UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended July ~~30, 2016~~29, 2017


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

For the transition period from ~~_____ to _____~~____to____

Commission File No. 001-31390

CHRISTOPHER & BANKS CORPORATION

(Exact name of registrant as specified in its charter)



Delaware		06 - 1195422
(State or other jurisdiction of		(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

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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. x☒ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x☒ YES ¨☐ NO

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



Large accelerated filer ¨	Accelerated filer x¨
Non-accelerated filer ☒ ¨(Do not check if a smaller reporting company)	Smaller reporting company ¨
Emerging growth company ¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨☐ YES x☒ NO

As of August ~~26, 2016~~25, 2017, there were ~~37,239,844~~37,855,181 shares of the registrant's common stock outstanding.

~~Table of Contents~~

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	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2523

Item 4.	Controls and Procedures	2623

	PART II
	OTHER INFORMATION

Item 1.	Legal Proceedings	2623

Item 1A.	Risk Factors	2624

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2624

Item 3.	Defaults Upon Senior Securities	2624

Item 4.	Mine Safety Disclosures	2624

Item 5.	Other Information	2624

Item 6.	Exhibits	2725

	Signatures	2826

~~Table of Contents~~

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)


	July 30, 2016			January 30, 2016			July 29, 2017			January 28, 2017
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	28,091		$	31,506		$	22,573		$	35,006
Short-term investments	—			3,015
Accounts receivable	3,965			4,067			3,833			2,549
Merchandise inventories	50,052			42,481			41,917			36,834
Prepaid expenses and other current assets	9,591			9,059			4,568			3,485
Income taxes receivable	601			513			255			516
Total current assets	92,300			90,641			73,146			78,390
Property, equipment and improvements, net	58,660			59,224			51,983			55,332
Other non-current assets:
Deferred income taxes	383			393			322			321
Other assets	532			632			641			577
Total other non-current assets	915			1,025			963			898
Total assets	$	151,875		$	150,890		$	126,092		$	134,620

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	22,049		$	16,645		$	22,994		$	13,867
Accrued salaries, wages and related expenses	4,870			2,845			4,338			6,613
Accrued liabilities and other current liabilities	22,936			24,570			20,801			26,426
Total current liabilities	49,855			44,060			48,133			46,906
Non-current liabilities:
Deferred lease incentives	9,636			9,880			8,540			9,021
Deferred rent obligations	6,276			7,241			6,583			6,576
Other non-current liabilities	1,368			1,301			2,574			822
Total non-current liabilities	17,280			18,422			17,697			16,419

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, 47,027 and 46,870 shares issued, and 37,236 and 37,079 shares outstanding at July 30, 2016 and January 30, 2016, respectively	469			468
Common stock — $0.01 par value, 74,000 shares authorized, 47,646 and 47,425 shares issued, and 37,855 and 37,634 shares outstanding at July 29, 2017 and January 28, 2017, respectively							476			473
Additional paid-in capital	126,233			125,851			127,057			126,516
Retained earnings	70,749			74,800			45,440			57,017
Common stock held in treasury, 9,791 shares at cost at July 30, 2016 and January 30, 2016	(112,711		)	(112,711		)
Common stock held in treasury, 9,791 shares at cost at July 29, 2017 and January 28, 2017							(112,711		)	(112,711		)
Total stockholders’ equity	84,740			88,408			60,262			71,295
Total liabilities and stockholders’ equity	$	151,875		$	150,890		$	126,092		$	134,620

See Notes to Condensed Consolidated Financial Statements

~~Table of Contents~~

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Thirteen Weeks Ended						Twenty-Six Weeks Ended						Thirteen Weeks Ended						Twenty-Six Weeks Ended
	July 30,			August 1,			July 30,			August 1,			July 29,			July 30,			July 29,			July 30,
	2016			2015			2016			2015			2017			2016			2017			2016

Net sales	$	89,923		$	93,997		$	189,957		$	185,618		$	86,618		$	89,923		$	175,173		$	189,957
Merchandise, buying and occupancy costs	59,774			63,061			122,096			122,473			61,990			59,774			120,007			122,096
Gross profit	30,149			30,936			67,861			63,145			24,628			30,149			55,166			67,861
Other operating expenses:
Selling, general and administrative	30,626			29,630			66,103			61,619			29,179			30,626			60,153			66,103
Depreciation and amortization	2,974			2,901			5,996			5,617			3,167			2,974			6,266			5,996
Impairment of store assets	309			115			476			115
Impairment of long-lived assets													93			309			163			476
Total other operating expenses	33,909			32,646			72,575			67,351			32,439			33,909			66,582			72,575
Operating loss	(3,760		)	(1,710		)	(4,714		)	(4,206		)	(7,811		)	(3,760		)	(11,416		)	(4,714		)
Interest expense, net	(42		)	(33		)	(82		)	(40		)	(38		)	(42		)	(69		)	(82		)
Other income	—			—			911			—			—			—			—			911
Loss before income taxes	(3,802		)	(1,743		)	(3,885		)	(4,246		)	(7,849		)	(3,802		)	(11,485		)	(3,885		)
Income tax provision (benefit)	82			(1,033		)	167			(2,094		)
Income tax provision													40			82			92			167
Net loss	$	(3,884	)	$	(710	)	$	(4,052	)	$	(2,152	)	$	(7,889	)	$	(3,884	)	$	(11,577	)	$	(4,052	)

Basic loss per share:
Net loss	$	(0.11	)	$	(0.02	)	$	(0.11	)	$	(0.06	)	$	(0.21	)	$	(0.11	)	$	(0.31	)	$	(0.11	)
Basic shares outstanding	36,981			36,871			36,953			36,860			37,156			36,981			37,123			36,953

Diluted loss per share:
Net loss	$	(0.11	)	$	(0.02	)	$	(0.11	)	$	(0.06	)	$	(0.21	)	$	(0.11	)	$	(0.31	)	$	(0.11	)
Diluted shares outstanding	36,981			36,871			36,953			36,860			37,156			36,981			37,123			36,953

See Notes to Condensed Consolidated Financial Statements

~~Table of Contents~~

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Thirteen Weeks Ended						Twenty-Six Weeks Ended						Thirteen Weeks Ended						Twenty-Six Weeks Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015			July 29, 2017			July 30, 2016			July 29, 2017			July 30, 2016

Net loss	$	(3,884	)	$	(710	)	$	(4,052	)	$	(2,152	)	$	(7,889	)	$	(3,884	)	$	(11,577	)	$	(4,052	)
Other comprehensive income, net of tax:
Unrealized holding (losses) gains on securities arising during the period, net of taxes of $0, $(1), $0 and $2 for the thirteen and twenty-six week periods ending July 30, 2016 and August 1, 2015, respectively	—			(1		)	—			2
Other comprehensive income, net of tax													—			—			—			—
Comprehensive loss	$	(3,884	)	$	(711	)	$	(4,052	)	$	(2,150	)	$	(7,889	)	$	(3,884	)	$	(11,577	)	$	(4,052	)

See Notes to Condensed Consolidated Financial Statements

~~Table of Contents~~

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Twenty-Six Weeks Ended						Twenty-Six Weeks Ended
	July 30, 2016			August 1, 2015			July 29, 2017			July 30, 2016
Cash flows from operating activities:
Net loss	$	(4,052	)	$	(2,152	)	$	(11,577	)	$	(4,052	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,996			5,617			6,266			5,996
Impairment of store assets	476			115
Impairment of long-lived assets							163			476
Deferred income taxes, net	11			(1,888		)	—			11
Gain on investments, net	(911		)	(1		)
Gain from company-owned life insurance							—			(911		)
Amortization of premium on investments	10			24			—			10
Amortization of financing costs	31			31			31			31
Deferred lease-related liabilities	(381		)	2,696			(442		)	(381		)
Stock-based compensation expense	406			1,071			550			406
Loss on disposal of assets	1			—			—			1
Changes in operating assets and liabilities:
Accounts receivable	102			(1,919		)	(1,284		)	102
Merchandise inventories	(7,571		)	(5,582		)	(5,082		)	(7,571		)
Prepaid expenses and other assets	(463		)	(3,414		)	(1,180		)	(463		)
Income taxes receivable	(88		)	163			261			(88		)
Accounts payable	5,547			5,135			9,096			5,547
Accrued liabilities	260			(2,980		)	(7,872		)	260
Other liabilities	106			(148		)	1,793			106
Net cash used in operating activities	(520		)	(3,232		)	(9,277		)	(520		)
Cash flows from investing activities:
Purchases of property, equipment and improvements	(6,788		)	(17,514		)	(3,150		)	(6,788		)
Proceeds from company-owned life insurance	911			—			—			911
Maturities of available-for-sale investments	3,005			7,108			—			3,005
Net cash used in investing activities	(2,872		)	(10,406		)	(3,150		)	(2,872		)
Cash flows from financing activities:
Shares redeemed for payroll taxes	(23		)	(26		)	(6		)	(23		)
Net cash used in financing activities	(23		)	(26		)	(6		)	(23		)
Net decrease in cash and cash equivalents	(3,415		)	(13,664		)	(12,433		)	(3,415		)
Cash and cash equivalents at beginning of period	31,506			37,245			35,006			31,506
Cash and cash equivalents at end of period	$	28,091		$	23,581		$	22,573		$	28,091
Supplemental cash flow information:
Interest paid	$	95		$	73		$	69		$	95
Income taxes paid (refunded)	$	102		$	(257	)
Income taxes (refunded) paid							$	(251	)	$	102
Accrued purchases of equipment and improvements	$	226		$	975		$	219		$	226

See Notes to Condensed Consolidated Financial Statements

~~Table of Contents~~

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 — Basis of Presentation

The unaudited 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. 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, except the condensed consolidated balance sheet as of January 28, 2017 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 January ~~30, 2016.~~28, 2017.

The results of operations for the interim period 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 July 29, 2017, and July 30, 2016 ~~and August 1, 2015~~ and for all periods presented.

Recently issued accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance under ~~Accounting Standards Update ("ASU")~~ASU No. 2014-09, Revenue from Contracts with ~~Customers~~Customers. . ASU 2014-09 supersedes existing revenue recognition requirements and provides a new comprehensive revenue recognition model that requires entities to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers, Deferral of the Effective Date, which defers the effective date of the new revenue recognition standard by one year. As a result, ASU 2014-09 is effective retrospectively for fiscal years and interim periods within those years beginning after December 15, 2017. ~~The adoption will include updates as provided under ASU No. 2016-08,~~ ~~Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue Gross versus Net);~~ ~~ASU No. 2016-10,~~ ~~Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing;~~ ~~and ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients.~~Adoption is allowed by either the full retrospective or modified retrospective approach. ~~The Company is currently evaluating which approach it~~We do not believe the adoption of this standard will ~~apply and the potential~~have a material impact on our ~~condensed~~ consolidated financial statements.

~~In November 2015, the FASB issued ASU No. 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes, which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent.~~ The ~~Company elected early adoption of this guidance for the fiscal year ended January 30, 2016, on a prospective basis. The adoption of this ASU allows~~new revenue standard will require the Company to ~~simplify its presentation~~recognize gift card breakage proportional to actual gift card redemptions. The Company continues to evaluate the merits of ~~deferred income tax liabilities and assets. Prior periods were not retrospectively adjusted.~~adopting the standard under the full retrospective or modified retrospective approach, which will require certain reclassifications.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires that lease arrangements longer than twelve months result in an entity recognizing an asset and liability. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. ~~We have not evaluated~~The Company is currently evaluating the guidance and its impact ~~of the updated guidance~~ on our condensed consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, ~~Compensation - Stock~~Compensation-Stock Compensation (Topic 718) -Improvements to Employee Share-Based Payment Accounting ~~which simplifies~~. ASU 2016-09 addresses simplification of several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ~~The standard~~ASU 2016-09 is effective for ~~fiscal years~~public companies for annual reporting periods beginning after December 15, 2016, ~~including~~and interim periods within those fiscal years. The ~~Company does not expect that the~~ adoption of ~~this pronouncement will~~ASU 2016-09 did not have a material impact on ~~our condensed~~ the Company's consolidated financial ~~statements.~~statements mostly due to the impact of the tax valuation allowance.

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

future adoption.

NOTE 2 ~~— Investments~~

~~No investments were held by the Company as of July 30, 2016.~~

~~Investment as of January 30, 2016, consisted of the following (in thousands):~~

Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value
Short-term investments:
Corporate bonds $ 2,810
$ 1
$ (1 ) $ 2,810
Municipal bonds 205
—
—
205
Total investments $ 3,015
$ 1
$ (1 ) $ 3,015

During the twenty-six weeks ended July 30, 2016 and August 1, 2015, there were no purchases of available-for-sale securities. During the twenty-six weeks ended July 30, 2016 and August 1, 2015, there were approximately $3.0 million and $7.1 million of maturities of available-for-sale securities, respectively. There were no other-than-temporary impairments of available-for-sale securities during the twenty-six weeks ended July 30, 2016 and August 1, 2015.

~~NOTE 3~~ — Merchandise Inventories and Sources of Supply

Merchandise inventories consisted of the following (in thousands):


	July 30, 2016		January 30, 2016		July 29, 2017		January 28, 2017
Merchandise - in store/eCommerce	$	38,690	$	31,751	$	32,648	$	28,584
Merchandise - in transit	11,362		10,730		9,269		8,250
Total merchandise inventories	$	50,052	$	42,481	$	41,917	$	36,834

There have been no material changes to our ratio of imports to total merchandise purchases or concentration of supplier purchases in the twenty-six weeks ended July ~~30, 2016~~29, 2017 compared to the fiscal ~~2015~~2016 year ended January ~~30, 2016.~~28, 2017.

NOTE 43 — Property, Equipment and Improvements, Net

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


Description	July 30, 2016			January 30, 2016			July 29, 2017			January 28, 2017
Land	$	1,597		$	1,597		$	1,597		$	1,597
Corporate office, distribution center and related building improvements	12,627			12,618			12,700			12,700
Store leasehold improvements	51,113			52,812			49,362			49,450
Store furniture and fixtures	71,866			74,513			69,244			69,598
Corporate office and distribution center furniture, fixtures and equipment	4,262			4,356			4,938			4,880
Computer and point of sale hardware and software	34,765			32,644			33,541			32,313
Construction in progress	4,424			5,781			1,515			1,321
Total property, equipment and improvements, gross	180,654			184,321			172,897			171,859
Less accumulated depreciation and amortization	(121,994		)	(125,097		)	(120,914		)	(116,527		)
Total property, equipment and improvements, net	$	58,660		$	59,224		$	51,983		$	55,332

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 with an impairment analysis, the Company determined that improvements and equipment at certain under-performing stores and at stores identified for closure were impaired. As a result, the Company recorded approximately ~~$0.3~~$0.1 million and ~~$0.1~~$0.3 million for long-lived asset impairments during the thirteen week periods ended July 29, 2017 and July 30, 2016, ~~and August 1, 2015,~~ respectively. The Company recorded approximately ~~$0.5~~$0.2 million and ~~$0.1~~$0.5 million for long-lived asset impairments during the twenty-six week periods ended July 29, 2017 and July 30, 2016, ~~and August 1, 2015,~~ respectively.

~~Table of Contents~~

NOTE 54 — Accrued Liabilities

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


	July 30, 2016		January 30, 2016		July 29, 2017		January 28, 2017
Gift card and store credit liabilities	$	5,351	$	8,029	$	5,128	$	7,414
Accrued Friendship Rewards Program loyalty liability	3,772		3,838		3,587		3,770
Accrued income, sales and other taxes payable	2,003		1,622		1,866		1,239
Accrued occupancy-related expenses	3,758		3,017		3,354		3,614
Sales return reserve	1,110		1,309		1,282		943
eCommerce operations	3,379		1,162
eCommerce obligations					2,868		3,190
Other accrued liabilities	3,563		5,593		2,716		6,256
Total accrued liabilities and other current liabilities	$	22,936	$	24,570	$	20,801	$	26,426

NOTE 65 — Credit Facility

The Company is party to an amended and restated credit agreement (the "Credit Facility") with Wells Fargo Bank, N.A. (“Wells Fargo”), as lender. The Credit Facility was most recently amended and extended on September 8, 2014. The current expiration date is September 8, 2019.

The Credit Facility provides the Company with revolving credit loans of up to $50.0 million in the aggregate, subject to a borrowing base formula based primarily on eligible credit card receivables, inventory and real estate, as such terms are defined in the Credit Facility, and up to $10.0 million of which may be drawn in the form of standby and documentary letters of credit.

Borrowings under the Credit Facility will generally accrue interest at a rate ranging from 1.50% to 1.75% over the London Interbank Offered Rate ("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 ~~term is~~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%.

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 covenants and other financial provisions as of July ~~30, 2016.~~29, 2017.

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.

The Company had no revolving credit loan borrowings under the Credit Facility during each of the twenty-six week periods ended July 29, 2017, and July 30, ~~2016, and August 1, 2015.~~2016. The total Borrowing Base at July ~~30, 2016~~29, 2017 was approximately ~~$41.4~~$36.5 million. As of July ~~30, 2016,~~29, 2017, the Company had open on-demand letters of credit of approximately ~~$0.3~~$0.9 million. Accordingly, after reducing the Borrowing Base for the open letters of credit and the required minimum availability of the greater of $3.0 million, or 10.0% of the Borrowing Base, the net availability of revolving credit loans under the Credit Facility was approximately ~~$37.0~~$32.0 million at July ~~30, 2016.~~29, 2017.

NOTE 76 — Income Taxes

The Company's liability for unrecognized tax benefits associated with uncertain tax positions is recorded within other non-current liabilities. There has been no material change in the reserve for unrecognized tax benefits since the end of the previous year. The Company recognizes interest and penalties related to unrecognized tax benefits as components of income tax expense.

The Company and its subsidiaries are subject to U.S. federal income taxes and the income tax obligations of various state and local jurisdictions. ~~The Company is currently under examination by the Internal Revenue Service (“IRS”) for fiscal 2013.~~

~~Table of Contents~~

Periods after ~~the~~ fiscal ~~2012 transition period currently~~2013 remain subject to examination by the IRS. With few exceptions, the Company is not subject to state income tax examination by tax authorities for taxable years prior to fiscal ~~2011.~~ 2012.

As of July ~~30, 2016,~~29, 2017, the end of the second quarter of fiscal 2017, the Company had no other ongoing audits in various jurisdictions and does not expect the liability for unrecognized tax benefits to significantly increase or decrease in the next twelve months.

In April 2015, the Company settled the IRS examination of the Fiscal 2011 tax year. The settlement was related to certain issues which the Company had previously reflected net of tax within deferred tax assets. The settlement did not result in any cash payments nor any impact to tax expense.

~~Deferred income tax assets represent potential future income tax benefits. Realization of these assets is ultimately dependent upon future taxable income. ASC 740~~ ~~Income Taxes~~ requires that deferred tax assets be reduced by a valuation allowance if, based on all available evidence, it is considered more likely than not that some or all of the recorded deferred tax assets will not be realized in a future period. Forming a conclusion that a valuation allowance is not needed is difficult when negative evidence such as cumulative losses exists.

In fiscal 2015, the continuation of net losses prompted management to further consider the realizability of the deferred tax assets. Although management’s evaluation considered the effects of improved sales trends on future taxable income, estimates such as these are inherently subjective. Without significant positive evidence to overcome the weight of possible future cumulative losses, the Company established a valuation allowance against its deferred tax assets in the fourth quarter of fiscal 2015. A non-cash provision of $37.5 million was recognized to establish the valuation allowance. A small deferred tax asset was allowed related to certain state tax benefits. As of July ~~30, 2016,~~29, 2017, the possibility of future cumulative losses still exists. Accordingly, the Company has continued to maintain a valuation allowance against its net deferred tax ~~assets; recording the valuation allowance does not have any impact on cash and does not prevent the Company from using the~~assets. A small deferred tax ~~assets in future periods when profits are realized.~~asset was allowed related to certain tax benefits.

As of July ~~30, 2016,~~29, 2017, the Company ~~had~~has federal and state net operating loss carryforwards ("NOLs") which will reduce future taxable income. Approximately ~~$29.8~~$36.2 million in net federal tax benefits are available from ~~these loss carryforwards of approximately $85.0 million, and an~~federal NOLs. An additional ~~$1.3~~$1.2 million is available in net tax credit carryforwards. Included in the federal net operating loss is approximately $5.3 million of loss generated by deductions related to equity-based compensation, the tax effect of which will be recorded to additional paid-in capital when utilized. The state ~~loss carryforwards~~NOLs will result in net state tax benefits of approximately ~~$2.1~~$2.5 million. ~~The federal net operating loss carryovers will expire~~

Sections 382 and 383 of the Internal Revenue Code limit the annual utilization of certain tax attributes, including NOL carryforwards, incurred prior to a change in ~~October 2032 and beyond. The state net operating loss carryforwards will expire in November 2016 and beyond. Additionally,~~ownership. If the Company ~~has charitable contribution carryforwards that will expire in 2016~~were to experience an ownership change, as defined by Sections 382 and ~~beyond.~~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.

NOTE 87 — 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 of operations:


	Thirteen Weeks Ended						Twenty-Six Weeks Ended						Thirteen Weeks Ended						Twenty-Six Weeks Ended
	July 30,			August 1,			July 30,			August 1,			July 29,			July 30,			July 29,			July 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Numerator (in thousands):
Net loss attributable to Christopher & Banks Corporation	$	(3,884	)	$	(710	)	$	(4,052	)	$	(2,152	)	$	(7,889	)	$	(3,884	)	$	(11,577	)	$	(4,052	)
Denominator (in thousands):
Weighted average common shares outstanding - basic	36,981			36,871			36,953			36,860			37,156			36,981			37,123			36,953
Dilutive shares	—			—			—			—			—			—			—			—
Weighted average common and common equivalent shares outstanding - diluted	36,981			36,871			36,953			36,860			37,156			36,981			37,123			36,953
Net loss per common share:
Basic	$	(0.11	)	$	(0.02	)	$	(0.11	)	$	(0.06	)	$	(0.21	)	$	(0.11	)	$	(0.31	)	$	(0.11	)
Diluted	$	(0.11	)	$	(0.02	)	$	(0.11	)	$	(0.06	)	$	(0.21	)	$	(0.11	)	$	(0.31	)	$	(0.11	)

Total stock options of approximately ~~2.2~~4.1 million and ~~0.8 million, and 2.4 million and 0.7~~2.2 million were excluded from the shares used in the computation of diluted earnings per share for the thirteen week periods ended July 29, 2017 and July 30, 2016, as they were anti-dilutive. Total stock options of approximately 4.1 million and 2.4 million were excluded from the shares used in the computation of diluted earnings per share for the twenty-six week periods ended July 29, 2017 and July 30, 2016, ~~and August 1, 2015,~~ respectively, as they were anti-dilutive.

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NOTE 98 — 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 ~~as of~~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 ~~Recurring Basis:~~

No investments were held by the Company as of July 30, 2016. There were no transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy during the twenty-six week periods ended July 30, 2016, and August 1, 2015. Consistent with Company policy, transfers into levels and transfers out of levels are recognized on the date of the event or when a change in circumstances causes a transfer.

~~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 July ~~30, 2016~~29, 2017 and the fiscal year ended January ~~30, 2016,~~28, 2017, 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):	July 30, 2016		January 30, 2016		July 29, 2017		January 28, 2017
Carrying value	$	567	$	356	$	163	$	877
Fair value measured using Level 3 inputs	$	91	$	75	$	—	$	91
Impairment charge	$	476	$	281	$	163	$	786

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 and Significant Accounting Policies in our ~~Annual Report on~~ Form 10-K for the year ended January ~~30, 2016.~~28, 2017. 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 the 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.

The fair value measurement of the long-lived assets encompasses the following significant unobservable inputs:

Range
Unobservable Inputs Fiscal 2016 Fiscal 2015
Weighted Average Cost of Capital (WACC) 15% 15%
Annual sales growth 0% to 2.1% 0% to 8%



		Range
Unobservable Inputs		Fiscal 2016
Weighted Average Cost of Capital (WACC)		16%
Annual sales growth		0% to 7%

NOTE 109 — Legal Proceedings

The Company is subject, from time to time, to various claims, lawsuits or actions that arise in the ordinary course of business. ~~Although~~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. In connection with a preliminary settlement of pre-litigation employment claims reached in February 2017, we established a loss contingency of $1.475 million as of January 28, 2017. In connection therewith, on April 13, 2017, a complaint was filed in state Circuit Court in the Fifteenth Judicial Circuit in Palm Beach County, Florida (the “Florida Circuit Court”) by three named plaintiffs in a purported class action asserting claims on behalf of current and former store managers. The plaintiffs principally alleged that they and other similarly situated store managers were improperly classified as exempt employees and thus not compensated for overtime work as required under applicable federal and state law. On May 4, 2017, the Company entered into a settlement agreement with the named plaintiffs and the proposed class. On May 8, 2017, the Florida Circuit Court issued an order approving the class settlement. As approved by the Florida Circuit Court, certain current and former store managers will be eligible to receive payments in connection with time worked in prior years. The settlement of the lawsuit is not an admission by us of any ~~liability that could arise with respect~~wrongdoing.

As part of the settlement, the Company contributed $1.475 million into a settlement fund in the second fiscal quarter of 2017. Any funds remaining after payment of all submitted claims and related settlement fund costs and expenses will revert to ~~any current proceedings cannot~~the Company. A final resolution of the matter and the dissolution of the settlement fund is expected by the end of this fiscal year. While the ultimate amount of the claims paid under the settlement is likely to be ~~accurately predicted, management does~~less than the Company has recorded, the difference is not ~~expect any such liability~~expected to have a material ~~adverse~~ impact on our consolidated financial position or liquidity.

The ultimate resolution of legal matters can be inherently uncertain and for some matters, we are currently unable to predict the ~~Company's~~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. The Company does not, however, currently believe that the resolution of any pending matter will have a material adverse effect on its financial position, results of operations or liquidity.

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NOTE 1110 — Segment Reporting

In the table below, ~~the~~ Retail Operations includes activity generated by the Company’s retail store locations (Missy Petite Women ("MPW"), ~~outlets,~~Outlets, Christopher & Banks, and C.J. ~~Banks)~~Banks stores) as well as the eCommerce business. Retail Operations only includes net sales, merchandise gross margin and direct store expenses with no allocation of corporate overhead as that is the information used by the chief operating decision maker to evaluate performance and to allocate resources. The Corporate/Administrative balances include supporting administrative activity at the corporate office and distribution center facility and are included to reconcile the amounts to the condensed consolidated financial statements.

Business Segment Information

(in thousands)

Retail Corporate/
Operations Administrative Consolidated
Thirteen Weeks Ended July 30, 2016
Net sales $ 89,923
$ —
$ 89,923
Depreciation and amortization 2,360
614
2,974
Impairment of store assets 309
—
309
Operating income (loss) 7,878
(11,638 ) (3,760 )

Thirteen Weeks Ended August 1, 2015
Net sales $ 93,997
$ —
$ 93,997
Depreciation and amortization 2,292
609
2,901
Impairment of store assets 115
—
115
Operating income (loss) 9,053
(10,763 ) (1,710 )

Twenty-Six Weeks Ended July 30, 2016
Net sales $ 189,957
$ —
$ 189,957
Depreciation and amortization 4,746
1,250
5,996
Impairment of store assets 476
—
476
Operating income (loss) 23,520
(28,234 ) (4,714 )
Total assets 105,274
46,601
151,875

Twenty-Six Weeks Ended August 1, 2015
Net sales $ 185,618
$ —
$ 185,618
Depreciation and amortization 4,392
1,225
5,617
Impairment of store assets 115
—
115
Operating income (loss) 20,448
(24,654 ) (4,206 )
Total assets 118,960
80,909
199,869

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	Retail		Corporate/
	Operations		Administrative			Consolidated
Thirteen Weeks Ended July 29, 2017
Net sales	$	86,618	$	—		$	86,618
Depreciation and amortization	2,491		676			3,167
Impairment of long-lived assets	93		—			93
Operating income (loss)	4,146		(11,957		)	(7,811		)

Thirteen Weeks Ended July 30, 2016
Net sales	$	89,923	$	—		$	89,923
Depreciation and amortization	2,360		614			2,974
Impairment of long-lived assets	309		—			309
Operating income (loss)	7,878		(11,638		)	(3,760		)

Twenty-Six Weeks Ended July 29, 2017
Net sales	$	175,173	$	—		$	175,173
Depreciation and amortization	4,950		1,316			6,266
Impairment of long-lived assets	163		—			163
Operating income (loss)	13,953		(25,369		)	(11,416		)
Total assets	91,705		34,387			126,092

Twenty-Six Weeks Ended July 30, 2016
Net sales	$	189,957	$	—		$	189,957
Depreciation and amortization	4,746		1,250			5,996
Impairment of long-lived assets	476		—			476
Operating income (loss)	23,520		(28,234		)	(4,714		)
Total assets	105,274		46,601			151,875

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 January ~~30, 2016~~28, 2017 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 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 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 July ~~30, 2016,~~29, 2017, we operated ~~506~~473 stores in 45 states, including ~~315~~320 Missy, Petite, Women ("MPW") stores, 8379 outlet stores, 5538 Christopher & Banks ("CB") stores, and 5336 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 CJC.J. Banks brand offers similar assortments of women’s apparel in sizes 14W to 26W.

~~We continue to evaluate the benefits of converting the remaining CB stores~~ Our MPW concept and CJ stores to MPW stores. MPW stores provide a unified store format that simplifies merchandising and allocations processes, enhances the customer experience, and enables more scale economies across functions.

~~Outlet stores play a distinct role in the store fleet and are an important growth lever. These stores enable us to expand our customer reach to new geographies and heighten brand awareness. Our~~ outlet stores ~~contain a mixture~~offer an assortment of ~~core merchandise, made-for-outlet merchandise,~~both Christopher & Banks and ~~clearance merchandise. After opening 6 outlet stores thus far~~C.J. Banks apparel servicing the Missy, Petite and Women-sized customer in fiscal 2016, the company now operates 83 outlets, a near doubling of the outlet store count compared to two years ago. Due to the significant growth in outlets coupled with challenging performance, we are focused on improving the performance of the existing outlets and do not expect to add outlet locations for the near term. Beginning in fiscal 2017, we plan to partner with a vendor to design and develop exclusive seasonal collections that are intended to meet the needs of our outlet customer.one location.

~~Update on our~~ Fiscal ~~2016~~2017 Strategic Priorities

~~In fiscal 2016, we intend to continue our efforts to provide our customers with experiences that make her look and feel her best.~~ Update

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

~~Bring the “special” back to our specialty stores~~Offer a differentiated product assortment

Increase ~~brand awareness~~customer loyalty, acquire new customers, and ~~drive customer engagement~~recapture lapsed customers

Leverage our omni-channel capabilities

~~Bring the “Special” Back to Our Specialty Stores~~

Offer a differentiated product assortment

We are committed to ensuring we consistently meet our customers’ needs with a differentiated ~~styles~~merchandise assortment that ~~fit~~fits her ~~lifestyle.~~lifestyle at a recognizable value. We intend to increase the ~~breadth~~flow of our fashion ~~offerings~~offering and ~~ensure frequent newness~~provide a more versatile assortment to encourage ~~repeat visits and increased spend. We also will continue our focus on expanding on our new categories to augment her wardrobe needs.~~

Our focus remains on cultivating and delivering a true “specialty” shopping experience through exceptional customer service and inspirational merchandising presentations. We have a highly loyal customer base largely attributable to our shopping environment and our engaged, knowledgeable store associates. Our associates have long-term relationships with our customers to shop more frequently and ~~understand their preferences to assist them in selecting styles that makes them look and feel their best. We believe this genuine service focus is a competitive advantage and is a key component~~buy more when she visits. To further support the newness of our ~~omni-channel initiative.~~

~~In the first quarter of fiscal 2016, we completed changes to our in-store~~ merchandise ~~presentation and related visual elements to assist customers of all sizes more easily find the product they seek. Leveraging our retail analytic capabilities,~~presentations, we are ~~also~~

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analyzing our promotional cadence and adjusting our markdown strategy to increase inventory turnover to keep merchandise fresh and current.

working to optimize the depth of our product assortments, with the goal of improving merchandise availability to enable a more localized merchandise assortment by tailoring our offerings by market typeIncrease customer loyalty, acquire new customers, and ~~customer size.~~

For the remainder of fiscal 2016, we expect ongoing momentum in both our denim and basic bottoms businesses through “slimming solution” programs along with continued improved in-stocks due to enhancements in our replenishment capabilities. In addition to anticipated sales increases in core knits, novelty knits, basic cardigans, wrinkle resistant shirts and heritage novelty jackets, we expect to generate sales growth in new businesses including branded merchandise, sleepwear, and footwear.

~~Increase Brand Awareness and Drive Engagement~~

recapture lapsed customers

We have a very loyal customer base that is highly engaged. ~~As such, we intend~~The personalized customer service that our Associates provide is a differentiator for us and is a contributor to ~~continue to leverage~~the loyalty our ~~direct and digital marketing channels to encourage~~customers exhibit, with approximately 90% of our ~~customer to shop more frequently and increase her spend with us. During the fiscal year, we also will be focused on increasing~~active customers participating in our brand awareness in order to acquire new customers. We intend to increase marketing spend to build the brand through refreshing our creative brand, look and feel, and by also expanding our marketing mix during the latter part of the year. loyalty rewards program.

We continue to be focused on maximizing the benefits of our customer relationship management ~~("CRM"~~(“CRM”) ~~system~~ database, ~~and~~ Friendship Rewards Loyalty Program (“Friendship Rewards”), and private-label credit card program to strengthen ~~our~~ engagement with our customers.

~~In the first quarter of fiscal 2016, we launched our redesigned~~ Our Friendship Rewards loyalty program to further strengthen our customer retention by rewarding her for shopping more frequently and incenting her to earn more rewards. The more personalized reward system is differentiated by level of purchase activity and provides enhanced benefits as customers achieve the next reward level. Our loyalty program, in conjunction with our CRM system, ~~will enable~~allows us to personalize communications and customize our offers. We also will continue to leverage our direct and digital marketing channels to encourage additional customer visits and increased spending per visit.

~~In the second half of fiscal 2016, we plan~~We are accelerating our efforts to re-engage customers that stopped shopping following the migration of their local CB or CJ store to the MPW format through targeted ~~communications beginning in October.~~communications. We ~~will~~are also ~~work~~working to gain new customers and brand awareness through increased investments in digital paid media, and ~~a new Shoprunner affiliation that recently launched.~~earned media. Additionally, we ~~intend to increase~~are increasing the frequency of store grass root events that will continue to capitalize on the strong relationships between our store associates and customers.

In the second quarter of fiscal 2017, we launched a “refer a friend” program to incentivize customers to introduce their friends to our brand. In the third quarter of fiscal 2017, we will implement personalization on our eCommerce site and in emails to further strengthen our customer relationships.

Leverage Our Omni-Channel Capabilities

We ~~continue to make significant~~will capitalize on investments made in ~~the development of~~ our integrated, omni-channel strategy which is designed to provide customers a seamless retail experience together with the ability to shop when and where they want, including retail stores, outlet stores, online and mobile. ~~Our omni-channel~~These investments ~~will~~ enable us to address multiple customer touch points to drive spend and build brand affinity by providing a ~~holistic~~comprehensive view of our customer and our merchandise assortment and depth.

In fiscal 2017, we expect continued growth in eCommerce by leveraging our new platform launched in fiscal 2016, including improving personalization and enhanced site experiences. New omni-channel capabilities, including new fulfillment functionality, store grading and localized assortment planning, will support improved management of the receipt, allocation, and distribution of merchandise.

In second quarter of fiscal ~~2016,~~2017, we launched our ~~new eCommerce website to serve as a valuable tool for~~“find in store” feature online in our ~~customers and~~effort to provide ~~improved product~~more convenience to our customers. We believe that providing more visibility into store inventory will help drive traffic to our stores where our associates can provide personalized service and ~~visual presentation, additional site navigation tools, a simplified check out process,~~outfitting recommendations, and ~~product recommendations. In addition, we have begun a roll-out of new point-of-sale hardware at all store locations that~~ultimately lead to increased customer spend. Later in fiscal 2017, we expect to ~~complete~~offer other fulfillment options, such as ship to store or pick up in ~~the fourth quarter of this year.~~store.

~~We expect to complete the omni-channel capability roll-out in fiscal 2017.~~

Performance Measures

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

Comparable sales

Comparable sales is a measure that highlights the performance of our store channel and ~~ecommerce~~eCommerce channel sales 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 ~~mall;~~center; and

eCommerce sales.

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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.

As we continue to execute our MPW ~~store~~format conversions, ~~as part of our strategic initiatives,~~ we have made changes to the base store ~~populations~~population that ~~comprise~~comprises comparable stores, as illustrated in the table below:


	July 30, 2016				August 1, 2015				July 29, 2017				July 30, 2016
Stores by Format	Total Store Count	Comparable Sales Stores	% of Comparable Sales Stores		Total Store Count	Comparable Sales Stores	% of Comparable Sales Stores		Total Store Count	Comparable Sales Stores	% of Comparable Sales Stores		Total Store Count	Comparable Sales Stores	% of Comparable Sales Stores
MPW	315	287	91	%	309	127	41	%	320	300	94	%	315	287	91	%
Outlet	83	53	64	%	65	35	54	%	79	77	97	%	83	53	64	%
Christopher and Banks	55	55	100	%	82	82	100	%	38	38	100	%	55	55	100	%
C.J. Banks	53	53	100	%	73	73	100	%	36	36	100	%	53	53	100	%
Total Stores	506	448	89	%	529	317	60	%	473	451	95	%	506	448	89	%

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

To supplement our comparable sales performance measure, we also monitor changes in net sales per store and net sales per gross ~~square foot, gross profit per store, and gross margin per~~ square foot for the entire store base.

~~Gross profit~~

~~Gross profit is equal to net sales minus merchandise, buying and occupancy costs.~~

~~Merchandise, buying and occupancy costs, exclusive of depreciation and amortization, measure whether we are appropriately optimizing the price of our merchandise and markdown utilization.~~

Merchandise, buying and occupancy costs include the cost of merchandise, markdowns, shrink, freight, buyer and distribution center salaries, buyer travel, rent and other occupancy-related costs, various merchandise design and development costs, miscellaneous merchandise expenses and other costs related to our distribution network.

~~Buying and occupancy costs related to stores mostly represent a fixed charge and, as a result, should not change significantly with changes in sales.~~

~~Operating income~~

Operating income measures our ability to effectively manage operating costs relative to changes in sales volume. The key components of operating income include net sales, merchandise, buying and occupancy costs, selling, general, and administrative expenses and depreciation and amortization expenses.

~~Cash flow and liquidity~~

We closely manage our liquidity and access to capital resources. Our liquidity requirements depend on key variables, including our financial results, the level of investment necessary to support our business strategies, capital expenditures, and working capital management. Capital expenditures are a component of our cash flow which, to a large extent, we can adjust in response to economic and other changes in our business.

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~~Critical Accounting Policies and Estimates~~

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed consolidated financial statements and related notes, which have been prepared in accordance with generally accepted accounting principles used in the United States. The preparation of these financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during a reporting period. Management bases its estimates on historical experience and various other assumptions that we believe to be reasonable. As a result, actual results could differ because of the use of these estimates and assumptions.

Our critical accounting policies can be found in Note 1 - Nature of Business and Significant Accounting Policies, to the condensed consolidated financial statements contained in Item 8 of our Annual Report on Form 10-K for the fiscal year ended January 30, 2016. There have been no significant changes to our critical accounting policies or estimates in the first half of fiscal 2016.

Second Quarter Fiscal ~~2016~~2017 Results of Operations

The following table presents selected consolidated financial data for the second quarter of fiscal ~~2016~~2017 compared to the second quarter of fiscal ~~2015:~~2016:


	Thirteen Weeks Ended						Thirteen Weeks Ended
(dollars in thousands)	July 30, 2016			August 1, 2015			July 29, 2017			July 30, 2016
Net sales	$	89,923		$	93,997		$	86,618		$	89,923
Merchandise, buying and occupancy costs	59,774			63,061			61,990			59,774
Gross profit	30,149			30,936			24,628			30,149
Other operating expenses:
Selling, general and administrative	30,626			29,630			29,179			30,626
Depreciation and amortization	2,974			2,901			3,167			2,974
Impairment of store assets	309			115			93			309
Total other operating expenses	33,909			32,646			32,439			33,909
Operating loss	(3,760		)	(1,710		)	(7,811		)	(3,760		)
Interest expense, net	(42		)	(33		)	(38		)	(42		)
Loss before income taxes	(3,802		)	(1,743		)	(7,849		)	(3,802		)
Income tax provision (benefit)	82			(1,033		)
Income tax provision							40			82
Net loss	$	(3,884	)	$	(710	)	$	(7,889	)	$	(3,884	)


	Thirteen Weeks Ended						Thirteen Weeks Ended
Rates as a percentage of net sales	July 30, 2016			August 1, 2015
Rate trends as a percentage of net sales							July 29, 2017			July 30, 2016
Gross margin	33.5		%	32.9		%	28.4		%	33.5		%
Selling, general, and administrative	34.1		%	31.5		%	33.7		%	34.1		%
Depreciation and amortization	3.3		%	3.1		%	3.7		%	3.3		%
Operating loss	(4.2		)%	(1.8		)%	(9.0		)%	(4.2		)%

Second Quarter Fiscal ~~2016~~2017 Summary

~~Comparable~~Net sales decreased ~~5.8% compared to a 12.9% decrease in the same period last year;~~

~~eCommerce sales increased 10.7%~~3.7% compared to the same period last year ~~contributing approximately 2.0 percentage points~~primarily due to a decline in average unit retail prices and a decrease in average store count, partly offset by a sequential improvement in traffic, leading to an increase in transactions;

Net sales sequentially improved through the second quarter reaching a positive single-digit comparable sales ~~growth;~~% in fiscal July;

~~Sales per store~~eCommerce sales increased 22.1% compared to a 10.8% increase the same period last year;

Gross margin rate decreased ~~3.4% and sales per square foot declined 5.5%~~510 basis points compared to the same period last ~~year;~~year primarily driven by our efforts to sell through non go-forward product and address slow sellers more quickly through markdowns;

Net loss aggregated to ~~$3.9~~$7.9 million, a ~~$0.11~~$0.21 loss per share, compared to a net loss of ~~$0.7~~$3.9 million, or a ~~$0.02~~$0.11 loss per share, for the ~~comparable prior year period;~~same period last year;

As of July 29, 2017, we held $22.6 million of cash and cash equivalents, compared to $28.1 million as of July 30, 2016.

Net ~~cash flow provided by operating activities~~Sales



	Thirteen Weeks Ended
Net sales (in thousands):	July 29, 2017		July 30, 2016		% Change
Net sales	$	86,618	$	89,923	(3.7	)%

The components of the 3.7% net sales decrease in the second quarter of fiscal ~~2016 totaled $4.5 million, a decrease of $1.5 million,~~2017 compared to the second quarter of fiscal ~~2015 of $6.0 million; and~~

~~Table of Contents~~

2016 were as follows:

~~As of July 30, 2016, we held $28.1 million of cash, cash equivalents, and investments, compared to $34.5 million as of January 30, 2016.~~

~~Net Sales~~

Thirteen Weeks Ended
Net sales (in thousands): July 30, 2016 August 1, 2015 % Change
Net sales $ 89,923
$ 93,997
(4.3 )%

~~The components of the 4.3% net sales decrease in the second quarter of fiscal 2016 compared to the second quarter of fiscal 2015 were as follows:~~



	Thirteen Weeks Ended
Sales driver change components	July ~~30, 2016~~29, 2017
Number of transactions	~~(9.1~~3.0	)%
Units per transaction	~~1.8~~0.9	%
Average unit retail ~~price~~	~~3.2~~	%
~~Other~~	(~~0.2~~7.6	)%
Total sales driver change ~~decrease~~increase	(~~4.3~~3.7	)%



	Thirteen Weeks Ended
Comparable sales	July ~~30, 2016~~29, 2017
Comparable sales	(~~5.8~~0.6	)%

Sales decreased ~~in the second quarter of fiscal 2016 compared to the second quarter of fiscal 2015,~~ primarily due to ~~continued deceleration in mall traffic leading to~~ a ~~comparable sales decrease of 5.8%, resulting in a~~7.6% decrease in ~~the number of transactions,~~average unit retail prices, a 7.0% decline in average store count, partly offset by a sequential improvement in mall traffic, higher conversion ~~rate, as well as, an increase in average unit retail price,~~rates and ana 0.9% increase in units per transaction. ~~We attribute~~The sales decrease was also correlated to lower inventory levels at the ~~transaction decline~~beginning of the quarter and promotional spend to ~~softness in~~sell through inventory that did not reflect our Outlet channel, a temporary decline in eCommerce sales during the transition to a new platform, a shift in the timing of merchandise promotions, including our May customer appreciation event, and underperformance in certain product categories.

~~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~~	~~July 30, 2016~~
~~Net sales per store % change~~	~~(3.4~~	)%
~~Net sales per square foot % change~~	~~(5.5~~	)%

~~Net sales per store and net sales per square foot percentage decreased compared~~go-forward strategy, contributing to the ~~same period last year, mainly attributable to a decrease in the number of transactions, partly offset by a high conversion rate, as well as, an increase~~decline in average unit retail ~~price, and an increase in units per transaction.~~

~~Store count, openings, closings, and square footage for our stores for the second quarter of fiscal 2016 were as follows:~~

~~Table of Contents~~

Store Count
Square Footage⁽¹⁾
April 30, MPW July 30, Avg Store July 30, April 30,
Stores by Format 2016 Open Close Conversions 2016 Count 2016 2016
MPW 317
1
(5 ) 2
315
316
1,206
1,211
Outlet 81
2
—
—
83
82
333
326
Christopher and Banks 59
—
(2 ) (2 ) 55
57
182
195
C.J. Banks 55
—
(1 ) (1 ) 53
54
190
197
Total Stores 512
3
(8 ) (1 ) 506
509
1,911
1,929


~~(1)~~	~~Square footage presented in thousands~~

Average store count in the second quarter of fiscal 2016 was 509 stores compared to an average store count of 521 stores in the second quarter of fiscal 2015, a 2.3% decrease. Average square footage in the second quarter of fiscal 2016 decreased 0.3% compared to the second quarter of fiscal 2015.

~~Gross Profit~~

Thirteen Weeks Ended
Gross profit July 30, 2016 August 1, 2015 Change
Gross profit $ 30,149
$ 30,936
$ (787 )
Gross margin rate as a percentage of net sales 33.5 % 32.9 % 0.6 %

Gross margin rate increased 62 basis points primarily due to higher merchandise margins partly offset by the effects of sales deleverage on occupancy expenses. Merchandise margin rate improvement is attributable to the benefit of improved initial mark-ups, partly offset by the effects of sale deleverage on occupancy costs.

~~To supplement our gross profit analysis, we also monitor changes in other store profit metrics as illustrated in the table below:~~



	~~Thirteen~~ ~~Weeks Ended~~
~~Store metrics~~	~~July 30, 2016~~
~~Gross profit per store % change~~	~~(2.4~~	)%
~~Gross profit per square foot % change~~	~~(4.6~~	)%

~~Gross profit per store and gross profit per square foot percentage decreased, primarily attributable to the net sales decrease partly offset by the gross margin rate increase.~~

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

Thirteen Weeks Ended
Selling, general, and administrative July 30, 2016 August 1, 2015 Change
Selling, general, and administrative $ 30,626
$ 29,630
$ 996
SG&A rate as a percentage of net sales 34.1 % 31.5 % 2.6 %

SG&A expenses increased in the second quarter of fiscal 2016 as compared to the second quarter of fiscal 2015 primarily due to incremental marketing expense of $0.8 million, including the add back of a direct mailer in July, higher medical costs of $0.7 million, higher net employee compensation expenses of $0.6 million, including a smaller incentive accrual reversal, and higher eCommerce operational and transition costs of $0.5 million, including a one-time expense to execute the eCommerce platform transition of $0.3 million, partly offset by reduced store operational expenses of $0.7 million, lower legal and advisory fees of $0.6 million, and various other expense reductions of $0.2 million. The SG&A rate increased 254 basis points mainly due to sales deleverage and increased SG&A spend.

~~Table of Contents~~

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

Thirteen Weeks Ended
Depreciation and amortization July 30, 2016 August 1, 2015 Change
Depreciation and amortization $ 2,974
$ 2,901
$ 73
D&A rate as a percentage of net sales 3.3 % 3.1 % 0.2 %

~~Depreciation and amortization expense increased primarily due to the effects of new stores, MPW store conversions, and the deployment of technology solutions, including new omni-channel capabilities.~~

~~Impairment of Store Assets~~

Thirteen Weeks Ended
Impairment of store assets July 30, 2016 August 1, 2015 Change
Impairment of store assets $ 309
$ 115
$ 194

~~We recorded non-cash impairment charges related to long-lived assets held at a small number of store locations.~~

~~Operating Loss~~

Thirteen Weeks Ended
Operating loss July 30, 2016 August 1, 2015 Change
Operating loss $ (3,760 ) $ (1,710 ) $ (2,050 )
Operating loss rate as a percentage of net sales (4.2 )% (1.8 )% (2.4 )%

Our operating loss increased in the second quarter of fiscal 2016 compared to our operating loss in the same period last year primarily due to a net sales decrease of 4.3% and higher SG&A expenses of $1.0 million attributable to incremental marketing expenses, higher medical costs, higher net employee compensation expenses, and higher eCommerce operational and transition costs, partly offset by reduced store operational expenses and lower legal and advisory fees.

~~Interest expense, net~~

Thirteen Weeks Ended
Interest expense, net July 30, 2016 August 1, 2015 Change
Interest expense, net $ 42
$ 33
$ 9
Interest expense, net rate as a percentage of net sales *
*
*

*Calculated results not meaningful

~~The change in interest expense, net is not material.~~

~~Income Tax Provision~~

Thirteen Weeks Ended
Income tax provision (benefit) July 30, 2016 August 1, 2015 Change
Income tax provision (benefit) $ 82
$ (1,033 ) $ 1,115
Income tax rate as a percentage of net sales 0.1 % (1.1 )% 1.2 %

We recorded income tax expense of approximately $0.1 million, with an effective tax rate of (2.2)% for the thirteen weeks ended July 30, 2016. For the thirteen weeks ended August 1, 2015, we recorded an income tax benefit of approximately $1.0 million with an effective tax rate of 59.3%. The decrease in the effective tax rate reflects the impact of the valuation allowance on our deferred tax assets, our net operating loss, and the impact of permanent differences and state income taxes.

~~Table of Contents~~

~~Net earnings~~

Thirteen Weeks Ended
Net loss July 30, 2016 August 1, 2015 Change
Net loss $ (3,884 ) $ (710 ) $ (3,174 )
Net loss rate as a percentage of net sales (4.3 )% (0.8 )% (3.5 )%

Our net loss increased in the second quarter of fiscal 2016 compared to the same period last year, primarily due to a net sales decrease of 4.3%, higher SG&A and other operational expenses and the absence of an income tax benefit.

~~First Half Fiscal 2016 Results of Operations~~

~~The following table presents selected consolidated financial data for the first half of fiscal 2016 compared to the first half of fiscal 2015:~~

Twenty-Six Weeks Ended
(dollars in thousands) July 30, 2016 August 1, 2015
Net sales $ 189,957
$ 185,618
Merchandise, buying and occupancy costs 122,096
122,473
Gross profit 67,861
63,145
Other operating expenses:
Selling, general and administrative 66,103
61,619
Depreciation and amortization 5,996
5,617
Impairment of store assets 476
115
Total other operating expenses 72,575
67,351
Operating loss (4,714 ) (4,206 )
Interest expense, net (82 ) (40 )
Other income 911
—
Loss before income taxes (3,885 ) (4,246 )
Income tax provision (benefit) 167
(2,094 )
Net loss $ (4,052 ) $ (2,152 )

Twenty-Six Weeks Ended
Rates as a percentage of net sales July 30, 2016 August 1, 2015
Gross margin 35.7 % 34.0 %
Selling, general, and administrative 34.8 % 33.2 %
Depreciation and amortization 3.2 % 3.0 %
Operating loss (2.5 )% (2.3 )%

~~First Half Fiscal 2016 Summary~~

~~Comparable sales decreased 0.2% compared to a 12.3% decrease in the same period last year;~~

~~eCommerce sales increased 23.2% compared to the same period last year, contributing approximately 4.0 percentage points to comparable sales growth;~~

~~Sales per store increased 1.8%, while sales per square foot declined 0.7%, compared to the same period last year;~~

~~Net loss aggregated to $4.1 million, a $0.11 loss per share, compared to a net loss of $2.2 million, or a $0.06 loss per share, for the prior year period; and~~

Net cash flow used by operating activities in the first half of fiscal 2016 totaled $0.5 million, a $2.7 million cash consumption decrease, compared to operating cash flow used in the first half of fiscal 2015 of $3.2 million.

~~Table of Contents~~

~~Net Sales~~

Twenty-Six Weeks Ended
Net sales (in thousands): July 30, 2016 August 1, 2015 % Change
Net sales $ 189,957
$ 185,618
2.3 %

~~The components of the 2.3% net sales increase in the first half of fiscal 2016 compared to the first half of fiscal 2015 were as follows:~~



	~~Twenty-Six Weeks Ended~~
~~Sales change components~~	~~July 30, 2016~~
~~Number of transactions~~	~~(4.1~~	)%
~~Units per transaction~~	~~2.5~~	%
~~Average unit retail price~~	~~3.8~~	%
~~Other~~	~~0.1~~	%
~~Total sales driver change increase~~	~~2.3~~	%



	~~Twenty-Six Weeks Ended~~
~~Comparable sales~~	~~July 30, 2016~~
~~Comparable sales~~	~~(0.2~~	)%

Sales increased in the first half of fiscal 2016 compared to fiscal 2015, primarily due to a balanced merchandise assortment, including depth in key merchandise categories, compelling visual presentations, and the absence of labor issues at West Coast ports which caused a disruption to our merchandise flow in late fiscal 2014 through the first part of fiscal 2015. The sales increase was partly offset by continued deceleration in mall traffic, softness in our Outlet channel, a shift in the timing of merchandise promotions, and underperformance in certain product categories.prices.

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



	~~Twenty-Six~~ Thirteen Weeks Ended
Store metrics	July ~~30, 2016~~29, 2017
Net sales per store % change	~~1.8~~(0.7	)%
Net sales per square foot % change	(~~0.7~~1.9	)%

Net sales per store ~~percentage increased compared to the same period last year, mainly attributable to the 2.3% increase in sales.~~and Net sales per square ~~footage~~foot decreased ~~mostly~~mainly due to ~~an increase in store sales that was lower than the increase~~a decline in average unit retail ~~square footage.~~prices.

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



	Store Count							Square Footage⁽¹⁾
	April 29,				MPW	July 29,	Avg Store	July 29,	April 29,
Stores by Format	2017	Open	Close		Conversions	2017	Count	2017	2017
MPW	320	—	—		—	320	320	1,241	1,241
Outlet	82	—	(3	)	—	79	80	306	329
Christopher and Banks	38	—	—		—	38	38	126	126
C.J. Banks	36	—	—		—	36	36	130	130
Total Stores	476	—	(3	)	—	473	474	1,803	1,826


⁽¹⁾	Square footage presented in thousands

Average store count in the second quarter of fiscal 2017 was 474 stores compared to an average store count of 509 stores in the second quarter fiscal 2016, a decrease of 6.9%. Average square footage in the second quarter of fiscal 2017 decreased 5.7% compared to the second quarter of fiscal 2016.

Gross Profit



	Thirteen Weeks Ended
Gross profit	July 29, 2017			July 30, 2016			Change
Gross profit	$	24,628		$	30,149		$	(5,521	)
Gross margin rate as a percentage of net sales	28.4		%	33.5		%	(5.1		)%

Gross margin rate decreased 510 basis points primarily driven by our efforts to sell through non go-forward product and address slow sellers more quickly through markdowns. The gross margin rate decline accelerated in the second quarter compared to the first quarter due to seasonal markdowns that typically occur at the end of the second quarter.

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



	Thirteen Weeks Ended
Selling, general, and administrative	July 29, 2017			July 30, 2016			Change
Selling, general, and administrative	$	29,179		$	30,626		$	(1,447	)
SG&A rate as a percentage of net sales	33.7		%	34.1		%	(0.4		)%

SG&A decreased by $1.4 million, driven by lower store operating expenses of $1.4 million due to a managed effort to reduce expenses. The SG&A expense decrease was also attributable to the absence of non-recurring charges of eCommerce transition costs of $0.3 million incurred in the second quarter of fiscal 2016. These SG&A expense savings were partially offset by an increase in eCommerce operating expenses of $0.2 million to support higher eCommerce sales. As a percent of net sales, SG&A improved approximately 40 basis points to 33.7%.

Depreciation and Amortization (“D&A”)



	Thirteen Weeks Ended
Depreciation and amortization	July 29, 2017			July 30, 2016			Change
Depreciation and amortization	$	3,167		$	2,974		$	193
D&A rate as a percentage of net sales	3.7		%	3.3		%	0.4		%

Depreciation and amortization expense increased primarily due to the deployment of technology solutions, including new omni-channel capabilities partly offset by the effects of the decrease in average store count.

Impairment of Long-Lived Assets



	Thirteen Weeks Ended
Impairment of long-lived assets	July 29, 2017		July 30, 2016		Change
Impairment of long-lived assets	$	93	$	309	$	(216	)

We recorded non-cash impairment charges related to long-lived assets held at store locations.

Operating Loss



	Thirteen Weeks Ended
Operating loss	July 29, 2017			July 30, 2016			Change
Operating loss	$	(7,811	)	$	(3,760	)	$	(4,051	)
Operating loss rate as a percentage of net sales	(9.0		)%	(4.2		)%	(4.8		)%

Our operating loss increased in the second quarter of fiscal 2017 compared to the second quarter of fiscal 2016 primarily due to a 510 basis point gross margin rate decline and net sales decrease of $3.3 million, partly offset by a SG&A decrease of $1.4 million, including the absence of fiscal 2016 non-recurring charges of $0.3 million.

Interest expense, net



	Thirteen Weeks Ended
Interest expense, net	July 29, 2017			July 30, 2016			Change
Interest expense, net	$	(38	)	$	(42	)	$	4

The change in interest expense, net is not material.

Income Tax Provision



	Thirteen Weeks Ended
Income tax provision	July 29, 2017		July 30, 2016		Change
Income tax provision	$	40	$	82	$	(42	)

The change in the income tax provision is not material. For the thirteen weeks ended July 29, 2017, our effective tax rate was (1.3)% compared to (2.2)% in the same period last year.

Net earnings



	Thirteen Weeks Ended
Net loss	July 29, 2017			July 30, 2016			Change
Net loss	$	(7,889	)	$	(3,884	)	$	(4,005	)
Net loss rate as a percentage of net sales	(9.1		)%	(4.3		)%	(4.8		)%

Our net loss increase in the second quarter of fiscal 2017 compared to our net loss in the second quarter of 2016 was primarily due to a gross margin rate decline and a net sales decrease partly offset by lower SG&A.

First Half Fiscal 2017 Results of Operations

The following table presents selected consolidated financial data for the first half of fiscal 2017 compared to the first half of fiscal 2016:



	Twenty-Six Weeks Ended
(dollars in thousands)	July 29, 2017			July 30, 2016
Net sales	$	175,173		$	189,957
Merchandise, buying and occupancy costs	120,007			122,096
Gross profit	55,166			67,861
Other operating expenses:
Selling, general and administrative	60,153			66,103
Depreciation and amortization	6,266			5,996
Impairment of store assets	163			476
Total other operating expenses	66,582			72,575
Operating loss	(11,416		)	(4,714		)
Interest expense, net	(69		)	(82		)
Other income	—			911
Loss before income taxes	(11,485		)	(3,885		)
Income tax provision	92			167
Net loss	$	(11,577	)	$	(4,052	)


	Twenty-Six Weeks Ended
Rate trends as a percentage of net sales	July 29, 2017			July 30, 2016
Gross margin	31.5		%	35.7		%
Selling, general, and administrative	34.3		%	34.8		%
Depreciation and amortization	3.6		%	3.2		%
Operating loss	(6.5		)%	(2.5		)%

First Half Fiscal 2017 Summary

Net sales decreased 7.8% compared to the same period last year primarily due to a decline in average unit retail prices and a decrease in average store count;

Net sales sequentially improved from a 11.5% sales decline and a comparable sales decrease of 8.9% in the first quarter of fiscal 2017 to a 3.7% sales decline and comparable sales decrease of 0.6% in the second quarter of fiscal 2017;

eCommerce sales increased 18.1% compared to a 27.2% increase the same period last year;

Gross margin rate decreased 420 basis points compared to the same period last year primarily driven by our second quarter efforts to sell through non go-forward product and address slow sellers more quickly through markdowns;

Net loss aggregated to $11.6 million, a $0.31 loss per share, compared to a net loss of $4.1 million, or a $0.11 loss per share, for the same period last year.

Net Sales



	Twenty-Six Weeks Ended
Net sales (in thousands):	July 29, 2017		July 30, 2016		% Change
Net sales	$	175,173	$	189,957	(7.8	)%

The components of the 7.8% net sales decrease in the first half of fiscal 2017 compared to the first half of fiscal 2016 were as follows:

Store Count
Square Footage⁽¹⁾
January 30, MPW July 30, Avg Store July 30, January 30,
Stores by Format 2016 Open Close Conversions 2016 Count 2016 2016
MPW 314
2
(6 ) 5
315
315
1,206
1,193
Outlet 77
6
—
—
83
80
333
311
Christopher and Banks 67
—
(7 ) (5 ) 55
61
182
221
C.J. Banks 60
—
(3 ) (4 ) 53
56
190
214
Total Stores 518
8
(16 ) (4 ) 506
512
1,911
1,939


~~(1)~~	~~Square footage presented in thousands~~

~~Table of Contents~~

Average store count in the first half of fiscal 2016 was 512 stores compared to an average store count of 520 stores in the first half of fiscal 2015, a 1.5% decrease. Average square footage in the first half of fiscal 2016 increased 1.0% compared to the first half of fiscal 2015.

~~Gross Profit~~

Twenty-Six Weeks Ended
Gross profit July 30, 2016 August 1, 2015 Change
Gross profit $ 67,861
$ 63,145
$ 4,716
Gross margin rate as a percentage of net sales 35.7 % 34.0 % 1.7 %

Gross margin rate increased 171 basis points, primarily due to higher merchandise margins and the effects of sales leverage partly offset by higher eCommerce transitional costs associated with temporarily running dual platforms. Merchandise margin rate improvement is attributable to the benefit of improved initial mark-ups and disciplined inventory management resulting in reduced markdowns.

~~To supplement our gross profit analysis, we also monitor changes in other store profit metrics as illustrated in the table below:~~



	Twenty-Six Weeks Ended
Sales driver change components	July 29, 2017
Number of transactions	1.6	%
Units per transaction	(0.6	)%
Average unit retail	(8.8	)%
Total sales driver change increase	(7.8	)%



	Twenty-Six Weeks Ended
Comparable sales	July 29, 2017
Comparable sales	(4.1	)%

Sales decreased primarily due to an 8.8% decrease in average unit retail prices, a 7.1% decline in average store count, continued weakness in mall traffic, and a 0.6% decrease in units per transaction, partly offset by higher conversion rates. The sales decrease was also correlated to lower inventory levels at the beginning of the year, lower inventory receipts in the first quarter and promotional spend to sell through inventory that did not reflect our go-forward strategy, contributing to the decline in average unit retail prices.

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	July ~~30, 2016~~29, 2017
~~Gross profit~~Net sales per store % change	~~5.5~~(5.2	)%
~~Gross profit~~Net sales per square foot % change	~~3.0~~(6.6	)%

~~Gross profit~~Net sales per store and ~~gross profit~~Net sales per square foot ~~percentage increased, primarily~~decreased mainly due to a decline in average unit retail prices.

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



	Store Count								Square Footage⁽¹⁾
	January 28,				MPW		July 29,	Avg Store	July 29,	January 28,
Stores by Format	2017	Open	Close		Conversions		2017	Count	2017	2017
MPW	318	1	(4	)	5		320	319	1,241	1,226
Outlet	82	—	(3	)	—		79	81	306	329
Christopher and Banks	43	—	—		(5	)	38	39	126	142
C.J. Banks	41	—	—		(5	)	36	37	130	147
Total Stores	484	1	(7	)	(5	)	473	476	1,803	1,844


⁽¹⁾	Square footage presented in thousands

Average store count in the first half of fiscal 2017 was 476 stores compared to an average store count of 512 stores in the same period of fiscal 2016, a decrease of 7.0%. Average square footage in the first half of fiscal 2017 decreased 5.7% compared to the same period of fiscal 2016.

Gross Profit



	Twenty-Six Weeks Ended
Gross profit	July 29, 2017			July 30, 2016			Change
Gross profit	$	55,166		$	67,861		$	(12,695	)
Gross margin rate as a percentage of net sales	31.5		%	35.7		%	(4.2		)%

Gross margin rate decreased 420 basis points primarily driven by our efforts to sell through non go-forward product and address slow sellers more quickly through markdowns, and to a lesser extent, the effects of sales leverage on occupancy expenses. The gross margin rate ~~increase~~decline accelerated in the second quarter compared to the first quarter due to ~~higher merchandise margins and higher sales.~~seasonal markdowns that typically occur at the end of the second quarter.

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


	Twenty-Six Weeks Ended									Twenty-Six Weeks Ended
Selling, general, and administrative	July 30, 2016			August 1, 2015			Change			July 29, 2017			July 30, 2016			Change
Selling, general, and administrative	$	66,103		$	61,619		$	4,484		$	60,153		$	66,103		$	(5,950	)
SG&A rate as a percentage of net sales	34.8		%	33.2		%	1.6		%	34.3		%	34.8		%	(0.5		)%

SG&A decreased by $5.9 million, driven by lower store operating expenses ~~increased in the first half~~ of ~~fiscal 2016 as compared~~$3.2 million and lower net employee compensation expenses of $1.2 million. The SG&A expense decrease was also attributable to the ~~first half~~absence of ~~fiscal 2015, primarily due to incremental marketing expenses~~non-recurring charges of ~~$1.4~~$2.2 million, including ~~investments in brand awareness and the add back of a direct mailer, higher~~ advisory fees in connection with shareholder activism of ~~$1.3~~$1.5 million ~~higher medical costs of $1.3 million,~~and eCommerce transition costs of $0.7 million ~~and~~incurred in the first half of fiscal 2016. These SG&A expense savings were partially offset by an increase in eCommerce operating expenses of $1.0 million to support higher eCommerce ~~operational costs~~sales. As a percent of ~~$0.5 million, and higher~~ net employee compensation expenses of $0.6 million, including a smaller incentive accrual reversal, partly offset by reduced store operational spend of $0.8 million and lower professional fees of $0.5 million. Thesales, SG&A ~~rate increased 160~~improved approximately 50 basis points ~~mainly due~~ to ~~increased SG&A spend partly offset by sales leverage.~~34.3%.

Depreciation and Amortization (“D&A”)


	Twenty-Six Weeks Ended									Twenty-Six Weeks Ended
Depreciation and amortization	July 30, 2016			August 1, 2015			Change			July 29, 2017			July 30, 2016			Change
Depreciation and amortization	$	5,996		$	5,617		$	379		$	6,266		$	5,996		$	270
D&A rate as a percentage of net sales	3.2		%	3.0		%	0.2		%	3.6		%	3.2		%	0.4		%

Depreciation and amortization expense increased primarily due to the ~~effects of new stores, MPW store conversions, and the~~ deployment of technology solutions, including new omni-channel ~~capabilities.~~

~~Table~~capabilities partly offset by the effects of ~~Contents~~

the decrease in average store count.

Impairment of ~~Store~~Long-Lived Assets

Twenty-Six Weeks Ended
Impairment of Store Assets July 30, 2016 August 1, 2015 Change
Impairment of Store Assets $ 476
$ 115
$ 361



	Twenty-Six Weeks Ended
Impairment of long-lived assets	July 29, 2017		July 30, 2016		Change
Impairment of long-lived assets	$	163	$	476	$	(313	)

We recorded non-cash impairment charges related to long-lived assets held at ~~a small number of~~ store locations.

Operating Loss


	Twenty-Six Weeks Ended									Twenty-Six Weeks Ended
Operating loss	July 30, 2016			August 1, 2015			Change			July 29, 2017			July 30, 2016			Change
Operating loss	$	(4,714	)	$	(4,206	)	$	(508	)	$	(11,416	)	$	(4,714	)	$	(6,702	)
Operating loss rate as a percentage of net sales	(2.5		)%	(2.3		)%	(0.2		)%	(6.5		)%	(2.5		)%	(4.0		)%

Our operating loss increased in the first half of fiscal ~~2016~~2017 compared to ~~our operating loss in~~ the ~~same period last year,~~first half of fiscal 2016 primarily due to ~~higher SG&A expenses~~a 420 basis point gross margin rate decline and a net sales decrease of $4.5 million attributable to $2.0 million of non-recurring charges, including advisory fees of $1.3 million in connection with shareholder activism and eCommerce transition costs to a new platform of $0.7 million, incremental marketing expenses of $1.4 million, higher medical costs of $1.3 million, higher net employee compensation expenses of $0.6 million, including a smaller incentive accrual reversal, and higher eCommerce operational costs of $0.5$14.8 million, partly offset by a ~~gross margin rate increase~~SG&A decrease of ~~171 basis points, an increase in sales, reduced store operational spend~~$5.9 million, including the absence of ~~$0.8 million and lower professional fees~~fiscal 2016 non-recurring charges of ~~$0.5~~$2.2 million.

Interest expense, net


	Twenty-Six Weeks Ended						Twenty-Six Weeks Ended
Interest expense, net	July 30, 2016		August 1, 2015		Change		July 29, 2017			July 30, 2016			Change
Interest expense, net	$	82	$	40	$	42	$	(69	)	$	(82	)	$	13
Interest expense, net rate as a percentage of net sales	*		*		*

The change in interest expense, net is not material.

Other income

Twenty-Six Weeks Ended
Other Income July 30, 2016 August 1, 2015 Change
Other income $ 911
$ —
$ 911
Other income rate 0.5 % — % 0.5 %



	Twenty-Six Weeks Ended
Other income	July 29, 2017		July 30, 2016		Change
Other income	$	—	$	911	$	(911	)

Other income in the ~~first half~~second quarter of fiscal 2016 reflects the receipt of proceeds from company-owned life insurance.

Income Tax Provision

Twenty-Six Weeks Ended
Income tax provision (benefit) July 30, 2016 August 1, 2015 Change
Income tax provision (benefit) $ 167
$ (2,094 ) $ 2,261
Income tax rate as a percentage of net sales 0.1 % (1.1 )% 1.2 %



	Twenty-Six Weeks Ended
Income tax provision	July 29, 2017		July 30, 2016		Change
Income tax provision	$	92	$	167	$	(75	)

~~We recorded~~The change in the income tax ~~expense of approximately $0.2 million, with an effective tax rate of (4.3)% for the first half of fiscal 2016.~~provision is not material. For the first half ~~of fiscal 2015, we recorded an income tax benefit of approximately $2.1 million with an~~2017, our effective tax rate ~~of 49.3%. The decrease~~was (1.5)% compared to (4.3)% in the ~~effective tax rate reflects the impact of the valuation allowance on our deferred tax assets, our net operating loss, as well as the impact of permanent differences and state income taxes.~~same period last year.

~~Table of Contents~~

Net earnings


	Twenty-Six Weeks Ended									Twenty-Six Weeks Ended
Net loss	July 30, 2016			August 1, 2015			Change			July 29, 2017			July 30, 2016			Change
Net loss	$	(4,052	)	$	(2,152	)	$	(1,900	)	$	(11,577	)	$	(4,052	)	$	(7,525	)
Net loss rate as a percentage of net sales	(2.1		)%	(1.2		)%	(0.9		)%	(6.6		)%	(2.1		)%	(4.5		)%

Our net loss ~~increase~~decrease in the first half of fiscal ~~2016~~2017 compared to our net loss in the ~~same period last year is~~first half of 2016 was primarily due to ~~higher SG&A and other operational expenses~~a gross margin rate decline, a net sales decrease, and the absence of ~~an income tax benefit,~~company-owned life insurance proceeds partly offset by ~~a gross margin rate increase and 2.3% increase in sales.~~lower SG&A.

~~Third Quarter 2016~~Fiscal 2017 Outlook

~~Based on~~We are implementing a number of strategic initiatives addressing merchandising, marketing, eCommerce and store operations designed to stabilize the business and drive more consistent financial performance going forward. Given the number of changes and time required to rebalance the merchandise assortment, we will not be providing sales ~~trends through August, we expect third quarter net sales of between $102.0 million~~ and ~~$106.0 million, compared to $103.6 million in~~EPS guidance for the ~~third quarter of fiscal 2015.~~

In the third quarter of fiscal 2016, we expect gross margin to be 35.0% to 36.0% as compared to last year's third-quarter gross margin of 35.8%, driven by slightly higher merchandise margins and potentially offset by sales deleverage at the low end of the third quarter sales range.

We expect SG&A dollars to be between $33.0 million and $33.6 million, compared to $33.6 million of SG&A expense in the third quarter last year. The expected SG&A decrease is attributable to lower store operational expenses and reduced professional fees offset in part by increased marketing expenditures and higher e-commerce expenses associated with increased sales, as compared to the same period last year. We continue to analyze our SG&A structure and other opportunities to reduce costs.

~~We expect depreciation and amortization to be approximately $3.3 million, compared to $3.1 million in the third quarter of last year.~~

~~We expect inventory to be essentially flat compared to the end of the third quarter of fiscal 2015.~~near term.

During the ~~third quarter,~~remainder of fiscal 2017, we ~~anticipate closing 1 MPW store and~~ plan to ~~open~~close 2 MPW stores, 1 Outlet and 1 CB store. In addition, we plan to convert 1 CB and 1 CJ store into 1 MPW store. ~~The average~~Average square footage for the year is expected to be down ~~3.6% year-over-year.~~

~~2016 Outlook~~

~~No new stores are planned for the fourth quarter of fiscal 2016.~~

~~At the end of fiscal 2016, we have~~ approximately 53 CB and CJ coterminous leases expiring, which are targeted for either being collapsed and combined or combined through relocation. In addition, we have MPW stores with natural lease expirations which we are analyzing to determine if a lease renewal is appropriate.

~~We expect the average square footage for the year to be down approximately 1.6%,~~5.3% as compared to fiscal ~~2015.~~2016 and down 5.6% in the third quarter.

We expect capital expenditures for the year to berange between ~~$12.0~~$6.5 million and ~~$12.5~~$7.5 million representing investments in ~~new stores as well as expenditures associated with completing~~store relocations, merchandising technology applications, and the ~~technology aspect~~development of ~~our Customer First initiative.~~omni-channel capabilities.

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

We expect the 53rd week in fiscal 2017 to add approximately $4.2 million in sales and to reduce operating income by approximately $1.6 million.

Liquidity and Capital Resources

~~Table of Contents~~

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 Bank N.A (“Wells Fargo”), subject to compliance with ~~the~~all covenants and other financial ~~covenant and the other terms~~provisions of the Credit Facility. Cash flow from operations has historically been sufficient to provide for our uses of cash.

The following table summarizes our cash and cash equivalents ~~and investments~~ as of the end of the ~~first half~~second quarter of fiscal ~~2016~~2017 and the end of fiscal ~~2015:~~2016:


(in thousands)	July 30, 2016		January 30, 2016		July 29, 2017		January 28, 2017
Cash and cash equivalents	$	28,091	$	31,506	$	22,573	$	35,006
Short-term investments	—		3,015
Total cash, cash equivalents and investments	$	28,091	$	34,521

The ~~$6.4~~$12.4 million decrease in cash and cash equivalents ~~and~~is primarily attributable the the net loss for the first half of fiscal 2017, investments ~~is mainly attributable to our use of cash to invest~~ in ~~new stores,~~ MPW store conversions and omni-channel capabilities, and changes in ~~addition to higher advisory fees in connection~~working capital. The working capital fluctuations are generally in-line with ~~shareholder activism.~~normal, seasonal patterns.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the first half of fiscal ~~2016~~2017 compared to the first half of ~~2015:~~2016:


	Twenty-Six Weeks Ended						Twenty-Six Weeks Ended
(in thousands)	July 30, 2016			August 1, 2015			July 29, 2017			July 30, 2016
Net cash used in operating activities	$	(520	)	$	(3,232	)	$	(9,277	)	$	(520	)
Net cash used in investing activities	(2,872		)	(10,406		)	(3,150		)	(2,872		)
Net cash used in financing activities	(23		)	(26		)	(6		)	(23		)
Net decrease in cash and cash equivalents	$	(3,415	)	$	(13,664	)	$	(12,433	)	$	(3,415	)

Operating Activities

The decrease in cash used in operating activities in the first half of fiscal ~~2016~~2017 compared to the first half of fiscal ~~2015~~2016 was primarily due to ~~changes in working capital and other non-cash charges partly offset by~~ an increase in the net loss for the twenty-six week ~~period.~~period and changes in working capital. The changes in working capital primarily ~~reflect an increase~~reflected the effects of a decrease in accrued liabilities, primarily due to ~~higher eCommerce~~payouts pertaining to a loss contingency, employee compensation, and timing of obligations to third-party service ~~contract obligations, which were~~providers, partly offset ~~by increased inventory levels~~an increase in accounts payable due to the timing of fashion merchandise receipts and lower ~~sales.~~inventory receipts.

Investing Activities

The ~~decrease~~increase in cash used in investing activities in the first half of fiscal ~~2016~~2017 compared to the first half of fiscal ~~2015~~2016 was mainly attributable to ~~a deceleration in~~ the ~~pace~~absence of ~~investments in new stores~~available-for-sale investment maturities and ~~MPW store conversions.~~the absence of proceeds from company-owned life insurance. Capital expenditures for the first half of fiscal ~~2016~~2017 were approximately ~~$6.8~~$3.2 million, which primarily reflected investments in ~~new stores~~MPW store conversions and in technology associated with our ~~Customer First initiative.~~omni-channel capabilities.

Financing Activities

Financing activities in the first half of fiscal ~~2016~~2017 and ~~2015~~2016 were limited to a small number of shares redeemed by employees to satisfy payroll tax ~~obligations in connection with the vesting of those shares.~~obligations.

We did not pay any dividends in the first half of fiscal ~~2016.~~2017. We have not paid any dividends in the last three fiscal years.

~~Table of Contents~~

Sources of Liquidity

Funds generated by operating activities, available cash and cash equivalents, investments 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 ~~Credit Facility~~existing facilities or obtain additional financing, if necessary, on favorable terms.

The Credit Facility with Wells Fargo was most recently amended and extended on September 8, 2014. The current expiration date is September 8, 2019. The Credit Facility provides the Company with revolving credit loans of up to $50.0 million in the aggregate, subject to a borrowing base formula based primarily on eligible credit card receivables, inventory and real estate, as such terms are defined in the Credit Facility, and up to $10.0 million of which may be drawn in the form of standby and documentary letters of credit.

The Company had no revolving credit loan borrowings under the Credit Facility during each of the twenty-six week periods ended July 29, 2017, and July 30, 2016. The total Borrowing Base at July 29, 2017 was approximately $36.5 million. As of July 29, 2017, the Company had open on-demand letters of credit of approximately $0.9 million. Accordingly, after reducing the Borrowing Base for the open letters of credit and the required minimum availability of the greater of $3.0 million, or 10.0% of the Borrowing Base, the net availability of revolving credit loans under the Credit Facility was approximately $32.0 million at July 29, 2017.

See Note 65 - 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 July ~~30, 2016.~~29, 2017.

Sourcing

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 week and twenty-six week periods ended July 29, 2017.

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 January ~~30, 2016,~~28, 2017, 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 January ~~30, 2016~~28, 2017, 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 January ~~30, 2016.~~28, 2017. There have been no material changes to our exposure to, and management of our market risks in the thirteen weeks ended July ~~30, 2016.~~29, 2017.

~~Table of Contents~~

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 Interim Chief Executive Officer and Interim 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 Interim Chief Executive Officer and Interim 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 Interim Chief Executive Officer and Interim Chief Financial Officer concluded that as of July 29, 2017 the Company’s disclosure controls and procedures are effective at the reasonable assurance ~~level as of July 30, 2016.~~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 July ~~30, 2016~~29, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

~~We are~~The Company is subject, from time to time, to various claims, lawsuits or actions that arise in the ordinary course of business. ~~Although~~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. In connection with a preliminary settlement of pre-litigation employment claims reached in February 2017, we established a loss contingency of $1.475 million as of January 28, 2017. In connection therewith, on April 13, 2017, a complaint was filed in state Circuit Court in the Fifteenth Judicial Circuit in Palm Beach County, Florida (the “Florida Circuit Court”) by three named plaintiffs in a purported class action asserting claims on behalf of current and former store managers. The plaintiffs principally alleged that they and other similarly situated store managers were improperly classified as exempt employees and thus not compensated for overtime work as required under applicable federal and state law. On May 4, 2017, the Company entered into a settlement agreement with the named plaintiffs and the proposed class. On May 8, 2017, the Florida Circuit Court issued an order approving the class settlement. As approved by the Florida Circuit Court, certain current and former store managers will be eligible to receive payments in connection with time worked in prior years. The settlement of the lawsuit is not an admission by us of any ~~liability that could arise with respect~~wrongdoing.

The ultimate resolution of legal matters can be inherently uncertain and for some matters, we are currently 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. The Company does not, however, currently believe that the resolution of any pending matter will have a material adverse effect on its financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS

In addition to the other information discussed in this report, the risk factors described in Part I, Item 1A. Risk Factors in our 2016 Annual Report on Form 10-K for the fiscal ~~year~~period ended January ~~30, 2016,~~28, 2017, should be considered as they could materially affect our business, financial condition or future results. There have not been any material changes with respect to the risks described in our ~~2015~~2016 Form 10-K, but 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.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

~~Table of Contents~~

ITEM 6. EXHIBITS



Exhibit	Description
10.1**10.1	Form of Christopher & Banks Corporation ~~2013 Directors' Equity Incentive Plan, as amended on June 30, 2016~~Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on ~~July 5, 2016)~~June 20, 2017)
10.2**	~~Form~~Retention Agreement, effective as of July 25, 2017, by and between Christopher & Banks Corporation Restricted Stock Award Agreement under the Christopher & Banks Corporation 2013 Directors’ Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on July 5, 2016)
10.3**	~~Form of Christopher & Banks Corporation Non-Qualified Stock Option Agreement under the Christopher & Banks Corporation 2014 Stock Incentive Plan~~and Marc A. Ungerman (incorporated by reference to Exhibit 10.1 to Current Report on Form ~~8-K~~8-K/A filed on ~~August~~July 26, ~~2016)~~
10.4**	Form of Christopher & Banks Corporation Time-Based Restricted Stock Agreement under the Christopher & Banks Corporation 2014 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on August 26, 2016)2017)
31.1*	Certification of Interim Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of the Interim 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*	Certification of the Interim 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 July ~~30, 2016,~~29, 2017, 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 arrangement

~~Table of Contents~~

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 1, 2016~~August 30, 2017	By:	/s/ ~~LuAnn Via~~Joel Waller
		~~LuAnn Via~~Joel Waller
		Interim President, ~~and~~ Chief Executive Officer and Director
		(Principal Executive Officer)

Dated: ~~September 1, 2016~~August 30, 2017	By:	/s/ ~~Peter G. Michielutti~~Marc Ungerman
		~~Peter G. Michielutti~~Marc Ungerman
		~~Executive Vice President, Chief Operating Officer and~~Interim Chief Financial Officer
		(Principal Financial Officer)

2826



	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments:
Corporate bonds	$	2,810	$	1	$	(1	)	$	2,810
Municipal bonds	205		—		—			205
Total investments	$	3,015	$	1	$	(1	)	$	3,015



	Store Count								Square Footage⁽¹⁾
	April 30,				MPW		July 30,	Avg Store	July 30,	April 30,
Stores by Format	2016	Open	Close		Conversions		2016	Count	2016	2016
MPW	317	1	(5	)	2		315	316	1,206	1,211
Outlet	81	2	—		—		83	82	333	326
Christopher and Banks	59	—	(2	)	(2	)	55	57	182	195
C.J. Banks	55	—	(1	)	(1	)	53	54	190	197
Total Stores	512	3	(8	)	(1	)	506	509	1,911	1,929



	Store Count								Square Footage⁽¹⁾
	January 30,				MPW		July 30,	Avg Store	July 30,	January 30,
Stores by Format	2016	Open	Close		Conversions		2016	Count	2016	2016
MPW	314	2	(6	)	5		315	315	1,206	1,193
Outlet	77	6	—		—		83	80	333	311
Christopher and Banks	67	—	(7	)	(5	)	55	61	182	221
C.J. Banks	60	—	(3	)	(4	)	53	56	190	214
Total Stores	518	8	(16	)	(4	)	506	512	1,911	1,939