UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~August 3,~~November 2, 2013



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

For the transition period from to

Commission File Number 0-23874

Jos. A. Bank Clothiers, Inc.

(Exact Name of Registrant as Specified in Its Charter)



Delaware		36-3189198
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

500 Hanover Pike, Hampstead, MD		21074-2095
(Address of Principal Executive Offices)		(Zip Code)

410-239-2700

(Registrant’s Telephone Number, Including Area Code)

None

(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. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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



Large accelerated filer þ		Accelerated filer o
Non-accelerated filer o		Smaller reporting company o
(Do not check if smaller reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:



Class		Outstanding as of ~~August 28,~~November 27, 2013
Common Stock, $.01 par value		27,988,392

JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES



	Page No.

Part I. Financial Information

Item 1. Unaudited Condensed Consolidated Financial Statements	4

Condensed Consolidated Statements of Income — Three and ~~Six~~Nine Months ended ~~July 28,~~October 27, 2012 and ~~August 3,~~November 2, 2013	4

Condensed Consolidated Balance Sheets — as of February 2, 2013 and ~~August 3,~~November 2, 2013	5

Condensed Consolidated Statements of Cash Flows — ~~Six~~Nine Months ended ~~July 28,~~October 27, 2012 and ~~August 3,~~November 2, 2013	6

Notes to Condensed Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1413

Item 3. Quantitative and Qualitative Disclosures About Market Risk	22

Item 4. Controls and Procedures	22

Part II. Other Information	22

Item 1. Legal Proceedings	22

Item 1A. Risk Factors	23

Item 6. Exhibits	25

Signature	26

Exhibit Index	27

Cautionary Statement

This Quarterly Report on Form 10-Q includes and incorporates by reference certain statements that may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information. When used in this Quarterly Report on Form 10-Q, the words “estimate,” “project,” “plan,” “will,” “anticipate,” “expect,” “intend,” “outlook,” “may,” “believe,” “assume,” and other similar expressions are intended to identify forward-looking statements and information.

Actual results may differ materially from those forecasted due to a variety of factors outside of our control that can affect our operating results, liquidity and financial condition. Such factors include risks associated with ~~the economy,~~domestic and international economic activity and inflation, weather, public health and other factors affecting consumer spending (including negative changes to consumer confidence and other recessionary pressures), higher energy and security costs, the successful implementation of our growth strategy (including our ability to finance our expansion plans), the mix and pricing of goods sold, the effectiveness and profitability of new concepts, the market price of key raw materials (such as wool and cotton) and other production inputs (such as labor costs), seasonality, merchandise trends and changing consumer preferences, the effectiveness of our marketing programs (including compliance with relevant legal requirements), the availability of suitable lease sites for new stores, doing business on an international basis, the ability to source product from our global supplier base, legal and regulatory matters and other competitive factors. The identified risk factors and other factors and risks that may affect our business or future financial results are detailed in our filings with the Securities and Exchange Commission, including, but not limited to, those described under “Risk Factors” in our Form 10-K for fiscal year 2012 and subsequent Quarterly Reports on Form 10-Q ("Form 10-Q"), including this Form 10-Q, and in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q. These risks should be carefully reviewed before making any investment decisions. These cautionary statements qualify all of the forward-looking statements we make herein. We cannot assure you that the results or developments anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business or our operations in the way we expect. We caution you not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We do not undertake an obligation to update or revise any forward-looking statements to reflect actual results or changes in our assumptions, estimates or projections.

PART I. FINANCIAL INFORMATION


Item 1.	Unaudited Condensed Consolidated Financial Statements

JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	July 28, 2012			August 3, 2013			July 28, 2012			August 3, 2013			October 27, 2012			November 2, 2013			October 27, 2012			November 2, 2013
	(In thousands, except per share information)												(In thousands, except per share information)
Net sales	$	260,343		$	232,529		$	461,697		$	428,584		$	232,851		$	247,468		$	694,548		$	676,052
Cost of goods sold	107,457			95,165			181,050			172,034			100,205			105,360			281,255			277,394
Gross profit	152,886			137,364			280,647			256,550			132,646			142,108			413,293			398,658
Operating expenses:
Sales and marketing, including occupancy costs	96,190			96,625			181,952			185,326			94,354			101,273			276,306			286,599
General and administrative	19,580			17,611			37,171			35,143			17,124			19,277			54,295			54,420
Total operating expenses	115,770			114,236			219,123			220,469			111,478			120,550			330,601			341,019
Operating income	37,116			23,128			61,524			36,081			21,168			21,558			82,692			57,639
Other income (expense):
Interest income	101			95			169			266			117			69			286			335
Interest expense	(5		)	(4		)	(17		)	(9		)	(4		)	(5		)	(21		)	(14		)
Total other income (expense)	96			91			152			257			113			64			265			321
Income before provision for income taxes	37,212			23,219			61,676			36,338			21,281			21,622			82,957			57,960
Provision for income taxes	14,054			8,970			23,686			14,001			7,976			8,006			31,662			22,007
Net income	$	23,158		$	14,249		$	37,990		$	22,337		$	13,305		$	13,616		$	51,295		$	35,953
Per share information:
Earnings per share:
Basic	$	0.83		$	0.51		$	1.36		$	0.80		$	0.48		$	0.49		$	1.84		$	1.29
Diluted	$	0.83		$	0.51		$	1.36		$	0.80		$	0.47		$	0.49		$	1.83		$	1.28
Weighted average shares outstanding:
Basic	27,885			27,981			27,858			27,973			27,933			27,988			27,883			27,978
Diluted	28,004			28,050			28,000			28,049			28,017			28,054			28,005			28,050

See accompanying notes.

JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	February 2, 2013			August 3, 2013			February 2, 2013			November 2, 2013
	(In thousands)						(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	71,288		$	43,305		$	71,288		$	85,023
Short-term investments	305,833			289,873			305,833			254,922
Accounts receivable, net	10,644			18,031			10,644			17,238
Inventories:
Finished goods	317,635			350,266			317,635			358,569
Raw materials	12,867			14,326			12,867			10,056
Total inventories	330,502			364,592			330,502			368,625
Prepaid expenses and other current assets	23,922			22,038			23,922			26,069
Total current assets	742,189			737,839			742,189			751,877
NONCURRENT ASSETS:
Property, plant and equipment, net	152,360			155,780			152,360			155,403
Other noncurrent assets	298			295			298			301
Total assets	$	894,847		$	893,914		$	894,847		$	907,581
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	53,782		$	40,434		$	53,782		$	40,572
Accrued expenses	104,639			97,795			104,639			97,035
Deferred tax liability — current	11,928			11,920			11,928			11,848
Total current liabilities	170,349			150,149			170,349			149,455
NONCURRENT LIABILITIES:
Deferred rent	45,531			43,026			45,531			43,178
Deferred tax liability — noncurrent	9,791			8,747			9,791			9,189
Other noncurrent liabilities	1,613			1,696			1,613			1,514
Total liabilities	227,284			203,618			227,284			203,336
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred Stock	—			—			—			—
Common stock	279			279			279			279
Additional paid-in capital	94,757			95,153			94,757			95,487
Retained earnings	572,718			595,055			572,718			608,670
Accumulated other comprehensive income (loss)	(191		)	(191		)	(191		)	(191		)
Total stockholders’ equity	667,563			690,296			667,563			704,245
Total liabilities and stockholders’ equity	$	894,847		$	893,914		$	894,847		$	907,581

See accompanying notes.

JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended						Nine Months Ended
	July 28, 2012			August 3, 2013			October 27, 2012			November 2, 2013
	(In thousands)						(In thousands)
Cash flows from operating activities:
Net income	$	37,990		$	22,337		$	51,295		$	35,953
Adjustments to reconcile net income to net cash (used in) operating activities:
Depreciation and amortization	13,746			14,666			20,910			22,132
Loss on disposals of property, plant and equipment	119			155			207			201
Non-cash equity compensation	1,434			927			1,688			1,260
(Decrease) in deferred taxes	(783		)	(1,052		)	(915		)	(682		)
Net (increase) in operating working capital and other components	(75,802		)	(68,414		)	(102,821		)	(73,391		)
Net cash (used in) operating activities	(23,296		)	(31,381		)	(29,636		)	(14,527		)
Cash flows from investing activities:
Capital expenditures	(11,830		)	(12,031		)	(22,423		)	(22,118		)
Proceeds from maturities of short-term investments	246,580			305,833			352,522			430,767
Payments to acquire short-term investments	(239,837		)	(289,873		)	(358,755		)	(379,856		)
Net cash provided by (used in) investing activities	(5,087		)	3,929			(28,656		)	28,793
Cash flows from financing activities:
Income tax benefit from equity compensation plans	6			(40		)
Income tax benefit (detriment) from equity compensation plans							72			(40		)
Net proceeds from issuance of common stock	479			—			556			—
Tax payments related to equity compensation plans	(634		)	(491		)	(634		)	(491		)
Net cash (used in) financing activities	(149		)	(531		)	(6		)	(531		)
Net (decrease) in cash and cash equivalents	(28,532		)	(27,983		)
Net increase (decrease) in cash and cash equivalents							(58,298		)	13,735
Cash and cash equivalents — beginning of period	87,230			71,288			87,230			71,288
Cash and cash equivalents — end of period	$	58,698		$	43,305		$	28,932		$	85,023

See accompanying notes.

JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	BASIS OF PRESENTATION

Jos. A. Bank Clothiers, Inc. is a nationwide designer, manufacturer, retailer and direct marketer (through stores, catalog and Internet) of men’s tailored and casual clothing and accessories and is a retailer of tuxedo rental products. The unaudited condensed consolidated financial statements include the accounts of Jos. A. Bank Clothiers, Inc. and its wholly-owned subsidiaries (collectively referred to as “we”, “our” or “us”). All intercompany balances and transactions have been eliminated in consolidation.

The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of the operating results for these periods. These adjustments are of a normal recurring nature.

We operate on a 52-53 week fiscal year ending on the Saturday closest to January 31. The following fiscal years ended or will end on the dates indicated and will be referred to herein by their fiscal year designations:



Fiscal year 2008	January 31, 2009
Fiscal year 2009	January 30, 2010
Fiscal year 2010	January 29, 2011
Fiscal year 2011	January 28, 2012
Fiscal year 2012	February 2, 2013
Fiscal year 2013	February 1, 2014
Fiscal year 2014	January 31, 2015

Each fiscal year noted above consisted or consists of 52 weeks except fiscal year 2012, which consisted of 53 weeks.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and therefore do not include all of the information and footnotes required by GAAP for comparable annual financial statements. Certain information has been derived from our audited Annual Report on Form 10-K for fiscal year 2012 and certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with our Annual Report on Form 10-K for fiscal year 2012.


2.	SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents - Cash and cash equivalents include bank deposit accounts, money market accounts and other highly liquid investments with original maturities of 90 days or less. At ~~August 3,~~November 2, 2013, substantially all of the cash and cash equivalents were invested in U.S. Treasury bills with original maturities of 90 days or less and overnight federally-sponsored agency notes.

Short-term Investments - Short-term investments consist of investments in securities with remaining maturities of less than one year, excluding investments with original maturities of 90 days or less. At ~~August 3,~~November 2, 2013, short-term investments consisted solely of U.S. Treasury bills with remaining maturities ranging from less than one month to ~~six~~five months. These investments are classified as held-to-maturity and their market values approximate their carrying values.

Inventories - We record inventory at the lower of cost or market (“LCM”). Cost is determined using the first-in, first-out method. We capitalize into inventory certain sourcing, warehousing and freight delivery costs associated with shipping our merchandise to the point of sale. We periodically review quantities of inventories on hand and compare these amounts to the expected sales of each product. We record a charge to cost of goods sold for the amount required to reduce the carrying value of inventory to estimated net realizable value.

Landlord Contributions - We typically receive reimbursement from landlords for a portion of the cost of leasehold improvements for new stores and, occasionally, for renovations and relocations. These landlord contributions are initially accounted for as an increase to ~~deferred~~Deferred rent and as an increase to ~~prepaid~~Prepaid expenses and other current assets when the related store is opened. When collected, we record cash and reduce the prepaid expenses and other current assets account. The collection of landlord contributions is presented in the Condensed Consolidated Statements of Cash Flows as an operating activity. The deferred rent is amortized over the lease term in a manner that is consistent with our policy to straight-line rent expense over the term of the lease. The amortization is recorded as a reduction to sales and marketing expense, which is consistent with the classification of lease expense.

Gift Cards and Certificates - We sell gift cards and gift certificates to individuals and companies. Our incentive gift certificates are used by various companies as a reward for achievement for their employees. We also redeem proprietary gift cards and gift certificates marketed by third-party premium/incentive companies. We record a liability when a gift card/certificate is purchased. As the gift card/certificate is redeemed, we reduce the liability and record revenue. Substantially all of our gift cards/certificates do not have expiration dates and they are all subject to state escheatment laws. Based on historical experience, gift cards/certificates redemptions after the escheatment due date are remote and we recognize any income (also referred to as “breakage”) on these unredeemed gift cards/certificates on a specific identification basis on the escheatment due date.

Tuxedo Rental Products - Revenues from tuxedo rental products are recognized on a gross basis upon delivery of rental products to customers. When a customer orders a tuxedo rental from us, we place an order with a national distributor who delivers the product to our stores, typically within several days prior to the intended use. The national distributor owns the rental product and charges the Company a rental cost for each rental and delivery which is recorded to ~~"Costs~~Cost of goods ~~sold".~~sold.

Equity Compensation -We account for our equity awards in accordance with FASB ASC 718, “Share-Based Payment” (“ASC 718”), which requires the compensation cost resulting from all share-based awards to be recognized in the financial statements. The amount of compensation is measured based on the grant-date fair value of the awards and is recognized over the vesting period of the awards. The vesting of awards to both the officers and directors is subject to service conditions being met, currently ranging from one to three years. Additionally, the vesting of awards to officers is subject to performance conditions being met in the fiscal year that the awards are granted such as, among other things, the attainment of certain annual earnings and performance goals. For these officer awards, we estimate the probability that such goals will be attained based on results-to-date at each interim quarter-end and record compensation cost to "General and administrative expense" for these awards based on the awards projected to vest. Share-based compensation expense recognized for the ~~second~~third quarter and first ~~six~~nine months of fiscal year 2013 related to equity awards issued under the Jos. A. Bank Clothiers, Inc. 2010 Equity Incentive Plan (“Equity Incentive Plan”) was $~~0.4~~0.3 million and $~~0.9~~1.3 million, respectively, and the tax benefit recognized related to this compensation for each of the ~~second~~third quarter and the first ~~six~~nine months was $~~0.2~~0.1 million and $~~0.4~~0.5 million. Share based compensation expense for the ~~second~~third quarter and first ~~six~~nine months of fiscal year 2012 was $~~0.8~~0.2 million and $~~1.4~~1.6 million, respectively, and the tax benefit recognized related to this compensation was $~~0.3~~0.1 million and $~~0.5~~0.6 million.

Recently Proposed Amendments to Accounting Standards- In May 2013, the FASB issued an updated exposure draft, “Leases” (the “Exposure Draft”), which would replace the existing guidance in ASC 840, “Leases.” Under the Exposure Draft, a lessee's rights and obligations under all leases, including existing and new arrangements, would be recognized as assets and liabilities, respectively, on the balance sheet. A final standard is expected to be issued in 2014 and is expected to be effective no earlier than our fiscal year 2017 annual reporting period. If this lease guidance becomes effective on the terms currently proposed by FASB, it will likely have a significant impact on our consolidated financial statements. However, as the standard-setting process is still ongoing, we are unable to determine at this time the impact this proposed change in accounting may have on our consolidated financial statements.


3.	SUPPLEMENTAL CASH FLOW DISCLOSURE

The net changes in operating working capital and other components consist of the following:


	Six Months Ended						Nine Months Ended
	July 28, 2012			August 3, 2013			October 27, 2012			November 2, 2013
	(In thousands)						(In thousands)
(Increase) in accounts receivable	$	(6,707	)	$	(7,387	)	$	(1,963	)	$	(6,594	)
(Increase) in inventories	(46,311		)	(34,090		)	(74,970		)	(38,123		)
Decrease in prepaids and other assets	827			1,887
(Increase) in prepaids and other assets							(9,604		)	(2,150		)
(Decrease) in accounts payable	(17,691		)	(13,348		)	(13,645		)	(13,210		)
(Decrease) in accrued expenses	(3,359		)	(13,054		)	(1,708		)	(10,862		)
(Decrease) in deferred rent and other noncurrent liabilities	(2,561		)	(2,422		)	(931		)	(2,452		)
Net (increase) in operating working capital and other components	$	(75,802	)	$	(68,414	)	$	(102,821	)	$	(73,391	)

Interest and income taxes paid were as follows:


	Six Months Ended				Nine Months Ended
	July 28, 2012		August 3, 2013		October 27, 2012		November 2, 2013
	(In thousands)				(In thousands)
Interest paid	$	17	$	11	$	21	$	14
Income taxes paid	$	27,554	$	11,690	$	43,223	$	23,220

As of ~~July 28,~~October 27, 2012 and ~~August 3,~~November 2, 2013, included in “Property, plant and equipment, net” and “Accrued expenses” in the Condensed Consolidated Balance Sheets are $~~7.2~~13.1 million and $~~14.9~~11.9 million, respectively, of accrued property, plant and equipment additions that have been incurred but not invoiced by vendors, and therefore, not paid by the end of the respective periods. The net increase in accrued property, plant, and equipment additions of $~~0.5~~6.3 million and $3.3 million for the first ~~six~~nine months of fiscal ~~year~~years 2012 and ~~the net increase in accrued property, plant, and equipment additions of~~ ~~$6.2 million~~ ~~for the~~ ~~first six months~~ ~~of fiscal year~~ 2013, respectively, and are excluded from payments for capital expenditures and changes in accrued expenses in the Condensed Consolidated Statements of Cash Flows, as these changes are non-cash items.


4.	EARNINGS PER SHARE

Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net income by the diluted weighted average common shares, which reflects the potential dilution related to common stock equivalents. The weighted average shares used to calculate basic and diluted EPS are as follows:


	Three Months Ended		Six Months Ended		Three Months Ended		Nine Months Ended
	July 28, 2012	August 3, 2013	July 28, 2012	August 3, 2013	October 27, 2012	November 2, 2013	October 27, 2012	November 2, 2013
	(In thousands)		(In thousands)		(In thousands)		(In thousands)
Weighted average shares outstanding for basic EPS	27,885	27,981	27,858	27,973	27,933	27,988	27,883	27,978
Dilutive effect of common stock equivalents	119	69	142	76	84	66	122	72
Weighted average shares outstanding for diluted EPS	28,004	28,050	28,000	28,049	28,017	28,054	28,005	28,050

We use the treasury method for calculating the dilutive effect of common stock equivalents. For the ~~second~~third quarter and the first ~~six~~nine months of fiscal years 2012 and 2013, there were no anti-dilutive common stock equivalents.


5.	INCOME TAXES

Income taxes are accounted for under the asset and liability method in accordance with FASB ASC 740, “Income Taxes,” (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Condensed Consolidated Statements of Income in the period that includes the enactment date.

We account for uncertainties in income taxes pursuant to ASC 740, which clarifies the accounting for uncertainty in income taxes recognized in financial statements. We recognize tax liabilities for uncertain income tax positions (“unrecognized tax benefits”) where an evaluation has indicated that it is more likely than not that the tax positions will not be sustained in an audit. We estimate the unrecognized tax benefits as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We re-evaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. The re-evaluations are based on many factors, including, but not limited to, changes in facts or circumstances, changes in tax law, settled issues as a result of audits, expirations due to statutes of limitations, and new federal or state audit activity. We also recognize accrued interest and penalties related to these unrecognized tax benefits. Changes in these accrued items are included in the provision for income taxes in the Condensed Consolidated Statements of Income.

The effective income tax rate for the ~~second~~third quarter of fiscal year 2013 was ~~38.6%~~37.0% as compared with ~~37.8%~~37.5% for the ~~second~~third quarter of fiscal year 2012. For the first ~~six~~nine months of fiscal year 2013, the effective tax rate was ~~38.5%~~38.0% as compared with ~~38.4%~~38.2% for the same period in fiscal year 2012. The ~~increase in the~~lower effective rate for the first ~~six~~nine months of fiscal year 2013 as compared to the same period of fiscal year 2012 was driven by ~~higher state income taxes, partially offset by~~ lower expense related to the liability for unrecognized benefits in fiscal year 2013 ~~compared to fiscal year~~ ~~2012~~., partially offset by higher state income taxes.

Significant changes to U.S. federal or state income tax rules could occur as part of future legislation. Such changes could influence our future income tax expense and/or the timing of income tax deductions. The impact of such changes on our business operations and financial statements remains uncertain. However, as the possibility of any enactment progresses, we will continue to monitor current developments and assess the potential implications of these tax law changes on our business and consolidated financial statements.

We file a federal income tax ~~return~~returns and state and local income tax returns in various jurisdictions. The Internal Revenue Service (“IRS”) has audited our tax returns through fiscal year 2008, including its examination of the tax returns for fiscal years 2007 and 2008, which was finalized in October 2010. No material adjustments were required to these tax returns as a result of the examination by the IRS. For the years before fiscal year ~~2009,~~2010, the majority of our state and local income tax returns are no longer subject to examinations by taxing authorities.


6.	SEGMENT REPORTING

We have two reportable segments: Stores and Direct Marketing. The Stores segment includes all Company-owned stores excluding Factory stores (“Full-line Stores”). The Direct Marketing segment includes our catalog call center and Internet operations. While each segment offers a similar mix of men’s clothing to the retail customer, the Stores segment also provides complete alterations, while the Direct Marketing segment provides certain limited alterations.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. We evaluate performance of the segments based on “four wall” contribution, which excludes any allocation of overhead from the corporate office and the distribution centers (except order fulfillment costs, which are allocated to Direct Marketing), interest and income taxes.

Our segments are strategic business units that offer similar products to retail customers by two distinctively different methods. Stores segment customers travel to Company stores to purchase merchandise and/or alterations and typically take their purchases with them from the Stores. Most of our Direct Marketing segment customers visit one or more of our Internet web sites and order online. Some of our Direct Marketing customers order through our catalog by phone, mail or fax. Direct Marketing purchases are shipped to the customer.

Segment data is presented in the following tables:

Three months ended ~~August 3,~~November 2, 2013


	Stores		Direct Marketing		Corporate and Other			Total		Stores		Direct Marketing		Corporate and Other			Total
	(In thousands)									(In thousands)
Net sales ^(a)	$	194,499	$	27,310	$	10,720		$	232,529	$	206,709	$	28,948	$	11,811		$	247,468
Depreciation and amortization	5,802		206		1,165			7,173		6,049		205		1,212			7,466
Operating income (loss) ^(b)	34,713		5,843		(17,428		)	23,128		35,258		6,356		(20,056		)	21,558
Capital expenditures ^(c)	4,499		7		1,630			6,136		6,737		17		3,333			10,087

Three months ended ~~July 28,~~October 27, 2012


	Stores		Direct Marketing		Corporate and Other			Total		Stores		Direct Marketing		Corporate and Other			Total
	(In thousands)									(In thousands)
Net sales ^(a)	$	223,986	$	27,832	$	8,525		$	260,343	$	199,937	$	23,446	$	9,468		$	232,851
Depreciation and amortization	5,624		179		1,123			6,926		5,827		187		1,150			7,164
Operating income (loss) ^(b)	49,266		7,463		(19,613		)	37,116		33,292		5,558		(17,682		)	21,168
Capital expenditures ^(c)	4,580		44		1,269			5,893		8,073		286		2,234			10,593

~~Six~~Nine months ended ~~August 3,~~November 2, 2013


	Stores		Direct Marketing		Corporate and Other			Total		Stores		Direct Marketing		Corporate and Other			Total
	(In thousands)									(In thousands)
Net sales ^(a)	$	360,409	$	48,197	$	19,978		$	428,584	$	567,118	$	77,145	$	31,789		$	676,052
Depreciation and amortization	11,896		410		2,360			14,666		17,945		615		3,572			22,132
Operating income (loss) ^(b)	61,175		11,463		(36,557		)	36,081		96,433		17,819		(56,613		)	57,639
Capital expenditures ^(c)	9,605		14		2,412			12,031		16,342		31		5,745			22,118

~~Six~~Nine months ended ~~July 28,~~October 27, 2012


	Stores		Direct Marketing		Corporate and Other			Total		Stores		Direct Marketing		Corporate and Other			Total
	(In thousands)									(In thousands)
Net sales ^(a)	$	398,749	$	46,377	$	16,571		$	461,697	$	598,686	$	69,823	$	26,039		$	694,548
Depreciation and amortization	11,159		353		2,234			13,746		16,986		540		3,384			20,910
Operating income (loss) ^(b)	85,403		13,650		(37,529		)	61,524		118,695		19,208		(55,211		)	82,692
Capital expenditures ^(c)	9,219		101		2,510			11,830		17,292		387		4,744			22,423

(a)

Stores net sales represent all Full-line Store sales. Direct Marketing net sales represent catalog call center and Internet sales. Net sales from operating segments below the GAAP quantitative thresholds are attributable primarily to our two other operating segments — Factory stores and Franchise stores. These operating segments have never met any of the quantitative thresholds for determining reportable segments and are included in “Corporate and Other.”

(b)

Operating income (loss) for the Stores and Direct Marketing segments represents profit before allocations of overhead from the corporate office and the distribution centers (except order fulfillment costs which are allocated to Direct Marketing), interest and income taxes (“four wall” contribution). Total Company shipping costs to customers of approximately $~~5.0~~3.6 million and $~~5.1~~4.9 million for the ~~second~~third quarter of fiscal years 2012 and 2013, respectively, and approximately $~~7.8~~11.4 million and $~~8.5~~13.4 million for the first ~~six~~nine months of fiscal years 2012 and 2013, respectively, were recorded to “Sales and marketing, including occupancy costs” in the Condensed Consolidated Statements of Income. Operating income (loss) for “Corporate and Other” consists primarily of costs included in general and administrative costs and operating income or loss related to the Factory stores and the Franchise stores operating segments. Total operating income represents profit before interest and income taxes.

were recorded to “Sales and marketing, including occupancy costs” in the Condensed Consolidated Statements of Income. Operating income (loss) for “Corporate and Other” consists primarily of costs included in general and administrative costs and operating income or loss related to the Factory stores and the Franchise stores operating segments. Total operating income represents profit before interest and income taxes.


(c)	Capital expenditures include payments for property, plant and equipment made for the reportable segment.


7.	LEGAL MATTERS

On March 16, 2012, Neil Holmes, a former employee of the Company, individually and on behalf of all those similarly situated, filed a Complaint (the "Holmes Complaint") against the Company in the Superior Court of California, County of Santa Clara, Case No. 112CV220780, alleging various violations of California wage and labor laws. The Holmes Complaint seeks, among other relief, certification of the case as a class action, injunctive relief, monetary damages, penalties, restitution, other equitable relief, interest, attorney's fees and costs. ~~On December 21, 2012,~~As described in our prior Quarterly Reports on Form 10-Q, the ~~parties accepted a mediator's proposal to settle this case. The proposed settlement has been recorded by the Company. The~~ parties entered into a settlement agreement on April 19, 2013. On ~~or about June 14,~~September 13, 2013, the ~~said Superior~~ Court ~~granted preliminary~~issued an Order and Judgement granting, among other things, final approval of a class action settlement. The settlement amount had been previously recorded by the settlement agreement, scheduled a final approval hearing and took certain other action in furtherance of the settlement. Although we expect the Superior Court to finally approve the settlement agreement, we cannot provide any assurance that it will do so. Company.

On August 29, 2012, Patrick Edward Camasta, individually and as the representative of a class of similarly situated persons, filed a putative class action complaint (the “Original Camasta Complaint”) against the Company in the Circuit Court of the Nineteenth Judicial Circuit, Lake County, Illinois (Case No. 12CH4405). The Company removed the case to the United States District Court for the Northern District of Illinois, Eastern Division (Case No. 12 CV 7782). The Original Camasta Complaint alleges, among other things, that the Company's pattern and practice of advertising its normal retail prices as temporary price reductions violate the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act. The Original Camasta Complaint seeks, among other relief, certification of the case as a class action, actual and punitive damages, attorney fees and costs and injunctive relief. On February 7, 2013, upon the motion of the Company, the said U.S. District Court issued a Memorandum Opinion and Order dismissing the Original Camasta Complaint in its entirety, without prejudice. On March 1, 2013, Camasta filed a First Amended Class Action Complaint in the said United States District Court making substantially the same allegations as in the Original Camasta Complaint. On July 25, 2013, upon the motion of the Company, the said U.S. District Court issued a Memorandum Opinion and Order dismissing the First Amended Class Action Complaint in its entirety, with prejudice. Camasta has appealed the dismissal to the United States Court of Appeals for the Seventh Circuit.

On July 30, 2013, Matthew B. Johnson, et al., on behalf of themselves and all Ohio residents similarly situated, filed a putative class action complaint (the “Johnson Complaint”) against the Company in the United States District Court for the Southern District of Ohio, Eastern District (Case No. 2:13-cv-756). The Johnson Complaint alleges, among other things, deceptive sales and marketing practices by the Company relating to its use of the words “free” and “regular price”. The Johnson Complaint seeks, among other relief, class certification, compensatory damages, declaratory relief, injunctive relief and costs and disbursements (including attorneys' fees). We intend to defend this lawsuit vigorously. (The law firm which filed the Johnson Complaint on behalf of the plaintiffs is one of the law firms which filed the “Schneider Complaint,” which is discussed in our Quarterly Report on Form 10-Q for the quarterly period ended May 4, 2013. On July 24, 2013, the Schneider Complaint was voluntarily dismissed by the plaintiffs from the United States District Court for the Northern District of Ohio. Approximately one week later, the substantially similar Johnson Complaint was filed in United States District Court for the Southern District of Ohio.)

In addition to the litigation discussed above, we are a party to routine litigation matters that are incidental to our business and are currently not expected to be material. From time to time, additional legal matters in which we may be named as a defendant are expected to arise in the normal course of our business activities.

~~The~~Except as otherwise set forth above, the resolution of our litigation matters cannot be accurately predicted and we have not estimated the costs or potential losses, if any, associated with these matters. Accordingly, we cannot determine whether our insurance coverage, if any, would be sufficient to cover such costs or potential losses, if any, and we have not recorded any provision for cost or loss associated with these actions. It is possible that our consolidated financial statements could be materially impacted in a particular fiscal quarter or year by an unfavorable outcome or settlement of any of these actions.

1312


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

The information that follows should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for fiscal year 2012.

Overview - For the ~~second~~third quarter of fiscal year 2013, our net income was $~~14.2~~13.6 million as compared with $~~23.2~~13.3 million for the ~~second~~third quarter of fiscal year 2012. We earned $~~0.51~~0.49 per diluted share in the ~~second~~third quarter of fiscal year 2013 as compared with $~~0.83~~0.47 per diluted share in the ~~second~~third quarter of fiscal year 2012. During the third quarter of fiscal year 2013, the Company made a non-binding proposal to acquire all of the outstanding shares of The Men’s Wearhouse, Inc. ("The Men’s Wearhouse Proposal"), which was withdrawn in November 2013. The $0.49 earnings per diluted share for the third quarter of fiscal year 2013 includes approximately $1.2 million of expense for legal and other professional services related to The Men’s Wearhouse Proposal, and therefore the earnings would have been higher if we had not incurred such expense. The results of the ~~second~~third quarter of fiscal year 2013, as compared to the ~~second~~third quarter of fiscal year 2012, were primarily driven by:

~~10.7%~~6.3% ~~decrease~~increase in net sales, driven by a ~~13.2%~~3.4% ~~decrease~~increase in the Stores segment sales, which includes the impact of new stores opened, and a ~~1.9%~~23.5% ~~decrease~~increase in the Direct Marketing segment sales;

~~15.9%~~0.1% decrease in comparable store sales and a ~~15.5%~~2.4% ~~decrease~~increase in combined comparable store and Internet sales.

40 basis point increase in gross profit margins (gross profit as a percent of net sales) primarily due to lower sourcing costs and higher net average selling prices;

~~470~~40 basis point increase in sales and marketing costs as a percentage of net sales driven primarily by higher ~~occupancy,~~ Store and Direct marketing payroll, ~~and~~ other variable selling and occupancy costs as a percentage of net sales, partially offset by lower advertising and marketing costs as a percentage of net sales; and

1040 basis point increase in general and administrative costs as a percentage of net sales driven primarily by higher ~~corporate overhead, distribution center costs and~~ professional services costs ~~partially offset by lower~~(which includes approximately $1.2 million of costs related to the The Men’s Wearhouse Proposal) and higher corporate compensation (which includes benefit costs and total company performance based incentive compensation other than commissions) as a percentage of net sales, partially offset by lower distribution center and other corporate overhead costs as a percentage of net sales.

As of the end of the ~~second~~third quarter of fiscal year 2013, we had ~~611~~628 stores, consisting of ~~558~~570 Company-owned Full-line Stores, 3843 Company-owned Factory stores and 15 stores owned and operated by franchisees. We opened 1028 stores and closed ~~one store~~two stores in the first ~~six~~nine months of fiscal year 2013. In the past five completed fiscal years, we have opened 189 stores. Specifically, there were 40 new stores opened in fiscal year 2008, 14 new stores opened in fiscal year 2009, 36 new stores opened in fiscal year 2010, 53 new stores opened in fiscal year 2011, and 46 new stores in fiscal year 2012. The lower number of store openings in fiscal year 2009 compared to the other years was due primarily to the impact of the national economic crisis that occurred during late 2008 and into 2009, which included, but was not limited to, slowed development of malls and retail centers which restricted our ability to find suitable locations for new stores.

Including the 1028 stores opened in the first ~~six~~nine months of fiscal year 2013, we expect to open approximately 30 to 35 stores in fiscal year 2013. This range includes approximately 8 Factory stores. Currently, we believe that the chain can be grown to approximately 800 stores consisting of approximately 700 Full-line Stores and approximately 100 Factory stores in the United States.

Capital expenditures in fiscal year 2013 are expected to be approximately $3435 million to $3736 million, primarily to fund the opening of approximately 30 to 35 new stores, the renovation and/or relocation of several stores, the implementation of various systems and infrastructure projects and the expansion and maintenance of our distribution capacity. In addition, these capital expenditures include payments for property, plant and equipment additions accrued at the end of fiscal year 2012 primarily related to stores opened in fiscal year 2012 and exclude amounts for that portion of property, plant and equipment additions in fiscal year 2013 which are not expected to be paid until fiscal year 2014. The capital expenditures include the cost of the construction of leasehold improvements for new stores and ~~several stores to be~~ renovated or relocated stores, of which approximately $~~4.0 million~~ to ~~$4.5~~4.2 million is expected to be reimbursed through landlord contributions.

From the end of the ~~second~~third quarter of fiscal year 2012 to the end of the ~~second~~third quarter of fiscal year 2013, inventory ~~increased~~decreased $~~13.6~~11.0 million or ~~3.9%~~2.9% due primarily to lower finished goods inventory levels which reflects a reduction in our purchases based on the weak sell-through we had in certain seasonal categories last year, as well lower unit costs in certain

categories, partially offset by additional inventory related to new ~~store openings.~~stores opened. In addition, the decline was related to lower raw materials inventory levels. By the end of fiscal year 2013, we expect that inventory will ~~have increased at a similar growth rate as~~be flat or down in the low single digits compared to the end of fiscal year 2012, depending on sales and other ~~factors in fiscal year~~ ~~2013~~.factors.

Critical Accounting Policies and Estimates - In preparing the consolidated financial statements, a number of assumptions and estimates are made that, in the judgment of management, are proper in light of existing general economic and company-specific circumstances. For a detailed discussion of the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements in our Annual Report on Form 10-K for fiscal year 2012.

While we have taken reasonable care in preparing these estimates and making these judgments, actual results could and probably will differ from these estimates. Management believes any difference in the actual results from the estimates will not have a material effect upon our financial position or results of operations. These estimates, among other things, were discussed by management with our Audit Committee.

Inventory. We record inventory at the lower of cost or market (“LCM”). Cost is determined using the first-in, first-out method. The estimated market value is based on assumptions for future demand and related pricing. We reduce the carrying value of inventory to net realizable value where cost exceeds estimated selling price less costs of disposal.

Management’s sales assumptions regarding sales below cost are based on our experience that most of our inventory is sold through our primary sales channels, with virtually no inventory being liquidated through bulk sales to third parties. Our LCM estimates for inventory that have been made in the past have been very reliable as a significant portion of our sales (approximately two-thirds in fiscal year 2012) are of classic, traditional products that are part of on-going programs and that bear low risk of write-down below cost. These products include items such as navy and gray suits, navy blazers, white and blue dress shirts, etc. To limit the need to sell significant amounts of product below cost, all product categories are closely monitored in an attempt to identify and correct situations in which aging goals have not been, or are not reasonably likely to be, achieved. In addition, our strong gross profit margins enable us to sell substantially all of our products above cost.

To calculate the estimated market value of our inventory, we periodically perform a detailed review of all of our major inventory classes and stock-keeping units and perform an analytical evaluation of aged inventory on a quarterly basis. Semi-annually, we compare the on-hand units and season-to-date unit sales (including actual selling prices) to the sales trend and estimated prices required to sell the units in the future, which enables us to estimate the amount which may have to be sold below cost. Substantially all of the units sold below cost are sold in our Factory stores, through our Internet websites and catalog call center or on clearance at the Full-line Stores, typically within 24 months of purchase. Our costs in excess of selling price for units sold below cost totaled $1.6 million and $1.7 million in fiscal year 2011 and fiscal year 2012, respectively. We reduce the carrying amount of our current inventory value for products in inventory that may be sold below cost. If the amount of inventory which is sold below cost differs from the estimate, our inventory valuation adjustment could change.

Asset Valuation. Long-lived assets, such as property, plant and equipment subject to depreciation, are reviewed for impairment to determine whether events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds our estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. The asset valuation estimate is principally dependent on our ability to generate profits at both the Company and store levels. These levels are principally driven by the sales and gross profit trends, which we closely monitor. While we perform a quarterly review of our long-lived assets to determine if impairment exists, the fourth quarter is typically the most significant quarter to make such a determination since it provides the best indication of performance trends in the individual stores. There were no asset valuation charges in either the first ~~six~~nine months of fiscal year 2013 or the first ~~six~~nine months of fiscal year 2012.

Lease Accounting. We use a consistent lease period (generally, the initial non-cancelable lease term plus renewal option periods provided for in the lease that can be reasonably assured) when calculating amortization of leasehold improvements and in determining straight-line rent expense and classification of a lease as either an operating lease or a capital lease. The lease term and straight-line rent expense commence on the date when we take possession and have the right to control the use of the leased premises. Funds received from the lessor intended to reimburse us for the costs of leasehold improvements are recorded as a deferred rent resulting from a lease incentive and are amortized over the lease term as a reduction to rent expense.

1514

Recently Proposed Amendments to Accounting Standards. In May 2013, the FASB issued an updated exposure draft, “Leases” (the “Exposure Draft”), which would replace the existing guidance in ASC 840, “Leases.” Under the Exposure Draft, a lessee's rights and obligations under all leases, including existing and new arrangements, would be recognized as assets and liabilities, respectively, on the balance sheet. A final standard is expected to be issued in 2014 and is expected to be effective no earlier than our fiscal year 2017 annual reporting period. If this lease guidance becomes effective on the terms currently proposed by FASB, it will likely have a significant impact on our consolidated financial statements. However, as the standard-setting process is still ongoing, we are unable to determine at this time the impact this proposed change in accounting may have on our consolidated financial statements.

Results of Operations

The following table is derived from our Condensed Consolidated Statements of Income and sets forth, for the periods indicated, the items included in the Condensed Consolidated Statements of Income expressed as a percentage of net sales.


	Percentage of Net Sales				Percentage of Net Sales				Percentage of Net Sales				Percentage of Net Sales
	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	July 28, 2012		August 3, 2013		July 28, 2012		August 3, 2013		October 27, 2012		November 2, 2013		October 27, 2012		November 2, 2013
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	41.3		40.9		39.2		40.1		43.0		42.6		40.5		41.0
Gross profit	58.7		59.1		60.8		59.9		57.0		57.4		59.5		59.0
Sales and marketing expenses	36.9		41.6		39.4		43.2		40.5		40.9		39.8		42.4
General and administrative expenses	7.5		7.6		8.1		8.2		7.4		7.8		7.8		8.0
Total operating expenses	44.5		49.1		47.5		51.4		47.9		48.7		47.6		50.4
Operating income	14.3		9.9		13.3		8.4		9.1		8.7		11.9		8.5
Total other income	—		—		—		0.1		—		—		—		—
Income before provision for income taxes	14.3		10.0		13.4		8.5		9.1		8.7		11.9		8.6
Provision for income taxes	5.4		3.9		5.1		3.3		3.4		3.2		4.6		3.3
Net income	8.9	%	6.1	%	8.2	%	5.2	%	5.7	%	5.5	%	7.4	%	5.3	%

Net Sales — Net sales ~~decreased~~increased ~~10.7%~~6.3% to $~~232.5~~247.5 million in the ~~second~~third quarter of fiscal year 2013 as compared with $~~260.3~~232.9 million in the ~~second~~third quarter of fiscal year 2012. Net sales for the first ~~six~~nine months of fiscal year 2013 decreased ~~7.2%~~2.7% to $~~428.6~~676.1 million as compared with $~~461.7~~694.5 million in the first ~~six~~nine months of fiscal year 2012.

The total net sales increase for the third quarter of fiscal year 2013 includes an increase in the Stores segment of 3.4% as compared to the same period in fiscal year 2012 which was driven primarily by an increase in new stores sales. The total net sales decrease for the first nine months of fiscal year 2013 includes a decrease in the Stores segment ~~sales~~ of ~~13.2%~~5.3% ~~and~~ ~~9.6%~~ ~~for the~~ ~~second~~ ~~quarter and~~ ~~first six months~~ ~~of fiscal year~~ ~~2013, respectively,~~ as compared to the same ~~periods~~period in fiscal year 2012, which was driven primarily by a ~~decreases~~decrease in comparable store sales, partially offset by sales from new stores. Comparable store sales decreased ~~15.9%~~0.1% and ~~12.7%~~8.5% for the ~~second~~third quarter and first ~~six~~nine months of fiscal year 2013, respectively, as compared to the same periods in fiscal year 2012. ~~This decrease~~The declines in comparable store sales for the ~~second~~third quarter and first ~~six~~nine months of fiscal year 2013 ~~was~~were due primarily to decreased traffic (as measured by number of transactions), partially offset by higher dollars per transaction. Comparable store sales include merchandise and tuxedo rental sales generated in all Company-owned stores that have been open for at least 13 full months.

Direct Marketing segment sales ~~decreased~~increased ~~1.9%~~23.5% and 10.5% for the ~~second~~third quarter and the first nine months of fiscal year 2013, respectively, as compared to the same ~~period~~periods in fiscal year 2012, driven primarily by ~~a decrease~~increases in the Internet channel, which represents the primary portion of this reportable segment. The ~~decrease~~increases in the Internet channel for the ~~second~~third quarter ~~of fiscal year~~ ~~2013~~ ~~was primarily the result of a lower average order value~~ and ~~lower traffic, partially offset by a higher conversion rate. Direct Marketing segment sales increased~~ ~~3.9%~~ ~~for~~ the first ~~six months~~ ~~of fiscal year 2013, as compared to the same period in fiscal year~~ ~~2012, driven primarily by an increase in the Internet channel, as a result of a higher conversion rate, partially offset by a lower average order value and lower traffic. The segment's sales for both the~~ ~~second~~ ~~quarter and~~ ~~first six~~nine months of fiscal year 2013 were ~~also negatively impacted~~primarily the result of higher conversion rates and higher traffic, partially offset by decreases in catalog call center sales. The ongoing trend for customers receiving catalogs is to place their orders over the Internet or go to one of our stores rather than place their orders through the call center.lower average order values.

Combined comparable store and Internet sales in the ~~second~~third quarter of fiscal year 2013 ~~decreased~~increased ~~15.5%~~2.4% when compared to the same period in fiscal year 2012. Combined comparable store and Internet sales in the first ~~six~~nine months of fiscal year 2013 decreased ~~11.9%~~6.4% when compared to the same period in fiscal year 2012.

Of our major product categories, unit sales for the third quarter of fiscal year 2013 grew strongly in the suits category, were essentially flat in the sportswear category and declined in the other tailored clothing (which includes sportscoats, blazers, and dress pants)~~, sportswear~~ and dress shirts ~~categories declined during both~~categories. For the ~~second~~ ~~quarter and~~ first ~~six~~nine months of fiscal year 2013., unit sales for the other clothing, dress shirts, and sportswear categories declined while the suits category had a moderate increase in unit sales.

The following table summarizes store opening and closing activity during the respective periods.


	Three Months Ended				Six Months Ended						Three Months Ended						Nine Months Ended
	July 28, 2012		August 3, 2013		July 28, 2012		August 3, 2013				October 27, 2012		November 2, 2013				October 27, 2012		November 2, 2013
	Stores	Square Feet*	Stores	Square Feet*	Stores	Square Feet*	Stores		Square Feet*		Stores	Square Feet*	Stores		Square Feet*		Stores	Square Feet*	Stores		Square Feet*
Stores open at the beginning of the period	559	2,486	606	2,718	556	2,474	602		2,699		568	2,530	611		2,739		556	2,474	602		2,699
Stores opened	9	44	5	21	12	56	10		43		19	86	18		73		31	142	28		116
Stores closed	—	—	—	—	—	—	(1	)	(3	)	—	—	(1	)	(5	)	—	—	(2	)	(8	)
Stores open at the end of the period	568	2,530	611	2,739	568	2,530	611		2,739		587	2,616	628		2,807		587	2,616	628		2,807

*Square feet are presented in thousands and exclude the square footage of our franchise stores.

Gross profit - Our gross profit represents net sales less cost of goods sold. Cost of goods sold primarily includes the cost of merchandise, tailoring and freight from vendors to the distribution center and from the distribution center to the stores. This gross profit classification may not be comparable to the classification used by certain other entities. Some entities include distribution center costs (including depreciation), store occupancy, buying and other costs in cost of goods sold. Other entities (including us) exclude such costs from gross profit, including them instead in general and administrative and/or sales and marketing expenses.

Gross profit totaled $~~137.4~~142.1 million or ~~59.1%~~57.4% of net sales in the ~~second~~third quarter of fiscal year 2013, as compared with $~~152.9~~132.6 million or ~~58.7%~~57.0% of net sales in the ~~second~~third quarter of fiscal year 2012, ~~a decrease~~an increase in gross profit dollars of approximately $~~15.5~~9.5 million and an increase in the gross profit margin (gross profit as a percent of net sales) of 40 basis points. Gross profit totaled $~~256.6~~398.7 million or ~~59.9%~~59.0% of net sales in the first ~~six~~nine months of fiscal year 2013, as compared with $~~280.6~~413.3 million or ~~60.8%~~59.5% of net sales in the first ~~six~~nine months of fiscal year 2012, a decrease in gross profit dollars of ~~$24.0~~$14.6 million and a decrease in gross profit margin of 9050 basis points. ~~The~~We estimate that approximately half of the gross profit margin increase for the ~~second~~third quarter of fiscal year 2013 was ~~substantially~~due to lower sourcing costs. The remainder of the increase was primarily related to higher net average selling prices driven ~~primarily~~ by ~~less promotional activity and~~ changes in the mix of products sold ~~while sourcing~~and higher alteration revenue and the leveraging of tailoring costs, ~~had nominal~~partially offset by the impact ~~on the gross profit margin change~~of increased promotional activity and higher clearance volumes for certain product categories during the quarter.

The gross profit margin decline for the first ~~six~~nine months of fiscal year 2013 was due primarily to higher sourcing costs and lower average selling prices. The Company incurred higher sourcing costs, primarily in the first quarter, as a result of increased raw material costs for wool and cotton and, to a lesser extent, higher vendor labor costs. We estimate that approximately ~~two-thirds~~half of the decline in gross profit margin in the first ~~six~~nine months was due to these higher sourcing costs. The remainder of the decrease in gross profit margin for the first ~~six~~nine months of fiscal year 2013 was due primarily to lower net average selling prices driven ~~primarily~~ by an increased ~~percentage of sales~~volume of clearance ~~products.~~products and increased promotional activity for certain product categories, partially offset by changes in the mix of products sold.

As stated in our Annual Report on Form 10-K for fiscal year 2012 and within this Form 10-Q, we are subject to certain risks that may affect our gross profit, including risks of doing business on an international basis, ~~increased costs~~the market price of key raw materials (such as wool and cotton) and other ~~resources~~production inputs (such as labor costs) and ~~changes in~~risks associated with domestic and international economic ~~conditions.~~activity and inflation. We expect to continue to be subject to these gross profit risks in the future. Specifically, with respect to the costs of raw materials, our products are manufactured using several key raw materials, most notably wool and cotton. The prices on these commodities, as well as other costs in the supply chain, continue to fluctuate and have a significant impact on our product costs which could potentially have a negative impact on our gross profit in fiscal year 2013. Our gross profit could also be adversely impacted by changes in our mix of products sold. Additionally, our gross profit

margin may be negatively impacted during the development phase of some of our new business initiatives such as the tuxedo rental business and the Factory store concept.

Sales and Marketing Expenses - Sales and marketing expenses consist primarily of a) Full-line Store, Factory store and Direct Marketing occupancy, payroll, selling and other variable selling costs (which include ~~such costs as~~ shipping costs to customers and credit card processing fees) and b) total Company advertising and marketing expenses. Sales and marketing expenses increased to $~~96.6~~101.3 million or ~~41.6%~~40.9% of net sales in the ~~second~~third quarter of fiscal year 2013 from $~~96.2~~94.4 million or ~~36.9%~~40.5% of net sales in the ~~second~~third quarter of fiscal year 2012. Sales and marketing expenses increased to $~~185.3~~286.6 million or ~~43.2%~~42.4% of net sales in the first ~~six~~nine months of fiscal year 2013 from $~~182.0~~276.3 million or ~~39.4%~~39.8% of net sales in the first ~~six~~nine months of fiscal

year 2012. The increase as a percentage of sales for the ~~second~~third quarter and the first ~~six~~nine months of fiscal year 2013 was driven by higher occupancy and Store and Direct Marketing payroll ~~and other variable selling~~ costs as a percentage of sales due primarily to additional expenses related to new stores opened in fiscal years 2013 and 2012 and the ~~decline in~~weaker sales during those periods. In addition, other variable selling costs increased as a percentage of sales during those periods due primarily to higher shipping costs to customers driven largely by the growth in the Direct Marketing business. The unfavorable impact of these costs was partially offset by lower advertising and marketing as a percentage of sales.

The ~~increase in~~components of the sales and marketing ~~expenses relates primarily to~~expense increases of $6.9 million for the ~~opening of~~ 43 ~~new stores (net of stores closed) since~~third quarter and $10.3 million for the ~~end of the~~ ~~second~~ ~~quarter of fiscal year~~ ~~2012. For the~~ ~~second~~ ~~quarter~~first nine months of fiscal year 2013~~, the net increase of approximately~~ are as follows.



	Fiscal Year 2013 Compared to Fiscal Year 2012
	Three Months Ended			Nine Months Ended
	(In millions)
Occupancy Costs	$	2.7		$	8.2
Advertising & Marketing Costs	(0.7		)	(5.7		)
Selling Payroll Costs, Including Benefits	2.9			5.3
Other Variable Selling Costs	2.0			2.5
Total	$	6.9		$	10.3

~~$0.4 million~~ ~~compared with the~~ ~~second~~ ~~quarter of fiscal year~~ ~~2012~~ consists of a) $2.8 million related to additional occupancy costs, and b) $1.2 million related to additional Stores and Direct Marketing payroll and benefits costs, partially offset by c) $3.1 million related to lower advertising and marketing costs, and d) $0.5 million related to lower other variable selling costs. For the ~~first six months~~ ~~of fiscal year~~ ~~2013~~, the increase of approximately $3.3 million consists of a) $5.5 million related to additional occupancy costs, b) $2.3 million related to additional Stores and Direct Marketing payroll and benefits costs, and c) $0.5 million related to additional other variable selling costs, partially offset by d) $5.0 million related to lower advertising and marketing costs. We expect sales and marketing expenses to increase for the remainder of fiscal year 2013 as compared to the same period of fiscal year 2012 primarily as a result of our anticipated opening of approximately 30 to 35 new stores in fiscal year 2013, the full year operation of stores that were opened during fiscal year 2012 and costs related to new business initiatives, partially offset by lower expected advertising costs.

General and Administrative Expenses - General and administrative (“G&A”) expenses, which consist primarily of corporate and distribution center costs, were $~~17.6~~19.3 million and $~~19.6~~17.1 million for the ~~second~~third quarter of fiscal years 2013 and 2012, respectively. G&A expenses were $~~35.1~~54.4 million for the first ~~six~~nine months of fiscal year 2013 compared to $~~37.2~~54.3 million for the first ~~six~~nine months of fiscal year 2012. As a percent of net sales, G&A expenses were ~~7.6%~~7.8% and ~~7.5%~~7.4% for the ~~second~~third quarter of fiscal years 2013 and 2012, respectively, and ~~8.2%~~8.0% and ~~8.1%~~7.8% for the first ~~six~~nine months of fiscal year 2013 and 2012, respectively. The higher level of expenses as a percentage of net sales for the ~~second~~third quarter ~~and the~~ ~~first six months~~ ~~of fiscal year~~ ~~2013~~ was driven primarily by higher ~~corporate overhead, distribution center costs~~professional fees and ~~professional~~outsourced services ~~costs, partially offset by lower~~and higher corporate compensation (which includes benefit costs and total company performance based incentive compensation other than commissions) as a percentage of net ~~sales.~~

~~For the~~ ~~second~~ ~~quarter of fiscal year~~ ~~2013, the net decrease in G&A expenses of~~ ~~$2.0 million~~ ~~compared with the~~ ~~second~~ ~~quarter of fiscal year~~ ~~2012~~ ~~was primarily driven by lower corporate compensation (which includes total company performance based incentive compensation other than commissions) and group medical costs of $2.5 million,~~sales, partially offset by ~~higher~~lower distribution center and other corporate overhead costs as a percentage of ~~$0.3 million,~~net sales. The higher ~~professional services costs~~level of ~~$0.1 million and higher distribution center costs~~expenses as a percentage of ~~$0.1 million. For~~net sales for the first ~~six~~nine months of fiscal year 2013, was driven primarily by higher professional fees and outsourced services and other corporate overhead costs as a percentage of net sales, partially offset by lower corporate compensation as a percentage of net sales.

The components of the ~~decrease~~G&A expense increase of ~~approximately $2.1~~$2.2 million ~~in G&A expenses compared with~~for the third quarter of fiscal year 2013 and the increase of $0.1 million for the first nine months of fiscal year 2013 are as follows.



	Fiscal Year 2013 Compared to Fiscal Year 2012
	Three Months Ended		Nine Months Ended
	(In millions)
Corporate Compensation, Including Benefits	$	0.7	$	(1.8	)
Distribution Center Costs	0.3		0.4
Professional Fees & Outsourced Services	1.1		1.2
Other Corporate Overhead Costs	0.1		0.3
Total	$	2.2	$	0.1

The higher professional fees and outsourced services costs for the third quarter and the first ~~six~~nine months of fiscal year 2013 compared to the same periods of fiscal year 2012 ~~was~~ were primarily ~~driven by lower corporate compensation~~due to $1.2 million of expenses for legal and ~~group medical costs of $2.5 million, partially offset by higher~~ other ~~corporate overhead costs of $0.2 million, higher~~ professional services ~~costs~~related to The Men’s Wearhouse Proposal during the third quarter of ~~$0.1 million, and higher distribution center costs of $0.1 million.~~fiscal year 2013. G&A expenses may increase for the remainder of fiscal year 2013 as compared to the same period of fiscal year 2012 depending on the growth of the business and costs related to potential strategic activities in the ~~second half~~remainder of the year.

Other Income (Expense) - Other income (expense), which is comprised solely of net interest income, for each of the ~~second~~third quarter of fiscal years 2013 and 2012 was $0.1 million of income. Other income (expense) for each of the first ~~six~~nine months of fiscal ~~year~~years 2013 and 2012 was $0.3 million of income. The nearly flat levels of net interest income in fiscal year 2013 compared to~~$0.2 million~~ ~~of income, respectively, for the~~ ~~first six months~~ of ~~2012. The improvement over~~ fiscal year 2012 ~~was~~were primarily due to ~~higher interest rates and~~ higher average cash and short-term investment ~~balances.~~balances, offset by slightly lower interest rates. Our net interest income is primarily a result of earnings from investments in short-term treasury bills and overnight federally-sponsored agency notes.

Income Taxes- The effective income tax rate for the ~~second~~third quarter of fiscal year 2013 was ~~38.6%~~37.0% as compared to ~~37.8%~~37.5% for the ~~second~~third quarter of fiscal year 2012. For the first ~~six~~nine months of fiscal year 2013, the effective tax rate was ~~38.5%~~38.0% compared with ~~38.4%~~38.2% for the same period of fiscal year 2012. The ~~increase in the~~lower effective rate for the first ~~six~~nine months of fiscal year 2013 as compared to the same period of fiscal year 2012 was driven by ~~higher state income taxes, partially offset by~~ lower expense related to the liability for unrecognized benefits in fiscal year 2013 ~~compared to fiscal year~~ ~~2012~~., partially offset by higher state income taxes.

Seasonality - Our net sales, net income and inventory levels fluctuate on a seasonal basis and therefore the results for one quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. The increased customer traffic during the holiday season and our increased marketing efforts during this peak selling season have historically resulted in sales and profits generated during the fourth quarter being the largest quarter of annual sales and profits as compared to the other three quarters. Seasonality is also impacted by growth as more new stores have historically been opened in the second half of the year. During the fourth quarters of fiscal years 2010, 2011 and 2012, we generated approximately 37%, 35% and 34%, respectively, of our annual net sales and approximately 48%, 45% and 36%, respectively, of our annual net income.

Liquidity and Capital Resources - Our principal sources of liquidity are our cash from operations, cash and cash equivalents and short-term investments. These sources of liquidity are used for our ongoing cash requirements.

The following table summarizes our sources and uses of funds as reflected in the Condensed Consolidated Statements of Cash Flows:


	Six Months Ended						Nine Months Ended
	July 28, 2012			August 3, 2013			October 27, 2012			November 2, 2013
	(In thousands)						(In thousands)
Cash provided by (used in):
Operating activities	$	(23,296	)	$	(31,381	)	$	(29,636	)	$	(14,527	)
Investing activities	(5,087		)	3,929			(28,656		)	28,793
Financing activities	(149		)	(531		)	(6		)	(531		)
Net increase (decrease) in cash and cash equivalents	$	(28,532	)	$	(27,983	)	$	(58,298	)	$	13,735

Our cash and cash equivalents consist primarily of U.S. Treasury bills with original maturities of 90 days or less and overnight federally-sponsored agency notes. Our short-term investments consist of U.S. Treasury bills with remaining maturities of less than one year, excluding investments with original maturities of 90 days or less. The following table summarizes our cash and cash equivalents and short-term investments and debt balances as of the respective period ends:


	July 28, 2012		February 2, 2013		August 3, 2013		October 27, 2012		February 2, 2013		November 2, 2013
	(In thousands)						(In thousands)
Cash and cash equivalents	$	58,698	$	71,288	$	43,305	$	28,932	$	71,288	$	85,023
Short-term investments	233,509		305,833		289,873		246,485		305,833		254,922
Total	$	292,207	$	377,121	$	333,178	$	275,417	$	377,121	$	339,945

Long-term debt	$	—	$	—	$	—	$	—	$	—	$	—

The significant changes in sources and uses of funds through ~~August 3,~~November 2, 2013 are discussed below.

Cash used in our operating activities of $~~31.4~~14.5 million in the first ~~six~~nine months of fiscal year 2013 was primarily the result of an increase in operating working capital and other components of $~~68.4~~73.4 million, partially offset by net income of $~~22.3~~36.0 million and depreciation and amortization and other non-cash items of $~~14.7~~22.9 million. The increase in operating working capital and other components included the following:

an increase in inventory of $~~34.1~~38.1 million primarily as a result of the replenishment of units sold in fiscal 2012 and the opening of new stores;

19a decrease in accounts payable of $13.2 million due primarily to the timing of payments to vendors;

a reduction in accrued expenses totaling $~~13.1~~10.9 million (excluding accrued property, plant and equipment) related primarily to the payment of advertising costs that had been accrued at the end of fiscal year 2012;

~~a decrease in accounts payable of~~ ~~$13.3 million~~ ~~due primarily to the timing of payments to vendors;~~ and

an increase in accounts receivable of $~~7.4~~6.6 million due primarily to higher credit card receivables from transactions through American Express, MasterCard and Visa as a result of increased sales near the end of the ~~second~~third quarter of fiscal year 2013 as compared with the end of fiscal year 2012.

Accounts payable represent all short-term liabilities for which we have received a vendor invoice prior to the end of the reporting period. Accrued expenses represent all other short-term liabilities related to, among other things, vendors from whom invoices have not been received, employee compensation, federal and state income taxes and unearned gift cards and gift certificates.

Cash provided by investing activities of $~~3.9~~28.8 million for the first ~~six~~nine months of fiscal year 2013 relates to ~~$15.9~~$50.9 million of net proceeds from short-term investments, partially offset by $~~12.0~~22.1 million of payments for capital expenditures, as described below.

Cash used in financing activities of $0.5 million relates primarily to tax payments associated with equity compensation plans.

We spent approximately $22.1 million on capital expenditures in the first nine months of fiscal year 2013 primarily related to payments for the stores opened or constructed during the first nine months of the fiscal year in addition to expenditures related to systems infrastructure projects and the expansion and maintenance of our distribution capacity. Also, capital expenditures for the period include payments for property, plant and equipment additions accrued at fiscal year-end 2012 for amounts that were incurred but not invoiced by vendors related to stores opened. For the stores opened, renovated and relocated in the first nine months of fiscal year 2013, we negotiated approximately $4.1 million of landlord contributions. The table below summarizes the landlord contributions that were negotiated and collected related to the stores opened, renovated and relocated in fiscal years 2013 and 2012.



	Negotiated Amounts		Amounts Collected in Fiscal Year 2012		Amounts Collected in Fiscal Year 2013		Amounts Outstanding November 2, 2013
	(In thousands )
Full Fiscal Year 2012 Store Openings (46 Stores), Renovations and Relocations	$	6,351	$	3,645	$	2,706	$	—
First Nine Months of Fiscal Year 2013 Store Openings (28 Stores), Renovations and Relocations	4,095		—		955		3,140
	$	10,446	$	3,645	$	3,661	$	3,140

Substantially all of the outstanding amounts of the landlord contributions for the stores opened, renovated and relocated in fiscal year 2013 are expected to be received within the next 12 months.

For fiscal year 2013, we expect to spend approximately $3435 million to $3736 million on capital expenditures, primarily to fund the anticipated opening of approximately 30 to 35 new stores, the renovation and/or relocation of several stores, the implementation of various systems and infrastructure projects and the expansion and maintenance of our distribution capacity. In addition, these capital expenditures include payments for property, plant and equipment additions accrued at the end of fiscal year 2012 primarily related to stores opened in fiscal year 2012 and exclude amounts for that portion of property, plant and equipment additions in fiscal year 2013 which are not expected to be paid until fiscal year 2014.

The capital expenditures include the cost of the construction of leasehold improvements for new stores and ~~several stores to be~~ renovated or relocated stores, of which approximately $~~4.0 million~~ to ~~$4.5~~4.2 million is expected to be reimbursed through landlord contributions. These amounts are typically paid by the landlords after we complete construction and receive the appropriate lien waivers from contractors.

~~We spent approximately~~ ~~$12.0 million~~ ~~on capital expenditures in the~~ ~~first six months~~ ~~of fiscal year~~ ~~2013~~ ~~primarily related to payments for the stores opened or being constructed during the~~ ~~first six months~~ ~~of the fiscal year. In addition, capital expenditures for the period include payments for property, plant and equipment additions accrued at fiscal year-end~~ ~~2012~~ ~~related to stores opened. For the stores opened, renovated and relocated in the~~ ~~first six months~~ ~~of fiscal year~~ ~~2013, we negotiated approximately~~ ~~$1.8 million~~ ~~of landlord contributions. The table below summarizes the landlord contributions that were negotiated and collected related to the stores opened, renovated and relocated in fiscal years~~ ~~2013~~ ~~and~~ ~~2012~~.

Negotiated
Amounts

Amounts
Collected in
Fiscal Year
2012

Amounts
Collected in
Fiscal Year
2013

Amounts
Outstanding
August 3,
2013
(In thousands )
Full Fiscal Year 2012 Store Openings (46 Stores), Renovations and Relocations $ 6,351
$ 3,645
$ 2,706
$ —
First Six Months of Fiscal Year 2013 Store Openings (10 Stores), Renovations and Relocations 1,803
—
477
1,326
$ 8,154
$ 3,645
$ 3,183
$ 1,326

~~Substantially all of the outstanding amounts of the landlord contributions for the stores opened, renovated and relocated in fiscal year~~ ~~2013~~ ~~are expected to be received within the next 12 months.~~

Management believes that our cash from operations, existing cash and cash equivalents and short-term investments will be sufficient to fund our planned capital expenditures and operating expenses through at least the next 12 months.

Off-Balance Sheet Arrangements - We have no off-balance sheet arrangements other than our operating lease agreements.

Effects of Inflation and Changing Prices

Inflation and changing prices could have a material adverse impact on our operations, financial condition and results of operations, especially with respect to our product costs which are largely driven by cotton and wool prices and other production inputs ~~such~~(such as labor costs, which are largely tied to the labor markets and economies of the various countries in which our vendors are ~~located.~~located). In general, we will attempt, over time, to increase prices to largely counteract the increasing costs due to inflation. However there is no assurance that our customers will accept such higher prices, especially over a short-term period.

Tabular Disclosure of Contractual Obligations

Our principal commitments are non-cancelable operating leases ~~( related~~(related to our our retail stores, certain tailoring facilities and equipment) and inventory purchase commitments. Under the terms of certain of the retail store leases, we are required to pay a base annual rent, plus a contingent amount based on sales (“contingent rent”). In addition, many of these leases include scheduled rent increases. Base annual rent and scheduled rent increases are included in the contractual obligations table below for operating leases, as these are the only rent-related commitments that are determinable at this time.

The following table reflects a summary of our contractual cash obligations and other commercial commitments for the periods indicated, including amounts paid in the first ~~six~~nine months of fiscal year 2013, except for inventory purchase commitments, which reflect only future amounts.


Contractual Obligations and Commercial Commitments	Payments Due by Period										Payments Due by Period
	(In thousands)										(In thousands)
	2013		2014 - 2016		2017-2018		Beyond 2018		Total^(f)		2013		2014 - 2016		2017 - 2018		Beyond 2018		Total^(f)
Operating lease obligations ^{(a) (b)}	$	77,587	$	200,986	$	89,886	$	102,414	$	470,873	$	75,457	$	209,466	$	96,827	$	112,061	$	493,811
Inventory purchase commitments ^(c)	184,175		35,049		—		—		219,224		87,659		142,681		—		—		230,340
Related party agreement ^(d)	825		1,650		—		—		2,475		825		1,650		—		—		2,475
License agreement ^(e)	165		330		—		—		495		165		330		—		—		495
Total	262,752		238,015		89,886		102,414		693,067		164,106		354,127		96,827		112,061		727,121

___________________________


(a)	Includes various lease agreements signed prior to ~~August 3,~~November 2, 2013 for stores to be opened and equipment placed in service subsequent to ~~August 3,~~November 2, 2013.


(b)	Excludes contingent rent and other lease costs.


(c)	Represents the value of expected future inventory purchases for receipts through fiscal year 2014 for which purchase orders have been issued or other commitments have been made to vendors as of ~~August 3,~~November 2, 2013.


(d)	Relates to a consulting agreement with our current Chairman of the Board to consult on matters of strategic planning and initiatives.


(e)	Relates to an agreement with David Leadbetter, a golf professional, which allows us to produce golf and other apparel under his name.


(f)	The total does not include obligations for unrecognized tax benefits and related penalties and interest of $~~0.6~~0.3 million which have been excluded from the above table as the amount to be settled in cash and the specific payment dates are not known.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

At ~~August 3,~~November 2, 2013, we were not a party to any derivative financial instruments. We do business with all of our product vendors in U.S. currency and do not have direct foreign currency risk. However, a devaluation of the U.S. dollar against the foreign currencies of our suppliers could have a material adverse effect on our product costs and resulting gross profit. We currently invest substantially all of our excess cash in short-term investments, primarily in U.S. Treasury bills with original maturities of less than one year, overnight federally-sponsored agency notes and money market accounts, where returns effectively reflect current interest rates. As a result, market interest rate changes may impact our net interest income or expense. The impact will depend on variables such as the magnitude of rate changes and the level of excess cash balances. A 100 basis point change in interest rates would have changed interest income by approximately $3.1 million in fiscal year 2012.


Item 4.	Controls and Procedures

Limitations on Control Systems. Because of their inherent limitations, disclosure controls and procedures and internal control over financial reporting (collectively, “Control Systems”) may not prevent or detect all failures or misstatements of the type sought to be avoided by Control Systems. Also, projections of any evaluation of the effectiveness of our Control Systems to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management, including our Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), does not expect that our Control Systems will prevent all errors or all fraud. A Control System, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the Control System are met. Further, the design of a Control System must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all Control Systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Reports by management, including the CEO and CFO, on the effectiveness of our Control Systems express only reasonable assurance of the conclusions reached.

Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities 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 management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Management, with the participation of the CEO and CFO, has evaluated the effectiveness, as of ~~August 3,~~November 2, 2013, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures were effective as of ~~August 3,~~November 2, 2013.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Section 240.13a-15 of the Exchange Act that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings

temporary price reductions violate the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform

Deceptive Trade Practices Act. The Original Camasta Complaint seeks, among other relief, certification of the case as a class action, actual and punitive damages, attorney fees and costs and injunctive relief. On February 7, 2013, upon the motion of the Company, the said U.S. District Court issued a Memorandum Opinion and Order dismissing the Original Camasta Complaint in its entirety, without prejudice. On March 1, 2013, Camasta filed a First Amended Class Action Complaint in the said United States District Court making substantially the same allegations as in the Original Camasta Complaint. On July 25, 2013, upon the motion of the Company, the said U.S. District Court issued a Memorandum Opinion and Order dismissing the First Amended Class Action Complaint in its entirety, with prejudice. Camasta has appealed the dismissal to the United States Court of Appeals for the Seventh Circuit.


Item 1A.	Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed under the caption “Item 1A. Risk Factors” in our Annual Report on Form 10-K for fiscal year 2012, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K for fiscal year 2012 are not the only risks facing us. Additional risks and uncertainties, including those not currently known to us or that we currently deem to be immaterial also could materially adversely affect our business, financial condition and/or operating results. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for fiscal year 2012 except for the following:

We rely heavily on a limited number of key suppliers, the loss of any of which could cause a significant disruption to our business and negatively affect our business.

Historically, we have purchased a substantial portion of our products from a limited number of suppliers throughout the world. During fiscal year 2012, approximately 53% of our total product purchases were sourced through a single buying agent and we expect to continue this relationship in fiscal year 2013 and beyond. In addition, four individual suppliers each provided over 5% of our product purchases in fiscal year 2012 for a combined total of approximately 38% of our total product purchases. The loss of this buying agent or any of these key suppliers or any significant interruption in our product supply, such as manufacturing problems or shipping delays, could have an adverse effect on our business due to lost sales, excessive markdowns or delays in finding alternative sources, and could result in increased costs. In addition, the current economic conditions, including decreased access to credit, may result in financial difficulties leading to restructurings, liquidations and other unfavorable events for industry suppliers. Key vendors may also be affected by natural disasters such as earthquakes, tsunamis and flooding which could adversely impact their operations. These suppliers may not be able to overcome any such difficulties which could lead to interruptions in our product supply and could also lead to increases in the costs that we pay for our products as any surviving suppliers could be in better positions to increase their prices.

In late May 2013, our second largest vendor (representing approximately 10% of our total purchases in fiscal year 2012) suffered a fire at one of its production facilities. In fiscal year 2012, approximately 6% of our total purchases were produced at the affected facility. As a result of this fire, through at least ~~early~~the first quarter of fiscal year 2014, we anticipate a disruption in the supply of goods which had previously been produced at the affected facility. We are attempting to mitigate the impact of this disruption by utilizing alternative vendors and by taking the disruption into account when managing our existing supply of affected inventory. We do not currently expect that the supply disruption will have a significant negative impact on our business. However, if our mitigation efforts are not successful, if the disruption lasts longer than expected or if there is a significant disruption of supply from any of our other vendors, our business, financial condition and results of operations could be materially, adversely affected.

Our advertising, marketing and promotional activities are highly regulated.

Our operations are subject to various federal and state consumer protection laws and regulations related to our advertising, marketing and promotional activities. We continue to be subject to a consent decree entered into in 2004 mandating certain advertising practices relating to sales promotions in the state of New York (the “Existing Assurance”). We received from the New York Office of the Attorney General (the "New York OAG") a letter dated April 25, 2011, requesting certain documents needed to evaluate our compliance with New York state law and the Existing Assurance. By letter dated November 15, 2011, the New York OAG proposed to resolve its investigation by having the Company enter into a new assurance of discontinuance (the "Proposed Assurance") which would, among other things, mandate certain more specific advertising practices relating to sales promotions in the state of New York. We have communicated to the New York OAG our response to the Proposed Assurance.

On August 4, 2011, the State of Georgia Governor's Office of Consumer Protection (the “Georgia OCP”) issued an investigative demand directing that we produce certain items in connection with an investigation being conducted on behalf of the Administrator of the Georgia Fair Business Practices Act (the “FBPA”). On June 27, 2012, the Georgia OCP issued a Notice of Contemplated Legal Action for alleged violations of the FBPA. The Notice stated that the Administrator of the FBPA may accept an Assurance of Voluntary Compliance in lieu of initiating any legal action. We subsequently met with the Georgia OCP and have produced additional information at its request.

In July 2012, we received a subpoena from the Florida Attorney General requiring the production of certain information relating to our advertising and sales promotion practices. Based on the data we provided, the assistant attorneys general handling the matter recommended that the case be administratively closed.

In December 2013, we received a subpoena from the Ohio Attorney General requiring the production of certain information relating to our advertising and marketing practices. We have not yet engaged with the Ohio Attorney General regarding the subpoena.

We endeavor to monitor and comply with all applicable laws and regulations (including the Existing Assurance) to ensure that our advertising, marketing and promotional activities comply with all applicable legal requirements, many of which involve subjective judgments. It is possible that any resolution which we may reach with any governmental authority may materially impact our current marketing program. Any changes in such laws or regulations or how such laws or regulations are enforced (including resolution of any existing or future governmental action), or any failure to comply with such laws or regulations could have a material adverse effect on our business, financial condition and results of operations. Additionally, inconsistent or conflicting regulations among states relating to advertising, marketing and promotional activities could make it difficult to craft and implement national advertising and promotional campaigns.


Item 6.	Exhibits

Exhibits



31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
32.1		Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
32.2		Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

SIGNATURE

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.



		Jos. A. Bank Clothiers, Inc. (Registrant)
Dated:	~~September~~December 5, 2013	/s/ DAVID E. ULLMAN
		David E. Ullman
		Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer)

Exhibit Index

Exhibits



31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
32.1		Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
32.2		Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.