated to remaining performance obligations

The following table includes the estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied as of August 3, 2019:



	Remainder of
	Fiscal 2019		Fiscal 2020		Thereafter
Private label credit card	$	137	$	274	$	1,073
Total	$	137	$	274	$	1,073

Contract Costs

The Company has not incurred any costs to obtain or fulfill a contract.

NOTE 3 — Property, Equipment and Improvements, Net

Property, equipment and improvements, net consisted of the following (in thousands):


Description	August 4, 2018			February 3, 2018			August 3, 2019			February 2, 2019
Land	$	—		$	1,597
Corporate office, distribution center and related building improvements	—			12,753
Store leasehold improvements	48,587			50,094			$	50,071		$	50,305
Store furniture and fixtures	68,149			70,447			70,442			70,815
Corporate office and distribution center furniture, fixtures and equipment	5,033			5,053			6,220			6,179
Computer and point of sale hardware and software	33,825			33,126			33,631			33,098
Construction in progress	1,300			1,275			91			419
Total property, equipment and improvements, gross	156,894			174,345			160,455			160,816
Less accumulated depreciation and amortization	(118,511		)	(126,572		)	(132,530		)	(129,173		)
Total property, equipment and improvements, net	$	38,383		$	47,773		$	27,925		$	31,643

Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value ~~of the asset~~ may not be recoverable. ~~In conjunction~~

When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset's estimated future cash flows (undiscounted and without interest charges). If the sum of the estimated future cash flows is less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset's estimated fair value, which is typically based on estimated discounted future cash flows. We recognize an impairment loss if the amount of the asset's carrying value exceeds the asset's estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. For a depreciable long-lived asset, the new cost basis is depreciated over the remaining useful life of that asset.

When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For long-lived assets deployed at store locations, we review for impairment at the individual store level.

Our impairment loss calculations involve uncertainty because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values, including estimating useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows. If actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material.

Due to declining sales and continued operating losses, the Company performed an impairment analysis during the ~~Company analyzed~~period ended August 3, 2019. Leasehold improvements, store furniture and ~~equipment~~fixtures at certain under-performing stores, and stores identified for closure were analyzed for impairment. As a result of this analysis, the Company recorded a $0.3 million long-lived asset impairment during the thirteen and twenty-six week periods ended August 3, 2019. The Company recorded no long-lived asset impairment during the thirteen and twenty-six week ~~period~~periods ended August 4, 2018 and approximately $0.1 million during the thirteen week period ended July 29, 2017. Additionally, the Company recorded no impairment during the twenty-six week period ended August 4, 2018 and approximately $0.2 million during the twenty-six week period ended July 29, 2017.2018.

Sale-Leaseback

On April 27, 2018, the Company completed the sale of and entered into an agreement to leaseback its corporate headquarters facility, ~~including the~~which includes its distribution center, in Plymouth, ~~MN.~~Minnesota. The agreement provided for the sale of the facility for a purchase price of $13.7 million and the subsequent leaseback of the facility for a 15-year period. The lease is classified as an operating lease. As a result of this transaction, the Company recorded a deferred gain of $7.7 million. AsDuring Fiscal 2018, the Company recognized the deferred gain on a straight-line basis over the term of ~~August 4, 2018, $7.1~~the lease. At the beginning of Fiscal 2019, the remaining $7.3 million of the deferred gain ~~is reflected in the condensed consolidated balance sheet under other non-current liabilities,~~was recorded as an adjustment to retained earnings with the ~~remaining $0.5 million included as a component~~adoption of ~~accrued liabilities and other current liabilities. The Company recorded $0.1 million into earnings during the thirteen week period ended August 4, 2018.~~ ASC 842, Leases.

As part of the transaction, the Company ~~put~~deposited $1.7 million in escrow for certain repairs to the building. As of August ~~4, 2018, $1.6~~3, 2019, and February 2, 2019, $0.8 million remained in escrow for repairs to the building. This amount is considered to be restricted cash and is included within cash and cash equivalents on the ~~condensed consolidated balance sheet.~~Condensed Consolidated Balance Sheet.

NOTE 34 — Accrued Liabilities

Accrued liabilities and other current liabilities consisted of the following (in thousands):


	August 4, 2018		February 3, 2018		August 3, 2019		February 2, 2019
Gift card and store credit liabilities	$	2,899	$	6,931	$	2,637	$	4,646
Accrued Friendship Rewards Program loyalty liability	3,868		3,539		4,169		3,768
Accrued income, sales and other taxes payable	1,287		1,587		1,200		911
Accrued occupancy-related expenses	3,743		3,432		645		3,700
Sales return reserve	1,304		1,079		1,215		1,176
eCommerce obligations	3,999		3,824		4,842		6,194
Other accrued liabilities	2,555		5,809		4,799		5,499
Total accrued liabilities and other current liabilities	$	19,655	$	26,201	$	19,507	$	25,894

NOTE 45 — Credit Facility

The Company is party to an amended and restated credit agreement ("the Credit Facility") with Wells Fargo Bank, National Association ("Wells Fargo"), as lender. On August 3, 2018, the Company entered into a second amendment ("Second Amendment") to the Credit Facility.

The Second Amendment, among other changes, (i) extended the term of the Credit Facility to August 3, 2023; and (ii) supplemented the existing $50.0 million revolving Credit Facility by adding a new $5.0 million revolving "first-in, last-out" tranche credit facility (the "FILO Facility"), subject to borrowing base restrictions applicable to the FILO Facility. The Company must draw under the FILO Facility before making any borrowings under the revolving Credit Facility.

Loans under the FILO Facility will bear interest based on quarterly excess available under the Borrowing Base as defined in the Credit Facility. The interest rate under the FILO Facility will be either (i) the London ~~interbank~~Interbank Offered Rate ("LIBOR") plus 3.00% for FILO loans that are LIBOR loans; or (ii) 2.00% above the Base Rate for FILO loans that are Base Rate loans as such terms are defined in the Credit Facility. Borrowings under the Credit Facility will generally accrue interest at a rate ranging from 1.50% to 1.75% over the LIBOR or 0.50% to 0.75% over the Wells Fargo Prime Rate based on the amount of Average Daily Availability for the Fiscal Quarter immediately preceding each Adjustment Date, as such terms are defined in the Credit Facility. The Company has the ability to select between the LIBOR or prime based rate at the time of the cash advance. The Credit Facility has an unused commitment fee of 0.25%.

In addition to these changes, the Second Amendment eliminates availability against the Company's real property, which was the subject of a ~~recent~~ sale-leaseback ~~transaction.~~transaction on April 27, 2018. The Company ~~recorded~~expensed approximately ~~$0.2 million~~$30 thousand of deferred financing costs induring the ~~second quarter of fiscal 2018~~twenty-six week period ended August 3, 2019 in connection with the ~~Second Amendment.~~Credit Agreement. The deferred financing costs have been combined with the balance of the deferred financing costs remaining from the prior amendment on September 8, 2014. ~~The entire deferred~~Deferred financing costs are ~~recorded within~~included in other assets on the ~~condensed consolidated balance sheet~~Condensed Consolidated Balance Sheet and are being amortized as interest expense over the related term of the Second Amendment.

The Credit Facility contains customary events of default and various affirmative and negative covenants. The sole financial covenant contained in the Credit Facility requires the Company to maintain Availability at least equal to the greater of (a) ten percent (10%) of the borrowing base or (b) $3.0 million. In addition, the Credit Facility permits the payment of dividends to the Company's stockholders if certain financial conditions are met. The Company was in compliance with all financial covenants and other financial provisions of the Credit Facility as of August ~~4, 2018.~~3, 2019.

The Company's obligations under the Credit Facility are secured by the assets of the Company and its subsidiaries. The Company has pledged substantially all of its assets as collateral security for the loans, including accounts owed to the Company, bank accounts, inventory, other tangible and intangible personal property, intellectual property (including patents and trademarks), and stock or other evidences of ownership of 100% of all of the Company's subsidiaries.

There were no$3.5 million and zero in outstanding borrowings under the Credit Facility as of August ~~4, 2018~~3, 2019 and ~~July 29, 2017.~~February 2, 2019, respectively. The ~~total Borrowing Base~~capped borrowing base at August ~~4, 2018~~3, 2019 was approximately ~~$29.6~~$39.8 million. As of August ~~4, 2018,~~3, 2019, the Company had open on-demand letters of credit of approximately ~~$6.7~~$11.1 million. Accordingly, after reducing the ~~Borrowing Base for the~~capped borrowing base, current borrowings of $3.5 million, open letters of credit and the required minimum availability of the greater of $3.0 million, or ~~10.0%~~$3.4 million (10.0% of the ~~Borrowing Base,~~revolving loan cap), the net availability of revolving credit loans under the Credit Facility was approximately ~~$22.2~~$21.8 million at August ~~4, 2018.~~3, 2019.

NOTE 56 — Income Taxes

For the thirteen weeks ended August ~~4, 2018,~~3, 2019, the Company recorded income tax expense of $40 thousand, or an effective tax rate of (0.7)%, versus income tax expense of $63 thousand, or an effective tax rate of (0.9)%~~, compared to~~ for the same period of Fiscal 2018. For the twenty-six weeks ended August 3, 2019, the Company recorded income tax expense of ~~$40~~$80 thousand, or an effective rate of ~~(0.5)~~(0.7)%, ~~for the second quarter of fiscal 2017. For the twenty-six weeks ended August 4, 2018, the Company recorded~~versus income tax expense of $106 thousand, or an effective rate of (0.8)%, ~~compared to income tax expense of $92 thousand, or an effective rate of (0.8)%,~~ for the same period of ~~fiscal 2017.~~Fiscal 2018. The income tax ~~provision~~provisions for the ~~fiscal~~Fiscal 2019 and 2018 ~~and 2017~~ periods isare primarily driven by state taxes.

As of August ~~4, 2018,~~3, 2019, the possibility of future cumulative losses still exists. Accordingly, the Company has continued to maintain a valuation allowance against its net deferred tax assets. A small deferred tax asset ~~remains~~was allowed to remain related to certain state tax benefits. ~~The~~As of February 2, 2019, the Company has gross federal and state net operating loss ("NOL") carryforwards ~~which will reduce future taxable income. Approximately $26.1~~of approximately $145.5 million inand $73.6 million, respectively. A portion of the federal net ~~federal tax benefits are available from these federal loss carryforwards. An additional $0.8 million is available in net tax credit carryforwards. The state~~operating loss carryforwards will ~~result~~begin to expire in 2032 while the other portion can be carried forward indefinitely. The state net ~~state~~operating loss carryforwards have carryforward periods of 5 to 20 years and begin to expire in the current year. The Company also has federal tax ~~benefits~~credits of ~~approximately $4.5 million.~~$859 thousand which will begin to expire in 2030 and gross charitable contribution carryforwards of $726 thousand that will begin to expire in 2020.

Sections 382 and 383 of the Internal Revenue Code limit the annual utilization of certain tax attributes, including net operating loss carryforwards, incurred prior to a change in ownership. If the Company were to experience an ownership change, as defined by Sections 382 and 383, its ability to utilize its tax attributes could be substantially limited. Depending on the severity of the annual NOL limitation, the Company could permanently lose its ability to use a significant number of its accumulated NOLs.

The Company's liability for unrecognized tax benefits associated with uncertain tax ~~positions~~provisions is recorded within ~~other~~the Condensed Consolidated Balance Sheets in Other non-current liabilities. There has been no material change in the reserve for unrecognized tax benefits since the end of the previous ~~fiscal~~ year. The Company recognizes interest and penalties related to unrecognized tax benefits as components of income tax expense. We do not expect any significant changes to the amount of unrecognized tax benefits in the next twelve months.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With few exceptions, the Company or its subsidiaries are no longer subject to examination prior to tax years before ~~fiscal 2013.~~Fiscal 2011. The Company does not have any ongoing income tax ~~audits.~~

~~The Tax Cuts and Jobs Act ("the Act") was enacted~~audits that are anticipated to have a material impact on ~~December 22, 2017. The Act reduced~~ the U.S. federal corporate tax rate from 35% to 21% as of January 1, 2018. The income tax effects of the Act required the remeasurement of our deferred tax assets and liabilities in accordance with ASC Topic 740. The Securities and Exchange Commission ("SEC") staff issued Staff Accounting Bulletin No. 118 ('SAB 118') that allows companies to record provisional estimates of the impacts of the Act during a measurement period of up to one year from the enactment, which is similar to the measurement period used when accounting for business combinations. The Company has estimated the effects of the Act, and those estimates have been reflected in our 2017 financial statements.

~~NOTE 6 — Revenue~~

~~Merchandise sales~~

~~Right of return~~

As part of our merchandise sales, we offer customers a right of return on merchandise that lapses based on the original purchase date. The Company estimates the amount of sales that may be returned by our customers and records this estimate as a reduction of revenue in the period in which the related revenues are recognized. We utilize historical and industry data to estimate the total return liability. Conversely, the reduction in revenue results in a corresponding reduction in merchandise, buying and occupancy costs which results in a contract asset for the anticipated merchandise returned. The total reduction in revenue from estimated returns was $1.3 million as of August 4, 2018, which is included within accrued liabilities and other current liabilities in the condensed consolidated balance sheet.

~~Friendship rewards program~~

In addition, the Company estimates breakage on the points earned within the program that will not be used by customers for future discounts. The Company estimates breakage based on the historical redemption rate and considers industry trends. Breakage is recorded as a reduction to the deferred revenue associated with the program.

As of August 4, 2018, the Company recorded $3.9 million in deferred revenue associated with the program, which is included in accrued liabilities and other current liabilities in the condensed consolidated balance sheet.

~~Gift card revenue~~

The Company sells gift cards to customers which can be redeemed for merchandise within our brick and mortar and eCommerce sales channels. Gift cards are recorded as deferred revenue when issued and are subsequently recorded as revenue upon redemption. The Company estimates breakage related to gift cards when the likelihood of redemption is remote. This estimate utilizes historical trends based on the vintage of the gift card. Breakage on gift cards is recorded as revenue in proportion to the rate of gift card redemptions by vintage. This represents a change in the methodology used to estimate

~~breakage as we have historically recognized breakage for the portion of the gift card balances that remained outstanding following 36 months of issuance.~~

As of August 4, 2018, the Company had $2.9 million of deferred revenue associated with the issuance of gift cards, which is included in accrued liabilities and other current liabilities in the condensed consolidated balance sheet.

~~Private label credit card~~

As part of the agreement, the Company received a signing bonus. We have determined that the benefits associated with signing the agreement are recognized over time throughout its term. This is a faithful depiction of the transfer of services as the customer receives and consumes the benefits by obtaining and having the ability to use financing through Comenity Bank for purchases within our brick and mortar and eCommerce sales channels throughout the agreement's term. As of August 4, 2018, the Company had $1.8 million recorded as deferred revenue associated with the signing bonus, which is included in accrued liabilities and other current liabilities in the condensed consolidated balance sheet. The Company recorded $0.1 million into revenue for the thirteen week and twenty-six week periods ended August 4, 2018 associated with the signing bonus.

The Company records revenue associated with royalties received for purchases made using the PLCC. Royalty revenue is recognized based on the total amount to which we have a right to invoice in accordance with the practical expedient included in ASC 606-10-55-18. Therefore, royalty revenue is recognized in the period in which the related purchases are recognized.

The Company receives a performance bonus based on the total amount of new accounts that are opened during the year. We have determined that this is a form of variable consideration. Variable consideration is recorded if, in the Company’s judgment, it is probable that a significant future reversal of revenue under the contract will not occur. For the thirteen week and twenty-six week periods ended August 4, 2018, the Company met certain performance metrics within the contract and recorded a small amount of revenue associated with performance bonuses.

~~Disaggregation of revenue~~

~~The following table provides information about disaggregated revenue by sales channel. All revenue illustrated below is included within our one reportable segment.~~

Thirteen Weeks Ended Twenty-six Weeks Ended
August 4, 2018 August 4, 2018
Brick and mortar stores $ 66,715
$ 134,770
eCommerce sales 19,216
38,010
Other 1,487
539
Net sales $ 87,418
$ 173,319

~~Amounts included within other revenue relate to revenues earned from our private label credit card, net of any revenue adjustments and accruals.~~

~~Contract balances~~

~~The following table provides information about contract assets and liabilities from contracts with customers (in thousands):~~

Contract liabilities
(current)

Contract liabilities
(non-current)
Contract Balances - February 4, 2018
Right of return $ 1,079
$ —
Friendship Rewards Program 3,501
—
Gift card revenue 4,986
—
Private label credit card 274
1,622
Total $ 9,840
$ 1,622

Contract Balances - August 4, 2018
Right of return $ 1,304
$ —
Friendship Rewards Program 3,868
—
Gift card revenue 2,899
—
Private label credit card 274
1,485
Total $ 8,345
$ 1,485

The Company recognized revenue of $1.5 million and $3.4 million in the thirteen week and twenty-six week periods ended August 4, 2018, respectively, related to contract liabilities recorded at the beginning of the period. Such revenues were comprised of the redemption and forfeiture of Friendship Rewards Program discount certificates, redemption of gift cards, and amortization of the PLCC signing bonus. The Company does not have any material contract assets as of August 4, 2018.

For the thirteen and twenty-six week periods ended August 4, 2018, the Company did not recognize any revenue resulting from changes in the estimated variable consideration to be received associated with performance obligations satisfied or partially satisfied in prior periods.

~~Transaction price allocated to remaining performance obligations~~

~~The following table includes the estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied as of August 4, 2018:~~

Remainder of
Fiscal 2018 Fiscal 2019 Thereafter
Private label credit card 137
274
1,348
Total 137
274
1,348

~~Contract Costs~~

~~The Company has not incurred any costs to obtain or fulfill a contract.~~

NOTE 7 — Earnings Per Share

The following table sets forth the calculation of basic and diluted earnings per share (“EPS”) shown on the face of the accompanying ~~consolidated statement~~Condensed Consolidated Statement of ~~operations:~~

Operations:


	Thirteen Weeks Ended						Twenty-six Weeks Ended						Thirteen Weeks Ended						Twenty-six Weeks Ended
	August 4,			July 29,			August 4,			July 29,			August 3,			August 4,			August 3,			August 4,
	2018			2017			2018			2017			2019			2018			2019			2018
Numerator (in thousands):
Net loss attributable to Christopher & Banks Corporation	$	(7,426	)	$	(7,889	)	$	(12,745	)	$	(11,577	)	$	(5,941	)	$	(7,426	)	$	(12,093	)	$	(12,745	)
Denominator (in thousands):
Weighted average common shares outstanding - basic	37,458			37,156			37,381			37,123			37,440			37,458			37,686			37,381
Dilutive shares	—			—			—			—			—			—			—			—
Weighted average common and common equivalent shares outstanding - diluted	37,458			37,156			37,381			37,123			37,440			37,458			37,686			37,381
Net loss per common share:
Basic	$	(0.20	)	$	(0.21	)	$	(0.34	)	$	(0.31	)	$	(0.16	)	$	(0.20	)	$	(0.32	)	$	(0.34	)
Diluted	$	(0.20	)	$	(0.21	)	$	(0.34	)	$	(0.31	)	$	(0.16	)	$	(0.20	)	$	(0.32	)	$	(0.34	)

Total stock options of approximately ~~4.3~~4.8 million and ~~4.1~~4.3 million were excluded from the shares used in the computation of diluted earnings per share for the ~~thirteen week~~thirteen-week periods ended August 3, 2019 and August 4, 2018, ~~and July 29, 2017,~~ as they were anti-dilutive. Total stock options of approximately ~~4.0~~4.7 million and ~~4.1~~4.0 million were excluded from the shares used in the computation of diluted earnings per share for the ~~twenty-six week~~twenty-six-week periods ended August 3, 2019 and August 4, 2018, ~~and July 29, 2017,~~ as they were anti-dilutive.

NOTE 8 — Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair value measurements, as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable

Level 3 – Unobservable inputs that are significant to the fair value of the asset or liability.

Assets that are Measured at Fair Value on a Non-recurring Basis:

The following table summarizes certain information for non-financial assets for the twenty-six weeks ended August ~~4, 2018~~3, 2019 and the fiscal year ended February ~~3, 2018,~~2, 2019, that are measured at fair value on a non-recurring basis in periods subsequent to an initial recognition period. The Company places amounts into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.


	Twenty-six Weeks Ended		Fiscal Year Ended		Twenty-six Weeks Ended		Fiscal Year Ended
Long-Lived Assets Held and Used (in thousands):	August 4, 2018		February 3, 2018		August 3, 2019		February 2, 2019
Carrying value	$	—	$	318	$	510	$	4,829
Fair value measured using Level 3 inputs	$	—	$	—	199		445
Impairment charge	$	—	$	318	$	311	$	4,384

Approximately $0.2 million of the Fiscal 2019 impairment charge reduced the carrying value of operating lease assets. The remainder of the Fiscal 2019 and 2018 impairment charges reduced the carrying value of fixed assets.

All of the fair value measurements included in the table above were based on significant unobservable inputs (Level 3). The Company determines fair value for measuring assets on a non-recurring basis using a discounted cash flow approach as discussed in Note ~~1, Nature of Business~~3, Property, Plant and ~~Significant Accounting Policies~~Equipment ~~in our Form 10-K for the year ended February 3, 2018.~~. In determining future cash flows, the Company uses its best estimate of future operating results, which requires the use of significant estimates and assumptions, including estimated sales, merchandise margin and expense levels, and the selection of an appropriate discount rate; therefore, differences in the estimates or assumptions could produce significantly different results. General economic uncertainty impacting the retail industry and continuation of recent trends in company performance makes it reasonably possible that additional long-lived asset impairments could be identified and recorded in future periods.

Fixed asset fair values were derived using a discounted cash flow ("DCF") model to estimate the present value of net cash flows that the asset or asset group is expected to generate. The key inputs to the DCF model generally included our forecasts of

net cash generated from revenue, expenses and other significant cash outflows, such as capital expenditures, as well as an appropriate discount rate. In the case of assets for which the impairment was the result of restructuring activities, no future cash flows have been assumed as the assets will cease to be used and expected sale values are nominal.

NOTE 9 — Leases

The Company leases its store locations and vehicles under operating leases. The store lease terms, including rental period, renewal options, escalation clauses and rent as a percentage of sales, vary among the leases. Most store leases require the Company to pay real estate taxes and common area maintenance charges. In addition, we have lease agreements that contain both lease and non-lease components. We have elected to combine lease and non-lease components for all classes of assets.

Maturities of our lease liabilities as of August 3, 2019 are as follows:



(in thousands)	Lease Liabilities⁽¹⁾
Remainder of 2019	$	19,479
2020	31,824
2021	26,201
2022	22,946
2023	22,170
Thereafter	45,568
Total lease payments	168,188
Less: Imputed interest	(27,962		)
Present value of lease liabilities	140,226
Less: Current lease liabilities	(28,258		)
Long-term lease liabilities	$	111,968


⁽¹⁾	Includes retail stores and the corporate headquarters facility, including the distribution center.

Maturities of our lease liabilities as of February 2, 2019 (under ASC 840, Leases) were as follows:



(in thousands)	Lease Liabilities⁽¹⁾
2019	$	36,965
2020	25,887
2021	21,386
2022	18,439
2023	17,811
Thereafter	38,827
Total lease payments	$	159,315


⁽¹⁾	Includes retail stores and the corporate headquarters facility, including the distribution center.

The weighted average remaining lease terms and discount rates for all leases as of August 3, 2019 were as follows:



Remaining lease term and discount rate:	August 3, 2019
Weighted average remaining lease term (years)	6.0
Weighted average discount rate	6.0	%

Operating expense for the thirteen weeks ended August 3, 2019 totaled approximately $10.2 million, with $0.5 million of that amount representing operating lease variable rent that was recorded in cost of sales. In addition, all but $20 thousand of the $9.7 million of non-variable operating lease rent is included in cost of sales. $20 thousand of operating lease expense is included in selling, general and administrative expenses. For the thirteen weeks ended August 3, 2019, cash lease payments were $11.2 million, and right of use assets obtained in exchange for lease liabilities were $0.5 million.

Operating expense for the twenty-six weeks ended August 3, 2019 totaled approximately $20.6 million, with $0.9 million of that amount representing operating lease variable rent that was recorded in cost of sales. In addition, all but $52 thousand of the $19.7 million of non-variable operating lease expense is included in cost of sales. $52 thousand of operating lease expense is included in selling, general and administrative expenses. For the twenty-six weeks ended August 3, 2019, cash lease payments were $21.3 million, and right of use assets obtained in exchange for lease liabilities were $2.6 million.

NOTE 10 — Legal Proceedings

We are subject, from time to time, to various claims, lawsuits or actions that arise in the ordinary course of business. We accrue for loss contingencies associated with outstanding litigation or legal claims for which management has determined it is probable that a loss contingency exists and the amount of the loss can be reasonably estimated. If we determine an unfavorable outcome is not probable or reasonably estimable, we do not accrue a potential loss contingency.

On August 14, 2019, Mark Gottlieb, a Company stockholder, filed a purported class action lawsuit against Jonathan Duskin; Seth Johnson; Keri Jones; Kent Kleeberger; William Sharpe, III; Joel Waller and Laura Weil (the "Named Directors"), B. Riley FBR, Inc. and B. Riley Financial Inc., in the Court of Chancery in the State of Delaware, on behalf of himself and all stockholders who held shares as of December 20, 2018. The lawsuit alleges that the Named Directors breached their duty of loyalty in connection with the Company's rejection in December of 2018, of an unsolicited bid to acquire the Company. The lawsuit further alleges that the B. Riley firms aided and abetted the asserted breach of the duty of loyalty by the Named Directors. The Company believes the Complaint is without merit. The Named Directors, and the Company on their behalf, together with the B. Riley firms, intend to defend the lawsuit vigorously.

The ultimate resolution of legal matters can be inherently uncertain and, for some matters, we may be unable to predict the ultimate outcome, determine whether a liability has been incurred or make an estimate of the reasonably possible liability that could result from an unfavorable outcome because of these uncertainties. We do not, however, currently believe that the resolution of any pending matter will have a material adverse effect on our financial position, results of operations or liquidity.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February ~~3, 2018~~2, 2019 and our unaudited Condensed Consolidated Financial Statements and related Notes included in Item 1 of this Quarterly Report on Form 10-Q. Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude.

Executive Overview

We are a ~~national~~ specialty retailer ~~featuring exclusively-designed, privately-branded women’s~~of privately branded women's apparel and accessories. We offer our customer an assortment of unique, classic and versatile clothing that fits her everyday needs at a good value.

We operate an integrated, omni-channel platform that provides our customer the ability to shop when and where she wants, including online or at our retail and outlet stores. This approach allows our customers to browse, purchase, return, or exchange our merchandise through the channel that is optimal for her.

As of August ~~4, 2018,~~3, 2019, we operated ~~461~~455 stores in 4544 states, including ~~313~~310 Missy, Petite, Women ("MPW") stores, 7980 outlet stores, 3634 Christopher & Banks ("CB") stores, and 3331 C.J. Banks ("CJ") stores. Our CB brand offers unique fashions and accessories featuring exclusively designed assortments of women’s apparel in sizes 4 to 16 and in petite sizes 4P to 16P. Our C.J. Banks brand offers similar assortments of women’s apparel in sizes 14W to 26W. Our MPW concept and outlet stores offer an assortment of both CB and CJ apparel servicing the Missy, Petite and Women-sized customer in one location.

Strategic Priorities

Our overall business strategy is to build sustainable, long-term revenue growth and consistent profitability through the following strategic initiatives:

Enhance the customer shopping experience;

~~Deliver compelling promotions that support our financial goals;~~Improve marketing and promotional effectiveness;

Leverage ~~our~~ omni-channel capabilities;

~~Attract new customers~~Build loyalty and grow our customer file;

Optimize our real estate portfolio; and

~~Optimize~~Right-size our cost structure.

Enhance the ~~shopping experience~~Customer Shopping Experience

We are committed to ~~ensuring that we consistently meet~~enhancing our ~~customers’ needs with~~customer's shopping experience by providing a ~~differentiated~~well curated product assortment that ~~fits her lifestyle at~~is presented in a ~~recognizable value. Over the past twelve months, we have increased the flow of fashion offerings to entice~~way that is easier for her to ~~shop more often.~~shop. We are focused on ~~ensuring that~~improving the flow and depth of our ~~assortment is easy~~inventory buys which are intended to ~~shop so that she can more easily see what is~~help her build an outfit and drive units per transaction. Additionally, we have recently launched a new Style and ~~how~~Selling model to ~~build her outfit.~~support our store associates in providing even better service and importantly drive sales.

Improve Marketing and Promotional Effectiveness

~~Deliver compelling~~Our goals include executing disciplined markdown management, leveraging improved analytics to inform what types and depth of promotions ~~that support~~and targeted offers are used and to increase our ~~financial goals~~

~~We intend to better leverage our data and tools to execute a~~return on marketing and promotional strategy that will drive traffic and conversion while expanding gross margins. We are committed to our value proposition that recognizes our customer is drawn to the style, quality and value that we offer. With the assistance of data analytics, we believe there is an opportunity to better leverage our data to drive fewer, more meaningful promotions. We will continue to analyze, test, react and refine our promotional strategy to ensure that we are providing the most attractive offers for our customer, which support our financial goals.investments.

Leverage ~~our omni-channel capabilities~~Omni-Channel Capabilities

Our integrated, omni-channel strategy is designed to provide ~~our~~ customers with a seamless ~~shopping~~retail experience, allowing her to shop ~~when~~whenever, however and ~~where~~wherever she ~~wants. New flexible fulfillment options should also allow us to leverage our total inventory across channels to drive sales and lower costs.~~chooses. In January of 2018, we launched ~~buy~~“Buy online, ship to ~~store. We are~~store,” and in ~~the process~~November of ~~piloting buy~~2018, we launched “Buy online, ship from ~~store and~~store.” As of August 2019, we ~~will pilot buy~~are fulfilling eCommerce orders from approximately 220 of our stores. We launched “Buy online, pick up in ~~store by~~store” during the ~~end~~first quarter of ~~the fall season. Additionally, while we have~~Fiscal 2019. These flexible fulfillment options not only meet a ~~well established and growing eCommerce business, we see an opportunity~~customer need, they allow us to ~~improve~~better leverage our website experience. This includes enhancing product recommendation capabilities, increasing site speed, and making it easier for her to create and access her account. We believe these enhancements will further improve her online experience and drive higher sales oninventory across our ~~site.~~chain.

~~Attract new customers~~Build Loyalty and ~~grow~~Grow our ~~customer file~~Customer File

We have a very loyal customer base that is highly engaged. ~~The personalized~~Our uniquely designed product, our value positioning and our customer service ~~that our Associates provide is a differentiator~~are key differentiators for us and ~~is a contributor~~contribute to the loyalty of our customers ~~exhibit,~~ with approximately 90% of our active customers participating in our loyalty rewards program. We look to drive increased spend with our current customers. To increase loyalty to our brand, we have been very focused on growing the number of private label credit card customers. During the second quarter, we saw a significant increase in the number of accounts activated. We also saw an increase in our customer loyalty penetration during the second quarter.

We ~~are extremely focused~~continue to focus on ~~increasing~~maximizing the benefits of our ~~total~~ customer ~~file.~~relationship management (“CRM”) database, Friendship Rewards Loyalty Program (“Friendship Rewards”), and private-label credit card program to strengthen engagement with our customers. Our Friendship Rewards program, in conjunction with our CRM system, allows us to personalize communications and customize our offers. We ~~believe that leveraging~~continue to leverage our direct and digital marketing ~~is one of the best ways~~channels to ~~acquire new customers~~encourage additional customer visits and increased spending per visit.

To grow our active customer file, we ~~have shifted a greater mix of~~intend to reallocate our marketing spend in an effort to ~~digital.~~drive acquisition of new customers, reactivate lapsed customers, and also capitalize on market disruptions. In addition, we intend to refresh our Friendship Rewards program and to continue to leverage that program. Finally, we plan to capitalize on our unique positioning in the market to drive engagement with customers on a grass roots level.

Optimize our Real Estate Portfolio

Between 2011 and 2015 we consolidated our store formats and reduced our store count by 33% in an effort to improve store productivity. Additionally, approximately 44% of our stores have a potential lease action arising during Fiscal 2019 and 57% before the end of Fiscal 2020. This should provide us with flexibility to close underperforming stores and the opportunity to renegotiate occupancy costs where applicable. To this end, we engaged a leading national third-party real estate consulting firm during the first quarter to assist us in lease restructuring and to accelerate and increase occupancy cost ~~structure~~savings.

Right-size our Cost Structure

We ~~believe that~~intend to take a holistic approach in driving cost reductions. To help us in accomplishing this we have ~~an opportunity~~hired a third-party, non-merchandise procurement specialist to assist us in analyzing relationships and negotiating cost reductions. In addition, we intend to continue to ~~control~~aggressively negotiate rent reductions, optimize our marketing spend, review and ~~leverage~~reduce our ~~expenses as~~corporate overhead and reduce our ~~business model evolves. In the second quarter, we signed a contract with a third party firm to leverage our non-merchandise procurement.~~shipping and fulfillment expense.

Performance Measures

Management evaluates our financial results based on the following key measures of performance:

Comparable sales

Comparable sales is a measure that highlights the sales performance of our store channel and eCommerce channel by measuring the changes in sales over the comparable, prior-year period of equivalent length.

Our comparable sales calculation includes merchandise sales for:

Stores operating for at least 13 full months;

Stores relocated within the same center; and

eCommerce sales.

Our comparable sales calculation excludes:

Stores converted to the MPW format for 13 full months post conversion.

We believe our eCommerce operations are interdependent with our brick-and-mortar store sales and, as such, we believe that reporting combined store and eCommerce comparable sales is a more appropriate presentation. Our customers are able to browse merchandise in one channel and consummate a transaction in a different channel. At the same time, our customers have the option to return merchandise to a store or our third-party distribution center, regardless of the original channel used for purchase.

Comparable sales measures can vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies.

Other performance metrics

To supplement our comparable sales performance measure, we also monitor changes in net sales, net sales per store, net sales per gross square foot, gross profit, gross margin rate, operating income, cash, inventory and liquidity.

Second Quarter Fiscal ~~2018~~2019 Results of Operations

The following table presents selected consolidated financial data for the second quarter of ~~fiscal 2018~~Fiscal 2019 compared to the second quarter of ~~fiscal 2017:~~Fiscal 2018:


	Thirteen Weeks Ended						Thirteen Weeks Ended						Net Change					Percent of Net Sales
(dollars in thousands)	August 4, 2018			July 29, 2017			August 3, 2019			August 4, 2018			Amount			Percent		August 3, 2019		August 4, 2018
Net sales	$	87,418		$	86,618		$	83,443		$	87,418		$	(3,975	)	(4.5	)%	100.0	%	100.0	%
Merchandise, buying and occupancy costs	62,546			61,990			58,969			62,546			(3,577		)	(5.7	)%	70.7	%	71.5	%
Gross profit	24,872			24,628			24,474			24,872			(398		)	(1.6	)%	29.3	%	28.5	%
Other operating expenses:
Selling, general and administrative	29,675			29,179			27,754			29,675			(1,921		)	(6.5	)%	33.3	%	33.9	%
Depreciation and amortization	2,518			3,167			2,199			2,518			(319		)	(12.7	)%	2.6	%	2.9	%
Impairment of store assets	—			93			311			—			311			—	%	0.4	%	—	%
Total other operating expenses	32,193			32,439			30,264			32,193			(1,929		)	(6.0	)%	36.3	%	36.8	%
Operating loss	(7,321		)	(7,811		)	(5,790		)	(7,321		)	1,531			(20.9	)%	(6.9	)%	(8.4	)%
Interest expense, net	(42		)	(38		)	(111		)	(42		)	(69		)	164.3	%	(0.1	)%	—	%
Loss before income taxes	(7,363		)	(7,849		)	(5,901		)	(7,363		)	1,462			(19.9	)%	(7.1	)%	(8.4	)%
Income tax provision	63			40			40			63			(23		)	(36.5	)%	—	%	0.1	%
Net loss	$	(7,426	)	$	(7,889	)	$	(5,941	)	$	(7,426	)	$	1,485		(20.0	)%	(7.1	)%	(8.5	)%


	Thirteen Weeks Ended
Rate trends as a percentage of net sales	August 4, 2018			July 29, 2017
Gross margin	28.5		%	28.4		%
Selling, general, and administrative	33.9		%	33.7		%
Depreciation and amortization	2.9		%	3.7		%
Operating loss	(8.4		)%	(9.0		)%



	Thirteen Weeks Ended
Rate trends as a percentage of net sales	August 3, 2019		August 4, 2018
Gross margin	29.3	%	28.5	%
Selling, general, and administrative	33.3	%	33.9	%
Depreciation and amortization	2.6	%	2.9	%
Operating loss	(6.9	)%	(8.4	)%

Second Quarter Fiscal ~~2018~~2019 Summary

Net sales ~~increased 0.9% compared to the same period last year primarily due to an increase in average unit retail, partly offset by a decrease in transactions;~~

~~Comparable sales increased 0.8% following a 0.6% decrease in the same period last year;~~

~~eCommerce sales increased 15.4% following a 22.1% increase in the same period last year;~~

~~Gross margin rate remained flat~~declined 4.5% compared to the same period last year due to ~~a reduction~~declines in ~~occupancy expense~~average unit retail, units per transaction, and average number of stores. These declines were partially offset by an increase in the number of transactions.

Comparable sales decreased 4.1% following a 0.8% increase in the same period last year.

eCommerce sales decreased 1.3% following a 16.4% increase in the same period last year.

Gross margin rate improved 88 basis points compared to last year's second quarter primarily due to increased ~~product~~merchandise margin, partially offset by higher shipping costs related to our ship from ~~our first~~store initiative.

SG&A expense was $1.9 million, or 6.5%, less than last year's second quarter ~~receipts. The product cost issue has been addressed~~due to lower expenses for compensation, medical benefits, professional services and eCommerce, and the ~~balance~~sale of ~~the year;~~a claim regarding credit card interchange fees.

Net loss ~~aggregated to $7.4~~totaled $5.9 million, or a ~~$0.20~~$(0.16) loss per share, compared to a net loss for the prior year's second quarter of ~~$7.9~~$7.4 million, or ~~$0.21~~a $(0.20) loss per ~~share, for the same period last year;~~share.

As of August ~~4, 2018,~~3, 2019, we held ~~$23.1~~$2.2 million of cash and cash equivalents, compared to ~~$22.6~~$2.6 million as of ~~July 29, 2017;~~

~~On August 3, 2018, Christopher & Banks Corporation entered into a second amendment to its existing credit facility with Wells Fargo~~May 4, 2019. Bank ~~to extend the term~~borrowings were $3.5 million as of the ~~credit facility to August 3, 2023 and supplement~~end of the ~~existing $50.0~~second quarter versus $3.0 million ~~credit facility by adding a new $5.0 million revolving "first-in, last-out" tranche credit facility.~~at the end of the first quarter.

Net Sales

Thirteen Weeks Ended
Net sales (in thousands): August 4, 2018 July 29, 2017 % Change
Net sales $ 87,418
$ 86,618
0.9 %

The components of the ~~0.9%~~4.5% net sales ~~increase~~decrease in the second quarter ~~fiscal 2018~~Fiscal 2019 compared to the second quarter of ~~fiscal 2017~~Fiscal 2018 were as follows:



	Thirteen Weeks Ended
Sales driver change components	August ~~4, 2018~~3, 2019
Number of transactions	~~(5.2~~2.1	)%
Units per transaction	~~0.3~~(2.9	)%
Average unit retail	~~5.2~~(3.5	)%
Other sales	~~0.6~~(0.2	)%
Total sales driver change	~~0.9~~(4.5	)%



	Thirteen Weeks Ended
Comparable sales	August ~~4, 2018~~3, 2019
Comparable sales	~~0.8~~(4.1	)%

Net sales ~~increased~~decreased primarily due to a ~~5.2% increase~~3.5% decrease in average unit retail and a 2.9% decline in units per transaction. These decreases were partially offset by a ~~decline~~2.1% increase in ~~transactions, including~~ the ~~effects~~number of ~~a 2.5% decline in store count. Average unit retail expansion coupled with eCommerce sales growth more than offset continued weakness in store traffic.~~transactions.

To supplement our comparable sales measure, we also monitor changes in other store sales metrics as illustrated in the table below:



	Thirteen Weeks Ended
Store metrics	August ~~4, 2018~~3, 2019
Net sales per store % change	~~0.1~~(4.2	)%
Net sales per square foot % change	—(5.0	)%

Net sales per store and net sales per square foot for the second quarter of ~~fiscal 2018 remained flat compared to~~Fiscal 2019 each declined primarily from the ~~same period last~~3.5% reduction in average dollar spend per transaction and a 2.9% reduction in units per transaction, partially offset by a 2.1% increase in the number of transactions from the second quarter of the prior year.

Store count, openings, closings, and square footage for our stores were as follows:


	Store Count							Square Footage⁽¹⁾		Store Count								Square Footage⁽¹⁾
	May 5,				MPW	August 4,	Avg Store	August 4,	May 5,	May 4,				MPW		August 3,	Avg Store	August 3,	May 4,
Stores by Format	2018	Open	Close		Conversions	2018	Count	2018	2018	2019	Open	Close		Conversions		2019	Count	2019	2019
MPW	314	—	(1	)	—	313	314	1,225	1,225	313	1	(3	)	(1	)	310	311	1,227	1,234
Outlet	79	—	—		—	79	79	309	310	81	—	(1	)	—		80	80	321	325
Christopher and Banks	36	—	—		—	36	36	119	119	33	1	—		—		34	34	112	109
C.J. Banks	33	—	—		—	33	33	120	120	30	1	—		—		31	31	111	109
Total Stores	462	—	(1	)	—	461	462	1,773	1,774	457	3	(4	)	(1	)	455	456	1,771	1,777


⁽¹⁾	Square footage presented in thousands

Average store count in the second quarter of ~~fiscal 2018~~Fiscal 2019 was ~~462~~456 stores compared to an average store count of ~~474~~462 stores in the second quarter of ~~fiscal 2017,~~Fiscal 2018, a decrease of ~~2.5%~~1.3%. Average square footage in the second quarter of ~~fiscal 2018~~Fiscal 2019 decreased ~~2.5%~~0.5% compared to the second quarter of ~~fiscal 2017.~~

Fiscal 2018.

Gross Profit

Thirteen Weeks Ended
Gross profit August 4, 2018 July 29, 2017 Change
Gross profit $ 24,872
$ 24,628
$ 244
Gross margin rate as a percentage of net sales 28.5 % 28.4 % 0.1 %

Gross margin rate ~~remained flat~~improved 88 basis points compared to the same period last year primarily due to ~~a reduction in occupancy expense~~increased merchandise margin, partially offset by ~~increased product~~higher shipping costs related to our ship from ~~our first quarter receipts. The product cost issue has been addressed for the balance of the year.~~store initiative.

Selling, General, and Administrative (“SG&A”) Expenses

Thirteen Weeks Ended
Selling, general, and administrative August 4, 2018 July 29, 2017 Change
Selling, general, and administrative $ 29,675
$ 29,179
$ 496
SG&A rate as a percentage of net sales 33.9 % 33.7 % 0.2 %

SG&A ~~increased~~expense decreased by ~~$0.5~~$1.9 million ~~mainly~~ due to ~~increases in~~lower expenses for compensation, medical benefits, professional services and eCommerce, and the sale of $0.5 million, marketing expenses of $0.4 million, severance expense of $0.3 million and medical expenses of $0.2 million. These SG&A expense increases were partially offset by savings in store operational expenses of $0.5 million and in insurance and taxes of $0.3 million.a claim regarding credit card interchange fees. As a percent of net sales, SG&A ~~increased~~decreased approximately ~~20 basis points.~~0.6%.

Depreciation and Amortization ~~(“D&A”)~~

Thirteen Weeks Ended
Depreciation and amortization August 4, 2018 July 29, 2017 Change
Depreciation and amortization $ 2,518
$ 3,167
$ (649 )
D&A rate as a percentage of net sales 2.9 % 3.7 % (0.8 )%

Depreciation and amortization expense decreased primarily due to the sale-leaseback of the corporate facility ~~and~~in April 2018, a decrease in average store ~~count.~~count and lower depreciation due to impairment charges on store-related fixed assets taken in the third and fourth quarters of Fiscal 2018, as well as in the second quarter of Fiscal 2019.

~~Impairment of Store Assets~~

Thirteen Weeks Ended
Impairment of Store Assets August 4, 2018 July 29, 2017 Change
Impairment of Store Assets $ —
$ 93
$ (93 )

There were no non-cash impairment charges relating to long-lived assets for the thirteen weeks ended August 4, 2018 compared to an impairment charge of $0.1 million in the same period last year related to long-lived assets at a small number of store locations.

Operating Loss

Thirteen Weeks Ended
Operating loss August 4, 2018 July 29, 2017 Change
Operating loss $ (7,321 ) $ (7,811 ) $ 490
Operating loss rate as a percentage of net sales (8.4 )% (9.0 )% 0.6 %

Our operating loss decreased $1.5 million in the second quarter of ~~fiscal 2018~~Fiscal 2019 compared to the second quarter of ~~fiscal 2017~~Fiscal 2018 primarily due to ~~an increase~~the $1.9 million decrease in ~~net sales of $0.8~~SG&A expenses and the $0.3 million ~~and a decline~~decrease in depreciation ~~and amortization expenses of $0.6 million, partly~~expense, partially offset by ~~a SG&A increase of $0.5 million.~~the $0.3 million impairment charge and the $0.4 million decrease in gross profit.

Interest expense, net

Thirteen Weeks Ended
Interest expense, net August 4, 2018 July 29, 2017 Change
Interest expense, net $ (42 ) $ (38 ) $ (4 )

The ~~change~~increase in net interest expense ~~net is not material.~~was due to a higher level of average borrowings from our Credit Facility during the second quarter of Fiscal 2019 compared to the comparable quarter of Fiscal 2018.

Income Tax Provision

Thirteen Weeks Ended
Income tax provision August 4, 2018 July 29, 2017 Change
Income tax provision $ 63
$ 40
$ 23

Income tax expense recorded for the thirteen weeks ended August ~~4, 2018~~3, 2019 was ~~$63~~$40 thousand compared to income tax expense of ~~$40~~$63 thousand for the same period of ~~fiscal 2017.~~Fiscal 2018. Our effective tax rate was ~~(0.9)~~(0.7)% for the thirteen weeks ended August ~~4, 2018~~3, 2019 compared to ~~(0.5)~~(0.9)% in the same period last year.

Net earnings

Thirteen Weeks Ended
Net loss August 4, 2018 July 29, 2017 Change
Net loss $ (7,426 ) $ (7,889 ) $ 463
Net loss rate as a percentage of net sales (8.5 )% (9.1 )% 0.6 %

Our net loss decrease in the second quarter of ~~fiscal 2018~~Fiscal 2019 compared to our net loss in the second quarter of ~~2017~~2018 was primarily due to ~~an increase~~the decrease in ~~net sales~~SG&A and ~~a decline in~~ depreciation ~~and amortization~~ expenses, ~~partly~~partially offset by ~~an increase~~the impairment charge and decrease in ~~SG&A.~~gross profit.

First Half Fiscal ~~2018 Results~~2019 Result of Operations

The following table presents selected consolidated financial data for the first ~~twenty-six weeks~~half of ~~fiscal 2018~~Fiscal 2019 compared to the first ~~twenty-six weeks~~half of ~~fiscal 2017:~~Fiscal 2018:



	Twenty-six Weeks Ended						Net Change					Percent of Net Sales
(dollars in thousands)	August 3, 2019			August 4, 2018			Amount			Percent		August 3, 2019		August 4, 2018
Net sales	$	166,663		$	173,319		$	(6,656	)	(3.9	)%	100.0	%	100.0	%
Merchandise, buying and occupancy costs	116,575			121,103			(4,528		)	(3.7	)%	69.9	%	69.9	%
Gross profit	50,088			52,216			(2,128		)	(4.1	)%	30.1	%	30.1	%
Other operating expenses:
Selling, general and administrative	56,942			59,422			(2,480		)	(4.2	)%	34.2	%	34.3	%
Depreciation and amortization	4,581			5,334			(753		)	(14.1	)%	2.7	%	3.1	%
Impairment of store assets	311			—			311			—	%	0.2	%	—	%
Total other operating expenses	61,834			64,756			(2,922		)	(4.5	)%	37.1	%	37.4	%
Operating loss	(11,746		)	(12,540		)	794			(6.3	)%	(7.0	)%	(7.2	)%
Interest expense, net	(267		)	(99		)	(168		)	169.7	%	(0.2	)%	(0.1	)%
Loss before income taxes	(12,013		)	(12,639		)	626			(5.0	)%	(7.2	)%	(7.3	)%
Income tax provision	80			106			(26		)	(24.5	)%	—	%	0.1	%
Net loss	$	(12,093	)	$	(12,745	)	$	652		(5.1	)%	(7.3	)%	(7.4	)%

Twenty-six Weeks Ended
(dollars in thousands) August 4, 2018 July 29, 2017
Net sales $ 173,319
$ 175,173
Merchandise, buying and occupancy costs 121,103
120,007
Gross profit 52,216
55,166
Other operating expenses:
Selling, general and administrative 59,422
60,153
Depreciation and amortization 5,334
6,266
Impairment of store assets —
163
Total other operating expenses 64,756
66,582
Operating loss (12,540 ) (11,416 )
Interest expense, net (99 ) (69 )
Loss before income taxes (12,639 ) (11,485 )
Income tax provision 106
92
Net loss $ (12,745 ) $ (11,577 )

Twenty-six Weeks Ended
Rate trends as a percentage of net sales August 4, 2018 July 29, 2017
Gross margin 30.1 % 31.5 %
Selling, general, and administrative 34.3 % 34.3 %
Depreciation and amortization 3.1 % 3.6 %
Operating loss (7.2 )% (6.5 )%



	Twenty-six Weeks Ended
Rate trends as a percentage of net sales	August 3, 2019		August 4, 2018
Gross margin	30.1	%	30.1	%
Selling, general, and administrative	34.2	%	34.3	%
Depreciation and amortization	2.7	%	3.1	%
Operating loss	(7.0	)%	(7.2	)%

First Half Fiscal ~~2018~~2019 Summary

Net sales decreased ~~1.1%~~3.9% compared to the same period last year primarily due to ~~a decline in transactions, including a decrease in average store count, partly offset by an increase~~declines in average unit ~~retail;~~retail, units per transaction and average number of stores. These declines were partially offset by increases in the number of transactions.

Comparable sales decreased ~~0.9%~~3.9% following a ~~4.1%~~0.9% decrease in the same period last ~~year;~~year.

eCommerce sales increased ~~9.1%~~4.8% following ~~an 18.1%~~a 9.1% increase in the same period last ~~year;~~year.

Gross margin ~~rate decreased 140~~percentage improved 7 basis points compared to the same period last year ~~largely driven~~as increased merchandise margin was offset by ~~an increase in product~~higher shipping costs ~~which have been addressed for the balance of the year, and additional markdowns due~~relating to ~~higher beginning of period inventory~~our ship from store initiative.

SG&A expense was $2.5 million, or 4.2%, less than last year's first half due to lower ~~than anticipated sales;~~expenses for corporate and store compensation, medical benefits, professional services and eCommerce, and the sale of a claim regarding credit card interchange fees in the second quarter. These expense decreases were partially offset by increases in insurance and recruiting and training expenses.

Net loss ~~aggregated to $12.7~~for the first half totaled $12.1 million, ~~a $0.34~~or $(0.32) loss per share, compared to a net loss for the prior year's first half of ~~$11.6~~$12.7 million, or ~~$0.31~~a $(0.34) loss per ~~share, for~~share.

As of August 3, 2019, we held $2.2 million of cash and cash equivalents, compared to $10.2 million as of February 2, 2019. Bank borrowings were $3.5 million as of the ~~same period last year.~~end of the second quarter versus zero at February 2, 2019.

Net Sales

Twenty-six Weeks Ended
Net sales (in thousands): August 4, 2018 July 29, 2017 % Change
Net sales $ 173,319
$ 175,173
(1.1 )%

The components of the ~~1.1%~~3.9% net sales decrease in the first half of ~~fiscal 2018~~Fiscal 2019 compared to the first half of ~~fiscal 2017~~Fiscal 2018 were as follows:



	Twenty-six Weeks Ended
Sales driver change components	August ~~4, 2018~~3, 2019
Number of transactions	~~(5.3~~0.7	)%
Units per transaction	(~~2.2~~0.5	)%
Average unit retail	~~5.5~~(4.3	)%
Other sales	~~0.9~~0.2	%
Total sales driver change	(~~1.1~~3.9	)%



	Twenty-six Weeks Ended
Comparable sales	August ~~4, 2018~~3, 2019
Comparable sales	(~~0.9~~3.9	)%

Net sales decreased primarily due to a ~~5.3%~~4.3% decrease ~~in transactions, including the effects of a 2.9% decrease in average store count, partly offset by an increase~~ in average unit retail and a 0.5% decline in units per transaction. These decreases were partially offset by a 0.7% increase in the number of 5.5%. Sales performance improved as the weather became more seasonal during the latter part of the first quarter and the first part of the second quarter as customers responded favorably to spring merchandise.transactions.

To supplement our comparable sales measure, we also monitor changes in other store sales metrics as illustrated in the table below:



	Twenty-six Weeks Ended
Store metrics	August ~~4, 2018~~3, 2019
Net sales per store % change	(~~0.7~~5.2	)%
Net sales per square foot % change	(~~1.1~~5.9	)%

Net sales per store and net sales per square foot ~~decreased mainly due to a decline~~for the first half of Fiscal 2019 each declined primarily from the 4.3% reduction of average dollar spend per transaction and 0.5% reduction in ~~transactions partly~~units per transaction, partially offset by ana 0.7% increase in ~~average unit retail.~~the number of transactions from the first half of the prior year.

Store count, openings, closings, and square footage for our stores were as follows:


	Store Count								Square Footage⁽¹⁾		Store Count								Square Footage⁽¹⁾
	February 3,				MPW		August 4,	Avg Store	August 4,	February 3,	February 2,				MPW		August 3,	Avg Store	August 3,	February 2,
Stores by Format	2018	Open	Close		Conversions		2018	Count	2018	2018	2019	Open	Close		Conversions		2019	Count	2019	2019
MPW	314	—	(2	)	1		313	314	1,225	1,225	312	2	(3	)	(1	)	310	312	1,227	1,227
Outlet	78	3	(2	)	—		79	79	309	314	80	1	(1	)	—		80	81	321	321
Christopher and Banks	37	—	—		(1	)	36	36	119	122	33	1	—		—		34	33	112	109
C.J. Banks	34	—	—		(1	)	33	33	120	123	30	1	—		—		31	30	111	109
Total Stores	463	3	(4	)	(1	)	461	462	1,773	1,784	455	5	(4	)	(1	)	455	456	1,771	1,766


⁽¹⁾	Square footage presented in thousands

Average store count in the first half of ~~fiscal 2018~~Fiscal 2019 was ~~462~~456 stores compared to an average store count of ~~476~~462 stores in the first half of ~~fiscal 2017,~~Fiscal 2018, a decrease of ~~2.9%~~1.3%. Average square footage in the first half of ~~fiscal 2018~~Fiscal 2019 decreased ~~2.8%~~0.5% compared to the first half of ~~fiscal 2017.~~Fiscal 2018.

Gross Profit

Twenty-six Weeks Ended
Gross profit August 4, 2018 July 29, 2017 Change
Gross profit $ 52,216
$ 55,166
$ (2,950 )
Gross margin rate as a percentage of net sales 30.1 % 31.5 % (1.4 )%

Gross margin ~~rate decreased 140~~percentage improved 7 basis points ~~primarily driven~~compared to the same period last year as increased merchandise margin was offset by ~~an increase in product~~higher shipping costs ~~which have been addressed for the balance of the year, and additional markdowns due~~related to ~~higher beginning of period inventory due to lower than anticipated sales.~~our ship from store initiative.

Selling, General, and Administrative (“SG&A”) Expenses

Twenty-six Weeks Ended
Selling, general, and administrative August 4, 2018 July 29, 2017 Change
Selling, general, and administrative $ 59,422
$ 60,153
$ (731 )
SG&A rate as a percentage of net sales 34.3 % 34.3 % — %

SG&A expense decreased by ~~$0.7~~$2.5 million ~~mainly~~ due to lower expenses for corporate and store ~~operating~~compensation, medical benefits, professional services and eCommerce, and the sale of a claim regarding credit card interchange fees in the second quarter. These expenses ~~of $1.5 million and lower insurance and tax expenses of $0.7 million. These SG&A expense savings~~ were partially offset by increases in ~~professional services of $0.8 million, marketing expenses of $0.8 million~~insurance and ~~severance expense of $0.3 million.~~recruiting and training expenses. As a percent of net sales, SG&A ~~remained flat.~~increased by approximately 0.5%.

Depreciation and Amortization ~~(“D&A”)~~

Twenty-six Weeks Ended
Depreciation and amortization August 4, 2018 July 29, 2017 Change
Depreciation and amortization $ 5,334
$ 6,266
$ (932 )
D&A rate as a percentage of net sales 3.1 % 3.6 % (0.5 )%

Depreciation and amortization expense decreased primarily due to the sale-leaseback of the corporate ~~facilities and~~facility in April 2018, a 0.5% decrease in average store ~~count.~~count and lower depreciation due to impairment charges on store-related fixed assets taken in the third and fourth quarters of Fiscal 2018, as well as in the second quarter of Fiscal 2019.

~~Impairment of Store Assets~~

Twenty-six Weeks Ended
Impairment of Store Assets August 4, 2018 July 29, 2017 Change
Impairment of Store Assets $ —
$ 163
$ (163 )

There were no non-cash impairment charges relating to long-lived assets for the twenty-six weeks ended August 4, 2018 compared to an impairment charge of $0.2 million in the same period last year related to long-lived assets at a small number of store locations.

Operating Loss

Twenty-six Weeks Ended
Operating loss August 4, 2018 July 29, 2017 Change
Operating loss $ (12,540 ) $ (11,416 ) $ (1,124 )
Operating loss rate as a percentage of net sales (7.2 )% (6.5 )% (0.7 )%

Our operating loss ~~increased~~decreased 6.3% in the first half of ~~fiscal 2018~~Fiscal 2019 compared to the first half of ~~fiscal 2017 primarily due to a 140 basis point gross margin rate~~Fiscal 2018 as the $2.5 million decline in SG&A expense and ~~a net sales decrease of $1.9~~$0.8 million ~~partly~~decline in depreciation expense was partially offset by ~~a depreciation~~the $2.1 million decline in gross profit and ~~amortization expense decrease of $0.9~~the $0.3 million ~~and a SG&A decrease of $0.7 million.~~asset impairment charge.

Interest expense, net

Twenty-six Weeks Ended
Interest expense, net August 4, 2018 July 29, 2017 Change
Interest expense, net $ (99 ) $ (69 ) $ (30 )

The ~~change~~increase in net interest expense ~~net is not material.~~was due to a higher level of average borrowings from our Credit Facility during the first half of Fiscal 2019 compared to the comparable half of Fiscal 2018.

Income Tax Provision

Twenty-six Weeks Ended
Income tax provision August 4, 2018 July 29, 2017 Change
Income tax provision $ 106
$ 92
$ 14

Income tax expense recorded for the twenty-six weeks ended August ~~4, 2018~~3, 2019 was ~~$106~~$80 thousand compared to income tax expense of ~~$92~~$106 thousand for the same period of ~~fiscal 2017.~~Fiscal 2018. Our effective tax rate was ~~(0.8)~~(0.7)% for ~~both~~ the twenty-six weeks ended August ~~4, 2018 and~~3, 2019 compared to (0.8)% in the same period last year.

Net earnings

Twenty-six Weeks Ended
Net loss August 4, 2018 July 29, 2017 Change
Net loss $ (12,745 ) $ (11,577 ) $ (1,168 )
Net loss rate as a percentage of net sales (7.4 )% (6.6 )% (0.8 )%

Our net loss ~~increase~~decrease in the first half of ~~fiscal 2018~~Fiscal 2019 compared to our net loss in the first half of ~~2017~~Fiscal 2018 was primarily due to anet sales and gross margin ~~rate decline and net sales decrease partly~~decreases, along with the store asset impairment charge, partially offset by ~~a decrease in~~lower SG&A and depreciation ~~and amortization and SG&A~~ expenses.

Fiscal ~~2018~~2019 Outlook

~~We are working~~Based on the strong top line results third quarter-to-date, the Company is maintaining its Fiscal 2019 guidance.

For the full year of Fiscal 2019, the Company expects:

Net sales to ~~implement a number~~be flat to up 2% as the result of ~~strategic priorities, including actions to enhance her shopping experience with a well-curated merchandise offering; deliver compelling promotions that support our financial goals; leverage our~~expanded omni-channel capabilities, ~~and attract new customers and grow our customer file. We also will continue to evaluate the business for further cost saving opportunities.~~

During the remainder of fiscal 2018, we plan to close 1 CB store, 1 CJ store, 1 Outlet store, and 1 MPW store. We plan to open 2 Outlet stores and 2 MPW stores. Average square footage for the year is expected to be down approximately 2.4% as compared to fiscal 2017 and down 2.2% in the third quarter as comparedenhancements to the ~~same period last year.~~overall product assortment, and more impactful marketing promotions intended to drive customer file growth;

Gross margin expansion of 100 to 200 basis points as a result of improved inventory management, including supply chain and omni-channel initiatives, greater disciplines around promotions and the continued reduction of occupancy costs; the gross margin guidance reflects the impact of recently announced tariffs;

~~We continue~~SG&A as a percentage of sales to ~~expect capital expenditures for~~decline 100 to 150 basis points due to ongoing cost reduction initiatives; and

To end the fiscal year ~~to range between $3.0 million~~with positive cash and ~~$4.0 million representing investments in store relocations, merchandising technology applications, and the continued development of our omni-channel capabilities.~~no outstanding borrowings under its Credit Facility.

~~We expect our taxes for the year to be nominal and to represent minimum fees and taxes.~~

~~Future Outlook~~

Through our continued progress on our strategic initiatives, we expect to achieve modest sales per store increases in brick and mortar stores and double digit growth in eCommerce. We also plan to achieve improved gross margin through merchandise margin expansion due to reduced discounting and higher penetration of full price sales, supply chain savings, and improved occupancy leverage.

We intend to realize our expense reduction initiative through our engagement of a third party non-merchandise procurement partner as well as a thorough review and right-sizing of all spending. We expect this to result in SG&A leverage throughout fiscal 2019.

~~We believe these efforts will deliver improved gross margin, drive year over year sales growth, and achieve meaningful improvement in earnings and cash flow for fiscal 2019.~~

Liquidity and Capital Resources

Cash flow and liquidity

Summary

We expect to operate our business and execute our strategic initiatives principally with funds generated from operations and ~~if necessary,~~ from our ~~amended and restated credit agreement (the “Credit Facility”) with Wells Fargo,~~Credit Facility, subject to compliance with ~~all covenants~~a financial covenant and other ~~financial provisions~~terms of the Company's Credit Facility. To supplement our financial flexibility, the Company completed a sale-leaseback transaction of the Company’s corporate facility for $13.7 million in the first quarter of fiscal 2018. As part of the sale-leaseback transaction, the Company has $1.6 million in escrow for certain repairs to the property.Facility with Wells Fargo Bank N.A ("Wells Fargo").

~~The following table summarizes~~As of August 3, 2019, our bank borrowings totaled $3.5 million, with $21.8 million of availability under the Company's Credit Facility. Our cash and cash equivalents balance as of ~~the end of the first half of fiscal 2018 and the end of fiscal 2017:~~

(in thousands) August 4, 2018 February 3, 2018
Cash and cash equivalents $ 23,114
$ 23,077

~~Cash and cash equivalents remained flat~~August 3, 2019 was $2.2 million, compared to ~~the end~~$10.2 million as of fiscal 2017. During the period, the Company received proceeds on the sale of the corporate facility as part of the sale-leaseback transaction, partly offset by the net loss in the first half of fiscal 2018.February 2, 2019.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the first half of ~~fiscal 2018~~Fiscal 2019 compared to the first half of ~~2017:~~2018:

Twenty-six Weeks Ended
(in thousands) August 4, 2018 July 29, 2017
Net cash used in operating activities $ (11,386 ) $ (9,277 )
Net cash provided by (used in) investing activities 11,607
(3,150 )
Net cash used in financing activities (184 ) (6 )
Net increase (decrease) in cash and cash equivalents $ 37
$ (12,433 )



	Twenty-six Weeks Ended
(in thousands)	August 3, 2019			August 4, 2018
Net cash used in operating activities	$	(10,348	)	$	(11,386	)
Net cash (used in) provided by investing activities	(996		)	11,607
Net cash provided by (used in) financing activities	3,347			(184		)
Net (decrease) increase in cash and cash equivalents	$	(7,997	)	$	37

Operating Activities

The ~~increase~~$1.0 million decrease in cash used in operating activities in the first half of ~~fiscal 2018~~Fiscal 2019 compared to the first half of ~~fiscal 2017~~Fiscal 2018 was primarily due to an increase in the net loss for the twenty-six week period and a decrease in depreciation expense due to the corporate facility sale-leaseback transaction as well as a lower average store count compared to the same period last year. Net seasonal changes in working capital. The positive effect of these items was partially offset by changes in non-cash lease-related items. Working capital ~~were relatively flat compared to~~fluctuations are a reflection of seasonal patterns and a change in the ~~same period last year.~~timing of accounts payable and payroll accruals.

Investing Activities

~~The increase~~Cash used in ~~cash provided by~~ investing activities infor the ~~first half of fiscal 2018~~current period was $1.0 million as compared to ~~the first half~~an increase of ~~fiscal 2017 was mainly~~cash of $11.6 million last year. The $12.6 million change is primarily attributable to ~~the~~ proceeds of $13.3 million from the sale of the corporate facility as part of a sale-leaseback ~~transaction. The gross sale proceeds were $13.7 million.~~transaction in April 2018. Capital expenditures for the first half of ~~fiscal 2018~~Fiscal 2019 were approximately ~~$1.7~~$1.0 million, which primarily reflected investments in technology associated with our ~~omni-channel~~eCommerce initiatives and merchandising capabilities, and expenditures supporting new stores.

Financing Activities

~~Financing~~The increase in cash provided by financing activities ~~in the first half of fiscal~~between Fiscal 2019 and 2018 ~~and 2017 were~~was due to net borrowings of $3.5 million on the ~~payment~~Company's Credit Facility during the second quarter of ~~deferred financing costs~~Fiscal 2019 and ~~to a small number~~was, partially offset by repurchases of ~~shares redeemed by employees to satisfy payroll tax obligations.~~

~~We have not paid any dividends in~~ the ~~last three fiscal years.~~Company's common stock.

Sources of Liquidity

Funds generated by operating activities, available cash and cash equivalents and our Credit Facility are our most significant sources of liquidity. We believe that our sources of liquidity will be sufficient to sustain operations and to finance anticipated capital investments and strategic initiatives over the next twelve months. However, in the event our liquidity is not sufficient to meet our operating needs, we may be required to limit our spending. There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability to borrow under our existing facilities or obtain additional financing, if necessary, on favorable terms.

The Credit Facility with Wells Fargo was most recently amended and extended on August 3, 2018. The current expiration date is August 3, 2023. The Credit Facility amendment ~~supplements~~in 2018 supplemented the Company’s existing $50.0 million revolving ~~credit facility~~Credit Facility by adding a new $5.0 million revolving “first-in, last-out” (“FILO Facility”) tranche, subject to the borrowing base restrictions applicable to

the FILO ~~Facility. The Company must draw under the FILO facility before making any borrowings under the revolving Credit~~ Facility.

In addition to these changes, the amendment eliminates availability against the Company’s real property, which was the subject of a sale-leaseback ~~transaction.~~transaction during Fiscal 2018.

~~There were no outstanding borrowings under the Credit Facility as of August 4, 2018 and July 29, 2017.~~ The ~~total Borrowing Base~~capped borrowing base at August ~~4, 2018~~3, 2019 was approximately ~~$29.6~~$39.8 million. As of August ~~4, 2018,~~3, 2019, the Company had open on-demand letters of credit of approximately ~~$6.7~~$11.1 million. Accordingly, after reducing the ~~Borrowing Base~~capped borrowing base for ~~the~~current borrowings of $3.5 million, open letters of credit and the required minimum availability of the greater of $3.0 million, or ~~10.0%~~$3.4 million (10.0% of the ~~Borrowing Base,~~revolving loan cap), the net availability of revolving credit loans under the Credit Facility was approximately ~~$22.2~~$21.8 million at August ~~4, 2018.~~3, 2019.

See Note 45 - Credit Facility for additional details regarding our Credit ~~Facility, including a description of the sole financial covenant, with which we were in compliance as of August 4, 2018.~~Facility.

~~In the first quarter of fiscal 2018,~~Exchange Listing

As previously disclosed, the Company ~~completed~~received notice from the ~~closing~~New York Stock Exchange (the “NYSE”) on April 17, 2019 that the Company was not in compliance with certain NYSE listing standards which require minimum market capitalization to be in excess of $15.0 million over a ~~sale-leaseback transaction~~30-day consecutive trading period. The Company exercised its right to seek review of this determination by a Committee of the Board of Directors of the Exchange and a hearing before that Committee was scheduled for July 18, 2019. Following discussions with representatives of the NYSE, on July 17, 2019, the Company withdrew its appeal given its current market capitalization was below $15.0 million. In connection therewith, trading in the Company’s common stock on the NYSE was suspended following the close of the NYSE market on Wednesday, July 17, 2019. On July 18, 2019, the Company’s common stock began trading on the OTC Markets Group under the symbol “CBKC”. On July 17, 2019, the NYSE filed a Form 25 with the Securities & Exchange Commission to effect the formal delisting of the Company’s ~~corporate facility for gross proceeds~~common stock from the NYSE, which became effective July 29, 2019. The Form 25 filing did not cause the removal of ~~$13.7 million, providing greater liquidity.~~any shares of the Company’s common stock from registration under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company remains subject to the periodic reporting requirements of the Exchange Act. The Company believes that the delisting of its common stock from the NYSE, as well as the related process leading up to delisting, has had a negative impact on the Company’s common stock market price as well as on the liquidity of its common stock.

Sourcing

There have been no material changes to our ratio of imports to total merchandise purchases or concentration of supplier purchases in the thirteen ~~weeks~~and twenty-six week periods ended August ~~4, 2018~~3, 2019 compared to the ~~fiscal 2017~~Fiscal 2018 year ended February 3, 2018. The Company is phasing out sourcing product from one of its largest vendors, which is expected to be completed early next fiscal year. The Company is in the process of sourcing inventory from alternative vendors. In connection with this transition, the Company does not anticipate that there will be a disruption in its supply of inventory of any significance, if at all.2, 2019.

Quarterly Results and Seasonality

Our quarterly results may fluctuate significantly depending on a number of factors, including general economic conditions, consumer confidence, customer response to our seasonal merchandise mix, timing of new store openings, adverse weather conditions, and shifts in the timing of certain holidays and shifts in the timing of promotional events.

Inflation

We do not believe that inflation had a material effect on our results of operations for the ~~thirteen or twenty-six week periods~~twenty-six-week period ended August ~~4, 2018.~~3, 2019.

Forward-Looking Statements

We may make forward-looking statements reflecting our current views with respect to future events and financial performance. These forward-looking statements, which may be included in reports filed under the Exchange Act, in press releases and in other documents and materials as well as in written or oral statements made by or on behalf of the Company, are subject to certain risks and uncertainties, including those discussed in Item 1A - Risk Factors of our Annual Report on Form

10-K for the fiscal year ended February ~~3, 2018,~~2, 2019, which could cause actual results to differ materially from historical results or those anticipated.

The words or phrases “will likely result,” “are expected to,” “estimate,” “project,” “believe,” “expect,” “should,” “anticipate,” “forecast,” “intend” and similar expressions are intended to identify forward-looking statements within the meaning of Section 21e of the Exchange Act and Section 27A of the Securities Act of 1933, as amended, as enacted by the Private Securities Litigation Reform Act of 1995 (“PSLRA”). In particular, we desire to take advantage of the protections of the PSLRA in connection with the forward-looking statements made in this Quarterly Report on Form 10-Q.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such statements are made. In addition, we wish to advise readers that the factors listed in Item 1A of our Annual Report on Form

10-K for the fiscal year ended February ~~3, 2018,~~2, 2019, as well as other factors, could affect our performance and could cause our actual results for future periods to differ materially from any opinions or statements expressed in the quarterly report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of our exposure to, and management of our market risks, see Item 7A, Quantitative and Qualitative Disclosures about Market Risk, in our Annual Report on Form 10-K for the fiscal year ended February ~~3, 2018.~~2, 2019. There have been no material changes to our exposure to, and management of our market risks in the thirteen ~~weeks~~and twenty-six week periods ended August ~~4, 2018.~~3, 2019.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

The Company carried out an evaluation as of the end of the period covered by this report (the “Evaluation Date”), under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rules 13(a)-15(e) and 15(d)-15(e) of the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of August ~~4, 2018~~3, 2019 the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Controls

There were no significant changes in our internal controls that could materially affect our disclosure controls and procedures subsequent to the Evaluation Date. Furthermore, there was no change in our internal control over financial reporting during the quarter ended August ~~4, 2018~~3, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

On August 14, 2019, Mark Gottlieb, a Company stockholder, filed a purported class action proceeding against Jonathan Duskin; Seth Johnson; Keri Jones; Kent Kleeberger; William Sharpe, III; Joel Waller and Laura Weil (the "Named Directors"), B. Riley FBR, Inc. and B. Riley Financial Inc., in the Court of Chancery in the State of Delaware, on behalf of himself and all stockholders who held shares as of December 20, 2018. The lawsuit alleges that the Named Directors breached their duty of loyalty in connection with the Company's rejection in December of 2018, of an unsolicited bid to acquire the Company. The lawsuit further alleges that the B. Riley firms aided and abetted the asserted breach of the duty of loyalty by the Named Directors. The Company believes the Complaint is without merit. The Named Directors, and the Company on their behalf, together with the B. Riley firms, intend to defend the lawsuit vigorously.

ITEM 1A. RISK FACTORS

In addition to the other information discussed in this report, the risk factors described in ~~Part~~“Part I, Item 1A. Risk ~~Factors~~Factors” in our ~~2017~~2018 Annual Report on Form 10-K for the fiscal period ended February ~~3, 2018,~~2, 2019, should be considered as they could materially affect our business, financial condition or ~~future~~operating results. These are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also adversely affect our business, financial condition or operating results. ~~There have not been any material changes with respect~~In addition to the risks described in our ~~2017~~2018 Annual Report on Form 10-K, ~~except for~~we also note the following:

We ~~are currently out of compliance with~~do not meet the ~~New York Stock Exchange’s (“NYSE”) listing~~ requirements ~~and we are at risk~~for continued qualification for trading on the OTCQX Marketplace of the ~~NYSE delisting our common stock, which could materially impair the liquidity and value of our common stock.~~OTC Markets Group.

~~We are~~Our current stock is currently ~~listed~~traded on the ~~NYSE.~~OTCQX Marketplace of the OTC Markets Group. On ~~June 14, 2018,~~July 24, 2019, we were notified that our market capitalization has stayed below $5 million for more than 30 consecutive calendar days and thus no longer meets the requirements for continued qualification for the OTCQX per the "OTCQX Rules for U.S. Companies" (the "Rules"), section 3.2.b.2. To remain eligible for trading on the OTCQX U.S. tier under this section of the Rules, the Company ~~received written notice from the NYSE that it is not in compliance with the continued listing standards set forth in Section 8~~must have (i) a minimum bid price of $0.10 per share as of the ~~NYSE Listed Company Manual. The Company is considered below the criteria established by the NYSE~~close of business for ~~continued listing because (i) its average~~at least one of every 30 consecutive calendar days; (ii) a market capitalization ~~has~~

~~been less than $50~~of at least $5 million ~~over a~~for at least one of every 30 consecutive ~~30 trading-day period,~~calendar days; and (iii) at ~~the same time its stockholders’ equity was less than $50 million, and (ii) its 30-day average closing~~least two Market Makers publishing price ~~was below $1.00. As a result, we are required to bring our share price and consecutive 30 trading-day average share price, as measured~~quotations on ~~the last trading day of any calendar month during the sixth month period following receipt~~OTC Link ATS within 90 days of the ~~NYSE notice above $1.00 per share or~~Company joining the ~~NYSE may commence suspension and delisting procedures. In addition, if our common stock price remains below~~OTCQX (the "Requirements"). The OTC Markets Group has given the ~~$1.00 per share threshold and falls to the point where the NYSE considers the stock price to be “abnormally low”, the NYSE has the discretion to begin delisting procedures immediately.~~

~~We have submitted~~Company a ~~continued listing plan (“Plan”) to the NYSE that outlines the steps we are taking~~cure period of until January 20, 2020 to regain compliance with this section of the ~~market capitalization and stockholders’ equity listing standard~~Rules. If the Company is unable to cure the deficiency within ~~eighteen months.~~ the timeframe provided, the Company will be moved to the OTC Pink Market.

On August ~~23, 2018 the NYSE~~26, 2019, we were notified ~~us that they accepted our Plan, subject to quarterly reviews~~ by the ~~NYSE Listing~~OTCQX that our bid price has closed below $0.10 for more than 30 consecutive days and ~~Compliance Committee to ensure progress against~~thus no longer meets the ~~Plan. The Company’s common stock continues to trade~~requirements for continued qualification under section 3.2.b.1 of the Rules. To remain eligible for trading on the ~~NYSE.~~OTCQX U.S. tier, the Company must meet the Requirements. The ~~current noncompliance~~OTC Markets Group is giving the Company a cure period of until February 20, 2020 to regain compliance with this section of the ~~standards described above does not affect~~Rules. If the ~~Company’s ongoing business operations or its reporting requirements with~~Company is unable to cure the ~~Securities and Exchange Commission.~~deficiency within the timeframe provided, the Company will be moved to the OTC Pink Market.

If the ~~NYSE~~Company's stock were to ~~delist our common stock,~~begin trading on the OTC Pink Market it ~~could: (i)~~could, among other things: reduce the liquidity and ~~quite~~ possibly even the market price of our common stock; (ii) reduce the number of institutional investors willing to hold or acquire our common stock, which could negatively affect our ability to raise equity financing; (iii) limit our access to public capital markets; (iv) impair our ability to provide equity incentives that would be attractive to our employees; (v) significantly impair our ability to use our common stock as consideration for acquisitions of other companies; (vi)and result in a limited availability for market quotations for our common ~~stock;~~stock.

Changes in U.S. trade policies, including the imposition of tariffs on apparel or accessories and ~~(vii)~~a potential resulting trade war, could have a material adverse impact on our business.

Most of our merchandise is produced in foreign countries, primarily in China, making the price and availability of our merchandise susceptible to international trade risks and other international conditions. The imposition of tariffs, duties, border adjustment taxes or other trade restrictions by the United States could also result in the ~~loss~~adoption of ~~analyst coverage~~new or increased tariffs or other trade restrictions by other countries. Recently, the current U.S. administration and China have imposed significant tariffs on goods imported from the other's country, and more recently, the United States announced a plan to impose the additional tariffs on apparel and accessories. These recently announced tariffs as well as additional tariffs or trade restrictions that are implemented by the United States or other countries, could have a significant adverse impact on the cost of our goods, the ~~Company.~~prices at which we offer them for sale and our overall financial performance. The adoption and expansion of trade restrictions and tariffs, quotas and embargoes, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies, has the potential to adversely impact the cost of and demand for our products, our overall costs, our customers, our suppliers and the world economy, which in turn could have a material adverse effect on our business, operational results, financial position and cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth information concerning purchases of our common stock for the quarter ended August ~~4, 2018:~~3, 2019:

Total Number of Maximum Number of
Shares Purchased as Shares that May Yet
Total Number of Part of Publicly Be Purchased Under
Shares Average Price Announced Plans or the Plans or
Period
Purchased⁽¹⁾
Paid per Share Programs Programs
5/6/18 - 6/2/18 2,126
$ 1.06
—
$ —
6/3/18 - 7/7/18 2,126
0.84
—
—
7/8/18 - 8/4/18 2,126
1.01
—
—
Total 6,378

—
—



				Total Number of	Maximum Number of
				Shares Purchased as	Shares that May Yet
	Total Number of			Part of Publicly	Be Purchased Under
	Shares	Average Price		Announced Plans or	the Plans or
Period	Purchased⁽¹⁾	Paid per Share		Programs	Programs
5/5/19 - 6/1/19	2,126	$	0.25	—	$	—
6/2/2019 - 7/6/2019	2,126	0.14		—	—
7/7/2019 - 8/3/2019	11,571	0.11		—	—
Total	15,823			—	—


⁽¹⁾	The shares of common stock in this column represent shares surrendered to us by stock plan participants in order to satisfy minimum withholding tax obligations related to the vesting of restricted stock awards.

The following table summarizes information in connection with purchases made by, or on behalf of, the Company or any

affiliated purchaser of the Company, of shares of the Company’s common stock during the 13-week period ended August 3, 2019.



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program
5/5/19 - 6/1/19	—	$	—	—	$	1,818,583
6/2/2019 - 7/6/2019	—	—		—	1,818,583
7/7/2019 - 8/3/2019	141,752	0.11		141,752	1,802,932
Total	141,752			141,752	—

⁽¹⁾

On December 20, 2018, the Company announced that the Board of Directors authorized a stock repurchase program to purchase up to $2.0 million of the Company’s outstanding common stock during the period ending December 31, 2019. The shares may be repurchased from time to time through open market purchases, block transactions, privately negotiated transactions or derivative transactions in a manner consistent with applicable securities laws and regulations.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



~~Exhibit~~
Exhibit No.		Exhibit Description
4.1* 31.1*	~~Form of certificate for shares of common stock of Christopher & Banks Corporation~~
10.1**	~~Christopher & Banks Corporation 2018 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on June 18, 2018)~~
10.2**	Christopher & Banks Corporation 2013 Directors' Equity Incentive Plan, as amended effective June 13, 2018 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on June 18, 2018)
10.3**	Form of Christopher & Banks Corporation Restricted Stock Award Agreement under the Christopher & Banks Corporation 2013 Directors' Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed on June 18, 2018)
10.4**	Form of Christopher & Banks Corporation Restricted Stock Unit Agreement under the Christopher & Banks Corporation 2013 Directors' Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K filed on June 18, 2018)
10.5**	Form of Non-Qualified Stock Option Agreement under the Christopher & Banks Corporation 2018 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on June 27, 2018)
10.6**	Form of Time-Based Restricted Stock Agreement under the Christopher & Banks Corporation 2018 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on June 27, 2018)
10.7**	Non-Qualified Stock Option Agreement effective as of July 9, 2018 between Richard Bundy and Christopher & Banks Corporation (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K/A filed on July 11, 2018)
10.8**	Time-Based Restricted Stock Agreement effective as of July 9, 2018 between Richard Bundy and Christopher & Banks Corporation (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K/A filed on July 11, 2018)
~~10.9~~	Second Amendment, dated August 3, 2018, to the Second Amended and Restated Credit Agreement, dated July 12, 2012, by and among Christopher & Banks Corporation, Christopher & Banks, Inc. and Christopher & Banks Company and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on August 6, 2018)
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* 31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1* 32.1*		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2* 32.2*		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*		Financial statements from the Quarterly Report on Form 10-Q of Christopher & Banks Corporation for the fiscal quarter ended August ~~4, 2018,~~3, 2019, formatted in eXtensible Business Reporting Language ("XBRL"): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements

* Filed with this report

** Management agreement or compensatory plan or agreement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	CHRISTOPHER & BANKS CORPORATION

Dated: September ~~6, 2018~~11, 2019	By:	/s/ Keri L. Jones
		Keri L. Jones
		President, Chief Executive Officer
		(Principal Executive Officer)

Dated: September ~~6, 2018~~11, 2019	By:	/s/ Richard Bundy
		Richard Bundy
		Senior Vice President, Chief Financial Officer
		(Principal Financial Officer)

2830



	February 3, 2018		ASC 606 Adjustments			February 4, 2018
Balance Sheet
Assets
Merchandise inventories	$	41,361	$	(482	)	$	40,879
Prepaid expenses and other current assets	2,715		482			3,197

Liabilities
Accrued liabilities and other current liabilities	26,201		(1,983		)	24,218

Equity
Retained earnings	34,993		1,983			36,976



	As reported		Balance without adoption of ASC 606		Effect of change Higher/(lower)
Balance Sheet
Assets
Merchandise inventories	$	40,184	$	40,781	$	(597	)
Prepaid expenses and other current assets	4,263		3,666		597

Liabilities
Accrued liabilities and other current liabilities	19,655		19,746		(91		)

Equity
Retained earnings	24,231		24,140		91



	Thirteen weeks ended August 4, 2018								Twenty-six weeks ended August 4, 2018
	As reported			Balance without adoption of ASC 606			Effect of change Higher/(lower)		As reported			Balance without adoption of ASC 606			Effect of change Higher/(lower)
Statement of Operations and Comprehensive Loss
Net sales	$	87,418		$	87,407		$	11	$	173,319		$	173,228		$	91
Net loss	(7,426		)	(7,437		)	11		(12,745		)	(12,836		)	91

Net loss per share:
Basic	$	(0.20	)	$	(0.20	)	$	0.00	$	(0.34	)	$	(0.34	)	$	0.00
Diluted	$	(0.20	)	$	(0.20	)	$	0.00	$	(0.34	)	$	(0.34	)	$	0.00



	Contract liabilities (current)		Contract liabilities (non-current)
Contract Balances - February 4, 2018
Right of return	$	1,079	$	—
Friendship Rewards Program	3,501		—
Gift card revenue	4,986		—
Private label credit card	274		1,622
Total	$	9,840	$	1,622

Contract Balances - August 4, 2018
Right of return	$	1,304	$	—
Friendship Rewards Program	3,868		—
Gift card revenue	2,899		—
Private label credit card	274		1,485
Total	$	8,345	$	1,485



	Remainder of
	Fiscal 2018	Fiscal 2019	Thereafter
Private label credit card	137	274	1,348
Total	137	274	1,348



	Thirteen Weeks Ended
Net sales (in thousands):	August 4, 2018		July 29, 2017		% Change
Net sales	$	87,418	$	86,618	0.9	%

Outstanding at
September 6, 2019

Trading Symbol

Name of each exchange on which registered

Common stock, par value $.01 per share