REPORT INDEX


Part and Item No.		Page ~~No.~~No.

PART I — Financial Information

Item 1 — Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of October 29, 2016, October 31, 2015 ~~November 1, 2014~~ and January ~~31, 2015~~30, 2016		2

Condensed Consolidated Statements of Earnings (Loss) ~~Earnings~~ for the Three and Nine Months Ended October 29, 2016 and October 31, 2015 ~~and November 1, 2014~~		3

Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ for the Three and Nine Months Ended October 29, 2016 and October 31, 2015 ~~and November 1, 2014~~		4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 29, 2016 and October 31, 2015 ~~and November 1, 2014~~		5

Notes to Condensed Consolidated Financial Statements		6

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		27 29

Item 3 — Quantitative and Qualitative Disclosures about Market Risk		41 42

Item 4 — Controls and Procedures		42

PART II — Other Information

Item 1 — Legal Proceedings		42 43

Item 1A — Risk Factors		42 43

Item 6 — Exhibits		42 43

SIGNATURES		43 44

~~THE MEN’S WEARHOUSE,~~

PART I – FINANCIAL INFORMATION

ITEM 1 – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

October 31,
2015

November 1,
2014

January 31,
2015

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$
53,654

$
64,716

$
62,261

Accounts receivable, net

66,902

84,054

73,266

Inventories

1,060,247

1,082,354

938,336

Other current assets

168,071

107,107

169,809

Total current assets

1,348,874

1,338,231

1,243,672

PROPERTY AND EQUIPMENT, net

548,481

569,779

566,074

RENTAL PRODUCT, net

147,344

129,579

132,672

GOODWILL

890,991

892,766

887,936

INTANGIBLE ASSETS, net

568,171

673,057

668,259

OTHER ASSETS

8,518

10,032

9,599

TOTAL ASSETS

$
3,512,379

$
3,613,444

$
3,508,212

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$
233,520

$
263,645

$
209,867

Accrued expenses and other current liabilities

264,978

283,271

268,935

Income taxes payable

14,233

13,590

1,609

Current maturities of long-term debt

7,000

11,000

11,000

Total current liabilities

519,731

571,506

491,411

LONG-TERM DEBT, net

1,649,206

1,638,606

1,637,686

DEFERRED TAXES AND OTHER LIABILITIES

358,059

367,612

409,326

Total liabilities

2,526,996

2,577,724

2,538,423

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY:

Preferred stock

—

—

—

Common stock

485

481

482

Capital in excess of par

452,666

435,755

440,907

Retained earnings

541,672

581,956

537,263

Accumulated other comprehensive (loss) income

(6,356
)
20,829

(5,671
)
Treasury stock, at cost

(3,084
)
(3,301
)
(3,192
)

Total shareholders’ equity

985,383

1,035,720

969,789

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$
3,512,379

$
3,613,444

$
3,508,212


	October 29,		October 31,		January 30,
	2016		2015		2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	34,948	$	53,654	$	29,980
Accounts receivable, net		71,898		66,902		63,890
Inventories		1,047,915		1,060,247		1,022,504
Other current assets		60,190		168,071		143,546
Total current assets		1,214,951		1,348,874		1,259,920
PROPERTY AND EQUIPMENT, net		501,391		548,481		521,824
RENTAL PRODUCT, net		160,101		147,344		157,460
GOODWILL		116,026		890,991		118,586
INTANGIBLE ASSETS, net		172,337		568,171		178,510
OTHER ASSETS		10,323		8,518		8,019
TOTAL ASSETS	$	2,175,129	$	3,512,379	$	2,244,319
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable	$	200,199	$	233,520	$	237,114
Accrued expenses and other current liabilities		280,658		265,993		256,762
Income taxes payable		917		13,218		—
Current portion of long-term debt		7,000		7,000		42,451
Total current liabilities		488,774		519,731		536,327
LONG-TERM DEBT, net		1,588,873		1,649,206		1,613,473
DEFERRED TAXES AND OTHER LIABILITIES		175,179		358,059		194,605
Total liabilities		2,252,826		2,526,996		2,344,405
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY:
Preferred stock		—		—		—
Common stock		487		485		485
Capital in excess of par		466,817		452,666		455,765
(Accumulated deficit) retained earnings		(499,663)		541,672		(524,876)
Accumulated other comprehensive loss		(45,338)		(6,356)		(28,486)
Treasury stock, at cost		—		(3,084)		(2,974)
Total shareholders' (deficit) equity		(77,697)		985,383		(100,086)
TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY	$	2,175,129	$	3,512,379	$	2,244,319

See Notes to Condensed Consolidated Financial Statements.

2

Table of Contents

~~THE MEN’S WEARHOUSE,~~

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) ~~EARNINGS~~

(In thousands, except per share data)

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended				For the Nine Months Ended
	October 31, 2015			November 1, 2014			October 31, 2015			November 1, 2014			October 29, 2016		October 31, 2015		October 29, 2016		October 31, 2015
Net sales:
Retail clothing product	$	615,874		$	634,447		$	1,931,926		$	1,598,199		$	575,046	$	615,874	$	1,806,660	$	1,931,926
Rental services	132,443			132,690			392,621			395,449				138,724		132,443		403,564		392,621
Alteration and other services	53,070			52,025			160,024			135,585				49,919		53,070		149,888		160,024
Total retail sales	801,387			819,162			2,484,571			2,129,233				763,689		801,387		2,360,112		2,484,571
Corporate apparel clothing product	64,059			71,475			186,038			194,956				83,245		64,059		225,328		186,038
Total net sales	865,446			890,637			2,670,609			2,324,189				846,934		865,446		2,585,440		2,670,609

Cost of sales:
Retail clothing product	274,348			287,309			850,782			722,140				247,978		274,348		796,215		850,782
Rental services	21,431			33,538			62,866			75,083				22,958		21,431		65,943		62,866
Alteration and other services	36,260			37,173			109,528			97,794				33,526		36,260		104,085		109,528
Occupancy costs	114,629			114,325			341,980			282,595				108,923		114,629		327,673		341,980
Total retail cost of sales	446,668			472,345			1,365,156			1,177,612				413,385		446,668		1,293,916		1,365,156
Corporate apparel clothing product	45,787			49,087			132,229			135,466				56,343		45,787		152,173		132,229
Total cost of sales	492,455			521,432			1,497,385			1,313,078				469,728		492,455		1,446,089		1,497,385

Gross margin:
Retail clothing product	341,526			347,138			1,081,144			876,059				327,068		341,526		1,010,445		1,081,144
Rental services	111,012			99,152			329,755			320,366				115,766		111,012		337,621		329,755
Alteration and other services	16,810			14,852			50,496			37,791				16,393		16,810		45,803		50,496
Occupancy costs	(114,629		)	(114,325		)	(341,980		)	(282,595		)		(108,923)		(114,629)		(327,673)		(341,980)
Total retail gross margin	354,719			346,817			1,119,415			951,621				350,304		354,719		1,066,196		1,119,415
Corporate apparel clothing product	18,272			22,388			53,809			59,490				26,902		18,272		73,155		53,809
Total gross margin	372,991			369,205			1,173,224			1,011,111				377,206		372,991		1,139,351		1,173,224

Advertising expense	47,991			42,075			143,628			109,072				45,656		47,991		138,547		143,628
Selling, general and administrative expenses	271,301			281,955			822,485			786,879				270,494		271,301		849,122		822,485
Tradename impairment charge	90,100			—			90,100			—				—		90,100		—		90,100
Operating (loss) income	(36,401		)	45,175			117,011			115,160
Operating income (loss)														61,056		(36,401)		151,682		117,011
Interest income	50			125			140			305				52		50		102		140
Interest expense	(26,457		)	(25,131		)	(79,475		)	(39,459		)		(25,476)		(26,457)		(77,853)		(79,475)
Loss on extinguishment of debt	—			—			(12,675		)	(2,158		)
(Loss) earnings before income taxes	(62,808		)	20,169			25,001			73,848
(Benefit) provision for income taxes	(35,654		)	13,168			(5,993		)	38,021

Net (loss) earnings including non-controlling interest	(27,154		)	7,001			30,994			35,827
Net earnings attributable to non-controlling interest	—			(208		)	—			(292		)

Net (loss) earnings attributable to common shareholders	$	(27,154	)	$	6,793		$	30,994		$	35,535

Net (loss) earnings per common share allocated to common shareholders:
Gain (loss) on extinguishment of debt, net														1,808		—		1,737		(12,675)
Earnings (loss) before income taxes														37,440		(62,808)		75,668		25,001
Provision (benefit) for income taxes														9,007		(35,654)		20,623		(5,993)
Net earnings (loss)													$	28,433	$	(27,154)	$	55,045	$	30,994
Net earnings (loss) per common share allocated to common shareholders:
Basic	$	(0.56	)	$	0.14		$	0.64		$	0.74		$	0.58	$	(0.56)	$	1.13	$	0.64
Diluted	$	(0.56	)	$	0.14		$	0.64		$	0.74		$	0.58	$	(0.56)	$	1.13	$	0.64

Weighted-average common shares outstanding:
Basic	48,339			48,009			48,258			47,852				48,655		48,339		48,570		48,258
Diluted	48,339			48,254			48,513			48,124				48,812		48,339		48,691		48,513

Cash dividends declared per common share	$	0.18		$	0.18		$	0.54		$	0.54		$	0.18	$	0.18	$	0.54	$	0.54

See Notes to Condensed Consolidated Financial Statements.

3

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~~THE MEN’S WEARHOUSE,~~

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

(In thousands)

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

October 31,
2015

November 1,
2014

October 31,
2015

November 1,
2014

Net (loss) earnings including non-controlling interest

$
(27,154
)
$
7,001

$
30,994

$
35,827

Currency translation adjustments

(2,024
)
(12,872
)
(378
)
(6,881
)

Unrealized loss on cash flow hedge, net of tax

(222
)
—

(307
)
—

Settlement of cash flow hedge, net of tax

—

—

—

399

Comprehensive (loss) income including non-controlling interest

(29,400
)
(5,871
)
30,309

29,345

Comprehensive income attributable to non-controlling interest:

Net earnings

—

(208
)
—

(292
)

Currency translation adjustments

—

321

—

—

Amounts attributable to non-controlling interest

—

113

—

(292
)

Comprehensive (loss) income attributable to common shareholders

$
(29,400
)
$
(5,758
)
$
30,309

$
29,053


	For the Three Months Ended				For the Nine Months Ended
	October 29,		October 31,		October 29,		October 31,
	2016		2015		2016		2015

Net earnings (loss)	$	28,433	$	(27,154)	$	55,045	$	30,994
Currency translation adjustments		(15,075)		(2,024)		(18,246)		(378)
Unrealized gain (loss) on cash flow hedges, net of tax		948		(222)		1,394		(307)
Comprehensive income (loss)	$	14,306	$	(29,400)	$	38,193	$	30,309

See Notes to Condensed Consolidated Financial Statements.

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~~THE MEN’S WEARHOUSE,~~

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


							For the Nine Months Ended
	For the Nine Months Ended						October 29,		October 31,
	October 31, 2015			November 1, 2014			2016		2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings including non-controlling interest	$	30,994		$	35,827
Net earnings							$	55,045	$	30,994
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	98,162			80,622				87,838		98,162
Rental product amortization	30,496			30,038				35,982		30,496
Tradename impairment charge	90,100			—				—		90,100
Loss on extinguishment of debt	12,675			2,158
(Gain) loss on extinguishment of debt, net								(1,737)		12,675
Amortization of deferred financing costs	5,151			3,014				4,922		5,151
Amortization of discount on long-term debt	848			589				728		848
Loss (gain) on disposition of assets								616		(833)
Asset impairment charges								4,293		1,695
Share-based compensation	12,614			12,254				13,958		12,614
Excess tax benefits from share-based plans	(1,104		)	(3,736		)		—		(1,104)
(Gain) loss on disposition of assets	(833		)	12,247
Asset impairment charges	1,695			302
Deferred tax benefit	(61,108		)	(25,763		)		(13,233)		(61,108)
Deferred rent expense and other	3,141			2,914				(1,281)		3,141
Changes in operating assets and liabilities:
Accounts receivable	7,116			(14,430		)		(13,273)		7,116
Inventories	(122,294		)	(158,449		)		(32,833)		(122,294)
Rental product	(45,704		)	(27,587		)		(37,817)		(45,704)
Other assets	6,210			14,133				84,844		6,210
Accounts payable, accrued expenses and other current liabilities	28,763			76,565				(4,314)		29,778
Income taxes payable	14,372			16,725				(2,065)		13,357
Other liabilities	942			1,594				(4,789)		942

Net cash provided by operating activities	112,236			59,017				176,884		112,236

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(86,406		)	(72,397		)		(80,550)		(86,406)
Acquisition of business, net of cash	—			(1,491,393		)
Proceeds from sales of property and equipment	2,613			160				605		2,613

Net cash used in investing activities	(83,793		)	(1,563,630		)		(79,945)		(83,793)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from new term loan	—			1,089,000
Payments on new term loan	(6,250		)	—
Payments on previous term loan	—			(97,500		)
Payments on term loan								(40,701)		(6,250)
Proceeds from asset-based revolving credit facility	5,500			340,000				520,550		5,500
Payments on asset-based revolving credit facility	(5,500		)	(340,000		)		(520,550)		(5,500)
Proceeds from issuance of senior notes	—			600,000
Repurchase and retirement of senior notes								(25,000)		—
Deferred financing costs	(3,566		)	(51,072		)		—		(3,566)
Cash dividends paid	(26,269		)	(26,119		)		(26,438)		(26,269)
Purchase of non-controlling interest	—			(6,651		)
Proceeds from issuance of common stock	2,454			7,115				1,451		2,454
Tax payments related to vested deferred stock units	(4,538		)	(6,907		)		(1,258)		(4,538)
Excess tax benefits from share-based plans	1,104			3,736				—		1,104
Repurchases of common stock	(277		)	(251		)		—		(277)

Net cash (used in) provided by financing activities	(37,342		)	1,511,351

Net cash used in financing activities								(91,946)		(37,342)
Effect of exchange rate changes	292			(1,274		)		(25)		292

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(8,607		)	5,464
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS								4,968		(8,607)
Balance at beginning of period	62,261			59,252				29,980		62,261

Balance at end of period	$	53,654		$	64,716		$	34,948	$	53,654

See Notes to Condensed Consolidated Financial Statements.

5

Table of Contents

~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Significant Accounting Policies

Basis of Presentation — Effective January 31, 2016, Tailored Brands, Inc., a Texas corporation (“Tailored Brands”), became the successor reporting company to The Men’s Wearhouse, Inc. (“Men’s Wearhouse”), pursuant to a holding company reorganization (the “Reorganization”). Upon completion of the Reorganization, each issued and outstanding share of common stock of Men's Wearhouse was automatically converted into one share of common stock of Tailored Brands, having the same designations, preferences, limitations, and relative rights and corresponding obligations as the shares of common stock of Men's Wearhouse. In addition, as part of the Reorganization, Men's Wearhouse's treasury shares were canceled. The consolidated assets and liabilities of Tailored Brands and its subsidiaries immediately after the Reorganization were the same as the consolidated assets and liabilities of Men's Wearhouse immediately prior to the Reorganization.

The condensed consolidated financial statements herein include the accounts of ~~The Men’s Wearhouse,~~Tailored Brands, Inc. and its subsidiaries (the “Company”) and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). As applicable under such regulations, certain information and footnote disclosures have been condensed or omitted. We believe the presentation and disclosures herein are adequate to make the information not misleading, and the condensed consolidated financial statements reflect all elimination entries and normal recurring adjustments which are necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented. Certain prior period amounts have been reclassified to conform to the current period ~~presentation, as further described below in Recent Accounting Pronouncements.~~presentation.

Our business results historically ~~has been seasonal in nature~~have fluctuated throughout the year and, as a result, the operating results of the interim periods presented are not necessarily indicative of the results that may be achieved for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended January ~~31, 2015.~~30, 2016.

Unless the context otherwise requires, “Company”, “we”, “us” and “our” refer to ~~The Men’s Wearhouse,~~Tailored Brands, Inc. and its subsidiaries.

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S.” GAAP”) requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual amounts could differ from those estimates.

Recent Accounting Pronouncements — We have considered all new accounting pronouncements and have concluded there are no new pronouncements that may have a material impact on our results of operations, financial condition, or cash flows, based on current information, except for those listed below.

In ~~November 2015,~~March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~2016-09, Compensation-Stock Compensation. ASU ~~2015-17~~2016-09 simplifies several aspects of the ~~presentation~~accounting for share-based payment transactions, including income tax consequences, classification of ~~deferred taxes by requiring deferred tax assets~~awards as either equity or liabilities, and ~~liabilities be classified as noncurrent~~classification on the ~~balance sheet.~~statement of cash flows. ASU ~~2015-17~~2016-09 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal ~~years. The guidance may be adopted prospectively or retrospectively and~~years with early adoption is permitted. We ~~are currently evaluating~~will adopt ASU ~~2015-17 to determine if this guidance~~2016-09 beginning in the first quarter of fiscal 2017 and we do not expect it will have a material impact on our financial position, results of operations or cash flows. However, under certain circumstances, this guidance could have an impact on our effective tax rate as changes between tax and book treatment of equity compensation will be recognized in the provision for income taxes beginning in fiscal 2017.

In ~~July 2015,~~February 2016, the FASB issued ASU No. ~~2015-11,~~ ~~Simplifying~~2016-02, Leases. ASU 2016-02 increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the ~~Measurement~~balance sheet and disclosing key information about leasing arrangements. The main difference between previous U.S. GAAP and ASU 2016-02 is the recognition of ~~Inventory~~.lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. ASU 2015-11 simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. ASU 2015-11 applies only to inventories for which cost is determined by methods other than last-in first-out and the retail inventory method. ASU 2015-112016-02 is effective for public companies for annual reporting periods beginning after December 15, ~~2016,~~2018, and interim periods within those fiscal years. Early adoption of ASU ~~2015-11~~2016-02 is permitted. The guidance is required to be adopted

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

using the modified retrospective approach. We are currently evaluating the impact ASU ~~2015-11 to determine if this guidance~~2016-02 will have ~~a material impact~~ on our financial position, results of operations orand cash ~~flows.~~

~~In April 2015, the FASB issued ASU No. 2015-03,~~ ~~Simplifying the Presentation of Debt Issuance Costs~~. The guidance requires debt issuance costs related to a recognized debt liability be reported on the balance sheet as a direct deduction from the carrying amount of that debt liability. The guidance is effective for fiscal years and interim periods beginning after December 15, 2015, and is required to be applied retrospectively. Early adoption is permitted and we adopted ASU 2015-03 in the second quarter of 2015. Subsequently, in August 2015, the FASB issued No. 2015-15, ~~Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.~~ ~~ASU 2015-15 codifies the SEC’s position~~flows but expect that it ~~would be allowable for an entity to defer~~will result in a significant increase in our long-term assets and ~~present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term~~liabilities given we have a significant number of ~~the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.~~

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

For the current quarter, we retrospectively adjusted our November 1, 2014 balance sheet by decreasing current assets by $5.8 million, other assets by $34.2 million and long-term debt by $40.0 million, and upon adoption, adjusted our January 31, 2015 balance sheet by decreasing current assets by $5.7 million, other assets by $32.8 million and long-term debt by $38.5 million. In accordance with ASU 2015-15, we will continue presenting debt issuance costs for our asset-based revolving credit facility as an asset because of the potential volatility of borrowings and repayments under the facility. The adoption of this guidance had no impact on our results of operations or cash flows. See Note 4 for a summary of the reclassifications for all periods presented.leases.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers,, to clarify the principles used to recognize revenue for all entities. In August 2015, the FASB issued ASU No. 2015-14 which deferred the effective date of ASU 2014-09 by one year. As a result of this deferral, ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted for annual reporting periods beginning after December 15, 2016. The guidance allows for either a full retrospective or a modified retrospective transition method. We are ~~currently evaluating~~continuing to evaluate our method of adoption and the impact of this guidance, including ~~the transition method,~~recent amendments and interpretations, may have on our financial position, results of operations and cash flows.

2. ~~Acquisition~~Restructuring and Other Charges

~~Jos. A. Bank~~

~~On June 18, 2014,~~During the fourth quarter of fiscal 2015, we ~~acquired 100%~~began implementing initiatives intended to reduce costs and improve operating performance. These initiatives include a store rationalization program which identified approximately 250 stores to be closed as well as a profit improvement program to drive operating efficiencies and improve our expense structure. The store rationalization program includes the closure of ~~the outstanding common stock of~~approximately 80 to 90 Jos. A. Bank ~~a men’s specialty apparel retailer, for $65.00 net per share~~full line stores, the closure of all factory and outlet stores at Jos. A. Bank and Men’s Wearhouse (58 stores) and the closure of between 100 and 110 Men’s Wearhouse and Tux stores primarily as the result of the rollout of our shops within Macy’s stores. We expect the store rationalization and profit improvement programs to be completed in cash, or total consideration of approximately $1.8 billion. The acquisition was funded primarily by a $1.1 billion term loan facility, the issuance of $600.0 million in senior unsecured notes and borrowings under an asset-based credit facility (see Note 4).fiscal 2016.

WeA summary of the charges incurred for the three and nine months ended October 29, 2016 along with cumulative charges incurred under these initiatives since inception is presented in the table below (amounts in thousands):


	For the Three Months Ended		For the Nine Months Ended
	October 29,		October 29,
	2016		2016		Cumulative
Lease termination costs	$	8,667	$	37,004	$	37,004
Store asset impairment charges and accelerated depreciation, net of deferred rent		(844)		2,330		25,476
Consulting costs		1,806		13,583		14,501
Inventory reserve charges		—		—		11,008
Favorable lease impairment charges		—		—		5,533
Severance and employee-related costs		481		4,643		4,643
Other costs		839		1,565		2,423
Total pre-tax restructuring and other charges(1)	$	10,949	$	59,125	$	100,588

⁽¹⁾

Consists of $12.4 million included in selling, general and administrative expenses (“SG&A”) offset by a $1.5 million reduction in cost of sales for the three months ended October 29, 2016. Consists of $61.8 million included in SG&A offset by a $2.7 million reduction in cost of sales for the nine months ended October 29, 2016. For the three and nine months ended October 29, 2016 and cumulatively since inception of the initiatives, of the total amounts recorded in the table above, $9.1 million, $42.7 million and $82.6 million relate to our retail segment and the remainder are recorded in shared services.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of October 29, 2016, we estimate that cumulative pre-tax restructuring and other charges related to these actions will approximate $114.0 million to $120.0 million, of which approximately $72.0 million to $75.0 million are estimated to be cash expenses. Included in the estimate of total pre-tax charges are approximately:

·

Approximately $50.0 million of lease termination costs;

·

$42.0 million to $45.0 million of inventory and long-lived and intangible asset impairment charges, including accelerated depreciation relating to store closures; and

·

$22.0 million to $25.0 million of consulting, severance and other costs.

The following table is a rollforward of amounts included in accrued expenses and other current liabilities in the condensed consolidated balance sheet related to the pre-tax restructuring and other charges (amounts in thousands):


	Severance and		Lease
	Employee-		Termination		Consulting		Other
	Related Costs		Costs		Costs		Costs		Total
Beginning Balance, January 30, 2016	$	—	$	—	$	918	$	858	$	1,776
Charges, excluding non-cash items		4,643		37,004		13,583		1,565		56,795
Payments		(4,179)		(30,562)		(13,983)		(2,398)		(51,122)
Ending Balance, October 29, 2016	$	464	$	6,442	$	518	$	25	$	7,449

In addition to the restructuring costs described above, we incurred integration and other costs related to Jos. A. Bank totaling ~~$4.7~~$1.4 million and ~~$15.5~~$5.0 million for the three ~~and nine~~ months ended October 29, 2016 and October 31, 2015, ~~respectively, which is~~respectively. For the three months ended October 29, 2016, $0.9 million of the integration costs are included in ~~selling, general~~SG&A and ~~administrative expenses (“SG&A”)~~$0.5 million are included in cost of sales in the condensed consolidated statement of earnings (loss) ~~earnings.~~. For the three ~~and~~months ended October 31, 2015, $5.2 million of the integration costs are included in SG&A offset by a $0.2 million reduction in in cost of sales in the condensed consolidated statement of earnings (loss).

For the nine months ended ~~November 1, 2014,~~October 29, 2016 and October 31, 2015, we incurred ~~$27.3 million and $44.7 million, respectively, of~~ integration and other costs related to Jos. A. Bank totaling $7.1 million and $15.9 million, respectively. For the nine months ended October 29, 2016, $5.5 million of ~~which $10.6~~the integration costs are included in SG&A and $1.6 million isare included in cost of sales ~~for the three and nine months ended November 1, 2014, respectively, and the remainder is included in SG&A~~ in the condensed consolidated statement of earnings (loss) ~~earnings.~~. For the ~~nine months ended November 1, 2014, we incurred acquisition-related costs for Jos. A. Bank totaling $43.5 million. For the three and~~ nine months ended October 31, 2015, $15.6 million of the integration costs are included in SG&A and $0.3 million are included in cost of sales in the ~~three months ended November 1, 2014, we did not incur any acquisition-related costs.~~condensed consolidated statement of earnings (loss).

~~The following table summarizes the final allocation of fair values of the identifiable assets acquired and liabilities assumed in the Jos. A. Bank acquisition (amounts in millions):~~

Cash

$
328.9

Accounts receivable (mainly credit card receivables)

8.3

Inventories

328.0

Other current assets

56.4

Property and equipment

165.3

Goodwill

769.0

Intangible assets

622.2

Accounts payable, accrued expenses and other current liabilities

(155.0
)
Other liabilities (mainly deferred income taxes)

(302.8
)
Total purchase price

1,820.3

Less: Cash acquired

(328.9
)
Total purchase price, net of cash acquired

$
1,491.4

Within the measurement period which closed during the second quarter of 2015, we made purchase accounting adjustments primarily related to deferred income taxes. None of these measurement period adjustments had a material impact on the purchase price allocation. Goodwill is calculated as the excess of the purchase price over the net assets acquired. The goodwill recognized is attributable to growth opportunities and expected synergies. All of the goodwill has been assigned to our retail reporting segment and is non-deductible for tax purposes.

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~The following table presents unaudited pro forma consolidated financial information as if the closing of our acquisition of Jos. A. Bank had occurred on February 3, 2013 (in thousands, except~~3. Earnings (Loss) per ~~share data):~~

For the Nine
Months Ended
November 1, 2014

Total net sales

$
2,668,460

Net earnings attributable to common shareholders

$
76,349

Net earnings per common share allocated to common shareholders:

Basic

$
1.59

Diluted

$
1.58

The pro forma financial information presented above has been prepared by combining our historical results and the historical results of Jos. A. Bank and further reflects the effect of purchase accounting adjustments and the elimination of transaction costs, among other items. This pro forma information is not necessarily indicative of the results of operations that actually would have resulted had the Jos. A. Bank acquisition occurred on the date indicated above or that may result in the future and does not reflect potential synergies, integration costs or other such costs and savings.

~~3. (Loss) Earnings per~~ Share

Basic earnings (loss) ~~earnings~~ per common share allocated to common shareholders is determined using the two-class method and is computed by dividing net earnings (loss) ~~earnings~~ allocated to common shareholders by the weighted-average common shares outstanding during the period. Diluted earnings (loss) ~~earnings~~ per common share reflect the more dilutive earnings (loss) ~~earnings~~ per common share amount calculated using the treasury stock method or the two-class method.

~~The following table sets forth the computation~~

8

Table of ~~basic and diluted (loss) earnings per common share allocated to common shareholders (in thousands, except per share amounts).~~ Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Basic and diluted earnings (loss) ~~earnings~~ per common share allocated to common shareholders are computed using the actual net earnings (loss) ~~earnings~~ allocated to common shareholders and the actual weighted-average common shares outstanding rather than the rounded numbers presented within our condensed consolidated statement of earnings (loss) ~~earnings~~ and the accompanying notes. As a result, it may not be possible to recalculate earnings (loss) ~~earnings~~ per common share allocated to common shareholders in our condensed consolidated statement of earnings (loss) ~~earnings~~ and the accompanying notes. The following table sets forth the computation of basic and diluted earnings (loss) per common share allocated to common shareholders (in thousands, except per share amounts):


	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended				For the Nine Months Ended
	October 31, 2015			November 1, 2014			October 31, 2015			November 1, 2014			October 29,		October 31,		October 29,		October 31,
													2016		2015		2016		2015
Numerator
Total net (loss) earnings attributable to common shareholders	$	(27,154	)	$	6,793		$	30,994		$	35,535
Net earnings (loss)													$	28,433	$	(27,154)	$	55,045	$	30,994
Net earnings allocated to participating securities (restricted stock and deferred stock units)	—			(14		)	(31		)	(100		)		(33)		—		(65)		(31)
Net (loss) earnings allocated to common shareholders	$	(27,154	)	$	6,779		$	30,963		$	35,435
Net earnings (loss) allocated to common shareholders													$	28,400	$	(27,154)	$	54,980	$	30,963
Denominator
Basic weighted-average common shares outstanding	48,339			48,009			48,258			47,852				48,655		48,339		48,570		48,258
Dilutive effect of share-based awards	—			245			255			272				157		—		121		255
Diluted weighted-average common shares outstanding	48,339			48,254			48,513			48,124				48,812		48,339		48,691		48,513
Net (loss) earnings per common share allocated to common shareholders:
Net earnings (loss) per common share allocated to common shareholders:
Basic	$	(0.56	)	$	0.14		$	0.64		$	0.74		$	0.58	$	(0.56)	$	1.13	$	0.64
Diluted	$	(0.56	)	$	0.14		$	0.64		$	0.74		$	0.58	$	(0.56)	$	1.13	$	0.64

For the three and nine months ended October 29, 2016, 1.9 million and 1.7 million anti-dilutive shares of common stock were excluded from the calculation of diluted earnings (loss) per common share, respectively. For the three and nine months ended October 31, 2015, 0.4 million and 0.3 million anti-dilutive shares of common stock were excluded from the calculation of diluted earnings (loss) ~~earnings~~ per common share, respectively. ~~For each of the three and nine months ended November 1, 2014, 0.2 million anti-dilutive shares of common stock were excluded from the calculation of diluted (loss) earnings per common share.~~

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

4. Debt

On June 18, 2014, weThe Men's Wearhouse, Inc. entered into a term loan credit agreement that provides for a senior secured term loan in the aggregate principal amount of $1.1 billion (the “Term Loan”) and a $500.0 million asset-based revolving credit agreement (the “ABL Facility”, and together with the Term Loan, the “Credit Facilities”) with certain of our U.S. subsidiaries and Moores the Suit People Inc., one of our Canadian subsidiaries, as co-borrowers. Proceeds from the Term Loan were reduced by an $11.0 million original issue discount (“OID”), which is presented as a reduction of the outstanding balance on the Term Loan on the balance sheet and will be amortized to interest expense over the contractual life of the Term Loan. In addition, on June 18, 2014, weThe Men’s Wearhouse, Inc. issued $600.0 million in aggregate principal amount of 7.00% Senior Notes due 2022 (the “Senior Notes”).

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including fixed charge coverage ratios, total leverage ratios and secured leverage ratios, as well as a restriction on our ability to pay dividends on our common stock in excess of $10.0 million per quarter. Since entering into these financing arrangements and as of October ~~31, 2015,~~29, 2016, our total leverage ratio and secured leverage ratio were above the maximums specified in the agreements, which was anticipated when we entered into these arrangements. As a result, we are currently subject to certain additional restrictions, including limitations on our ability to make acquisitions and incur additional indebtedness.

~~We used the net proceeds from the Term Loan, the offering~~

9

Table of the Senior Notes and the net proceeds from $340.0 million drawn on the ABL Facility to pay the approximately $1.8 billion purchase price for the acquisition of Jos. A. Bank and to repay all of our obligations under our Third Amended and Restated Credit Agreement, dated as of April 12, 2013 (as amended, the “Previous Credit Agreement”), including $95.0 million outstanding under the Previous Credit Agreement as well as settlement of the then existing interest rate swap.Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Credit Facilities

The Term Loan is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries and will mature on June 18, 2021. The interest rate on the Term Loan is based on 3-month LIBOR, which was approximately ~~0.33%~~0.89% at October ~~31, 2015.~~29, 2016. However, the Term Loan interest rate is subject to a LIBOR floor of 1% per annum, plus the applicable margin which is currently 3.50%, resulting in a total interest rate of 4.50%. In January 2015, we entered into an interest rate swap agreement, ~~to swap variable-rate interest~~in which the variable rate payments ~~for fixed-rate interest payments on~~due under a ~~notional amount~~portion of $520.0 million, effective in February 2015. The interest rate swap agreement matures in August 2018 and has periodic interest settlements. Under this interest rate swap agreement, we receive a floating rate based on 3-month LIBOR and paythe Term Loan were exchanged for a fixed rate ~~of 5.03% (including the applicable margin of 3.50%) on the outstanding notional amount.~~(see Note 12).

OnIn April 7, 2015, weThe Men's Wearhouse, Inc. entered into Incremental Facility Agreement No. 1 (the “Incremental Agreement”) resulting in a refinancing of $400.0 million aggregate principal amount of the Term Loan from a variable rate to a fixed rate of 5.0% per annum. The Incremental Agreement did not impact the total amount borrowed under the Term Loan, the maturity date of the Term Loan of June 18, 2021, or collateral and guarantees under the Term Loan. In connection with the Incremental Agreement, we incurred deferred financing costs of $3.6 million, which will be amortized over the life of the remaining term using the interest method. In addition, as a result of entering into the Incremental Agreement, we recorded a loss on extinguishment of debt totaling $12.7 million consisting of the elimination of unamortized deferred financing costs and OID related to the Term Loan, which is included as a separate line in the condensed consolidated statement of earnings (loss) ~~earnings.~~.

As a result of the interest rate swap and the Incremental Agreement, we have converted a majority of the variable interest rate under the Term Loan to a fixed rate and, as of October ~~31, 2015,~~29, 2016, the Term Loan had a weighted average interest rate of ~~4.92%~~4.89%.

The ABL Facility provides for a senior secured ~~asset-based~~ revolving credit facility of $500.0 million, with possible future increases to $650.0 million ~~with~~under an expansion feature ~~which~~that matures on June 18, 2019, and is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices: (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate (“CDOR”) rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the federal funds effective rate plus 0.5% or adjusted LIBOR for a one-month period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 2.00%. The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.50% to 2.00%, and a fee on unused commitments which ranges from 0.25% to 0.375%.

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~ As of October 29, 2016, there were no borrowings outstanding under the ABL Facility. During the three and nine months ended October 29, 2016, the maximum borrowing outstanding under the ABL Facility was $68.5 million.

We utilize letters of credit primarily to secure inventory purchases and as collateral for workers compensation claims. ~~Except for~~At October 29, 2016, letters of credit totaling approximately ~~$25.7~~$28.9 million were issued and ~~outstanding, no amounts were drawn on the ABL Facility as of October 31, 2015 and we have approximately $436.5 million of borrowing availability~~outstanding. Borrowings available under the ABL Facility as of October ~~31, 2015.~~29, 2016 were $427.2 million.

Senior Notes

The ~~Senior Notes contain customary non-financial covenants and the~~ Senior Notes are guaranteed, jointly and severally, on an unsecured basis by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The Senior Notes and the related guarantees are senior unsecured obligations of the Company and the guarantors, respectively, and will rank equally with all of the Company's and each guarantor's present and future senior indebtedness. The Senior Notes will mature on July 1, 2022. Interest on the Senior Notes is payable on January 1 and July 1 of each year.

~~We had entered into~~Long-Term Debt

On May 2, 2016, in accordance with the terms of the Credit Facilities, we made a ~~registration rights agreement regarding~~mandatory excess cash flow prepayment of $35.5 million on the Term Loan. As a result of this prepayment, we recorded a loss on extinguishment of debt totaling $0.9 million consisting of the elimination of unamortized deferred financing costs and OID related to the Term Loan.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In addition, during the third quarter of 2016, we repurchased and retired $18.5 million of Senior Notes through open market transactions, which were consummated via borrowings on our ABL Facility. As a result, we recorded a net gain on extinguishment totaling $1.8 million, which reflects a $2.1 million gain upon repurchase partially offset by the elimination of unamortized deferred financing costs totaling $0.3 million related to the Senior ~~Notes pursuant to which we agreed, among other things, to use~~Notes.

For the nine months ended October 29, 2016, as a result of our ~~commercially reasonable efforts to consummate an exchange offer~~excess cash flow prepayment and the repurchase and retirement of ~~the~~a total of $25.0 million of Senior Notes, ~~for substantially identical notes registered under~~we recorded a net gain on extinguishment totaling $1.7 million, which reflects a $3.1 million gain upon repurchase partially offset by the ~~Securities Act~~elimination of ~~1933,~~unamortized deferred financing costs of $1.4 million, which is included as ~~amended, on or before July 13, 2015. On June 24, 2015,~~a separate line in the ~~exchange offer was completed.~~

~~Long-Term Debt~~condensed consolidated statement of earnings (loss).

The following table provides details on our long-term debt as of October 29, 2016, October 31, 2015 ~~November 1, 2014~~ and January ~~31, 2015~~30, 2016 (in thousands):

	October 31, 2015			November 1, 2014			January 31, 2015
Term Loan (net of unamortized original issue discount of $5.6 million at
October 31, 2015, $10.4 million at November 1, 2014 and $10.0 million at January 31, 2015	$	1,085,392		$	1,089,589		$	1,087,232
										October 29,		October 31,		January 30,
										2016		2015		2016
Term Loan (net of unamortized OID of $4.4 million at October 29, 2016, $5.6 million at October 31, 2015 and $5.4 million at January 30, 2016)										$	1,044,173	$	1,085,392	$	1,083,891
Senior Notes	600,000			600,000			600,000				575,000		600,000		600,000
Less: Deferred financing costs related to the Term Loan and Senior Notes	(29,186		)	(39,983		)	(38,546		)		(23,300)		(29,186)		(27,967)
Total long-term debt, net	1,656,206			1,649,606			1,648,686				1,595,873		1,656,206		1,655,924
Current portion of long-term debt	(7,000		)	(11,000		)	(11,000		)		(7,000)		(7,000)		(42,451)
Total long-term debt, net of current portion	$	1,649,206		$	1,638,606		$	1,637,686		$	1,588,873	$	1,649,206	$	1,613,473

5. Supplemental Cash Flows

Supplemental disclosure of cash flow information is as follows (in thousands):


					For the Nine Months Ended
	For the Nine Months Ended				October 29,		October 31,
	October 31, 2015		November 1, 2014		2016		2015

Cash paid for interest	$	61,895	$	8,409	$	62,450	$	61,895
Cash paid for income taxes, net	$	32,932	$	32,085
Cash (refunded) paid for income taxes, net					$	(44,961)	$	32,932

Schedule of noncash investing and financing activities:
Cash dividends declared	$	9,028	$	8,882	$	9,572	$	9,028
Increase in capital in excess of par due to purchase of non-controlling interest	$	—	$	7,410

We had unpaid capital expenditure purchases included in accounts payable and accrued expenses and other current liabilities of approximately ~~$7.3~~$7.8 million and ~~$8.4~~$7.3 million at October 29, 2016 and October 31, 2015, ~~and November 1, 2014,~~ respectively. Capital expenditure purchases are recorded as cash outflows from investing activities in the condensed consolidated statement of cash flows in the period they are paid.

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

6. Inventories

The following table provides details on our inventories as of October 29, 2016, October 31, 2015 ~~November 1, 2014~~ and January ~~31, 2015~~30, 2016 (in thousands):


							October 29,		October 31,		January 30,
	October 31, 2015		November 1, 2014		January 31, 2015		2016		2015		2016
Finished goods	$	1,006,182	$	1,039,871	$	883,323	$	963,036	$	1,006,182	$	919,623
Raw materials and merchandise components	54,065		42,483		55,013			84,879		54,065		102,881
Total inventories	$	1,060,247	$	1,082,354	$	938,336	$	1,047,915	$	1,060,247	$	1,022,504

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

7. Income Taxes

Our effective income tax rate ~~decreased~~increased to ~~56.8%~~24.1% for the third quarter of 2016 from a benefit of (56.8)% for the third quarter of 2015 ~~from 65.3%~~primarily as a result of the Jos. A. Bank tradename impairment charge of $90.1 million in last year’s third quarter, which generated a book loss in our U.S. entities and significantly impacted our effective tax rate. In addition, the effective tax rate for the third quarter of ~~2014 and~~2016 is impacted by lower U.S. income as compared to income earned in foreign jurisdictions, which have lower statutory tax rates.

Our effective income tax rate increased to 27.3% for the first nine months of 2016 from a benefit of (24.0)% for the first nine months of 2015 ~~from 51.5%~~primarily due to the impact of the aforementioned Jos. A. Bank tradename impairment charge, which resulted in our effective tax rate being a benefit for the first nine months of ~~2014. Our~~2015. In addition, the effective income tax rates in 2014 were significantly impacted by non-deductible transaction costs related to the Jos. A. Bank acquisition. In the third quarter of 2015, we recorded a $90.1 million non-cash tradename impairment charge for the Jos. A. Bank tradename (see Note 12), which generated a book loss for our combined U.S. entities. This loss in the U.S. combined with income in foreign jurisdictions with lower tax rates resulted in a negative effective income tax rate for the first nine months of ~~2015.~~2016 is impacted by lower U.S. income as compared to income earned in foreign jurisdictions, which have lower statutory tax rates.

Lastly, we are currently undergoing several federal, foreign and state audits which we are vigorously defending and currently do not believe should result in any material change to tax expense.

8. Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes and Other Liabilities

Other current assets consist of the following (in thousands):

	October 31, 2015		November 1, 2014		January 31, 2015
							October 29,		October 31,		January 30,
							2016		2015		2016
Prepaid expenses							$	39,935	$	42,824	$	42,166
Tax receivable	$	69,830	$	26,556	$	87,916		4,697		69,830		85,153
Prepaid expenses	42,824		48,354		39,375
Current deferred tax assets	38,736		12,929		23,777			—		38,736		—
Other	16,681		19,268		18,741			15,558		16,681		16,227
Total other current assets	$	168,071	$	107,107	$	169,809	$	60,190	$	168,071	$	143,546

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


								October 29,		October 31,		January 30,
	October 31, 2015			November 1, 2014		January 31, 2015		2016		2015		2016
Accrued salary, bonus, sabbatical, vacation and other benefits	$	71,921		$	79,165	$	83,515	$	70,631	$	71,921	$	75,373
Sales, value added, payroll, property and other taxes payable									36,021		35,486		27,505
Unredeemed gift certificates	34,477			32,511		39,563			34,693		34,477		40,884
Sales, value added, payroll, property and other taxes payable	34,472		��	31,075		28,765
Accrued workers compensation and medical costs	28,408			25,331		28,814			30,818		28,408		30,877
Customer deposits, prepayments and refunds payable									29,371		25,715		25,218
Accrued interest	27,207			27,572		15,715			25,884		27,207		16,282
Customer deposits, prepayments and refunds payable	25,715			24,275		24,540
Loyalty program reward certificates									10,704		8,181		9,215
Cash dividends declared	9,028			8,882		8,987			9,572		9,028		9,150
Loyalty program reward certificates	8,181			8,073		6,889
Accrued royalties	6,630			8,392		2,825			7,977		6,630		3,727
Accrued strategic professional fees	1,141			12,126		7,566
Lease termination and other store closure costs									6,442		92		—
Other	17,798			25,869		21,756			18,545		18,848		18,531
Total accrued expenses and other current liabilities	$	264,978		$	283,271	$	268,935	$	280,658	$	265,993	$	256,762

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Deferred taxes and other liabilities consist of the following (in thousands):

October 31,
2015

November 1,
2014

January 31,
2015

Non-current deferred and other income tax liabilities

$
275,213

$
287,851

$
328,271

Deferred rent and landlord incentives

65,764

60,189

61,475

Unfavorable lease liabilities

9,129

12,966

12,040

Other

7,953

6,606

7,540

Total deferred taxes and other liabilities

$
358,059

$
367,612

$
409,326


	October 29,		October 31,		January 30,
	2016		2015		2016
Deferred and other income tax liabilities	$	102,243	$	275,213	$	112,469
Deferred rent and landlord incentives		61,641		65,764		66,075
Unfavorable lease liabilities		5,394		9,129		8,279
Other		5,901		7,953		7,782
Total deferred taxes and other liabilities	$	175,179	$	358,059	$	194,605

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

9. Accumulated Other Comprehensive (Loss) Income

The following table summarizes the components of accumulated other comprehensive (loss) income for the nine months ended October 29, 2016 (in thousands and net of tax):


	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— January 30, 2016	$	(26,659)	$	(2,007)	$	180	$	(28,486)
Other comprehensive (loss) income before reclassifications		(18,246)		354		—		(17,892)
Amounts reclassified from accumulated other comprehensive loss		—		1,040		—		1,040
Net other comprehensive (loss) income		(18,246)		1,394		—		(16,852)
BALANCE— October 29, 2016	$	(44,905)	$	(613)	$	180	$	(45,338)

The following table summarizes the components of accumulated other comprehensive (loss) income for the nine months ended October 31, 2015 (in thousands and net of tax):

Foreign
Currency
Translation

Interest Rate
Swap

Pension
Plan

Total

BALANCE — January 31, 2015

$
(4,232
)
$
(1,665
)
$
226

$
(5,671
)

Other comprehensive loss before reclassifications

(378
)
(734
)
—

(1,112
)
Amounts reclassified from accumulated other comprehensive loss

—

427

—

427

Net current-period other comprehensive loss

(378
)
(307
)
—

(685
)

BALANCE — October 31, 2015

$
(4,610
)
$
(1,972
)
$
226

$
(6,356
)

~~The following table summarizes the components of accumulated other comprehensive income for the nine months ended November 1, 2014 (in thousands and net of tax):~~

Foreign
Currency
Translation

Interest Rate
Swap

Pension
Plan

Total

BALANCE — February 1, 2014

$
27,710

$
(399
)
$
—

$
27,311

Other comprehensive loss before reclassifications

(6,881
)
—

—

(6,881
)
Amounts reclassified from accumulated other comprehensive income

—

399

—

399

Net current-period other comprehensive (loss) income

(6,881
)
399

—

(6,482
)

BALANCE — November 1, 2014

$
20,829

$
—

$
—

$
20,829


	Foreign
	Currency		Interest Rate		Pension
	Translation		Swap		Plan		Total
BALANCE— January 31, 2015	$	(4,232)	$	(1,665)	$	226	$	(5,671)
Other comprehensive income (loss) before reclassifications		(378)		(1,531)		—		(1,909)
Amounts reclassified from accumulated other comprehensive income		—		1,224		—		1,224
Net current-period other comprehensive loss		(378)		(307)		—		(685)
BALANCE— October 31, 2015	$	(4,610)	$	(1,972)	$	226	$	(6,356)

Amounts reclassified from other comprehensive (loss) income for the nine months ended October 29, 2016 and October 31, 2015, ~~and November 1, 2014,~~ respectively, relate to changes in fair value for our interest rate ~~swaps~~swap, which ~~were~~is recorded within interest expense in the condensed consolidated statement of earnings (loss) ~~earnings.~~.

10. ~~Non-Controlling Interest~~Share-Based Compensation Plans

In September 2014, we exercised our option and completed the purchase of the remaining 14% interest in our UK operations from the minority interest holders. As a result, we eliminated the non-controlling interest balance and recorded an increase in capital in excess of par of $7.4 million less the $6.7 million in cash consideration paid to the former minority interest holders.

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~11. Share-Based Compensation Plans~~

For a discussion of our share-based compensation plans refer to Note 1113 in our Annual Report on Form 10-K for the fiscal year ended January ~~31, 2015.~~30, 2016. In June 2016 our shareholders approved the Tailored Brands, Inc. 2016 Long-Term Incentive Plan (the “2016 LTIP”), which replaced our 2004 Long-Term Incentive Plan (the “2004 LTIP”). Awards are no longer available for grant under the 2004 LTIP but outstanding awards under the 2004 LTIP remain in effect in accordance with the terms of the awards and the 2004 LTIP. The number of shares of our common stock authorized for awards under the 2016 LTIP is 6.4 million, subject to adjustments. Under the 2016 LTIP, 18,328 awards have been issued as of October 29, 2016.

We account for share-based awards in accordance with the authoritative guidance regarding share-based payments, which requires the compensation cost resulting from all share-based payment transactions be recognized in the financial

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

statements. The amount of compensation cost is measured based on the grant-date fair value of the instrument issued and is recognized over the vesting period. Share-based compensation expense recognized for the three and nine months ended October ~~31, 2015~~29, 2016 was ~~$4.2~~$5.2 million and ~~$12.6~~$14.0 million, respectively. Share-based compensation expense recognized for the three and nine months ended ~~November 1, 2014~~October 31, 2015 was ~~$4.3~~$4.2 million and ~~$12.3~~$12.6 million, respectively.

Non-Vested Deferred Stock Units, Performance Units and Restricted Stock

The following table summarizes the activity of time-based and performance-based awards for the nine months ended October ~~31, 2015:~~29, 2016:

Units

Weighted-Average
Grant-Date Fair Value

Time-
Based

Performance-Based

Time-
Based

Performance- Based

Non-Vested at January 31, 2015

378,518

170,789

$
42.67

$
43.94

Granted

360,967

36,844

52.60

57.32

Vested (1)

(231,764
)
(18,977
)
43.69

46.41

Forfeited

(19,552
)
(20,000
)
40.17

33.09

Non-Vested at October 31, 2015

488,169

168,656

$
49.63

$
47.87


			Weighted-Average
	Units		Grant-Date Fair Value
	Time-	Performance-	Time-		Performance-
	Based	Based	Based		Based
Non-Vested at January 30, 2016	478,106	168,656	$	49.60	$	47.87
Granted	830,002	258,168		16.68		17.43
Vested(1)	(216,936)	—		49.01		—
Forfeited	(24,426)	(59,943)		39.49		33.72
Non-Vested at October 29, 2016	1,066,746	366,881	$	24.34	$	28.76

~~(1)Includes 86,035 shares relinquished for tax payments related to vested deferred stock units for the nine months ended October 31, 2015.~~

⁽¹⁾

Includes 71,896 shares relinquished for tax payments related to vested deferred stock units for the nine months ended October 29, 2016.

On April 3, 2013, our Board of Directors approved a change in the form of award agreements to be issued for grants of deferred stock units (“DSUs”) ~~to participants under our 2004 Long-Term Incentive Plan.~~. As revised, the award agreements provide that dividend equivalents, if any, will be accrued during the vesting period for such DSU awards and paid out only upon vesting of the underlying DSUs. As such, grants of DSU awards on or after April 3, 2013 earn dividends throughout the vesting period which are subject to the same vesting terms as the underlying share award. Grants of DSUs generally vest over a period of three years. DSU awards granted prior to April 3, 2013 are entitled to receive non-forfeitable dividend equivalents, if any, when and if paid to shareholders of record at the payment date. Included in the non-vested time-based awards as of October ~~31, 2015~~29, 2016 are ~~17,576~~11,288 DSUs granted prior to April 3, 2013.

~~Of the 36,844~~The performance units granted in the first nine months of ~~2015, 22,645 units~~2016 represent a contingent right to ~~receive one share~~earn shares of common stock, ~~and vest after our 2017 fiscal year,~~ subject to ~~our~~the achievement of a ~~cumulative~~Company-specific performance target for fiscal ~~years 2015-2017.~~

The remaining 14,199 performance units granted in the first nine months of 2015 represent a contingent right to receive up to 2.25 shares of common stock and vest after our 2017 fiscal year, subject to our achievement of a performance target for fiscal 2017.2016-2017. Assuming the performance target is achieved, 50% of the ~~number~~award will vest on the two year anniversary of ~~performance units earned~~the grant date and the remaining 50% of the award will ~~be adjusted based~~vest on ~~multipliers related to (1)~~ the ~~Company’s adjusted earnings per share for fiscal 2017 and (2)~~three year anniversary of the ~~Company’s relative total shareholder return (“TSR”) compared to the TSR of certain peer companies over a pre-defined period.~~

grant date. Performance units that are unvested at the end of the performance period will lapse and be forfeited. The performance units earn dividends throughout the vesting period ~~and~~that are subject to the same vesting terms as the underlying performance-based awards.

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Performance-based DSUs granted in April 2014 (“April 2014 performance-based DSUs”) represented a contingent right to receive one share of common stock and vested over a one year period, subject to our achievement of a performance target for 2014. Having met the performance target for 2014, the April 2014 performance-based DSUs vested in accordance with their terms in April 2015.

The following table summarizes the activity of restricted stock for the nine months ended October ~~31, 2015:~~29, 2016:

	Shares		Weighted- Average Grant-Date Fair Value
Non-Vested at January 31, 2015	67,790		$	37.05
						Weighted- Average
					Shares	Grant-Date Fair Value
Non-Vested at January 30, 2016					33,157	$	27.93
Granted	12,425		50.31		18,646		17.37
Vested	(44,398	)	40.25		(6,951)		58.44
Forfeited	(19,360	)	27.77		—		—
Non-Vested at October 31, 2015	16,457		$	49.37
Non-Vested at October 29, 2016					44,852	$	18.81

Restricted stock awards receive non-forfeitable dividends, if any, when and if paid to shareholders of record at the payment date.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of October ~~31, 2015,~~29, 2016, we have unrecognized compensation expense related to non-vested DSUs, performance units, and shares of restricted stock of approximately ~~$22.3~~$24.6 million, which is expected to be recognized over a weighted-average period of ~~1.7~~1.5 years.

Stock Options

The following table summarizes the activity of stock options for the nine months ended October ~~31, 2015:~~29, 2016:

	Shares		Weighted- Average Exercise Price
Outstanding at January 31, 2015	660,283		$	38.28
						Weighted-
					Number of	Average
					Shares	Exercise Price
Outstanding at January 30, 2016					681,117	$	39.65
Granted	41,951		57.91		593,509		17.43
Exercised	(19,617	)	33.02		—		—
Forfeited	—		—		(3,051)		48.31
Expired	—		—		(1,525)		48.31
Outstanding at October 31, 2015	682,617		$	39.64
Exercisable at October 31, 2015	301,070		$	31.83
Outstanding at October 29, 2016					1,270,050	$	29.23
Exercisable at October 29, 2016					450,630	$	36.25

The weighted-average grant date fair value of the ~~41,951~~593,509 stock options granted during the nine months ended October ~~31, 2015~~29, 2016 was ~~$18.63~~$5.18 per share. The following table summarizes the weighted-average assumptions used to fair value stock options at the date of grant using the Black-Scholes option pricing model for the nine months ended October ~~31, 2015:~~29, 2016:

	~~For the Nine~~ ~~Months Ended~~
	~~October 31,~~ ~~2015~~

~~Risk-free interest rate~~	~~1.51~~For the Nine Months Ended	%
	October 29,
	2016
Risk-free interest rates	1.22%
Expected lives	5.0 years
Dividend yield	~~1.38~~ 4.13%	%
Expected volatility	~~39.74~~ 47.95%	%

As of October ~~31, 2015,~~29, 2016, we have unrecognized compensation expense related to non-vested stock options of approximately ~~$3.9~~$4.5 million, which is expected to be recognized over a weighted-average period of ~~1.5~~1.4 years.

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~12.~~11. Goodwill and Other Intangible Assets

Please refer to Note 3 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended January 30, 2016 for information on impairment charges recorded in fiscal 2015 related to goodwill and intangible assets for Jos. A. Bank.

Goodwill

Goodwill allocated to our reportable segments and changes in the net carrying amount of goodwill for the nine months ended October ~~31, 2015~~29, 2016 are as follows (in thousands):

Retail

Corporate
Apparel

Total

Balance at January 31, 2015

$
861,180

$
26,756

$
887,936

Adjustments to purchase price allocation of acquired businesses

3,062

—

3,062

Translation adjustment

(608
)
601

(7
)
Balance at October 31, 2015

$
863,634

$
27,357

$
890,991


			Corporate
	Retail		Apparel		Total
Balance at January 30, 2016	$	93,201	$	25,385	$	118,586
Translation adjustment		921		(3,481)		(2,560)
Balance at October 29, 2016	$	94,122	$	21,904	$	116,026

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Goodwill is evaluated for impairment at least annually. A more frequent evaluation is performed if events or circumstances indicate that impairment could have occurred. Such events or circumstances could include, but are not limited to, new significant negative industry or economic trends, unanticipated changes in the competitive environment, decisions to significantly modify or dispose of operations and a significant sustained decline in the market price of our stock. No impairment evaluation was considered necessary during the first nine months ended October 29, 2016.

Based on Jos. A. Bank’s results, as well as the recent significant decline in our market capitalization, we concluded that a triggering event occurred that required an interim goodwill impairment test. During the third quarter of 2015, Jos. A. Bank’s results were impacted by significantly lower than forecasted revenue results primarily due to a greater than expected decline in traffic resulting from our transition away from the historical promotional strategy at Jos. A. Bank. While the short term decline is greater than we expected, we have implemented several strategies that we expect to offset the decline in revenues resulting in a stable profit model to generate cash flows over the long-term. Based on the results of our interim goodwill impairment test, as of October 31, 2015, we concluded that our goodwill was not impaired. However, if we determine we are not likely to meet our projections of future cash flows or if our market capitalization remains at current levels, among other factors, it is possible our annual impairment test in the fourth quarter of 2015 could result in a material impairment of the Jos. A. Bank goodwill. As of October 31, 2015, goodwill associated with the Jos. A. Bank reporting unit totaled $769.0 million.

Intangible Assets

The gross carrying amount and accumulated amortization of our identifiable intangible assets are as follows (in thousands):

October 31,
2015

November 1,
2014

January 31,
2015

Amortizable intangible assets:

Carrying amount:

Trademarks and tradenames

$
16,516

$
16,628

$
16,448

Favorable leases

24,118

24,400

24,400

Customer relationships

85,515

86,699

84,788

Total carrying amount

126,149

127,727

125,636

Accumulated amortization:

Trademarks and tradenames

(9,679
)
(9,261
)
(9,331
)
Favorable leases

(4,025
)
(1,130
)
(1,883
)
Customer relationships

(24,507
)
(14,659
)
(16,468
)
Total accumulated amortization

(38,211
)
(25,050
)
(27,682
)
Total amortizable intangible assets, net

87,938

102,677

97,954

Indefinite-lived intangible assets:

Trademarks and tradename, gross

570,333

570,380

570,305

Impairment of Jos. A. Bank tradename

(90,100
)
—

—

Trademarks and tradename, net

480,233

570,380

570,305

Total intangible assets, net

$
568,171

$
673,057

$
668,259


	October 29,		October 31,		January 30,
	2016		2015		2016
Amortizable intangible assets:
Carrying amount:
Trademarks and tradenames	$	15,897	$	16,516	$	16,292
Favorable leases		14,381		24,118		14,675
Customer relationships		24,750		85,515		29,129
Total carrying amount		55,028		126,149		60,096
Accumulated amortization:
Trademarks and tradenames		(9,930)		(9,679)		(9,728)
Favorable leases		(4,045)		(4,025)		(2,739)
Customer relationships		(12,891)		(24,507)		(13,459)
Total accumulated amortization		(26,866)		(38,211)		(25,926)
Total amortizable intangible assets, net		28,162		87,938		34,170
Indefinite-lived intangible assets:
Trademarks and tradename, net		144,175		480,233		144,340
Total intangible assets, net	$	172,337	$	568,171	$	178,510

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

Pre-tax amortization expense associated with intangible assets subject to amortization totaled $1.2 million and $3.7 million for the three and nine months ended October 29, 2016. Pre-tax amortization expense associated with intangible assets subject to amortization totaled $3.4 million and $10.5 million for the three and nine months ended October 31, 2015, respectively. Pre-tax amortization associated with intangible assets subject to amortization at October 29, 2016 is estimated to be $1.2 million for the remainder of fiscal 2016, $4.2 million for fiscal 2017, $4.0 million for fiscal 2018, $3.8 million for fiscal 2019 and $3.6 million for fiscal 2020.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~As discussed above, during~~In the third quarter of 2015, we concluded that a triggering event occurred that required an interim impairment test for the Jos. A. Bank tradename. The fair value of the Jos. A. Bank tradename was estimated using a relief from royalty method, which ~~calculates~~calculated the present value of savings resulting from the right to sell products without having to pay a royalty fee. Critical assumptions that ~~are~~were used in this method ~~include~~included future sales projections, an estimated royalty rate and a discount rate. Based on ~~our~~this analysis, during the third quarter of 2015, we concluded that the Jos. A. Bank tradename was impaired and recorded a non-cash impairment charge of $90.1 million, which is included as a separate line in the condensed statement of earnings (loss) ~~earnings,~~, and relates to our retail segment. In addition, should the downward revenue trend accelerate during the fourth quarter of 2015 from what we expect or if other valuation inputs such as the royalty rate or discount rate change, it is possible our annual impairment test in the fourth quarter of 2015 could result in an additional impairment charge for the Jos. A. Bank tradename. As of October 31, 2015, after giving effect to the impairment charge, the book value of the Jos. A. Bank tradename was $449.0 million.

The pre-tax amortization expense associated with intangible assets subject to amortization totaled $3.4 million and $10.5 million for the three and nine months ended October 31, 2015, respectively. The pre-tax amortization expense associated with intangible assets subject to amortization totaled $3.5 million and $6.5 million for the three and nine months ended November 1, 2014, respectively. Pre-tax amortization associated with intangible assets subject to amortization at October 31, 2015 is estimated to be $3.9 million for the remainder of fiscal year 2015, $13.7 million for fiscal year 2016, $13.2 million for fiscal year 2017, $12.8 million for fiscal year 2018 and $12.6 million for fiscal year 2019.

For further information on our goodwill and tradename analysis, see the discussion in Management’s Discussion and Analysis in the “Executive Overview” section beginning on page 27 and the “Critical Accounting Policies and Estimates” section beginning on page 40, of this Form 10-Q.

~~13.~~12. Derivative Financial Instruments

As discussed in Note 4, in January 2015, we entered into an interest rate swap agreement on a notional amount of $520.0 million that matures in August 2018 with periodic interest settlements. At October 29, 2016, the notional amount totaled $390.0 million. Under this interest rate swap agreement, we receive a floating rate based on 3-month LIBOR and pay a fixed rate of 5.03% (including the applicable margin of 3.50%) on the outstanding notional amount. We have designated the interest rate swap as a cash flow hedge of the variability of interest payments under the Term Loan due to changes in the LIBOR benchmark interest rate. At October ~~31, 2015,~~29, 2016, the fair value of the interest rate swap was a liability of ~~$3.2~~$1.9 million with ~~$2.4~~$1.6 million recorded in accrued expenses and other current liabilities and ~~$0.8~~$0.3 million in other liabilities in

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

our condensed consolidated balance sheet. The effective portion of the swap is reported as a component of accumulated other comprehensive (loss) income. There was no hedge ineffectiveness at October ~~31, 2015.~~29, 2016. Changes in fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same period that the hedged item affects earnings.

Over the next 12 months, ~~$2.4~~$1.6 million of the effective portion of the interest rate swap is expected to be reclassified from accumulated other comprehensive (loss) income into earnings. If, at any time, the interest rate swap is determined to be ineffective, in whole or in part, due to changes in the interest rate swap or underlying debt agreements, the fair value of the portion of the interest rate swap determined to be ineffective will be recognized as a gain or loss in the statement of earnings for the applicable ~~period.~~period.

~~14.~~Furthermore, as a result of recent exchange rate fluctuations in Europe, we have entered into derivative instruments to hedge our foreign exchange risk, specifically related to the British pound and Euro. We have designated these instruments as cash flow hedges of the variability in exchange rates for those foreign currencies. At October 29, 2016, the fair value of these cash flow hedges was a liability of $0.6 million recorded in accrued expenses and other current liabilities in our consolidated balance sheet. The effective portion of the hedges is reported as a component of accumulated other comprehensive (loss) income. There was no hedge ineffectiveness at October 29, 2016. Changes in fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same period that the hedged item affects earnings. Over the next 12 months, $0.3 million of the effective portion of the cash flow hedges is expected to be reclassified from accumulated other comprehensive (loss) income into earnings.

In addition, we are exposed to market risk associated with foreign currency exchange rate fluctuations as a result of our direct sourcing programs and our operations in foreign countries. As a result, from time to time, we may enter into derivative instruments to hedge our foreign exchange risk. We have not elected to apply hedge accounting to these derivative instruments. At October 29, 2016, the fair value of our derivative instruments was an asset of $0.8 million included in other current assets in our consolidated balance sheet.

For the three and nine months ended October 29, 2016, we recognized net pre-tax gains of $0.4 million and $2.3 million, respectively, in cost of sales in the condensed consolidated statement of earnings (loss) for our derivative financial instruments not designated as cash flow hedges. For the three and nine months ended October 31, 2015, we recognized a net pre-tax gain of $0.4 million and a net pre-tax loss of $1.0 million, respectively, in cost of sales in the condensed consolidated statement of earnings (loss) for our derivative financial instruments not designated as cash flow hedges.

13. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-tier fair value hierarchy, categorizing the inputs used to measure fair value. The hierarchy can be described as follows: Level 1- observable inputs such as quoted prices in active markets; Level 2- inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3- unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

For the periods presented and described in Note 12, derivative financial instruments were the only assets and liabilities measured at fair value on a recurring basis. These derivative financial instruments are recorded in the condensed consolidated balance sheets at fair value based upon observable market inputs, which we classify as a Level 2 input within the fair value hierarchy.

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~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Assets and Liabilities that are Measured at Fair Value on a Non-Recurring Basis

Long-lived assets, such as property and equipment, goodwill and identifiable intangibles, are periodically evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset.

During the nine months ended October 29, 2016, we incurred $2.1 million of asset impairment charges, which is included within SG&A expenses in our condensed consolidated statement of earnings (loss), primarily related to store locations to be closed and underperforming stores. We estimated the fair value of the long-lived assets based on an income approach using projected future cash flows discounted using a weighted-average cost of capital analysis that reflects current market conditions, which we classify as Level 3 within the fair value hierarchy.

In addition, during the nine months October 29, 2016, we recorded a $2.2 million impairment charge related to a long-lived asset reclassified as held for sale, which is included within SG&A expenses in our condensed consolidated statement of earnings (loss). We estimated the fair value of the asset held for sale using market values for similar assets which would fall within Level 2 of the fair value hierarchy.

During the third quarter of 2015, we recorded an impairment charge related to our Jos. A. Bank tradename totaling $90.1 million. The fair value of the Jos. A. Bank tradename was based on our own judgments about the assumptions that market participants would use in pricing the asset, which we classified as Level 3 within the fair value hierarchy.

Fair Value of Financial Instruments

Our financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses and other current liabilities and long-term debt. Management estimates that, as of October 29, 2016, October 31, 2015, ~~November 1, 2014,~~ and January ~~31, 2015,~~30, 2016, the carrying value of cash, accounts receivable, accounts payable and accrued expenses and other current liabilities approximated their fair value due to the highly liquid or short-term nature of these instruments.

The fair values of our Term Loan ~~and the term loan under the Previous Credit Agreement~~ were valued based upon observable market data provided by a third party for similar types of debt, which we classify as a Level 2 input within the fair value hierarchy. Beginning in June 2015, the fair value of our Senior Notes is based on quoted prices in active markets, which we classify as a Level 1 input within the fair value hierarchy. In prior periods, the fair value of our Senior Notes was based on trading data in active markets, which we classified as a Level 2 input within the fair value hierarchy. The table below shows the fair value and carrying value of our long-term debt, including current ~~maturities~~portion (in thousands):

October 31, 2015

November 1, 2014

January 31, 2015

Carrying
Amount

Estimated Fair
Value

Carrying
Amount

Estimated Fair
Value

Carrying
Amount

Estimated Fair
Value

Long-term debt, net

1,656,206

1,711,104

1,649,606

1,718,902

1,648,686

1,706,546


	October 29, 2016				October 31, 2015				January 30, 2016
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value		Amount		Fair Value
Long-term debt, including current portion	$	1,595,873	$	1,556,661	$	1,656,206	$	1,711,104	$	1,655,924	$	1,410,651

~~Assets and Liabilities that are Measured at Fair Value on a Non-Recurring Basis~~

~~Long-lived assets, such as property and equipment, goodwill and identifiable intangibles, are periodically evaluated for impairment whenever events or~~14. Segment Reporting

In the first quarter of 2016, we revised our segment reporting presentation to reflect changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset. As discussed in Note 12, ~~during the third quarter of 2015,~~how we ~~recorded an impairment charge~~manage our business, including resource allocation and performance assessment. Specifically, we are now presenting expenses related to our ~~Jos. A. Bank tradename totaling $90.1 million. The fair value~~shared services platform separately from the results of ~~the Jos. A. Bank tradename was based on~~ our ~~own judgments about the assumptions that market participants would use~~operating segments to promote enhanced comparability of our operating segments. Previously, these shared service expenses were primarily included in ~~pricing the asset, which we classified as Level 3 within the fair value hierarchy.~~

~~15. Segment Reporting~~our retail segment. Comparable prior period information has been recast to reflect our revised segment presentation.

Our operations are conducted in two reportable segments, retail and corporate apparel, based on the way we manage, evaluate and internally report our business activities.

18

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The retail segment includes the results from our four retail merchandising brands: Men’s Wearhouse/Men’s Wearhouse and Tux, Jos. A. Bank, Moores Clothing for Men (“Moores”) and K&G. These four brands are operating segments that have been aggregated into the retail reportable segment. MW Cleaners is also aggregated in the retail segment as these operations have not had a significant effect on our revenues or expenses. Specialty apparel merchandise offered by our four retail merchandising concepts include suits, suit separates, sport coats, slacks, business casual, sportswear, outerwear, dress and casual shirts, shoes and accessories for men. Ladies’ career apparel, sportswear and accessories, including shoes, as well as children’s apparel isare also offered at most of our K&G stores. Tuxedo and suit rentals are offered at our Men’s Wearhouse/Men’s Wearhouse and Tux, Jos. A. Bank and Moores retail stores and our tuxedo shops within Macy’s stores.

The corporate apparel segment includes the results from our corporate apparel and uniform operations conducted by Twin Hill in the U.S. and Dimensions, Alexandra, and Yaffy in the United Kingdom (“UK”)~~. The two corporate apparel and uniform concepts are operating segments that have been aggregated into the reportable corporate apparel segment. The corporate apparel segment provides corporate~~, which provide clothing uniforms and workwear to workforces. The Twin Hill and UK operations constitute one operating segment.

We measure segment profitability based on operating income, defined as income before interest expense, interest income, gain (loss) on extinguishment of debt, net and income taxes, before shared service expenses. Shared service expenses include costs incurred and ~~non-controlling interest. Corporate expenses and assets~~directed primarily by our corporate offices that are not allocated to ~~the retail segment.~~

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~segments.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Net~~Additional net sales ~~by brand and reportable segment are~~information is as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended

Net sales:

October 31,
2015

November 1,
2014

October 31,
2015

November 1,
2014

MW(1)

$
465,396

$
436,107

$
1,391,782

$
1,307,417

Jos. A. Bank

198,936

233,313

636,704

347,005

K&G

72,733

72,835

257,448

251,474

Moores

55,862

68,724

173,281

199,302

MW Cleaners

8,460

8,183

25,356

24,035

Total retail segment

801,387

819,162

2,484,571

2,129,233

Dimensions and Alexandra (UK)

53,444

59,704

155,474

163,809

Twin Hill

10,615

11,771

30,564

31,147

Total corporate apparel segment

64,059

71,475

186,038

194,956

Total net sales

$
865,446

$
890,637

$
2,670,609

$
2,324,189


	For the Three Months Ended				For the Nine Months Ended
	October 29, 2016		October 31, 2015		October 29, 2016		October 31, 2015
Net sales:
MW(1)	$	461,806	$	465,396	$	1,386,347	$	1,391,782
Jos. A. Bank		165,992		198,936		530,482		636,704
K&G		70,874		72,733		252,007		257,448
Moores		56,520		55,862		166,203		173,281
MW Cleaners		8,497		8,460		25,073		25,356
Total retail segment		763,689		801,387		2,360,112		2,484,571
Total corporate apparel segment		83,245		64,059		225,328		186,038
Total net sales	$	846,934	$	865,446	$	2,585,440	$	2,670,609

~~(1)MW includes Men’s Wearhouse stores, Men’s Wearhouse and Tux stores, Joseph Abboud store, tuxedo shops within Macy’s and JA Holding.~~

⁽¹⁾

MW includes Men’s Wearhouse, Men’s Wearhouse and Tux, Joseph Abboud and tuxedo shops within Macy’s.

The following table sets forth supplemental products and services sales information for the Company (in thousands):


									For the Three Months Ended				For the Nine Months Ended
	For the Three Months Ended				For the Nine Months Ended				October 29, 2016		October 31, 2015		October 29, 2016		October 31, 2015
Net sales:	October 31, 2015		November 1, 2014		October 31, 2015		November 1, 2014
Men’s tailored clothing product	$	351,269	$	351,071	$	1,109,665	$	878,746
Men’s non-tailored clothing product	245,250		263,053		756,699		655,566
Ladies’ clothing product	16,228		16,575		56,827		56,224
Men's tailored clothing product									$	326,741	$	351,269	$	1,025,495	$	1,109,665
Men's non-tailored clothing product										230,146		245,250		718,233		756,699
Ladies' clothing product										15,626		16,228		55,940		56,827
Other	3,127		3,748		8,735		7,663			2,533		3,127		6,992		8,735
Total retail clothing product	615,874		634,447		1,931,926		1,598,199			575,046		615,874		1,806,660		1,931,926

Rental services	132,443		132,690		392,621		395,449			138,724		132,443		403,564		392,621

Alteration services	44,610		43,842		134,668		111,550			41,422		44,610		124,815		134,668
Retail dry cleaning services	8,460		8,183		25,356		24,035			8,497		8,460		25,073		25,356
Total alteration and other services	53,070		52,025		160,024		135,585			49,919		53,070		149,888		160,024

Corporate apparel clothing product	64,059		71,475		186,038		194,956			83,245		64,059		225,328		186,038

Total net sales	$	865,446	$	890,637	$	2,670,609	$	2,324,189	$	846,934	$	865,446	$	2,585,440	$	2,670,609

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Operating income (loss) ~~income~~ by reportable segment, shared service expense, and the reconciliation to earnings (loss) ~~earnings~~ before income taxes is as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended
Operating (loss) income:

October 31,
2015

November 1,
2014

October 31,
2015

November 1,
2014

Retail

$
(38,971
)
$
39,848

$
110,739

$
106,117

Corporate apparel

2,570

5,327

6,272

9,043

Operating (loss) income

(36,401
)
45,175

117,011

115,160

Interest income

50

125

140

305

Interest expense

(26,457
)
(25,131
)
(79,475
)
(39,459
)
Loss on extinguishment of debt

—

—

(12,675
)
(2,158
)
(Loss) earnings before income taxes

$
(62,808
)
$
20,169

$
25,001

$
73,848


	For the Three Months Ended				For the Nine Months Ended
	October 29, 2016		October 31, 2015		October 29, 2016		October 31, 2015
Operating income (loss):
Retail	$	97,629	$	512	$	278,732	$	233,143
Corporate apparel		10,314		2,623		24,288		6,429
Shared service expense		(46,887)		(39,536)		(151,338)		(122,561)
Operating income		61,056		(36,401)		151,682		117,011
Interest income		52		50		102		140
Interest expense		(25,476)		(26,457)		(77,853)		(79,475)
Gain (loss) on extinguishment of debt, net		1,808		—		1,737		(12,675)
Earnings (loss) before income taxes	$	37,440	$	(62,808)	$	75,668	$	25,001

~~THE MEN’S WEARHOUSE, INC. AND SUBSIDIARIES~~

As a result of our revised segment presentation, total assets for our reportable segments have changed. There were no changes to consolidated total assets. Total assets by reportable segment are as follows (in thousands):


	October 29,		October 31,		January 30,
	2016		2015		2016
Segment assets:
Retail	$	1,719,572	$	2,802,991	$	1,705,728
Corporate apparel		196,085		216,920		211,820
Shared services(1)		259,472		492,468		326,771
Total assets	$	2,175,129	$	3,512,379	$	2,244,319

⁽¹⁾

Shared service assets consist primarily of cash and cash equivalents, assets related to our distribution network and tax-related assets.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~16.~~15. Legal Matters

On ~~July 30, 2013, Matthew B. Johnson, et al., on behalf of themselves and all Ohio residents similarly situated (the “Johnson Plaintiffs”),~~March 29, 2016, Peter Makhlouf filed a putative class action ~~Complaint~~lawsuit against ~~Jos. A. Bank~~the Company and its Chief Executive Officer ("CEO"), Douglas S. Ewert, in the ~~U.S.~~United States District Court for the Southern District of ~~Ohio, Eastern District~~Texas (Case No. ~~2:13-cv-756)~~4:16-cv-00838). The ~~Complaint~~complaint attempts to allege claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of persons who purchased or otherwise acquired the Company's securities between June 18, 2014 and December 9, 2015. In particular, the complaint alleges ~~among other things, deceptive sales~~that the Company and ~~marketing practices by~~its CEO made certain statements about the Company's acquisition and subsequent integration of Jos. A. Bank ~~relating to its use of the words “free”~~that were false and ~~“regular price.” The Complaint seeks, among other relief, certification of the complaint as a class action, compensatory damages, declaratory relief, injunctive relief~~misleading and costs and disbursements (including attorneys’ fees). On August 19, 2014, the Court dismissed the class claims and certain other breach of contract claims. On June 9, 2015, the Court also dismissed the plaintiffs’ claim for injunctive relief. Based on the two favorable court rulings, we do notomitted material facts. We believe that ~~this case will have a material adverse effect on our financial position, results of operations or cash flows.~~

~~In December 2013, Jos. A. Bank received a subpoena from~~ the ~~Ohio Attorney General requiring the production of certain information relating to its advertising~~claims are without merit and marketing practices. Jos. A. Bank produced information in response to the subpoena, cooperated with further information requests and had ongoing communications with the Ohio Attorney General’s office. On October 9, 2015, the Attorney General’s office issued a letter advising the Company that it was taking no further action at this time. We consider the matter closed.

On July 9, 2014, David Lucas and Eric Salerno, on behalf of themselves and all California residents similarly situated, filed a putative class action Complaint against Jos. A. Bank in the U.S. District Court for Southern California (Case No. ‘14CV1631LAB JLB). The Complaint alleges, among other things, that Jos. A. Bank violated the California Unfair Competition Law and the California Consumers Legal Remedies Act with its comparative price advertising, price discounts and free apparel promotions. The Complaint seeks, among other relief, certification of the case as a class action, permanent injunction, actual and compensatory damages, restitution including disgorgement of profits and unjust enrichment, costs and attorney fees. We intend to ~~vigorously~~ defend the ~~case.~~lawsuit vigorously. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse effect on our financial position, results of operations or cash flows.

In addition, we are involved in various routine legal proceedings, including ongoing litigation, incidental to the conduct of our business. Management does not believe that any of these matters will have a material adverse effect on our financial position, results of operations or cash flows.

~~17.~~16. Condensed Consolidating Information

As discussed in Note 4, The Men’s Wearhouse, Inc. (the “Issuer”) issued $600.0 million in aggregate principal amount of 7.00% Senior Notes. The Senior Notes are guaranteed jointly and severally, on an unsecured basis by Tailored Brands,

20

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Inc. (the "Parent") and certain of our U.S. subsidiaries ~~(collectively, the~~(the “Guarantors”). Our Canadian and U.K. subsidiaries (collectively, the “Non-Guarantors”) are not guarantors of the Senior Notes. Each of the Guarantors is 100% owned and all guarantees are joint and several. In addition, the guarantees are full and unconditional except for certain automatic release provisions related to the Guarantors.

These automatic release provisions are considered customary and include the sale or other disposition of all or substantially all of the assets or all of the capital stock of any subsidiary guarantor, the release or discharge of a guarantor’s guarantee of the obligations under the Term Loan other than a release or discharge through payment thereon, the designation in accordance with the Indenture of a guarantor as an unrestricted subsidiary or the satisfaction of the requirements for defeasance or discharge of the Senior Notes as provided for in the Indenture.

The tables in the following pages present the condensed consolidating financial information for the Parent, the Issuer, the Guarantors and the Non-Guarantors, together with eliminations, as of and for the periods indicated. The consolidating financial information may not necessarily be indicative of the financial positions, results of operations or cash flows had the Issuer, Guarantors and Non-Guarantors operated as independent entities. Certain of our current Guarantor subsidiaries did not exist and were created as part of the Reorganization. As a result, prior periods presented have been retrospectively adjusted and contain certain allocations to reflect our current organizational structure.

21

Table of Contents

~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The Men’s Wearhouse, Inc.~~

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

October ~~31, 2015~~29, 2016

(in thousands)


	The Men’s		Guarantor		Non-Guarantor							Tailored		The Men’s		Guarantor		Non-Guarantor
	Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations			Consolidated		Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	771	$	2,128	$	50,755	$	—		$	53,654	$	—	$	5,435	$	1,984	$	27,529	$	—	$	34,948
Accounts receivable, net	21,452		353,807		33,203		(341,560		)	66,902			7,373		17,112		455,368		31,140		(439,095)		71,898
Inventories	252,520		652,080		155,647		—			1,060,247			—		253,482		459,159		335,274		—		1,047,915
Other current assets	90,352		69,646		8,073		—			168,071			7,102		22,155		42,995		6,963		(19,025)		60,190
Total current assets	365,095		1,077,661		247,678		(341,560		)	1,348,874			14,475		298,184		959,506		400,906		(458,120)		1,214,951
Property and equipment, net	311,313		197,503		39,665		—			548,481			—		249,797		217,156		34,438		—		501,391
Rental product, net	121,983		7,150		18,211		—			147,344			—		139,386		3,677		17,038		—		160,101
Goodwill	6,159		837,532		47,300		—			890,991			—		6,160		68,510		41,356		—		116,026
Intangible assets, net	213		546,937		21,021		—			568,171			—		105		157,788		14,444		—		172,337
Investments in subsidiaries	2,418,994		—		—		(2,418,994		)	—			(67,257)		1,375,395		—		—		(1,308,138)		—
Other assets	40,961		858		8,831		(42,132		)	8,518			3,257		6,004		939		7,623		(7,500)		10,323
Total assets	$	3,264,718	$	2,667,641	$	382,706	$	(2,802,686	)	$	3,512,379	$	(49,525)	$	2,075,031	$	1,407,576	$	515,805	$	(1,773,758)	$	2,175,129

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable	$	399,292	$	128,803	$	46,985	$	(341,560	)	$	233,520	$	16,216	$	337,499	$	99,597	$	185,982	$	(439,095)	$	200,199
Accrued expenses and other current liabilities	146,102		111,308		21,801		—			279,211			9,617		143,023		105,446		42,514		(19,025)		281,575
Current maturities of long-term debt	7,000		—		—		—			7,000
Current portion of long-term debt													—		7,000		—		—		—		7,000
Total current liabilities	552,394		240,111		68,786		(341,560		)	519,731			25,833		487,522		205,043		228,496		(458,120)		488,774
Long-term debt, net	1,649,206		—		33,432		(33,432		)	1,649,206			—		1,588,873		—		—		—		1,588,873
Deferred taxes and other liabilities	77,735		277,783		11,241		(8,700		)	358,059			2,339		65,893		104,512		9,935		(7,500)		175,179
Shareholders’ equity	985,383		2,149,747		269,247		(2,418,994		)	985,383
Total liabilities and shareholders’ equity	$	3,264,718	$	2,667,641	$	382,706	$	(2,802,686	)	$	3,512,379
Shareholders' (deficit) equity													(77,697)		(67,257)		1,098,021		277,374		(1,308,138)		(77,697)
Total liabilities and shareholders' (deficit) equity												$	(49,525)	$	2,075,031	$	1,407,576	$	515,805	$	(1,773,758)	$	2,175,129

22

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~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The Men’s Wearhouse, Inc.~~

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

~~November 1, 2014~~October 31, 2015

(in thousands)


	The Men’s		Guarantor		Non-Guarantor							Tailored		The Men’s		Guarantor		Non-Guarantor
	Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations			Consolidated		Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,214	$	8,719	$	54,783	$	—		$	64,716	$	—	$	771	$	2,128	$	50,755	$	—	$	53,654
Accounts receivable, net	13,165		194,027		44,240		(167,378		)	84,054			5,766		13,382		356,111		33,203		(341,560)		66,902
Inventories	161,148		756,770		164,436		—			1,082,354			—		252,520		652,080		155,647		—		1,060,247
Other current assets	59,408		40,427		7,272		—			107,107			15,727		49,061		95,210		8,073		—		168,071
Total current assets	234,935		999,943		270,731		(167,378		)	1,338,231			21,493		315,734		1,105,529		247,678		(341,560)		1,348,874
Property and equipment, net	304,461		224,315		41,003		—			569,779			—		272,192		236,624		39,665		—		548,481
Rental product, net	97,330		13,094		19,155		—			129,579			—		121,983		7,150		18,211		—		147,344
Goodwill	6,159		834,929		51,678		—			892,766			—		6,159		837,532		47,300		—		890,991
Intangible assets, net	320		648,031		24,706		—			673,057			—		213		546,937		21,021		—		568,171
Investments in subsidiaries	2,352,986		—		—		(2,352,986		)	—			983,834		2,570,579		—		—		(3,554,413)		—
Other assets	69,178		680		9,980		(69,806		)	10,032			13,353		24,616		3,850		8,831		(42,132)		8,518
Total assets	$	3,065,369	$	2,720,992	$	417,253	$	(2,590,170	)	$	3,613,444	$	1,018,680	$	3,311,476	$	2,737,622	$	382,706	$	(3,938,105)	$	3,512,379

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	193,913	$	182,338	$	54,772	$	(167,378	)	$	263,645	$	18,891	$	393,176	$	116,028	$	46,985	$	(341,560)	$	233,520
Accrued expenses and other current liabilities	105,604		161,769		29,488		—			296,861			9,592		142,648		105,170		21,801		—		279,211
Current maturities of long-term debt	11,000		—		—		—			11,000
Current portion of long-term debt													—		7,000		—		—		—		7,000
Total current liabilities	310,517		344,107		84,260		(167,378		)	571,506			28,483		542,824		221,198		68,786		(341,560)		519,731
Long-term debt, net	1,638,606		—		59,906		(59,906		)	1,638,606			—		1,649,206		—		33,432		(33,432)		1,649,206
Deferred taxes and other liabilities	80,526		285,293		11,693		(9,900		)	367,612			4,814		135,612		215,092		11,241		(8,700)		358,059
Shareholders’ equity	1,035,720		2,091,592		261,394		(2,352,986		)	1,035,720
Total liabilities and shareholders’ equity	$	3,065,369	$	2,720,992	$	417,253	$	(2,590,170	)	$	3,613,444
Shareholders' equity													985,383		983,834		2,301,332		269,247		(3,554,413)		985,383
Total liabilities and shareholders' equity												$	1,018,680	$	3,311,476	$	2,737,622	$	382,706	$	(3,938,105)	$	3,512,379

23

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~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The Men’s Wearhouse, Inc.~~

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

January ~~31, 2015~~30, 2016

(in thousands)


	The Men’s		Guarantor		Non-Guarantor							Tailored		The Men’s		Guarantor		Non-Guarantor
	Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations			Consolidated		Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	18,262	$	4,857	$	39,142	$	—		$	62,261	$	—	$	724	$	2,243	$	27,013	$	—	$	29,980
Accounts receivable, net	20,304		422,930		35,303		(405,271		)	73,266			—		23,067		392,944		29,845		(381,966)		63,890
Inventories	285,309		510,651		142,376		—			938,336			—		253,472		630,407		138,625		—		1,022,504
Other current assets	105,507		58,792		5,510		—			169,809			19,037		79,964		36,308		8,237		—		143,546
Total current assets	429,382		997,230		222,331		(405,271		)	1,243,672			19,037		357,227		1,061,902		203,720		(381,966)		1,259,920
Property and equipment, net	306,597		221,454		38,023		—			566,074			—		254,335		230,209		37,280		—		521,824
Rental product, net	107,908		8,318		16,446		—			132,672			—		124,468		16,224		16,768		—		157,460
Goodwill	6,159		834,470		47,307		—			887,936			—		6,160		68,510		43,916		—		118,586
Intangible assets, net	293		645,388		22,578		—			668,259			—		186		159,530		18,794		—		178,510
Investments in subsidiaries	2,405,680		—		—		(2,405,680		)	—			(109,188)		1,439,187		-		-		(1,329,999)		—
Other assets	42,279		681		9,671		(43,032		)	9,599			—		6,914		992		8,513		(8,400)		8,019
Total assets	$	3,298,298	$	2,707,541	$	356,356	$	(2,853,983	)	$	3,508,212	$	(90,151)	$	2,188,477	$	1,537,367	$	328,991	$	(1,720,365)	$	2,244,319

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable	$	449,102	$	120,499	$	45,537	$	(405,271	)	$	209,867	$	—	$	419,187	$	153,717	$	46,176	$	(381,966)	$	237,114
Accrued expenses and other current liabilities	145,943		101,363		23,238		—			270,544			7,602		154,014		75,676		19,470		—		256,762
Current maturities of long- term debt	11,000		—		—		—			11,000
Current portion of long-term debt													—		42,451		-		—		—		42,451
Total current liabilities	606,045		221,862		68,775		(405,271		)	491,411			7,602		615,652		229,393		65,646		(381,966)		536,327
Long-term debt, net	1,637,686		—		33,432		(33,432		)	1,637,686			—		1,613,473		-		—		—		1,613,473
Deferred taxes and other liabilities	84,778		323,376		10,772		(9,600		)	409,326			2,333		68,540		121,531		10,601		(8,400)		194,605
Shareholders’ equity	969,789		2,162,303		243,377		(2,405,680		)	969,789
Total liabilities and shareholders’ equity	$	3,298,298	$	2,707,541	$	356,356	$	(2,853,983	)	$	3,508,212
Shareholders' (deficit) equity													(100,086)		(109,188)		1,186,443		252,744		(1,329,999)		(100,086)
Total liabilities and shareholders' (deficit) equity												$	(90,151)	$	2,188,477	$	1,537,367	$	328,991	$	(1,720,365)	$	2,244,319

24

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~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The Men’s Wearhouse, Inc.~~

Tailored Brands, Inc.

Condensed Consolidating Statement of Earnings (Loss) ~~Earnings~~

(in thousands)

	The Men’s			Guarantor			Non-Guarantor
	Wearhouse, Inc.			Subsidiaries			Subsidiaries			Eliminations			Consolidated			Tailored		The Men’s		Guarantor		Non-Guarantor
Three months ended October 31, 2015:
																Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Three Months Ended October 29, 2016
Net sales	$	464,380		$	448,712		$	109,306		$	(156,952	)	$	865,446		$	—	$	460,432	$	466,476	$	105,474	$	(185,448)	$	846,934
Cost of sales	241,412			340,652			67,343			(156,952		)	492,455				—		230,110		361,117		63,949		(185,448)		469,728
Gross margin	222,968			108,060			41,963			—			372,991				—		230,322		105,359		41,525		—		377,206
Operating expenses	186,467			197,899			29,487			(4,461		)	409,392				974		146,398		153,439		29,662		(14,323)		316,150
Operating income (loss)	36,501			(89,839		)	12,476			4,461			(36,401		)
Operating (loss) income																	(974)		83,924		(48,080)		11,863		14,323		61,056
Other income and expenses, net	4,461			—			—			(4,461		)	—				—		—		14,323		—		(14,323)		—
Interest income	682			1,003			40			(1,675		)	50				—		60		517		49		(574)		52
Interest expense	(27,278		)	(579		)	(275		)	1,675			(26,457		)		(8)		(25,890)		—		(152)		574		(25,476)
Earnings (loss) before income taxes	14,366			(89,415		)	12,241			—			(62,808		)
Provision (benefit) for income taxes	8,524			(44,859		)	681			—			(35,654		)
Earnings (loss) before equity in net loss of subsidiaries	5,842			(44,556		)	11,560			—			(27,154		)
Equity in loss of subsidiaries	(32,996		)	—			—			32,996			—
Net (loss) earnings attributable to common shareholders	$	(27,154	)	$	(44,556	)	$	11,560		$	32,996		$	(27,154	)
Comprehensive (loss) income	$	(29,400	)	$	(44,556	)	$	9,536		$	35,020		$	(29,400	)
Gain on extinguishment of debt, net																	—		1,808		—		—		—		1,808
(Loss) earnings before income taxes																	(982)		59,902		(33,240)		11,760		—		37,440
(Benefit) provision for income taxes																	(247)		14,763		(8,119)		2,610		—		9,007
(Loss) earnings before equity in net income of subsidiaries																	(735)		45,139		(25,121)		9,150		—		28,433
Equity in earnings of subsidiaries																	29,168		(15,971)		—		—		(13,197)		—
Net earnings (loss)																$	28,433	$	29,168	$	(25,121)	$	9,150	$	(13,197)	$	28,433
Comprehensive income (loss)																$	14,306	$	30,116	$	(25,121)	$	(5,925)	$	930	$	14,306

Three months ended November 1, 2014:

Three Months Ended October 31, 2015
Net sales	$	435,285		$	453,905		$	128,429		$	(126,982	)	$	890,637		$	—	$	464,380	$	448,712	$	109,306	$	(156,952)	$	865,446
Cost of sales	344,575			227,532			76,307			(126,982		)	521,432				—		241,412		340,652		67,343		(156,952)		492,455
Gross margin	90,710			226,373			52,122			—			369,205				—		222,968		108,060		41,963		—		372,991
Operating expenses	178,233			114,729			34,331			(3,263		)	324,030				783		182,912		200,671		29,487		(4,461)		409,392
Operating (loss) income	(87,523		)	111,644			17,791			3,263			45,175				(783)		40,056		(92,611)		12,476		4,461		(36,401)
Other income and expenses, net	3,658			(395		)	—			(3,263		)	—				—		4,461		—		—		(4,461)		—
Interest income	329			12			108			(324		)	125				—		682		1,003		40		(1,675)		50
Interest expense	(25,032		)	(40		)	(383		)	324			(25,131		)		—		(27,278)		(579)		(275)		1,675		(26,457)
(Loss) earnings before income taxes	(108,568		)	111,221			17,516			—			20,169				(783)		17,921		(92,187)		12,241		—		(62,808)
(Benefit) provision for income taxes	(39,908		)	48,891			4,185			—			13,168				(254)		5,654		(41,735)		681		—		(35,654)
(Loss) earnings before equity in net income of subsidiaries	(68,660		)	62,330			13,331			—			7,001				(529)		12,267		(50,452)		11,560		—		(27,154)
Equity in earnings of subsidiaries	75,661			—			—			(75,661		)	—				(26,625)		(38,892)		—		—		65,517		—
Net earnings including non-controlling interest	7,001			62,330			13,331			(75,661		)	7,001
Net earnings attributable to non-controlling interest	(208		)	—			(208		)	208			(208		)
Net earnings attributable to common shareholders	$	6,793		$	62,330		$	13,123		$	(75,453	)	$	6,793
Net (loss) earnings																$	(27,154)	$	(26,625)	$	(50,452)	$	11,560	$	65,517	$	(27,154)
Comprehensive (loss) income	$	(5,758	)	$	62,330		$	251		$	(62,581	)	$	(5,758	)	$	(29,400)	$	(26,847)	$	(50,452)	$	9,536	$	67,763	$	(29,400)

25

Table of Contents

~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The Men’s Wearhouse, Inc.~~

Tailored Brands, Inc.

Condensed Consolidating Statement of Earnings (Loss)

(in thousands)

	The Men’s			Guarantor			Non-Guarantor
	Wearhouse, Inc.			Subsidiaries			Subsidiaries			Eliminations			Consolidated			Tailored		The Men’s		Guarantor		Non-Guarantor
Nine months ended October 31, 2015:
Net sales	$	1,388,910		$	1,369,352		$	328,755		$	(416,408	)	$	2,670,609
Cost of sales	701,191			1,010,107			202,495			(416,408		)	1,497,385
Gross margin	687,719			359,245			126,260			—			1,173,224
Operating expenses	563,251			414,870			90,649			(12,557		)	1,056,213
Operating income (loss)	124,468			(55,625		)	35,611			12,557			117,011
Other income and expenses, net	11,543			1,014			—			(12,557		)	—
Interest income	1,831			2,672			103			(4,466		)	140
Interest expense	(81,579		)	(1,535		)	(827		)	4,466			(79,475		)
Loss on extinguishment of debt	(12,675		)	—			—			—			(12,675		)
Earnings (loss) before income taxes	43,588			(53,474		)	34,887			—			25,001
Provision (benefit) for income taxes	18,152			(32,771		)	8,626			—			(5,993		)
Earnings (loss) before equity in net income of subsidiaries	25,436			(20,703		)	26,261			—			30,994
Equity in earnings of subsidiaries	5,558			—			—			(5,558		)	—
Net earnings (loss) attributable to common shareholders	$	30,994		$	(20,703	)	$	26,261		$	(5,558	)	$	30,994
Comprehensive income (loss)	$	30,309		$	(20,703	)	$	25,883		$	(5,180	)	$	30,309
																Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Nine months ended November 1, 2014:
Nine Months Ended October 29, 2016
Net sales	$	1,303,738		$	1,051,976		$	363,111		$	(394,636	)	$	2,324,189		$	—	$	1,382,515	$	1,300,852	$	315,060	$	(412,987)	$	2,585,440
Cost of sales	774,707			713,272			219,735			(394,636		)	1,313,078				—		676,761		992,265		190,050		(412,987)		1,446,089
Gross margin	529,031			338,704			143,376			—			1,011,111				—		705,754		308,587		125,010		—		1,139,351
Operating expenses	593,263			212,373			100,921			(10,606		)	895,951				2,554		452,661		486,419		88,958		(42,923)		987,669
Operating (loss) income	(64,232		)	126,331			42,455			10,606			115,160				(2,554)		253,093		(177,832)		36,052		42,923		151,682
Other income and expenses, net	9,477			1,129			—			(10,606		)	—				—		—		42,923		—		(42,923)		—
Interest income	1,314			343			262			(1,614		)	305				2		70		1,393		89		(1,452)		102
Interest expense	(39,643		)	(370		)	(1,060		)	1,614			(39,459		)		(13)		(78,932)		—		(360)		1,452		(77,853)
Loss on extinguishment of debt	(2,158		)	—			—			—			(2,158		)
Gain on extinguishment of debt, net																	—		1,737		—		—		—		1,737
(Loss) earnings before income taxes	(95,242		)	127,433			41,657			—			73,848				(2,565)		175,968		(133,516)		35,781		—		75,668
(Benefit) provision for income taxes	(27,733		)	55,672			10,082			—			38,021				(671)		46,915		(34,900)		9,279		—		20,623
(Loss) earnings before equity in net income of subsidiaries	(67,509		)	71,761			31,575			—			35,827				(1,894)		129,053		(98,616)		26,502		—		55,045
Equity in earnings of subsidiaries	103,336			—			—			(103,336		)	—				56,939		(72,114)		—		—		15,175		—
Net earnings including non-controlling interest	35,827			71,761			31,575			(103,336		)	35,827
Net earnings attributable to non-controlling interest	(292		)	—			(292		)	292			(292		)
Net earnings attributable to common shareholders	$	35,535		$	71,761		$	31,283		$	(103,044	)	$	35,535
Comprehensive income	$	29,053		$	71,761		$	24,402		$	(96,163	)	$	29,053
Net earnings (loss)																$	55,045	$	56,939	$	(98,616)	$	26,502	$	15,175	$	55,045
Comprehensive income (loss)																$	38,193	$	58,333	$	(98,616)	$	8,256	$	32,027	$	38,193

Nine Months Ended October 31, 2015
Net sales																$	—	$	1,388,910	$	1,369,352	$	328,755	$	(416,408)	$	2,670,609
Cost of sales																	—		701,191		1,010,107		202,495		(416,408)		1,497,385
Gross margin																	—		687,719		359,245		126,260		—		1,173,224
Operating expenses																	2,138		470,716		505,267		90,649		(12,557)		1,056,213
Operating (loss) income																	(2,138)		217,003		(146,022)		35,611		12,557		117,011
Other income and expenses, net																	—		11,543		1,014		—		(12,557)		—
Interest income																	—		1,831		2,672		103		(4,466)		140
Interest expense																	—		(81,579)		(1,535)		(827)		4,466		(79,475)
Loss on extinguishment of debt, net																	—		(12,675)		—		—		—		(12,675)
(Loss) earnings before income taxes																	(2,138)		136,123		(143,871)		34,887		—		25,001
(Benefit) provision for income taxes																	(706)		44,778		(58,691)		8,626		—		(5,993)
(Loss) earnings before equity in net income of subsidiaries																	(1,432)		91,345		(85,180)		26,261		—		30,994
Equity in earnings of subsidiaries																	32,426		(58,919)		—		—		26,493		—
Net earnings (loss)																	30,994		32,426		(85,180)		26,261		26,493		30,994
Comprehensive income (loss)																$	30,309	$	32,119	$	(85,180)	$	25,883	$	27,178	$	30,309

26

Table of Contents

~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The Men’s Wearhouse, Inc.~~

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended October ~~31, 2015~~29, 2016

(in thousands)

	The Men’s			Guarantor			Non-Guarantor
	Wearhouse, Inc.			Subsidiaries			Subsidiaries			Eliminations		Consolidated			Tailored		The Men’s		Guarantor		Non-Guarantor
Net cash provided by operating activities	$	73,276		$	19,237		$	19,723		$	—	$	112,236
															Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities															$	26,245	$	156,148	$	36,198	$	(15,269)	$	(26,438)	$	176,884

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(55,857		)	(22,147		)	(8,402		)	—		(86,406		)		—		(40,273)		(37,055)		(3,222)		—		(80,550)
Proceeds from sales of property and equipment	2,586			27			—			—		2,613
Intercompany activities																—		(19,025)		—		—		19,025		—
Proceeds from sale of property and equipment																—		—		598		7		—		605
Net cash used in investing activities	(53,271		)	(22,120		)	(8,402		)	—		(83,793		)		—		(59,298)		(36,457)		(3,215)		19,025		(79,945)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on new term loan	(6,250		)	—			—			—		(6,250		)
Payments on term loan																—		(40,701)		—		—		—		(40,701)
Proceeds from asset-based revolving credit facility	5,500			—			—			—		5,500				—		517,500		—		3,050		—		520,550
Payments on asset-based revolving credit facility	(5,500		)	—			—			—		(5,500		)		—		(517,500)		—		(3,050)		—		(520,550)
Deferred financing costs	(3,566		)	—			—			—		(3,566		)
Repurchase and retirement of senior notes																—		(25,000)		—		—		—		(25,000)
Intercompany activities																—		(26,438)		—		19,025		7,413		—
Cash dividends paid	(26,269		)	—			—			—		(26,269		)		(26,438)		—		—		—		—		(26,438)
Proceeds from issuance of common stock	2,454			—			—			—		2,454				1,451		—		—		—		—		1,451
Tax payments related to vested deferred stock units	(4,538		)	—			—			—		(4,538		)		(1,258)		—		—		—		—		(1,258)
Excess tax benefits from share-based plans	950			154			—			—		1,104
Repurchases of common stock	(277		)	—			—			—		(277		)
Net cash (used in) provided by financing activities	(37,496		)	154			—			—		(37,342		)		(26,245)		(92,139)		—		19,025		7,413		(91,946)
Effect of exchange rate changes	—			—			292			—		292				—		—		—		(25)		—		(25)
(Decrease) increase in cash and cash equivalents	(17,491		)	(2,729		)	11,613			—		(8,607		)
Increase (decrease) in cash and cash equivalents																—		4,711		(259)		516		—		4,968
Cash and cash equivalents at beginning of period	18,262			4,857			39,142			—		62,261				—		724		2,243		27,013		—		29,980
Cash and cash equivalents at end of period	$	771		$	2,128		$	50,755		$	—	$	53,654		$	—	$	5,435	$	1,984	$	27,529	$	—	$	34,948

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~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~The Men’s Wearhouse, Inc.~~

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended ~~November 1, 2014~~October 31, 2015

(in thousands)

	The Men’s			Guarantor			Non-Guarantor
	Wearhouse, Inc.			Subsidiaries			Subsidiaries			Eliminations		Consolidated			Tailored		The Men’s		Guarantor		Non-Guarantor
Net cash provided by (used in) operating activities	$	360,468		$	(324,183	)	$	22,732		$	—	$	59,017
															Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net cash provided by operating activities															$	27,680	$	55,665	$	35,437	$	19,723	$	(26,269)	$	112,236

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(51,329		)	(13,510		)	(7,558		)	—		(72,397		)		—		(39,657)		(38,347)		(8,402)		—		(86,406)
Acquisition of business, net of cash	(1,820,308		)	328,915			—			—		(1,491,393		)
Proceeds from sales of property and equipment	160			—			—			—		160
Net cash (used in) provided by investing activities	(1,871,477		)	315,405			(7,558		)	—		(1,563,630		)
Proceeds from sale of property and equipment																—		2,586		27		—		—		2,613
Net cash used in investing activities																—		(37,071)		(38,320)		(8,402)		—		(83,793)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from new term loan	1,089,000			—			—			—		1,089,000
Payments on previous term loan	(97,500		)	—			—			—		(97,500		)
Payments on term loan																—		(6,250)		—		—		—		(6,250)
Proceeds from asset-based revolving credit facility	340,000			—			—			—		340,000				—		5,500		—		—		—		5,500
Payments on asset-based revolving credit facility	(340,000		)	—			—			—		(340,000		)		—		(5,500)		—		—		—		(5,500)
Proceeds from issuance of senior notes	600,000			—			—			—		600,000
Deferred financing costs	(51,072		)	—			—			—		(51,072		)		—		(3,566)		—		—		—		(3,566)
Intercompany activities																—		(26,269)		—		—		26,269		—
Cash dividends paid	(26,119		)	—			—			—		(26,119		)		(26,269)		—		—		—		—		(26,269)
Purchase of non-controlling interest	(6,651		)	—			—			—		(6,651		)
Proceeds from issuance of common stock	7,115			—			—			—		7,115				2,454		—		—		—		—		2,454
Tax payments related to vested deferred stock units	(6,907		)	—			—			—		(6,907		)		(4,538)		—		—		—		—		(4,538)
Excess tax benefits from share-based plans	3,194			542			—			—		3,736				950		—		154		—		—		1,104
Repurchases of common stock	(251		)	—			—			—		(251		)		(277)		—		—		—		—		(277)
Net cash provided by financing activities	1,510,809			542			—			—		1,511,351
Net cash (used in) provided by financing activities																(27,680)		(36,085)		154		—		26,269		(37,342)
Effect of exchange rate changes	—			—			(1,274		)	—		(1,274		)		—		—		—		292		—		292
(Decrease) increase in cash and cash equivalents	(200		)	(8,236		)	13,900			—		5,464				—		(17,491)		(2,729)		11,613		—		(8,607)
Cash and cash equivalents at beginning of period	1,414			16,955			40,883			—		59,252				—		18,262		4,857		39,142		—		62,261
Cash and cash equivalents at end of period	$	1,214		$	8,719		$	54,783		$	—	$	64,716		$	—	$	771	$	2,128	$	50,755	$	—	$	53,654

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~For supplemental information, we suggest that~~We encourage you to read this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) ~~be read~~ in conjunction with the corresponding section included in our Annual Report on Form 10-K for the year ended January ~~31, 2015.~~30, 2016. References herein to years are to our 52-week or 53-week fiscal year, which ends on the Saturday nearest January 3130 in the following calendar year. For example, references to ~~“2015”~~“2016” mean the 52-week fiscal year ending January ~~30, 2016.~~28, 2017.

Executive Overview

Background

We are the largest specialty retailer of men’s suits and the largest provider of apparel rental product in the U.S. and Canada with ~~1,748~~1,710 stores including tuxedo shops within Macy’s stores. Our operations are conducted in two reportable segments, retail and corporate apparel, based on the way we manage, evaluate and internally report our business activities. Refer to Note 1514 of Notes to Condensed Consolidated Financial Statements and the discussion included in “Results of Operations” below for additional information and disclosures regarding our reporting segments.

We conduct our retail segment as a specialty apparel retailer offering suits, suit separates, sport coats, slacks, business casual, sportswear, outerwear, dress and casual shirts, shoes and accessories, primarily for men. We offer our products and services through multiple brands ~~and channels~~ including The Men’s Wearhouse/Men’s Wearhouse and Tux (“Men’s Wearhouse”), Jos. A. Bank, Moores Clothing for Men (“Moores”), K&G and ~~the Internet~~Joseph Abboud and through multiple channels including physical stores, online at www.menswearhouse.com, www.josbank.com and ~~www.josephabboud.com.~~www.josephabboud.com, and our call center. Our stores are located throughout the United States (“U.S.”), Puerto Rico and Canada and carry a wide selection of exclusive and non-exclusive merchandise brands. Tuxedo and suit rentals are offered at our Men’s Wearhouse, Jos. A. Bank and Moores retail stores and our tuxedo shops within Macy’s stores. In addition, we offer our customers alteration services and most of our K&G stores offer ladies’ career apparel, sportswear, accessories and shoes and children’s apparel. We also conduct retail dry cleaning, laundry and heirlooming operations through MW Cleaners in Texas.

~~We operate two~~The corporate apparel ~~providers —~~segment includes the results from our ~~UK-based~~corporate apparel and uniform operations ~~the largest provider~~conducted by Twin Hill in the ~~UK under the~~U.S. and Dimensions, Alexandra, and Yaffy ~~brands, and our Twin Hill operations~~ in the ~~U.S.~~United Kingdom (“UK”). These operations provide corporate clothing uniforms and workwear to workforces through multiple channels including managed corporate accounts, catalogs and the internet at www.dimensions.co.uk and www.alexandra.co.uk.

In the first quarter of 2016, we ~~will launch a holding company called Tailored Brands. We believe that the holding company structure will allow us~~revised our segment reporting presentation to ~~further leverage~~reflect changes in how we manage our business, including resource allocation and performance assessment. Specifically, we are now presenting expenses related to our shared services platform ~~and support, nurture and augment~~separately from the results of our ~~family~~operating segments to promote enhanced comparability of ~~brands.~~our operating segments. Previously, these shared service expenses were primarily included in our retail segment. Comparable prior period information has been recast to reflect our revised segment presentation.

~~On June 18, 2014,~~Third Quarter Discussion

Our improved profitability this quarter reflects solid progress on our cost reduction initiatives as we ~~acquired 100% of~~continue to navigate the ~~outstanding common stock~~turnaround of Jos. A. Bank and a ~~men’s specialty apparel retailer,~~choppy retail environment.

Men’s Wearhouse’s 0.1% comparable sales increase reflects the softening traffic trend we initially saw after Father’s Day, which has continued. While the retail environment remains challenging, we have experienced positive response to premium clothing, custom clothing and performance wear, including the recently launched Kenneth Cole performance wear offering. We plan to drive greater awareness of these innovative offerings and view them as significant growth drivers in 2017. In addition, we continued to strengthen our omnichannel capabilities during the third quarter, which we believe will help drive additional traffic as we make it easy for ~~$65.00 net per share in cash, or total consideration of approximately $1.8 billion. We believe that~~customers to shop with us both online and in-store.

Our Jos. A. Bank turnaround is gaining traction. Jos. A. Bank’s ~~business model~~comparable sales decline of 9.8% in ~~conjunction with our business model will create meaningful opportunities for future growth and operational synergies. The comparability of our results~~the third quarter was better than expected, particularly since we were up against last year’s final “Buy-One-Get-Three Free” event in October. While there is ~~affected~~still work to be done, we are encouraged by the ~~inclusion of~~healthier trends we are seeing at Jos. A. ~~Bank’s results for~~Bank that reflect

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our investments in elevating the ~~entire nine month period ended October 31, 2015, while last year’s operations include Jos. A. Bank’s results beginning on June 18, 2014.~~brand and customer experience through marketing, merchandising and a more engaging sales experience.

~~On June 10, 2015, we entered into a 10-year agreement with Macy’s, Inc.~~We are on track to ~~operate men’s tuxedo rental shops inside 300 Macy’s stores. As~~achieve our targeted $50 million of ~~October 31, 2015, we had opened 12 tuxedo shops within Macy’s stores, Tuxedo Shop @ Macy’s, with the remainder to open during~~cost savings for fiscal 2016. In addition, we ~~will collaborate with Macy’s~~continue to ~~develop an online tuxedo rental shop~~make progress on ~~www.macys.com.~~

~~Third Quarter Discussion~~our store base rationalization initiative. During the third quarter, we closed 83 stores, including 74 Men’s Wearhouse and Tux stores, bringing our total year-to-date closures to 187 stores. We expect to close approximately 63 stores in the fourth quarter of fiscal 2016 for a total of approximately 250 store closures during fiscal 2016.

Key ~~performance~~operating metrics for the quarter ended October ~~31, 2015~~29, 2016 include:

·

Net sales decrease of 2.1%

·

Comparable sales increased 0.1% at Men’s Wearhouse while comparable sales decreased at Jos. A. Bank, Moores and K&G by 9.8%, 0.4% and 3.0%, respectively.

·

Operating income increased to $61.1 million compared to an operating loss of $36.4 million in the third quarter of fiscal 2015. Results for the third quarter of fiscal 2015 included a pre-tax, non-cash tradename impairment charge for Jos. A. Bank of $90.1 million.

·

Diluted earnings per share of $0.58 compared to diluted loss per share of $0.56 in the third quarter of fiscal 2015.

· ~~Net sales decrease of 2.8%~~

· ~~Comparable sales increase at Men’s Wearhouse and K&G of 5.3% and 3.7%, respectively, while comparable sales at Jos. A. Bank and Moores decreased 14.6% and 5.4%, respectively.~~

· ~~Results~~Key liquidity metrics for the ~~third quarter~~nine months ended October 29, 2016 include:

·

Cash provided by operating activities was $176.9 million for the first nine months of fiscal 2016 compared to $112.2 million for the first nine months of fiscal 2015.

·

Capital expenditures were $80.6 million for the first nine months of fiscal 2016 compared to $86.4 million for the first nine months of fiscal 2015.

·

We repaid $40.7 million on our term loan, repurchased and retired $25.0 million of senior notes and had no borrowings outstanding on our revolving credit facility as of October 29, 2016.

·

Dividends paid totaled $26.4 million for the nine months ended October 29, 2016.

Items Affecting Comparability of ~~2015 and 2014 include acquisition, integration~~Results

The comparability of our results has been impacted by certain items, including restructuring and other costs consisting of ~~$5.1 million and $27.3 million, respectively, primarily~~costs related to our profit improvement and store rationalization programs and integration costs for Jos. A. Bank.

· ~~Pre-tax, non-cash Jos. A. Bank tradename impairment charge~~ A summary of ~~$90.1 million~~

· ~~Diluted loss per share~~the effect of ~~$0.56~~these items on pretax income for each applicable period is presented below (dollars in millions):


	For the Quarter Ended				For the Nine Months Ended
	October 29,		October 31,		October 29,		October 31,
	2016		2015		2016		2015
Tradename impairment charge	$	—	$	90.1	$	—	$	90.1
Restructuring and other charges (1)		10.9		—		59.1		—
Integration costs related to Jos. A. Bank(2)		1.4		5.0		7.1		15.9
Purchase accounting adjustment for the step up of Jos. A. Bank inventory		—		—		—		0.8
Other purchase accounting related charges		—		2.2		(0.6)		7.0
(Gain) loss on extinguishment of debt, net		(1.8)		—		(1.7)		12.7
Separation costs with a former executive		—		—		—		3.7
Other		—		0.1		2.6		0.1
Total (3)	$	10.5	$	97.4	$	66.5	$	130.3

⁽¹⁾

See Note 2 to the condensed consolidated financial statements for additional information on restructuring and other costs.

⁽²⁾

For the quarters ended October 29, 2016 and October 31, 2015, integration costs related to Jos. A. Bank included $0.1 million and $0.5 million of severance costs, respectively. For the nine months ended October 29, 2016 and October 31, 2015, integration costs related to Jos. A. Bank included $2.0 million and $5.9 million of severance and employee-related costs, respectively.

⁽³⁾

For the quarter ended October 29, 2016, includes $13.3 million within selling, general and administrative expenses (“SG&A”) offset by a $1.0 million reduction in cost of sales and a $1.8 million gain on extinguishment of debt, net.

~~During the third quarter, our Men’s Wearhouse brand performed well, generating a comparable sales increase~~

30

Table of 5.3%, with clothing comparable sales of 7.2% and a rental service comparable sales increase of 0.7%. However, this was offset by Jos. A. Bank’s comparable sales decrease of 14.6%, primarily due to a decline in traffic as we transition away from Jos. A. Bank’s historical promotional strategy.Contents

For the quarter ended October 31, 2015, includes $90.1 million for a tradename impairment charge and $7.4 million within SG&A offset by a $0.1 reduction in cost of sales. For the nine months ended October 29, 2016, includes $69.9 million within SG&A offset by a $1.7 million reduction in cost of sales and a $1.7 million gain on extinguishment of debt, net. For the nine months ended October 31, 2015, includes $90.1 million for the tradename impairment charge, $25.5 million included in SG&A, $2.0 million in cost of sales and a $12.7 million loss on extinguishment of debt. Tradename impairment charge and gain (loss) on extinguishment of debt, net amounts are shown as separate lines in the condensed consolidated statement of earnings (loss).

Subsequent to our acquisition of Jos. A. Bank on June 18, 2014, we focused on (a) integrating the people, processes and systems, including point-of-sale, merchandising, and back office, (b) realizing significant cost synergies, (c) introducing new, updated and expanded assortments in the Jos. A. Bank stores, (d) making changes to the Jos. A. Bank promotional and brand building strategies, and (e) identifying and implementing new revenue growth initiatives, including the expansion of tuxedo and suit rental into all Jos. A. Bank stores.

While we have had success in many of these initiatives, we have been challenged in growing revenue opportunities. After we completed the integration, we were able to develop a firmer grasp of the Jos. A. Bank business and promotional model. As our understanding of the Jos. A. Bank business grew, we discovered that the historical promotional pricing model at Jos. A. Bank had been delivering diminishing returns over time, and we realized that attaining revenue synergies was going to require eliminating the most unhealthy promotional offers.

Moreover, during the second and third quarters of 2015, the effectiveness of the existing Jos. A. Bank promotional model began to deteriorate more quickly than we had anticipated. As a result, we made the decision to accelerate the transition away from the harmful promotional cadence by removing the most excessive offers (the Buy-One-Get-Three Free or more events), and began seeking sustainable volume and margin growth.

As noted above, Jos. A. Bank experienced a comparable sales decrease of 14.6%, which was far below our expectations. This decrease was primarily driven by a decline in traffic as we reduced the number of Buy-One-Get-Two Free and Buy-One-Get Three Free events towards the end of the third quarter in anticipation of a final Buy-One-Get-Three Free event, which occurred on October 22 through 25, 2015. Based on this third quarter trend, we currently expect comparable sales at Jos. A. Bank to further deteriorate significantly during the fourth quarter of 2015.

While we expected some top-line volatility as we changed the promotional model, we did not anticipate that the impact on top-line sales from the traffic decline would occur to the degree it did. Despite these results, we continue to believe that transitioning away from the unsustainable promotional strategy we inherited from Jos. A. Bank and the introduction of our new promotional strategy will provide a foundation for long-term profitability at the Jos. A. Bank brand. Although we anticipate continuing declines in traffic and in units per transaction, we have introduced new promotional offers that do not require large quantity purchases and are better aligned with how our customers have told us they prefer to shop. Our customer research indicates while our existing customers appreciate our quality and value, many dislike being forced to buy in quantity and many of our prospective Jos. A. Bank customers found our promotional offers confusing and causing them to question the quality of our products.

On November 5, 2015, we announced our preliminary results for the third quarter and an updated fiscal 2015 outlook. Based on Jos. A. Bank’s results in the third quarter of 2015 as well as the recent significant decline in our market capitalization that occurred subsequent to our November 5th announcement, we concluded a triggering event occurred that required an interim test for impairment of its tradename and goodwill. Based on our analysis, we concluded that the Jos. A. Bank tradename was impaired and recorded a non-cash impairment charge of $90.1 million. We further concluded, based on our analysis that there was no goodwill impairment, as of October 31, 2015. However, if we determine we are not likely to meet the projections used in our interim impairment tests or if our market capitalization remains at current levels, it is possible that our annual impairment tests in the fourth quarter of 2015 could result in a material impairment of the Jos. A. Bank goodwill and an additional impairment of its tradename. For additional information on our tradename and goodwill analysis, see Note 12 to Condensed Consolidated Financial Statements and the discussion under “Critical Accounting Policies and Estimates” beginning on page 40 of this Form 10-Q.

Store Data

The following table presents information with respect to retail apparel stores and tuxedo shops within Macy’s stores in operation during each of the respective fiscal periods:

For the Three Months
Ended

For the Nine Months
Ended

For the Year
Ended

October 31,
2015

November 1,
2014

October 31,
2015

November 1,
2014

January 31,
2015

Open at beginning of period:

1,754

1,756

1,758

1,124

1,124

Acquired from Jos. A. Bank(1)

—

—

—

624

624

Opened (2)

18

20

32

45

60

Closed

(24
)
(16
)
(42
)
(33
)
(50
)
Open at end of the period

1,748

1,760

1,748

1,760

1,758

Men’s Wearhouse(2)

709

686

709

686

698

Men’s Wearhouse and Tux

183

223

183

223

210

Tuxedo shops @ Macy’s

12

—

12

—

—

Jos. A. Bank(1)

633

637

633

637

636

Moores

123

122

123

122

123

K&G

88

92

88

92

91

1,748

1,760

1,748

1,760

1,758


	For the Three Months Ended		For the Nine Months Ended		For the Year Ended
	October 29,	October 31,	October 29,	October 31,	January 30,
	2016	2015	2016	2015	2016

Open at beginning of period:	1,767	1,754	1,724	1,758	1,758
Opened (1)(2)	26	18	173	32	42
Closed	(83)	(24)	(187)	(42)	(76)
Open at end of the period	1,710	1,748	1,710	1,748	1,724

Men’s Wearhouse(2)	713	709	713	709	714
Men’s Wearhouse and Tux	61	183	61	183	160
Tuxedo shops @ Macy’s	170	12	170	12	12
Jos. A. Bank(3)	550	633	550	633	625
Moores	126	123	126	123	124
K&G	90	88	90	88	89
	1,710	1,748	1,710	1,748	1,724

~~(1)Excludes franchise stores.~~

~~(2)For 2015, includes one Joseph Abboud store.~~

⁽¹⁾

Includes 158 tuxedo shops within Macy’s stores opened in 2016.

⁽²⁾

Includes one Joseph Abboud store opened in 2015.

⁽³⁾

Excludes franchise stores.

During the ~~first nine months~~third quarter of ~~2015,~~2016, we opened 3226 stores/tuxedo shops ~~(12 Men’s Wearhouse stores, 12~~(20 tuxedo shops within Macy’s stores, ~~six~~four Men’s Wearhouse stores, one Jos. A. Bank ~~stores, one Joseph Abboud~~ store and one ~~Moores~~K&G store). We closed 4283 stores ~~(27~~(74 Men’s Wearhouse and Tux stores, ~~nine~~eight Jos. A. Bank stores ~~three K&G stores, two~~and one Men’s Wearhouse ~~stores and one Moores~~ store).

Seasonality

Our sales and net earnings are subject to seasonal fluctuations. Our rental revenues are heavily concentrated in the second and third quarters ~~due to prom~~(prom and wedding ~~seasons~~season) while the fourth quarter is considered the seasonal low ~~point for rentals.~~point. In addition, Jos. A. Bank has historically experienced increased customer traffic during the holiday season and its increased marketing efforts during the holiday season have historically resulted in sales and net earnings generated in the fourth quarter, ~~that~~which are significantly larger as compared to the other three quarters. This trend did not occur in the fourth quarter of 2015 as a result of our decision to change the brand’s promotional strategy. We ~~do not~~ currently ~~know whether~~expect this trend ~~will continue~~to resume at some point in the ~~current year’s fourth quarter given the change in promotional strategy.~~future. With respect to our corporate apparel sales and operating results, seasonal fluctuations are not significant but the acquisition of new customers or existing customer decisions to rebrand or revise their corporate wear programs can cause significant variations in period results. Because of these fluctuations in our sales, results for any quarter are not necessarily indicative of the results that may be achieved for the full year.

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Results of Operations

For the Three Months Ended October 29, 2016 Compared to the Three Months Ended October 31, 2015 ~~Compared to the Three Months Ended November 1, 2014~~

The following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated:


	For the Three Months Ended (1)				For the Three Months Ended(1)
	October 31,		November 1,		October 29,		October 31,
	2015		2014		2016		2015
Net sales:
Retail clothing product	71.2	%	71.2	%	67.9	%	71.2	%
Rental services	15.3		14.9		16.4		15.3
Alteration and other services	6.1		5.8		5.9		6.1
Total retail sales	92.6		92.0		90.2		92.6
Corporate apparel clothing product	7.4		8.0		9.8		7.4
Total net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales (2):
Retail clothing product	44.5		45.3		43.1		44.5
Rental services	16.2		25.3		16.5		16.2
Alteration and other services	68.3		71.5		67.2		68.3
Occupancy costs	14.3		14.0		14.3		14.3
Total retail cost of sales	55.7		57.7		54.1		55.7
Corporate apparel clothing product	71.5		68.7		67.7		71.5
Total cost of sales	56.9		58.6		55.5		56.9
Gross margin (2):
Retail clothing product	55.5		54.7		56.9		55.5
Rental services	83.8		74.7		83.5		83.8
Alteration and other services	31.7		28.6		32.8		31.7
Occupancy costs	(14.3	)	(14.0	)	(14.3)		(14.3)
Total retail gross margin	44.3		42.3		45.9		44.3
Corporate apparel clothing product	28.5		31.3		32.3		28.5
Total gross margin	43.1		41.5		44.5		43.1
Advertising expense	5.5		4.7		5.4		5.5
Selling, general and administrative expenses	31.3		31.7		31.9		31.3
Tradename impairment charge	10.4		—		—		10.4
Operating (loss) income	(4.2	)	5.1
Operating income (loss)					7.2		(4.2)
Interest income	0.0		0.0		0.0		0.0
Interest expense	(3.1	)	(2.8	)	(3.0)		(3.1)
(Loss) earnings before income taxes	(7.3	)	2.3
(Benefit) provision for income taxes	(4.1	)	1.5
Net (loss) earnings including non-controlling interest	(3.1	)	0.8
Net earnings attributable to non-controlling interest	—		0.0
Net (loss) earnings attributable to common shareholders	(3.1	)%	0.8	%
Gain on extinguishment of debt, net					0.2		—
Earnings (loss) before income taxes					4.4		(7.3)
Provision (benefit) for income taxes					1.1		(4.1)
Net earnings (loss)					3.4	%	(3.1)	%

⁽¹⁾

Percentage line items may not sum to totals due to the effect of rounding.

⁽²⁾

Calculated as a percentage of related sales.

32

~~(2)Calculated as a percentage of related sales.~~

Net Sales

Total net sales decreased ~~$25.2~~$18.5 million, or ~~2.8%~~2.1%, to ~~$865.4~~$846.9 million for the third quarter of ~~2015~~2016 as compared to the third quarter of ~~2014.~~2015.

Total retail sales decreased ~~$17.8~~$37.7 million, or ~~2.2%~~4.7%, to ~~$801.4~~$763.7 million for the third quarter of ~~2015~~2016 as compared to the third quarter of ~~2014~~2015 primarily due to a $40.8 million decrease in clothing product ~~sales~~revenues primarily at our Jos. A. Bank brand and ~~unfavorable currency fluctuations at our Canadian operations,~~a $3.2 million decrease in alteration and other services revenues, partially offset by ~~increased sales at Men’s Wearhouse.~~a $6.3 million increase in rental service revenues. The net decrease is attributable to the following:

~~(in millions)~~		~~Amount Attributed to~~
$	~~21.6~~		~~5.3% increase in comparable sales at Men’s Wearhouse.~~
(~~31.0~~in millions)		)	~~14.6%~~Amount��Attributed to
$	0.5		0.1% increase in comparable sales at Men's Wearhouse.
	(16.6)		9.8% decrease in comparable sales at Jos. A. Bank.

~~2.5~~ (2.1)		~~3.7% increase~~3.0% decrease in comparable sales at K&G.

~~(3.0~~ (0.2)	)	~~5.4%~~0.4% decrease in comparable sales at Moores(1).
	(15.2)		Decrease in non-comparable sales (primarily due to closed stores).
~~5.5~~	0.3		Increase ~~from net sales of stores opened in 2014, relocated stores and expanded stores not yet included in comparable sales.~~
~~5.0~~			~~Increase in net sales from new stores opened in 2015.~~
~~(9.4~~		)	~~Decrease in net sales resulting from closed stores.~~
~~(11.0~~		)	~~Decrease~~ in net sales resulting from change in U.S./Canadian dollar exchange rate.

~~2.0~~ (4.4)		~~Other.~~	Other (primarily decrease in alteration revenues).
$	~~(17.8~~ (37.7)	)	Decrease in total retail sales.

⁽¹⁾

Comparable sales percentages for Moores are calculated using Canadian dollars.

~~(1)Comparable sales percentages for Moores are calculated using Canadian dollars.~~

Comparable sales exclude the net sales of a store for any month of one period if the store was not owned or open throughout the same month of the prior period and include e-commerce net sales. We operate our business using an omnichannel approach and do not differentiate e-commerce sales from our other channels.

The slight increase at Men’s Wearhouse resulted primarily from ~~increased~~higher rental services revenue while comparable sales for clothing decreased primarily due to decreases in average transactions per store ~~that more than offset decreased~~and units sold per transaction ~~while~~partially offset by increased average unit retails (net selling prices) ~~were flat.~~. The decrease at Jos. A. Bank resulted primarily from decreased average transactions per store and decreased average unit retails partially offset by ~~increased~~higher units ~~sold~~ per ~~transaction.~~transaction and higher rental services revenue. The ~~increase~~decrease at K&G resulted from ~~increased~~lower average transactions per store ~~and~~partially offset by an increase in average unit retails ~~while~~and units sold per ~~transaction were flat.~~transaction. The decrease at Moores resulted from decreased average transactions per store partially offset by increased average unit retails with units sold per transaction ~~and average unit retails, driven by macroeconomic conditions in Canada.~~essentially flat. At Men’s Wearhouse, rental service comparable sales increased ~~0.7%~~4.9% due to an increase in rental rates partially offset by a decrease in unit rentals.

Total corporate apparel clothing product sales ~~decreased $7.4~~increased $19.2 million for the third quarter of ~~2015~~2016 as compared to the third quarter of ~~2014. UK corporate apparel sales decreased $6.3 million~~2015 primarily due ~~mainly~~ to the impact of a large new uniform program. The rollout of the new uniform program commenced in June 2016, was completed during the third quarter of 2016 and has now transitioned to a standard replenishment phase. The increase in corporate apparel sales was partially offset by the impact of a weaker British pound ~~Sterling~~ this year compared to last ~~year as well as lower sales from existing customer programs. U.S. corporate apparel sales decreased $1.1 million primarily due to lower sales from existing customer programs.~~year.

Gross Margin

Buying and distribution costs are included in determining our retail and corporate apparel clothing product gross margins. Our gross margin may not be comparable to other specialty retailers, as some companies exclude costs related to their distribution network from cost of goods sold while others, like us, include all or a portion of such costs in cost of goods sold and exclude them from SG&A expenses. Distribution costs are not included in determining our rental services gross margin but are included in SG&A expenses.

Our total gross margin increased ~~$3.8~~$4.2 million, or ~~1.0%~~1.1%, to ~~$373.0~~$377.2 million in the third quarter of ~~2015~~2016 as compared to the third quarter of 2014. During the third quarter of 2014, $11.8 million of an inventory valuation step up for Jos. A. Bank and a $10.6 million charge to rationalize our rental inventory to allow for more productive rental styles were recognized and negatively impacted last year’s gross margin results.

2015. Total retail segment gross margin ~~increased $7.9~~decreased $4.4 million, or ~~2.3%~~1.2%, from the same prior year quarter to ~~$354.7~~$350.3 million in the third quarter of ~~2015. As~~2016 primarily due to lower sales at Jos. A. Bank.

For the retail segment, total gross margin as a percentage of related sales ~~retail segment gross margin~~ increased from ~~42.3% in the third quarter of 2014 to~~ 44.3% in the third quarter of 2015 ~~driven primarily by an increase~~to 45.9% in the rental services gross margin rate as last year’s rate was impacted by the $10.6 million charge to rationalize our rental inventory as well as a higher retail clothing product gross margin rate, which was impacted last year by the inventory step up at Jos. A. Bank. However, during the third quarter of ~~2015, retail segment~~2016 as a result of anniversarying lower gross ~~margin was negatively impacted by~~margins in last year’s third quarter, resulting from the clearance of merchandise through ~~our~~the e-commerce channel, primarily at our Men’s ~~Wearhouse.~~Wearhouse brand.

33

Table of Contents

Occupancy costs ~~increased $0.3~~decreased $5.7 million ~~while occupancy~~primarily due to our store rationalization efforts. Occupancy costs as a percentage of retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, ~~increased from 14.0% to~~was essentially flat at 14.3% for both the third ~~quarter~~quarters of ~~2015 compared to the third quarter of 2014, primarily due to deleverage resulting from lower retail sales.~~2016 and 2015.

Corporate apparel gross margin ~~decreased $4.1~~increased $8.6 million, or ~~18.4%~~47.2%, in the third quarter of ~~2015 primarily due to unfavorable currency impacts at our UK operations and changes in the sales mix.~~2016. For the corporate apparel segment, total gross margin as a percentage of related sales ~~decreased~~increased from ~~31.3% in the third quarter of 2014 to~~ 28.5% in the third quarter of 2015 to 32.3% in the third quarter of 2016 primarily due to ~~unfavorable currency impacts at our UK operations.~~the impact of a large new uniform program.

Advertising Expense

Advertising expense ~~increased~~decreased to $45.7 million in the third quarter of 2016 from $48.0 million in the third quarter of 2015, ~~from $42.1 million in the third quarter~~a decrease of ~~2014, an increase of $5.9~~$2.3 million, or ~~14.1%~~4.9%. ~~The increase was primarily due to a shift in timing of marketing initiatives.~~ As a percentage of total net sales, advertising expense ~~increased~~decreased from ~~4.7% in the third quarter of 2014 to~~ 5.5% in the third quarter of ~~2015.~~2015 to 5.4% in the third quarter of 2016.

Selling, General and Administrative Expenses

SG&A expenses decreased to $270.5 million in the third quarter of 2016 from $271.3 million in the third quarter of 2015, ~~from $282.0 million in the third quarter of 2014,~~ a decrease of ~~$10.7~~$0.8 million, or ~~3.8%~~0.3%. As a percentage of total net sales, these expenses ~~decreased~~increased from ~~31.7% in the third quarter of 2014 to~~ 31.3% in the third quarter of ~~2015.~~2015 to 31.9% in the third quarter of 2016 primarily reflecting deleveraging from lower sales. The components of this ~~0.4%~~0.6% net ~~decrease~~increase in SG&A expenses as a percentage of total net sales and the related ~~absolute~~ dollar changes were as follows:

%

in millions

Attributed to

(1.4
)
$
(12.2
)
Decrease in acquisition, integration and other items as a percentage of sales from 1.9% in the third quarter of 2014 to 0.5% in the third quarter of 2015. For the third quarter of 2015 these costs totaled $4.8 million, related primarily to Jos. A. Bank integration and other costs, asset impairment charges, partially offset by a gain on the sale of property. For the third quarter of 2014, these costs totaled $17.0 million, related primarily to Jos. A. Bank acquisition and integration costs.

0.7

3.3

Increase in store salaries as a percentage of sales from 11.9% in the third quarter of 2014 to 12.6% in the third quarter of 2015 primarily due to deleverage resulting from lower retail sales. Store salaries on an absolute dollar basis increased $3.3 million primarily due to higher commissions at Men’s Wearhouse resulting from higher net sales.

0.3

(1.8
)
Increase in other SG&A expenses as a percentage of sales from 17.5% in the third quarter of 2014 to 17.8% in the third quarter of 2015. On an absolute dollar basis, other SG&A expenses decreased $1.8 million primarily due to decreases in non-store payroll costs, including incentive compensation, partially offset by higher benefit costs.

(0.4
)%
$
(10.7
)
Total


%	in millions		Attributed to
1.0	$	8.0	Increase in restructuring, integration and other items as a percentage of sales from 0.6% in the third quarter of 2015 to 1.6% in the third quarter of 2016. For the third quarter of 2016, these costs totaled $13.3 million, related primarily to restructuring and other costs. For the third quarter of 2015, these costs totaled $5.3 million related primarily to Jos. A. Bank integration and other costs and asset impairment charges, partially offset by a gain on the sale of property.
0.1		(2.0)	Increase in other SG&A expenses as a percentage of sales from 17.7% in the third quarter of 2015 to 17.8% in the third quarter of 2016 primarily due to deleverage in net sales. Other SG&A expenses decreased $2.0 million primarily due to cost reduction initiatives and a decrease in amortization of intangible assets as a result of the impairment charges recorded in the fourth quarter of 2015 partially offset by higher incentive compensation accruals.
(0.5)		(6.8)	Store salaries decreased $6.8 million and decreased as a percentage of sales from 13.1% in the third quarter of 2015 to 12.6% in the third quarter of 2016 primarily due to cost reduction initiatives.
0.6	$	(0.8)	Total

In the retail segment, SG&A expenses as a percentage of related net sales ~~decreased~~increased from ~~32.4%~~27.0% in the third quarter of ~~2014~~2015 to ~~32.0%~~27.2% in the third quarter of ~~2015. On an absolute dollar basis,~~2016 primarily due to deleveraging resulting from lower retail sales. Retail segment SG&A expenses decreased ~~$9.3~~$9.2 million primarily due to ~~decreases in acquisition, integration and other items compared to the third quarter of 2014.~~cost reduction initiatives.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales ~~increased~~decreased from ~~23.2%~~23.6% in the third quarter of ~~2014~~2015 to ~~23.7%~~19.4% in the third quarter of ~~2015. On an absolute dollar basis, corporate~~2016 primarily due to leverage from higher sales. Corporate apparel segment SG&A expenses ~~decreased $1.4~~increased $1.0 million.

Shared service expenses represent costs not specifically related to the operations of our business segments and are included in SG&A. Shared service SG&A expenses as a percentage of total net sales increased from 4.6% in the third quarter of 2015 to 5.5% in the third quarter of 2016. Shared service SG&A expenses increased $7.4 million primarily due to higher incentive compensation accruals and costs associated with our profit improvement program.

Tradename Impairment Charge

During the third quarter of 2015, we concluded that a triggering event occurred that required an interim impairment test for the Jos. A. Bank tradename. Based on our analysis, we concluded that the Jos. A. Bank tradename was impaired and recorded a non-cash, pre-tax impairment charge of $90.1 million. ~~Refer to Note 12~~

34

Table of ~~Notes to Condensed Consolidated Financial Statements and as previously discussed in MD&A on page 27 for additional information.~~Contents

Provision for Income Tax

Our effective income tax rate ~~decreased from 65.3%~~increased to 24.1% for the third quarter of ~~2014 to 56.8%~~2016 from a benefit of (56.8)% for the third quarter of 2015 primarily ~~due to~~as a ~~decrease in permanent items, consisting~~result of ~~non-deductible transaction costs related to the Jos. A. Bank acquisition in 2014 and~~ the Jos. A. Bank tradename impairment charge of $90.1 million in ~~2015, resulting~~last year’s third quarter, which generated a book loss in our U.S. entities and significantly impacted our effective tax rate. In addition, the effective tax rate ~~being a benefit~~ for the third quarter of ~~2015. Furthermore, the~~2016 is impacted by lower U.S. income as compared to income earned in foreign ~~jurisdictions in which we operate had profitability which require us to provide for income tax, specifically, our operations in Canada and the United Kingdom.~~ jurisdictions.

For the third quarter of ~~2015~~2016 and ~~2014,~~2015, the statutory tax rates in Canada and the ~~United Kingdom~~UK were approximately 26% and 20%, ~~respectively, which favorably impacted our effective tax rate.~~respectively. For the third quarter of ~~2015~~2016 and ~~2014,~~2015, tax expense for our operations in foreign jurisdictions totaled ~~$2.8~~$2.7 million and ~~$3.7~~$2.8 million, respectively.

Our income tax expense and effective income tax rate in future periods may be impacted by many factors, including our geographic mix of earnings and changes in tax laws. Currently, we expect our effective tax rate in future periods to be lower than the statutory U.S. combined federal and state tax rate based on the expected geographic mix of earnings. In addition, if ~~there are additional impairment charges and/or~~ our financial results in ~~the fourth quarter of 2015 cause us to be in~~fiscal 2016 generate a ~~cumulative 3-year~~ loss ~~position,~~or certain deferred tax liabilities decrease, we may need to establish a valuation allowance on our U.S. deferred tax assets, which could have a material impact on our financial condition and results of operations.

~~Net Loss Attributable~~ Lastly, we are currently undergoing several federal, foreign and state audits which we are vigorously defending and currently do not believe should result in any material change to ~~Common Shareholders~~tax expense.

Net Earnings (Loss)

Net earnings were $28.4 million for the third quarter of 2016 compared with a net loss ~~attributable to common shareholders was~~of $27.2 million for the third quarter of ~~2015 compared with net earnings~~2015.

35

Table of ~~$6.8 million for~~Contents

For the ~~third quarter of 2014.~~

~~For~~Nine Months Ended October 29, 2016 Compared to the Nine Months Ended October 31, 2015 ~~Compared to the Nine Months Ended November 1, 2014~~

The following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated:


	For the Nine Months Ended (3)				For the Nine Months Ended(1)
	October 31,		November 1,		October 29,		October 31,
	2015		2014		2016		2015
Net sales:
Retail clothing product	72.3	%	68.8	%	69.9	%	72.3	%
Rental services	14.7		17.0		15.6		14.7
Alteration and other services	6.0		5.8		5.8		6.0
Total retail sales	93.0		91.6		91.3		93.0
Corporate apparel clothing product	7.0		8.4		8.7		7.0
Total net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales (4):
Cost of sales(2):
Retail clothing product	44.0		45.2		44.1		44.0
Rental services	16.0		19.0		16.3		16.0
Alteration and other services	68.4		72.1		69.4		68.4
Occupancy costs	13.8		13.3		13.9		13.8
Total retail cost of sales	54.9		55.3		54.8		54.9
Corporate apparel clothing product	71.1		69.5		67.5		71.1
Total cost of sales	56.1		56.6		55.9		56.1
Gross margin (4):
Gross margin(2):
Retail clothing product	56.0		54.8		55.9		56.0
Rental services	84.0		81.0		83.7		84.0
Alteration and other services	31.6		27.9		30.6		31.6
Occupancy costs	(13.8	)	(13.3	)	(13.9)		(13.8)
Total retail gross margin	45.1		44.7		45.2		45.1
Corporate apparel clothing product	28.9		30.5		32.5		28.9
Total gross margin	43.9		43.6		44.1		43.9
Advertising expense	5.4		4.7		5.4		5.4
Selling, general and administrative expenses	30.8		33.9		32.8		30.8
Tradename impairment charge	3.4		—		—		3.4
Operating income	4.4		5.0		5.9		4.4
Interest income	0.0		0.0		0.0		0.0
Interest expense	(3.0	)	(1.7	)	(3.0)		(3.0)
Loss on extinguishment of debt	(0.5	)	(0.1	)
Gain (loss) on extinguishment of debt, net					0.1		(0.5)
Earnings before income taxes	0.9		3.2		2.9		0.9
(Benefit) provision for income taxes	(0.2	)	1.6
Net earnings including non-controlling interest	1.2		1.5
Net earnings attributable to non-controlling interest	—		0.0
Net earnings attributable to common shareholders	1.2	%	1.5	%
Provision for income taxes					0.8		(0.2)
Net earnings					2.1	%	1.2	%

⁽¹⁾

Percentage line items may not sum to totals due to the effect of rounding.

⁽²⁾

Calculated as a percentage of related sales.

36

~~(3)Percentage line items may not sum to totals due to the effect~~Table of ~~rounding.~~Contents

~~(4)Calculated as a percentage of related sales.~~

Net Sales

Total net sales ~~increased $346.4~~decreased $85.2 million, or ~~14.9%~~3.2%, to ~~$2,670.6~~$2,585.4 million for the first nine months of ~~2015~~2016 as compared to the first nine months of ~~2014.~~2015.

Total retail sales ~~increased $355.3~~decreased $124.5 million, or ~~16.7%~~5.0%, to ~~$2,484.6~~$2,360.1 million for the first nine months of ~~2015~~2016 as compared to the first nine months of ~~2014~~2015 primarily due ~~mainly~~ to ~~$289.7~~a $125.3 million ~~of incremental sales from~~decrease in clothing product revenues primarily at our Jos. A. Bank ~~in the first nine months of 2015~~brand and ~~increases~~a $10.1 million decrease in ~~clothing product and~~ alteration and other services revenues, ~~from our other brands,~~ partially offset by ~~unfavorable currency fluctuations at our Canadian operations and~~ a ~~decrease~~$10.9 million increase in rental ~~services revenue of $9.7 million.~~service revenues. The net ~~increase~~decrease is attributable to the following:


(in millions)			Amount Attributed to
$	~~289.7~~ (1.7)		~~Increase in net sales from Jos. A. Bank.~~
~~61.2~~			~~5.0% increase~~0.1% decrease in comparable sales at Men’s Wearhouse.
~~14.0~~	(77.9)		~~6.0% increase~~14.2% decrease in comparable sales at Jos. A. Bank.
	(3.6)		1.5% decrease in comparable sales at K&G.
~~(2.3~~	(2.9)	)	~~1.4%~~1.8% decrease in comparable sales at Moores(1).
~~28.1~~	(20.5)		~~Increase from net~~Decrease in non-comparable sales ~~of stores opened in 2014, relocated stores and expanded stores not yet included in comparable sales(2)~~(primarily due to closed stores).
~~7.5~~	(4.8)		~~Increase in net sales from new stores opened in 2015(2)~~.
~~(24.2~~		)	~~Decrease in net sales resulting from closed stores.~~
~~(27.1~~		)	Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
~~8.4~~	(13.1)		Other~~(2)~~ (primarily decrease in alteration revenues).
$	~~355.3~~ (124.5)		~~Increase~~Decrease in total retail sales.

~~(1)Comparable sales percentages for Moores are calculated using Canadian dollars.~~

~~(2)Excludes Jos. A. Bank.~~

⁽¹⁾

Comparable sales percentages for Moores are calculated using Canadian dollars.

Comparable sales ~~for Men’s Wearhouse, K&G and Moores~~ exclude the net sales of a store for any month of one period if the store was not owned or open throughout the same month of the prior period and include e-commerce net sales. We operate our business using an omnichannel approach and do not differentiate e-commerce sales from our other channels.

The ~~increase~~slight decrease at Men’s Wearhouse resulted primarily from ~~increased average unit retails and average transactions per store that more than offset a decrease in units sold per transaction. The increase at K&G resulted from increases~~decreases in average transactions per store and ~~average unit retails while~~ units sold per transaction ~~were flat.~~partially offset by increased average unit retails and higher rental services revenue. The decrease at Jos. A. Bank resulted primarily from decreased average transactions per store partially offset by higher units per transaction, increased average unit retails and higher rental services revenue. The decrease at K&G resulted from lower average transactions per store partially offset by an increase in average unit retails and higher units per transaction. The decrease at Moores resulted from ~~decreases in~~decreased average transactions per store and units sold per transaction partially offset by increased average unit retails. At Men’s Wearhouse, rental service comparable sales ~~decreased 1.4%~~increased 2.2% due to an increase in rental rates partially offset by a decrease in unit ~~rentals partially offset by an increase in rental rates.~~

Comparable sales for Jos. A. Bank decreased by 8.6%, and are calculated in the same manner as our other brands except that it is based on Jos. A. Bank’s entire first nine months of 2014, a portion of which was prior to the acquisition on June 18, 2014.rentals.

Total corporate apparel clothing product sales ~~decreased $8.9~~increased $39.3 million for the first nine months of ~~2015~~2016 as compared to the first nine months of ~~2014. UK corporate apparel sales decreased $8.3 million~~2015 primarily due to the impact of a large new uniform program. The rollout of the new uniform program commenced in June 2016, was completed during the third quarter of 2016 and has now transitioned to a standard replenishment phase. The increase in corporate apparel sales was partially offset by the impact of a weaker British pound ~~Sterling~~ this year compared to last year. ~~U.S. corporate apparel sales decreased $0.6 million primarily due to lower sales from existing customer programs.~~

Gross Margin

Buying and distribution costs are included in determining our retail and corporate apparel clothing product gross margins. Our gross margin may not be comparable to other specialty retailers, as some companies exclude costs related to their distribution network from cost of goods sold while others, like us, include all or a portion of such costs in cost of goods sold and exclude them from SG&A expenses. Distribution costs are not included in determining our rental services gross margin but are included in SG&A expenses.

Our total gross margin ~~increased $162.1~~decreased $33.9 million, or ~~16.0%~~2.9%, to ~~$1,173.2~~$1,139.4 million in the first nine months of ~~2015~~2016 as compared to the first nine months of 2014. During the first nine months of 2015 and 2014, $0.8 million and $17.6 million, respectively, of inventory valuation step up related to Jos. A. Bank were recognized and negatively impacted gross margin results. In addition, during the nine months of 2014, gross margin was impacted by a $10.6 million charge to rationalize our rental inventory to allow for more productive rental styles.

2015. Total retail segment gross margin ~~increased $167.8~~decreased $53.2 million, or ~~17.6%~~4.8%, from the same prior year nine months to ~~$1,119.4~~$1,066.2 million in the first nine months of ~~2015. The dollar increase in gross margin was~~2016 primarily ~~driven by an increase of $135.7 million in gross margin generated by~~due to lower sales at Jos. A. Bank.

For the retail segment, total gross margin as a percentage of related sales increased from ~~44.7% in the first nine months of 2014 to~~ 45.1% in the first nine months of 2015 ~~driven primarily by an increase~~to 45.2% in the ~~rental services~~first nine months of 2016 as a result of anniversarying lower gross ~~margin rate as~~margins in last year’s ~~rate was impacted~~third quarter, resulting from the clearance of merchandise through the e-commerce channel, primarily at our Men’s Wearhouse brand partially offset by the ~~$10.6 million charge to rationalize our rental inventory as well as a higher retail clothing product gross margin rate, which was also impacted last year by~~impact of the ~~inventory step up at Jos. A. Bank.~~closing of the factory/outlet stores during the second quarter of 2016.

37

Table of Contents

Occupancy costs ~~increased $59.4~~decreased $14.3 million primarily due to ~~incremental Jos. A. Bank occupancy costs.~~our store rationalization efforts. Occupancy costs as a percentage of retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, increased from ~~13.3%~~13.8% to ~~13.8%~~13.9% for the first nine months of ~~2015~~2016 compared to the first nine months of ~~2014,~~2015, primarily due to ~~the impact~~deleveraging of ~~Jos A. Bank’s~~ occupancy costs ~~which are higher as a percentage of~~from lower sales ~~than our other brands.~~at Jos. A. Bank.

Corporate apparel gross margin ~~decreased $5.7~~increased $19.3 million, or ~~9.6%~~36.0%, in the first nine months of ~~2015.~~2016. For the corporate apparel segment, total gross margin as a percentage of related sales ~~decreased~~increased from ~~30.5% in the first nine months of 2014 to~~ 28.9% in the first nine months of 2015 ~~primarily~~to 32.5% in the first nine months of 2016 due to ~~changes in~~ the ~~sales mix~~impact of a large new uniform program as well as ~~unfavorable~~pre-tax gains on foreign currency ~~impacts at our UK operations.~~hedging transactions.

Advertising Expense

Advertising expense ~~increased~~decreased to $138.5 million in the first nine months of 2016 from $143.6 million in the first nine months of 2015, ~~from $109.1 million in the first nine months~~a decrease of ~~2014, an increase of $34.6~~$5.1 million, or ~~31.7%~~3.5%. ~~The increase was primarily due to Jos. A. Bank advertising costs as well as increased advertising expense to support branding initiatives.~~ As a percentage of total net sales, advertising expense ~~increased from 4.7%~~was 5.4% in the first nine months of ~~2014~~2016 which was flat compared to ~~5.4% in~~ the first nine months of 2015.

Selling, General and Administrative Expenses

SG&A expenses increased to $849.1 million in the first nine months of 2016 from $822.5 million in the first nine months of 2015, ~~from $786.9 million in the first nine months of 2014,~~ an increase of ~~$35.6~~$26.6 million or ~~4.5%~~3.2%. As a percentage of total net sales, these expenses ~~decreased~~increased from ~~33.9% in the first nine months of 2014 to~~ 30.8% in the first nine months of ~~2015.~~2015 to 32.8% in the first nine months of 2016. The components of this ~~3.1% net decrease~~2.0% increase in SG&A expenses as a percentage of total net sales and the related absolute dollar changes were as follows:

%

in millions

Attributed to

(3.0
)
$
(66.9
)
Decrease in acquisition, integration and other items as a percentage of sales from 3.7% in the first nine months of 2014 to 0.7% in the first nine months of 2015. For the first nine months of 2015, these costs totaled $19.5 million related primarily to separation costs with a former executive, integration and other costs related to Jos. A. Bank and asset impairment charges, partially offset by a gain on the sale of property. For the first nine months of 2014, these costs totaled $86.4 million, related primarily to Jos. A. Bank acquisition and integration costs and other cost reduction initiatives.

0.5

53.9

Increase in store salaries as a percentage of sales from 12.0% in the first nine months of 2014 to 12.5% in the first nine months of 2015. Store salaries on an absolute dollar basis increased $53.9 million primarily due to the impact of Jos. A. Bank store salaries and higher commissions at Men’s Wearhouse resulting from higher net sales.

0.1

4.0

Increase in amortization of intangible assets as a percentage of sales from 0.3% in the first nine months of 2014 to 0.4% in the first nine months of 2015. Amortization of intangible assets on an absolute dollar basis increased $4.0 million primarily due to intangible assets recorded in connection with the Jos. A. Bank acquisition.

(0.7
)
44.6

Decrease in other SG&A expenses as a percentage of sales from 17.8% in the first nine months of 2014 to 17.1% in the first nine months of 2015. On an absolute dollar basis, other SG&A expenses increased $44.6 million primarily due to the inclusion of Jos. A. Bank’s other SG&A expenses.

(3.1
)%
$
35.6

Total


%	in millions		Attributed to
2.0	$	50.5	Increase in restructuring, integration and other items as a percentage of sales from 0.7% in the first nine months of 2015 to 2.7% in the first nine months of 2016. For the first nine months of 2016, these costs totaled $69.9 million, related primarily to restructuring and other costs. For the first nine months of 2015, these costs totaled $19.4 million related primarily to separation costs with a former executive and integration and other costs related to Jos. A. Bank and asset impairment charges, partially offset by a gain on the sale of property.
(0.2)		(17.2)	Decrease in other SG&A expenses as a percentage of sales from 17.5% in the first nine months of 2015 to 17.3% in the first nine months of 2016. Other SG&A expenses decreased $17.2 million primarily due to cost reduction initiatives and a decrease in amortization of intangible assets as a result of the impairment charges recorded in the fourth quarter of 2015.
0.2		(6.7)	Store salaries decreased $6.7 million primarily due to cost reduction initiatives yet increased as a percentage of sales from 12.6% in the first nine months of 2015 to 12.8% in the first nine months of 2016 primarily due to deleverage resulting from lower retail sales.
2.0	$	26.6	Total

In the retail segment, SG&A expenses as a percentage of related net sales ~~decreased~~increased from ~~34.7%~~26.3% in the first nine months of ~~2014~~2015 to ~~31.3%~~27.6% in the first nine months of ~~2015. On an absolute dollar basis,~~2016 primarily due to deleverage resulting from lower retail sales. Retail segment SG&A expenses ~~increased $38.5~~decreased $3.8 million primarily due to ~~operating expenses for Jos. A. Bank,~~cost reduction initiatives partially offset by ~~a decrease in acquisition, integration and other items compared to the first nine months of 2014.~~lease termination costs.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales decreased from ~~25.1%~~24.6% in the first nine months of ~~2014~~2015 to ~~24.7%~~21.1% in the first nine months of ~~2015. On an absolute dollar basis, corporate~~2016 primarily due to leverage from higher sales. Corporate apparel segment SG&A expenses ~~decreased $2.9~~increased $1.6 million.

Shared service expenses represent costs not specifically related to the operations of our business segments and are included in SG&A. Shared service SG&A expenses as a percentage of total net sales increased from 4.6% in the first nine months of 2015 to 5.9% in the first nine months of 2016. Shared service SG&A expenses increased $28.8 million ~~mainly~~primarily due to ~~the impact of a weaker pound Sterling.~~costs associated with our profit improvement program.

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Tradename Impairment Charge

During the first nine months of 2015, we concluded that a triggering event occurred that required an interim impairment test for the Jos. A. Bank tradename. Based on our analysis, we concluded that the Jos. A. Bank tradename was impaired and recorded a non-cash, pre-tax impairment charge of $90.1 million. ~~Refer to Note 12 of Notes to Condensed Consolidated Financial Statements and as previously discussed in MD&A on page 27 for additional information.~~

~~Interest Expense~~

Interest expense increased to $79.5 million in the first nine months of 2015 from $39.5 million in the first nine months of 2014, an increase of $40.0 million, or 101.4%, due to incremental interest incurred on borrowings entered into in connection with the Jos. A. Bank acquisition.

~~Loss on Extinguishment of Debt~~

During the first nine months of 2015, we recorded a loss on extinguishment of debt totaling $12.7 million consisting of the elimination of unamortized deferred financing costs and original issue discount related to the Term Loan compared with a loss on extinguishment of debt totaling $2.2 million recorded in the first nine months of 2014.

Provision for Income Tax

Our effective income tax rate ~~decreased from 51.5%~~increased to 27.3% for the first nine months of ~~2014 to~~2016 from a benefit of (24.0)% for the first nine months of 2015 primarily due to the impact of the aforementioned Jos. A. Bank tradename impairment charge, ~~in 2015,~~ which ~~generated a book loss~~resulted in ~~our U.S. entities and caused~~ our effective tax rate being a benefit for the first nine months of 2015. In addition, the effective tax rate for the first nine months of 2016 is impacted due to be lower ~~than the statutory~~ U.S. ~~combined federal and state tax rate. Furthermore, the~~income as compared to income earned in foreign ~~jurisdictions in which we operate had profitability which require us to provide for income tax, specifically, our operations in Canada and the United Kingdom.~~ jurisdictions.

For the first nine months of ~~2015~~2016 and ~~2014,~~2015, the statutory tax rates in Canada and the ~~United Kingdom~~UK were approximately 26% and 20%, ~~respectively, which favorably impacted our effective tax rate.~~respectively. For the first nine months of ~~2015~~2016 and ~~2014,~~2015, tax expense for our operations in foreign jurisdictions totaled ~~$8.1~~$9.3 million and ~~$9.8~~$8.1 million, respectively.

Our income tax expense and effective income tax rate in future periods may be impacted by many factors, including our geographic mix of earnings and changes in tax laws. Currently, we expect our effective tax rate in future periods to be lower than the statutory ~~United States~~U.S. combined federal and state tax rate based on the expected geographic mix of earnings. In addition, if ~~there are additional impairment charges and/or~~ our financial results in ~~the fourth quarter of 2015 cause us to be in~~fiscal 2016 generate a ~~cumulative 3-year~~ loss ~~position,~~or certain deferred tax liabilities decrease, we may need to establish a valuation allowance on our U.S. deferred tax assets, which could have a material impact on our financial condition and results of operations. Lastly, we are currently undergoing several federal, foreign and state audits which we are vigorously defending and currently do not believe should result in any material change to tax expense.

Net Earnings ~~Attributable to Common Shareholders~~

Net earnings ~~attributable to common shareholders~~ were $55.0 million for the first nine months of 2016 compared with net earnings of $31.0 million for the first nine months of ~~2015 compared with net earnings of $35.5 million for the first nine months of 2014.~~2015.

Liquidity and Capital Resources

At October 29, 2016, October 31, 2015 ~~November 1, 2014~~ and January ~~31, 2015,~~30, 2016, cash and cash equivalents totaled $34.9 million, $53.7 million ~~$64.7 million~~ and ~~$62.3~~$30.0 million, respectively, and working capital totaled $726.2 million, $829.1 million ~~$766.7 million~~ and ~~$752.3~~$723.6 million, respectively. Our primary sources of working capital are cash flows from operations and available borrowings under our financing arrangements, as described below.

On June 18, 2014, weThe Men’s Wearhouse, Inc. entered into a term loan credit agreement that provides for a senior secured term loan in the aggregate principal amount of $1.1 billion (the “Term Loan”) and a $500.0 million asset-based revolving credit agreement (the “ABL Facility”, and together with the Term Loan, the “Credit Facilities”) with certain of our U.S. subsidiaries and Moores the Suit People Inc., one of our Canadian subsidiaries, as co-borrowers. In addition, on June 18, 2014, weThe Men’s Wearhouse, Inc. issued $600.0 million in aggregate principal amount of 7.00% Senior Notes due 2022 (the “Senior Notes”).

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including fixed charge coverage ratios, total leverage ratios and secured leverage ratios, as well as a restriction on our ability to pay dividends on our common stock in excess of $10.0 million per quarter. Since entering into these financing arrangements and as of October ~~31, 2015,~~29, 2016, our total leverage ratio and secured leverage ratio were above the maximums specified in the agreements, which was anticipated when we entered into these arrangements. As a result, we are currently subject to certain additional restrictions, including limitations on our ability to make acquisitions and incur additional indebtedness.

The Term Loan is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries and will mature on June 18, 2021. The interest rate on the Term Loan is based on 3-month LIBOR, which was approximately ~~0.33%~~0.89% at October ~~31, 2015.~~29, 2016. However, the Term Loan interest rate is subject to a LIBOR floor of 1% per annum, plus the applicable margin which is currently 3.50%, resulting in a total interest rate of 4.50%. In January 2015, we entered into an interest rate swap agreement to swap variable-rate interest payments for fixed-rate interest payments on a notional amount of $520.0 million, effective in February 2015. The interest rate swap agreement matures in August 2018 and has

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periodic interest settlements. Under this interest rate swap agreement, we receive a floating rate based on 3-month LIBOR and pay a fixed rate of 5.03% (including the applicable margin of 3.50%) on the outstanding notional amount.At October 29, 2016, the notional amount totaled $390.0 million.

OnIn April 7, 2015, weThe Men’s Wearhouse, Inc. entered into Incremental Facility Agreement No. 1 (the “Incremental Agreement”) resulting in a refinancing of $400.0 million aggregate principal amount of our Term Loan from a variable rate to a fixed rate of 5.0% per annum. The Incremental Agreement did not impact the total amount borrowed under the Term Loan, the maturity date of the Term Loan of June 18, 2021, or collateral and guarantees under the existing Term Loan.

As a result of the interest rate swap and the Incremental Agreement, we have converted a majority of the variable interest rate under the Term Loan to a fixed rate and, as of October ~~31, 2015,~~29, 2016, the Term Loan had a weighted average interest rate of ~~4.92%~~4.89%.

The ABL Facility provides for a senior secured asset-based revolving credit facility of $500.0 million, with possible future increases to $650.0 million with an expansion feature, which matures on June 18, 2019, and is guaranteed, jointly and severally, by certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices: (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate, (iii) Canadian prime rate or (iv) alternate base rate (equal to the greater of the prime rate, the federal funds effective rate plus 0.5% or adjusted LIBOR for a one-month period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 2.00%. The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.50% to 2.00%, and a fee on unused commitments which ranges from 0.25% to 0.375%.

We utilize letters of credit primarily to secure inventory purchases and as collateral for workers compensation claims. Except for letters of credit totaling approximately $28.9 million issued and outstanding, no amounts were drawn on the ABL Facility as of October 29, 2016 and we have approximately $427.2 million of borrowing availability under the ABL Facility as of October 29, 2016.

The obligations under the Credit Facilities are secured on a senior basis by a first priority lien on substantially all of the assets of the Company, certain of its U.S. subsidiaries and, in the case of the ABL Facility, Moores The Suit People Inc. The Credit Facilities and the related guarantees and security interests granted thereunder are senior secured obligations of, and will rank equally with all present and future senior indebtedness of the Company, the co-borrowers and the respective guarantors.

The ~~indenture governing the Senior Notes contains customary non-financial covenants and the~~ Senior Notes are guaranteed, jointly and severally, on an unsecured basis by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The Senior Notes will mature on July 1, 2022. Interest on the Senior Notes is payable on January 1 and July 1 of each year.

We may redeem some or all of the Senior Notes at any time on or after July 1, 2017 at the redemption prices set forth in the indenture governing the Senior Notes. At any time prior to July 1, 2017, we will have the option to redeem some or all of the Senior Notes at a redemption price of 100% of the principal amount of the Senior Notes to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to the date of redemption. We may also redeem up to a maximum of 35% of the original aggregate principal amount of the Senior Notes with the proceeds of certain equity offerings prior to July 1, 2017 at a redemption price of 107% of the principal amount of the Senior Notes plus accrued and unpaid interest, if any. Upon the occurrence of certain specific changes of control, we may be required to offer to purchase the Senior Notes at 101% of their aggregate principal amount plus accrued and unpaid interest thereon to the date of purchase.

Cash Flow Activities

We had entered into a registration rights agreement regarding the Senior Notes pursuant to which we agreed, among other things, to use our commercially reasonable efforts to consummate an exchange offer of the Senior Notes for substantially identical notes registered under the Securities Act of 1933, as amended, on or before July 13, 2015. On June 24, 2015, the exchange offer was completed.

We utilize letters of credit primarily to secure inventory purchases and as collateral for workers compensation claims. Except for letters of credit totaling approximately $25.7 million issued and outstanding, no amounts were drawn on the ABL Facility as of October 31, 2015 and we have approximately $436.5 million of borrowing availability under the ABL Facility as of October 31, 2015.

~~Cash Flow Activities~~

Operating activities — Net cash provided by operating activities was ~~$112.2~~$176.9 million and ~~$59.0~~$112.2 million for the first nine months of ~~2015~~2016 and ~~2014,~~2015, respectively. The ~~$53.2~~$64.6 million increase was driven by ~~an increase~~changes in ~~net earnings adjusted for the non-cash tradename impairment charge,~~other assets related to income tax refunds and a decrease in inventory purchases ~~driven by the rollout of Joseph Abboud merchandise in the prior year, and changes in credit card receivables.~~as we normalize inventory levels, particularly at Jos. A. Bank. These favorable impacts were partially offset by ~~fluctuations~~an increase in accounts ~~payable, accrued expenses~~receivable driven by the rollout of a large new uniform program and the impact of restructuring and other ~~current liabilities, primarily driven by accrued Jos. A. Bank transaction costs in the prior year, as well as, increased purchases of rental product.~~costs.

Investing activities — Net cash used in investing activities was ~~$83.8~~$79.9 million and ~~$1,563.6~~$83.8 million for the first nine months of 2016 and 2015, ~~and 2014,~~ respectively. The $1,479.8 million decrease was driven by last year’s acquisition of Jos. A. Bank partially offset by an increase in capital expenditures for new store openings, remodels and/or relocations and investments related to the integration of Jos. A. Bank.

Financing activities — Net cash used in financing activities was $91.9 million and $37.3 million for the first nine months of 2016 and 2015, ~~compared to net cash provided by financing activities~~respectively. The $54.6 million increase primarily reflects the impact of ~~$1,511.4~~a $35.5 million ~~for the first nine months of 2014. The $1,548.7 million change in our financing activities was primarily driven by last year’s proceeds~~prepayment on our Term Loan and ~~issuance~~the repurchase of $25.0 million of our Senior Notes.

Share repurchase program — ~~In March 2013, the~~ The Board of Directors (the “Board”) had previously approved a $200.0 million share repurchase program for our common ~~stock, which amended~~stock. During the first nine months of 2016 and ~~replaced our then existing share repurchase program authorized by~~2015, no shares were repurchased

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in open market transactions under the ~~Board in January 2011.~~Board’s authorization. At ~~January 31, 2015,~~October 29, 2016, the remaining balance available under the Board’s ~~March 2013~~ authorization was $48.0 million. ~~During the first nine months of 2015 and 2014, no shares were repurchased in open market transactions under the Board’s March 2013 authorization.~~

Dividends — Cash dividends paid were approximately ~~$26.3~~$26.4 million and ~~$26.1~~$26.3 million for the first nine months of ~~2015~~2016 and ~~2014,~~2015, respectively. During each of the quarters ended October 29, 2016 and October 31, 2015, ~~and November 1, 2014,~~ we declared quarterly dividends of $0.18 per share.

Future Sources and Uses of Cash

Our primary uses of cash are to finance working capital requirements of our operations and to repay our indebtedness. In addition, we will use cash to fund capital expenditures, income taxes, ~~integration~~ costs ~~associated with Jos. A. Bank,~~related to our store rationalization and profit improvement programs including lease termination payments, dividend payments ~~operating leases~~ and various other commitments and obligations, as they arise.

During the course of the year, we borrowed and repaid amounts under our ABL Facility primarily due to costs incurred under our store rationalization and profit improvement programs. During the nine months ended October 29, 2016, the maximum borrowing outstanding at any point in time was $68.5 million.

Capital expenditures are anticipated to be in the range of ~~$120.0~~$110.0 to ~~$130.0~~$120.0 million for ~~2015.~~2016. This amount includes the anticipated costs to open ~~approximately 20~~158 shops within Macy’s stores, 10 to 15 Men’s Wearhouse stores, ~~six to nine~~three Jos. A. Bank stores, two Moores stores, and two ~~Moores~~K&G stores and to expand and/or relocate approximately 125 to 10 existing Men’s Wearhouse stores, two to six existing Jos. A. Bank stores and one existing ~~Moores stores.~~K&G store. During the first nine months of ~~2015,~~2016, we opened 32173 stores/tuxedo shops ~~(12 Men’s Wearhouse stores, 12~~(158 tuxedo shops within Macy’s ~~six~~stores, nine Men’s Wearhouse stores, three Jos. A. Bank stores, ~~one Joseph Abboud store~~two Moores stores and one ~~Moores~~K&G store). Capital expenditures for ~~2015~~2016 will also include integration projects for Jos. A. Bank, point-of-sale and other computer equipment and systems, store remodeling, ~~distribution facilities~~ and investment in other corporate assets. The actual amount of future capital expenditures will depend in part on the number of new stores opened and the terms on which new stores are leased and the timing of our Jos. A. Bank integration projects, as well as on industry trends consistent with our anticipated operating plans.

Additionally, market conditions may produce attractive opportunities for us to make acquisitions. Any such acquisitions may be undertaken as an alternative to opening new stores. We may use cash on hand, together with cash flow from operations, borrowings under our Credit Facilities and issuances of debt or equity securities, to take advantage of any acquisition opportunities.

Current and future domestic and global economic conditions could negatively affect our future operating results as well as our existing cash and cash equivalents balances. In addition, conditions in the financial markets could limit our access to ~~additional~~further capital resources, if needed, and could increase associated costs. We believe based on our current business plan that our existing cash and cash flows from operations and availability under our ABL Facility will be sufficient to fund our operating cash requirements, repayment of current indebtedness, costs related to our ~~indebtedness,~~store rationalization and profit improvement plans including lease termination payments, planned store openings, relocations and remodels and other capital ~~expenditures and integration costs associated with Jos. A. Bank.~~expenditures.

Contractual Obligations

There have been no material changes to our contractual obligations as discussed in our Annual Report on Form 10-K for the fiscal year ended January ~~31, 2015.~~30, 2016.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements requires the appropriate application of accounting policies in accordance with generally accepted accounting principles. In many instances, this also requires management to make estimates and assumptions about future events that affect the amounts and disclosures included in our financial statements.

We base our estimates on historical experience and various assumptions that we believe are reasonable under our current business model. However, because future events and conditions and their effects cannot be determined with certainty, actual results will differ from our estimates and such differences could be material to our financial statements. There have been no significant changes to our critical accounting policies and estimates as discussed in our Annual Report on Form 10-K for the fiscal year ended January ~~31, 2015 except for the update below to regarding goodwill and other indefinite-lived intangible assets.~~30, 2016.

41

~~Goodwill and Other Indefinite-Lived Intangible Assets~~

~~The annual assessment~~Table of goodwill for 2014 was performed during the fourth quarter of 2014 (the “2014 Valuation”). As disclosed in our Form 10-K for the fiscal year ended January 31, 2015, with the exception of the Jos. A. Bank reporting unit, all of our other reporting units had fair values that significantly exceeded their carrying values. In addition, the fair value of all of our reporting units reasonably reconciled to our market capitalization, taking into account observable control premiums. As of the 2014 Valuation, the percentage by which the fair value of the Jos. A. Bank reporting unit exceeded its carrying value was approximately 13%.Contents

Management judgment is a significant factor in the goodwill impairment evaluation process. The computations require management to make estimates and assumptions. Actual values may differ significantly from these judgments, particularly if there are significant adverse changes in the operating environment for our reporting units. Critical assumptions used to estimate the fair value of a reporting unit include the timing and estimates of future cash flows of the reporting unit and selection of an appropriate discount rate.

To estimate the future cash flows of a reporting unit, management uses estimates of economic and market conditions over the projected period, including growth rates in revenue, gross margin and expense. The cash flows are based on our current business operating plans and various growth rates have been assumed for years beyond the current business plan period.

~~Management uses a weighted-average cost of capital analysis to determine an appropriate discount rate, which is used in the estimate of the fair value of a reporting unit~~. The discount rate is affected by changes in short-term interest rates and long-term yield as well as variances in the typical capital structure of marketplace participants. For the 2014 Valuation, the weighted-average cost of capital used to discount the cash flows for the Jos. A. Bank reporting unit was 11.0%.

For the nine months ended October 31, 2015, Jos. A. Bank experienced a decrease in sales and profitability, which were significantly below our expectations. Also, we expect the comparable sales decrease to accelerate in the fourth quarter of 2015 resulting from both a decline in traffic and a previously expected decline in units per transaction as customers adapt to the shift in promotional strategy. Several factors could impact the estimated fair value of the Jos. A. Bank reporting unit including, but not limited to: (i) additional information obtained from customers’ reaction to the shift in promotional strategy, (ii) modifications to our Jos. A. Bank real estate strategy, (iii) our inability to realize higher gross margins to offset the expected decline in revenues and (iv) an increase in the discount rate. Furthermore, our market capitalization significantly decreased since the 2014 Valuation. Given the relatively small excess of fair value over carrying value as of the 2014 Valuation, if we determine we are not likely to meet our projections of future cash flows or if our market capitalization remains at current levels, among other factors, it is possible our annual impairment test in the fourth quarter of 2015 could result in a material impairment of the Jos. A. Bank goodwill. As of October 31, 2015, goodwill associated with the Jos. A. Bank reporting unit totaled $769.0 million.

As it relates to estimating the fair value of the Jos. A. Bank tradename, management uses a relief from royalty method, which calculates the present value of savings resulting from the right to sell products without having to pay a royalty fee. Critical assumptions that are used in this method include future sales projections, an estimated royalty rate and a discount rate. Although we recorded an impairment charge of $90.1 million on the Jos. A. Bank tradename asset, should the downward revenue trend accelerate during the fourth quarter of 2015 from what we expect or if other valuation inputs such as the royalty rate or discount rate change, it is possible our annual impairment test in the fourth quarter of 2015 could result in an additional impairment charge for the Jos. A. Bank tradename. As of October 31, 2015, after giving effect to the impairment charge, the book value of the Jos. A. Bank tradename was $449.0 million.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in foreign currency exchange rates and changes in interest rates.

We are exposed to market risk associated with foreign currency exchange rate fluctuations as a result of our direct sourcing programs and our operations in foreign countries. In connection with our direct sourcing programs, we may enter into merchandise purchase commitments that are denominated in a currency different from the functional currency of the operating entity. Our risk management policy is to hedge a portion of forecasted merchandise purchases for our direct sourcing programs that bear foreign exchange risk using foreign exchange forward contracts. In addition, as a result of recent exchange rate fluctuations in Europe, we have entered into derivative instruments to hedge our foreign exchange risk, specifically related to the British pound and Euro.

As the foreign exchange forward contracts are with financial institutions, we are exposed to credit risk in the event of nonperformance by these parties but due to the creditworthiness of these major financial institutions, full performance is anticipated.

As discussed in Note 4 and Note 1312 of the Notes to the Condensed Consolidated Financial Statements, we have undertaken steps to mitigate our exposure to changes in interest rates on our indebtedness. As of October ~~31, 2015, 88%~~29, 2016, 84% of our total debt was at a fixed rate with the remainder at a variable rate. In addition, due to the existence of a LIBOR floor of 1%1.0% per annum on the portion of our debt subject to a variable rate, we believe our interest rate risk is substantially mitigated. At October ~~31, 2015,~~29, 2016, the effect of one percentage point change in interest rates would result in an approximate ~~$2.0~~$2.6 million change in annual interest expense on our Term Loan.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the CEO and CFO have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective to ensure information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the fiscal third quarter ended October 31~~, 2015~~29, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~On June 18, 2014, we acquired Jos. A. Bank. We excluded the operations~~

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Table of Jos. A. Bank from the scope of our Sarbanes-Oxley Section 404 report on internal controls for the year ended January 31, 2015. We are in the process of implementing our internal control structure over the acquired operations and expect this effort will be completed in fiscal 2015.Contents

In 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued an updated version of its Internal Control — Integrated Framework, referred to as the 2013 COSO Framework to replace the 1992 Framework. Management’s assessment of the overall effectiveness of our internal controls over financial reporting for the year ending January 30, 2016 will be based on the 2013 COSO Framework and we do not expect the change to materially impact our overall control structure over financial reporting.

PART II. OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

For a description of our legal proceedings, see Note 1615 of the Notes to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

ITEM 1A — RISK FACTORS

For a more detailed explanation of the factors affecting our business, please refer to the Risk Factors section in the Form 10-K for the fiscal year ended January ~~31, 2015.~~30, 2016. Except as described in Part 1A of our Quarterly Report on Form 10-Q for the quarterly ~~periods~~period ended ~~May 2, 2015 and August 1, 2015~~July 30, 2016 and which ~~are~~is incorporated herein, there has not been a material change to the risk factors set forth in the Form 10-K for the fiscal year ended January ~~31, 2015, except for the following risk factor which has been updated as shown below:~~30, 2016.

~~We could incur losses due to impairment in the carrying value of our goodwill or indefinite-lived intangible assets.~~

Under generally accepted accounting principles, we review our goodwill and indefinite-lived intangible assets for impairment at least annually and when circumstances suggest that there may be an impairment. Based on Jos. A. Bank’s results in the third quarter of 2015 as well as the recent significant decline in our market capitalization, we concluded that a triggering event occurred that required an interim impairment test on goodwill and the Jos. A. Bank indefinite-lived tradename asset. Based on our analyses, as of October 31, 2015, we concluded that our goodwill was not impaired, but that the Jos. A. Bank tradename was impaired, resulting in a non-cash impairment charge of $90.1 million. If we determine we are not likely to meet our projections of future cash flows or if our market capitalization remains at current levels, among other factors, it is possible our annual impairment tests in the fourth quarter of 2015 could result in a material impairment of the Jos. A. Bank goodwill and an additional impairment of its tradename. The amount of any impairment could be significant and could have a material adverse effect on our financial position or results of operations.

ITEM 6 — EXHIBITS

Exhibits filed with this quarterly report on Form 10-Q are incorporated herein by reference as set forth in the Index to Exhibits on page ~~44.~~45.

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SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant, ~~The Men’s Wearhouse,~~Tailored Brands, Inc., has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: December ~~10, 2015~~8, 2016	~~THE MEN’S WEARHOUSE,~~TAILORED BRANDS, INC.


	By	/s/ JON W. KIMMINS
		Jon W. Kimmins
		Executive Vice President, Chief Financial Officer, Treasurer and
		Principal Financial Officer

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EXHIBIT INDEX

Exhibit Number		Exhibit Index

31.1	—	Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (filed herewith).
31.2	—	Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (filed herewith).
32.1	—	Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (furnished herewith). †
32.2	—	Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (furnished herewith). †
101.1	—	The following financial information from ~~The Men’s Wearhouse,~~Tailored Brands, Inc.’s Quarterly Report on Form 10-Q for the three and nine months ended October ~~31, 2015,~~29, 2016, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Earnings (Loss) ~~Earnings;~~; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income;~~; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.

†This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.

4445

Texas		~~74-1790172~~47-4908760
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

~~6380 Rogerdale Road~~
~~Houston, Texas~~6380 Rogerdale Road
Houston, Texas		77072-1624
(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer x☒			Accelerated filer o☐

Non-accelerated filer o	☐	(Do not check if a smaller reporting company)	Smaller reporting company o☐

Cash	$	328.9
Accounts receivable (mainly credit card receivables)	8.3
Inventories	328.0
Other current assets	56.4
Property and equipment	165.3
Goodwill	769.0
Intangible assets	622.2
Accounts payable, accrued expenses and other current liabilities	(155.0		)
Other liabilities (mainly deferred income taxes)	(302.8		)
Total purchase price	1,820.3
Less: Cash acquired	(328.9		)
Total purchase price, net of cash acquired	$	1,491.4

	For the Nine Months Ended November 1, 2014

Total net sales	$	2,668,460
Net earnings attributable to common shareholders	$	76,349
Net earnings per common share allocated to common shareholders:
Basic	$	1.59
Diluted	$	1.58

	Foreign Currency Translation			Interest Rate Swap			Pension Plan		Total
BALANCE — January 31, 2015	$	(4,232	)	$	(1,665	)	$	226	$	(5,671	)

Other comprehensive loss before reclassifications	(378		)	(734		)	—		(1,112		)
Amounts reclassified from accumulated other comprehensive loss	—			427			—		427
Net current-period other comprehensive loss	(378		)	(307		)	—		(685		)

BALANCE — October 31, 2015	$	(4,610	)	$	(1,972	)	$	226	$	(6,356	)

	Units				Weighted-Average Grant-Date Fair Value
	Time- Based		Performance-Based		Time- Based		Performance- Based
Non-Vested at January 31, 2015	378,518		170,789		$	42.67	$	43.94
Granted	360,967		36,844		52.60		57.32
Vested (1)	(231,764	)	(18,977	)	43.69		46.41
Forfeited	(19,552	)	(20,000	)	40.17		33.09
Non-Vested at October 31, 2015	488,169		168,656		$	49.63	$	47.87

	Retail			Corporate Apparel		Total
Balance at January 31, 2015	$	861,180		$	26,756	$	887,936
Adjustments to purchase price allocation of acquired businesses	3,062			—		3,062
Translation adjustment	(608		)	601		(7		)
Balance at October 31, 2015	$	863,634		$	27,357	$	890,991

	For the Three Months Ended						For the Nine Months Ended
Operating (loss) income:	October 31, 2015			November 1, 2014			October 31, 2015			November 1, 2014
Retail	$	(38,971	)	$	39,848		$	110,739		$	106,117
Corporate apparel	2,570			5,327			6,272			9,043
Operating (loss) income	(36,401		)	45,175			117,011			115,160
Interest income	50			125			140			305
Interest expense	(26,457		)	(25,131		)	(79,475		)	(39,459		)
Loss on extinguishment of debt	—			—			(12,675		)	(2,158		)
(Loss) earnings before income taxes	$	(62,808	)	$	20,169		$	25,001		$	73,848

	For the Three Months Ended				For the Nine Months Ended				For the Year Ended
	October 31, 2015		November 1, 2014		October 31, 2015		November 1, 2014		January 31, 2015

Open at beginning of period:	1,754		1,756		1,758		1,124		1,124
Acquired from Jos. A. Bank(1)	—		—		—		624		624
Opened (2)	18		20		32		45		60
Closed	(24	)	(16	)	(42	)	(33	)	(50	)
Open at end of the period	1,748		1,760		1,748		1,760		1,758

Men’s Wearhouse(2)	709		686		709		686		698
Men’s Wearhouse and Tux	183		223		183		223		210
Tuxedo shops @ Macy’s	12		—		12		—		—
Jos. A. Bank(1)	633		637		633		637		636
Moores	123		122		123		122		123
K&G	88		92		88		92		91
	1,748		1,760		1,748		1,760		1,758

%		in millions			Attributed to
(1.4	)	$	(12.2	)	Decrease in acquisition, integration and other items as a percentage of sales from 1.9% in the third quarter of 2014 to 0.5% in the third quarter of 2015. For the third quarter of 2015 these costs totaled $4.8 million, related primarily to Jos. A. Bank integration and other costs, asset impairment charges, partially offset by a gain on the sale of property. For the third quarter of 2014, these costs totaled $17.0 million, related primarily to Jos. A. Bank acquisition and integration costs.
0.7		3.3			Increase in store salaries as a percentage of sales from 11.9% in the third quarter of 2014 to 12.6% in the third quarter of 2015 primarily due to deleverage resulting from lower retail sales. Store salaries on an absolute dollar basis increased $3.3 million primarily due to higher commissions at Men’s Wearhouse resulting from higher net sales.
0.3		(1.8		)	Increase in other SG&A expenses as a percentage of sales from 17.5% in the third quarter of 2014 to 17.8% in the third quarter of 2015. On an absolute dollar basis, other SG&A expenses decreased $1.8 million primarily due to decreases in non-store payroll costs, including incentive compensation, partially offset by higher benefit costs.
(0.4	)%	$	(10.7	)	Total