Commercial Bancgroup, Inc. Common Stock Annual Report 2018

FY2018 Annual Report · Commercial Bancgroup, Inc. Common Stock

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(Mark One)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

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

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

For the fiscal year ended February 2, 2019

For the period from to
Commission File No. 001-31390
CHRISTOPHER & BANKS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

2400 Xenium Lane North, Plymouth, Minnesota

(Address of principal executive offices)

06 - 1195422

(I.R.S. Employer

Identification No.)

55441

(Zip Code)

Registrant’s telephone number, including area code (763) 551-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common Stock, par value $0.01 per share

Name of each exchange on which registered

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

YES

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

YES

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

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

Large accelerated filer

Non-accelerated filer

Accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

YES

The aggregate market value of the Common Stock, par value $0.01 per share, held by non-affiliates of the registrant as of August 4, 2018, was approximately
$31.1 million based on the closing price of such stock as quoted on the New York Stock Exchange ($0.9442) on such date.

The number of shares outstanding of the registrant’s Common Stock, par value $0.01 per share, was 38,334,473 shares as of March 15, 2019 (excluding
treasury shares of 10,026,098).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held (the “Proxy Statement”) are incorporated by reference into
Part III.

CHRISTOPHER & BANKS CORPORATION
2018 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

Item 1.

Item 1A.

Item 1B.

Item 2.

Item 3.

Item 4.

Item 4A.

Item 5.
Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Item 9B.

Item 10.

Item 11.

Item 12.

Item 13.

Item 14.

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Mine Safety Disclosures

Executive Officers of the Registrant

PART I

PART II

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures About Market Risk

Financial Statements and Supplementary Data

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Controls and Procedures

Other Information

Directors, Executive Officers and Corporate Governance

Executive Compensation

PART III

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accounting Fees and Services

Item 15.

Exhibits, Financial Statement Schedules

Signatures

PART IV

Page

24
25

PART I

ITEM 1. BUSINESS

Overview

Christopher & Banks Corporation is a national specialty retailer featuring exclusively-designed, privately-branded women’s
apparel and accessories. We offer our customers an assortment of classic and versatile clothing for her everyday needs at a good
value. Our merchandise is developed for women of all sizes, typically age 50 and older with an income level from moderate to
above average.

We operate an integrated, omni-channel business platform that is designed to provide customers a seamless retail experience
with the ability to shop when and where they want, including our retail stores, outlet stores, and website. This allows our
customers to browse, purchase, return, or exchange our merchandise through the channel that is optimal for her.

Unless otherwise noted, the use of the terms “the Company”, “we”, “us” and “our” in this Annual Report on Form 10-K
("Annual Report") refers to Christopher & Banks Corporation and its wholly owned subsidiaries, Christopher & Banks, Inc.
and Christopher & Banks Company.

Our Brand

Christopher & Banks Corporation was incorporated in 1986 to acquire Braun’s Fashions, Inc., which had operated as a family-
owned business since 1956. We became a publicly traded corporation in 1992 and, in July 2000, our stockholders approved a
company name change from Braun’s Fashions Corporation to Christopher & Banks Corporation. Christopher & Banks caters to
missy and petite sized customers. In 2000, we introduced our women’s plus sized collection under the name C.J. Banks.

We offer merchandise assortments that reflect a balance of novelty and basic core items, at affordable prices. We emphasize
comfort and easy care in relevant fashions with a consistent fit. To differentiate ourselves from our competitors, our buyers,
working in conjunction with our product development teams and suppliers, strive to create a merchandise assortment of
coordinated outfits, the majority of which are manufactured exclusively for us under our proprietary Christopher & Banks® and
C.J. Banks® names.

Our Store Formats

Our Christopher and Banks (“CB”) stores offer merchandise assortments in women’s apparel and accessories for missy sizes 4
to 16 and petite sizes 4P to 16P.

Our C.J. Banks (“CJ”) stores offer merchandise assortments in similar women’s apparel and accessories for women’s sizes
14W to 26W.

Our Missy, Petite, Women (“MPW”) and outlet stores, and our website offer merchandise assortments from both Christopher
and Banks and C.J. Banks in all three size ranges resulting in greater opportunity to service our customers and improve our
sales productivity.

Our Vision

Our vision is to be our customer’s trusted brand by delivering style and value every day.

Our Mission

Our mission is to provide her with the style and versatility that reflects who she is, the lasting quality and affordable value that
she expects, and the personalized attention that she deserves.

Our Strategy

Our overall business strategy is to significantly improve our operating results and thereby begin the path towards sustainable,
long-term revenue growth and consistent profitability through the following strategic initiatives:

• Enhance the customer shopping experience;
• Improve marketing and promotional effectiveness;
• Leverage omni-channel capabilities;
• Build loyalty and grow our file;
• Optimize our real estate portfolio; and
• Right-size our cost structure.

Enhance the Customer Shopping Experience

We are committed to enhancing our customer's shopping experience by providing a well curated product assortment that is
presented in a way that is easier for her to shop. We are focused on improving the flow and depth of our inventory buys which
are intended to help her build an outfit and drive units per transaction. Additionally, we have recently launched a new Style and
Selling model to support our store associates in providing even better service and, more importantly, driving sales.

Improve Marketing and Promotional Effectiveness

Our goals include executing disciplined markdown management, leveraging improved analytics to inform what types and depth
of promotions and targeted offers are used and to increase our return on our marketing investments.

Leverage Omni-Channel Capabilities

Our integrated, omni-channel strategy is designed to provide customers with a seamless retail experience, allowing her to shop
whenever, however and wherever she chooses. In January of 2018, we launched “Buy online ship to store,” and in November
of 2018, we launched “Buy online ship from store.” We currently are fulfilling eCommerce orders from 170 of our stores. We
plan on launching “Buy online pick up in store” during the first quarter of fiscal 2019. These flexible fulfillment options not
only serve a customer need, they allow us to better leverage our inventory across our chain.

Build Loyalty and Grow our Customer File

We have a very loyal customer base that is highly engaged. Our uniquely designed product, our value positioning and our
customer service are key differentiators for us and contribute to the loyalty of our customers with approximately 90% of our
active customers participating in our loyalty rewards program.

We continue to focus on maximizing the benefits of our customer relationship management (“CRM”) database, Friendship
Rewards Loyalty Program (“Friendship Rewards”), and private-label credit card program to strengthen engagement with our
customers. Our Friendship Rewards program, in conjunction with our CRM system, allows us to personalize communications
and customize our offers. We continue to leverage our direct and digital marketing channels to encourage additional customer
visits and increased spending per visit.

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

Optimize our Real Estate Portfolio

Between 2011 and 2015 we consolidated our store formats and reduced our store count by 33% in an effort to improve store
productivity. Additionally, approximately 44% of our stores have a lease action arising within 12 months and 57% within 24
months. This should provide us with flexibility to close underperforming stores and the opportunity to renegotiate occupancy
costs where applicable.

Right-size our Cost Structure

We intend to take a holistic approach in driving cost reductions. To help us in accomplishing this we have hired a third-party,
non-merchandise procurement specialist to assist us in analyzing relationships and negotiating cost reductions. In addition, we
intend to continue to aggressively negotiate rent reductions, optimize our marketing spend, review and reduce our corporate
overhead and reduce our shipping and fulfillment expense.

Our Merchandise

Our merchandise assortments include mostly exclusive designs of women’s apparel, generally consisting of casual clothing,
everyday basics, wear-to-work, leisure / active wear, and seasonal sleepwear in missy, petite and women sizes. The Company
also offers a selection of jewelry and accessories to complement our customer’s wardrobe.

While each store offers a base merchandise assortment, store assortments vary to reflect individual store demands, sales levels,
and local market preferences. We design our products and merchandise them in our stores and through our website in a
coordinated manner intended to drive the number of units per transaction. On average, our customers purchase 2 to 3 items per
transaction.

Our Operations

All of the Company operations are located in the United States ("U.S."). Merchandise selection, pricing and promotions,
procurement and sourcing, marketing and advertising, and labor deployment across all channels are centrally managed at our
corporate headquarters. In addition, functional support capabilities (e.g. human resources, finance, legal) are also performed at
our corporate location. We also have field operations that support our retail teams. Our retail stores have procedures for
transaction processing, customer experience, merchandise display, inventory management, asset protection, and staff training.

Our Stores

As of February 2, 2019, we operated 455 stores in 45 states. The following table illustrates the change in store count and store
format for the past five fiscal years:

Store Count Rollforward

Stores as beginning of year

Opened
Closed
Conversions
Stores at end of year

Stores by Format
MPW
Outlet
Christopher and Banks
C.J. Banks
Total Stores

2018

463
10
(14)
(4)
455

2018
312
80
33
30
455

2017

484
1
(16)
(6)
463

2017
314
78
37
34
463

2016

518
9
(27)
(16)
484

2016
318
82
43
41
484

2015

518
42
(19)
(23)
518

2015
314
77
67
60
518

2014

560
23
(21)
(44)
518

2014
216
44
173
85
518

We continue to evaluate converting the remaining CB stores and CJ stores to MPW stores. MPW stores provide a unified store
format that simplifies merchandising and allocation processes, promotes cross shopping among sizes, enhances the customer
experience, and enables more economies of scale across functions.

Our Website

Our website at www.christopherandbanks.com provides customers the ability to browse our offerings, locate our stores, and
order merchandise online. Our website is designed to be an extension of our brand and is key to our developing omni-channel
strategy. The online merchandise assortment consists of a combination of exclusive styles as well as special sizes and lengths.
We offer online customers the option to return items in our stores.

Competition

The women’s retail apparel business is highly competitive and includes regional, national and international department stores,
specialty stores, boutique stores, catalog companies, off-price and online retailers. Many of these competitors have greater
name recognition and some of these competitors may have greater financial, marketing and other resources compared to us. We
compete in the specialty retail space by offering unique, classic and versatile clothing that fits her everyday needs at a good
value. We believe our visual merchandise presentation, attentive customer service and physical store locations complement our
compelling value proposition.

Global Sourcing and Products

We utilize a broad base of manufacturers located primarily in China, Indonesia and Vietnam with some domestic
manufacturing. We believe we produce goods at the level of quality that our customers desire, at a competitive cost. For the
most recently completed fiscal year, our ten largest suppliers accounted for approximately 67% of the merchandise we
purchased, and our two largest suppliers accounted for 16% and 10% of our goods, respectively.

We purchase our merchandise using individual purchase orders and, therefore, are not subject to long-term production contracts
with any of our vendors, manufacturers, or buying agents. We intend to continue our efforts to optimize our purchasing power
with consideration for the potential risk of limiting our manufacturing flexibility.

We may take ownership of product either in the foreign country where the factory is located, at a designated point of entry into
the United States, or at our distribution center depending on the specific terms of the sale. Most of our sourcing activities are
performed by a single-shared sourcing and procurement function. We believe that this function, working in concert with our
key supply chain partners, will deliver high quality apparel and accessories at a lower cost while providing the opportunity to
minimize freight costs through consolidation. We believe that the decision to centralize our sourcing and procurement
operations has helped us mitigate the impact of higher sourcing costs.

Typical lead times for delivery of our merchandise are 90 to 150 days from the date of order placement, however we have some
ability to expedite the sourcing of merchandise in those cases where we see an opportunity to garner incremental sales on those
items that have resonated with our customer. In addition, we will make purchases domestically when demand warrants.

Although we expect the cost of cotton and synthetics to remain relatively stable in fiscal 2019, our average unit cost may
change based on other factors, including overall mix of fashion versus core merchandise, fluctuations in transportation costs
and potential changes in tariffs. To the extent that we cannot offset increases in the cost of goods with other cost reductions or
efficiencies, we may be forced to sell the product at higher prices, which is subject to customer receptivity.

Merchandise Distribution

We distribute most of our products that are sold in our stores and online from our distribution center located in Plymouth,
Minnesota. New merchandise is generally received each weekday at our corporate distribution center. After arrival,
merchandise is sorted and packaged for shipment to individual stores or to our third party eCommerce fulfillment center or is
held for future store or eCommerce replenishment. Merchandise is generally pre-ticketed with price and related informational
tags at the point of manufacture.

Merchandise is typically shipped to our stores via third-party delivery services multiple times per week, providing our stores
with a steady flow of new inventory.

Merchandise sold through our eCommerce channel is fulfilled directly to the customer through either our third-party service
provider or from one of our stores. In fiscal year 2019, we intend to launch the ability for a customer to buy online and to pick
up merchandise in the store.

Information Technology

Our information technology strategy is intended to provide a platform for an integrated, omni-channel retail experience. Our
information systems are designed to enable us to obtain, analyze, and take action on information in a timely fashion. We are
committed to leveraging technology to maintain effective financial and operational controls.

We continue to make investments in capabilities that will allow us to better manage the flow of product. Existing and
anticipated system enhancements are intended to allow our teams to analyze store-level data to tailor the merchandise
assortment to the demographics of the surrounding community. We expect these insights will lead to improved merchandise
assortments thereby generating higher unit velocity and improved average unit retail, which should translate into higher
merchandise margins.

We are committed to evolving change management and portfolio management processes and standards to improve the security
of our data and our customers’ information as well as to maintain effective financial and operational controls. We have
established an information security infrastructure and methodology which can adapt to the evolving needs of the business in an
effort to ensure the appropriate safeguarding of assets and secure, reliable customer transactions.

In fiscal 2018 and 2017, we leveraged omni-channel capability investments to further enable us to address multiple customer
touch points to drive spend and build brand affinity.

Employees

As of February 2, 2019, we employed approximately 3,700 associates, approximately 32% of whom were full-time employees
and the balance of whom were part-time employees. The number of part-time employees fluctuates during peak selling
periods. Approximately 190 of our associates are employed at our corporate office and distribution center facility, with the
majority of the associate population employed in our store field organization. We have no collective bargaining agreements
covering any of our employees, have never experienced a work stoppage and are unaware of any efforts or plans to organize
our employees. We consider relations with our employees to be good.

Trademarks and Service Marks

We are the owner of certain registered and common law trademarks and service marks (collectively referred to as “Marks”).

Our wholly owned subsidiary, Christopher & Banks Company, is the owner of the federally registered Marks “christopher &
banks®,” which is our predominant private brand, and “cj banks®,” our private brand for women sizes 14W to 26W.

Our rights in the Marks are important to our business and are recognized in the women’s retail apparel industry. Accordingly,
we intend to maintain our Marks and the related registrations and applications. United States trademark registrations are for a
term of ten years and are renewable every ten years as long as the trademarks are used in the regular course of trade. We are not
aware of any claims of infringement or other challenges to our rights to use any registered Marks in the United States.

Seasonality

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

Working Capital

We fund our business operations through a combination of cash and cash equivalents and cash flows generated from operations.
In addition, our revolving credit facilities are available for additional working capital needs, for general corporate purposes and
investment opportunities.

Effective inventory management is critical to our success. We employ various methods to manage inventory levels including
demand forecasting, optimal allocations, and various forms of inventory replenishment. We seek to minimize markdowns
through effective inventory management.

Available Information

Our investor relations website is located at www.christopherandbanks.com. Through this website, we make available free of
charge, our Annual Reports, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange
Act”), as soon as reasonably practicable after we file such material with, or furnish it to, the U.S. Securities and Exchange
Commission (“SEC”).

Our Corporate Governance Guidelines, Code of Conduct, and our Board of Directors' committee charters are also available free
of charge at our investor relations website.

ITEM 1A. RISK FACTORS

Our business is subject to a variety of risks. Thus, an investment in our stock is also subject to risk. The following risk factors
should be read carefully in connection with evaluating our business and the forward-looking statements that are contained in
this Annual Report, as well as certain of our other filings made or to be made with the SEC. Any of the following risks and
uncertainties could materially adversely affect our business, financial condition, results of operations, liquidity, cash flows, the
trading price of our stock and/or the outcome of matters with respect to which forward-looking statements are made in this
Annual Report.

The risk factors have been separated into four groups: (1) Macroeconomic and Industry Risks; (2) Operational Risks; (3)
Capital Risks; and (4) Legal and Regulatory Risks. Based upon information currently known to us, the Company believes that
the following information identifies the most significant risk factors affecting our Company and our securities. The risk factors
described below should not be construed as an exhaustive list of all the risks we face nor are they listed in order of the
likelihood that the risk may occur or the severity of the impact if the risk should occur. Before making an investment decision,
you should carefully consider the risks and uncertainties described below together with all of the other information included or
incorporated by reference in this Annual Report.

We operate in a continually changing business environment and new risk factors emerge from time to time. There can be no
assurance that we have identified, assessed and appropriately addressed all risks affecting our business operations. Additional
risks and uncertainties could adversely affect our business, operational results, financial position, liquidity and cash flows.

1. MACROECONOMIC AND INDUSTRY RISKS

General economic conditions in the U.S. may adversely affect our business.

All of our stores are located within the U.S., making us highly susceptible to macroeconomic conditions and consumer
confidence in the United States. Apparel retailing is a volatile industry that is highly dependent upon the overall level of
consumer spending and consumer confidence. Because apparel typically is a discretionary purchase, declines in consumer
spending may have a more negative effect on apparel retailers than on other retailers.

In addition, there is a risk that consumer sentiment may decline as a result of market disruptions caused by severe or
unseasonable weather conditions, natural disasters, public health concerns, terrorist activities, political crises or other major
events or the prospect of these events. Such macroeconomic and other factors could have a negative effect on consumer
spending in the U.S., which in turn could have a material effect on our business, operational results, financial position and cash
flows.

The ability to attract customers to our stores depends heavily on customer traffic at malls and centers in which our stores are
located.

The majority of our stores are located in shopping malls and other retail centers. Sales at these stores are derived in
considerable part from the volume of traffic generated in those malls or retail centers and surrounding areas. The continued
decrease in traffic at malls and shopping centers where our stores are located and/or, the closing of anchor stores important to
driving mall traffic could result in lower sales and leave us with excess inventory. In such circumstances, we may have to
respond by increasing markdowns or initiating marketing promotions to reduce excess inventory, which could adversely impact
our financial results, business and cash flows.

We are subject to risks associated with leasing all of our store locations.

We currently lease all of our store locations. Our leases range from month-to-month to approximately ten years in length. A
number of our leases have early termination provisions that apply if we do not achieve specified sales levels, such that we or
the landlord may terminate the lease or alternatively we may seek to re-negotiate rent if we do not achieve such sales levels.
The leases for approximately 44% of our store base expire between February 3, 2019 and January 29, 2020, including those
leases which are month-to-month. We believe that, over the last few years, we have generally been able to negotiate favorable
rental rates. Going forward we may need to close additional stores if we fail to achieve certain sales levels or we may not be
able to renew our leases on as favorable terms or terms which we deem acceptable. In addition, some landlords may choose to
rent to another entity that is prepared to pay higher rents. As a result, we may need to pay higher occupancy costs or close
stores, which could adversely impact our financial performance, results of operations, liquidity and cash flows. In addition,
economic conditions could negatively impact the Company's retail landlords, particularly class C & D quality malls where the
majority of our brick-and-mortar stores are located. That, in turn, could affect their ability to maintain their shopping centers,
including a high level of sustained occupancy, and otherwise perform their obligations, which could negatively impact
customer traffic, our sales, results of operations, liquidity and cash flows.

We have, and will continue to have, significant lease obligations. If an existing or future store is not profitable, and we decide
to close it, we may nonetheless be committed to fulfill our obligations under the applicable lease including paying the base rent
for the balance of the lease term. Additionally, continued consolidation in the commercial retail real estate market could affect
our ability to successfully negotiate favorable rental terms for our stores in the future and could concentrate our leases with
fewer landlords who may then be in a position to dictate unfavorable terms to us due to their significant negotiating leverage.
If we are unable to enter into new leases or renew existing leases on terms acceptable to us or be released from our obligations
under leases for stores that could have a material effect on our business, operational results, financial condition and cash flows.

Fundamental shifts in the retail industry and the competitive environment could impact our revenues, operational results and
market share.

The women's specialty retail apparel business is highly competitive. We believe we compete primarily with department stores,
specialty stores, discount stores, mass merchandisers, and on line businesses that sell women's apparel. Many of our
competitors are significantly larger with greater resources available to them, may offer a broader selection of merchandise than
we do, and have greater brand recognition and comparatively lower costs of operations. They also may be able to adapt to
changes in customer preferences more quickly, as well as respond faster to economic, operational, regulatory or organizational
changes. In addition to competing for sales, we compete for favorable store locations, lease terms and qualified
associates. Increased competition in any of these areas could result in higher costs, which could reduce our revenue and gross
margins.

In addition, the growth and prominence of fast-fashion and value-fashion retailers and expansion of off-price retailers have
fundamentally shifted customers’ expectations of affordable pricing of apparel. The rise of these retailers as well as the shift in
shopping preferences away from brick-and-mortar stores to the direct channel, where online-only businesses or those with
robust direct channel capabilities can facilitate competitive entry and comparison shopping in our brands, have increased the
difficulty of maintaining or gaining market share. The Company’s execution of its own omni-channel strategy to adapt to these
changes, in relation to its competitors’ actions as well as to our customers’ adoption of new technology, presents a specific risk.
Further, unanticipated changes in pricing and other practices of the Company’s competitors, including promotional activity,
such as free shipping and pricing pressures, could have a material adverse effect on our business, operational results, financial
position and cash flows.

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

Most of our merchandise is produced in foreign countries, primarily in China, making the price and availability of our
merchandise susceptible to international trade risks and other international conditions. The imposition of tariffs, duties, border
adjustment taxes or other trade restrictions by the United States could also result in the adoption of new or increased tariffs or
other trade restrictions by other countries. Recently, the current U.S. administration and China have imposed significant tariffs
on goods imported from the other's country, and have threatened the imposition of additional tariffs in retaliation, which could
apply to apparel and accessories. If the current administration follows through with such tariffs, or if additional tariffs or trade
restrictions are implemented by the United States or other countries, the resulting trade barriers could have a significant adverse
impact on our business as we may not be able to successfully shift production to factories located outside of China.

We are not able to predict future trade policy of the United States or of any foreign countries in which we purchase goods, or
the terms of any renegotiated trade agreements, or their impact on our business. The adoption and expansion of trade
restrictions and tariffs, quotas and embargoes, the occurrence of a trade war, or other governmental action related to tariffs or
trade agreements or policies, has the potential to adversely impact demand for our products, our costs, our customers, our
suppliers and the world economy, which in turn could have a material adverse effect on our business, operational results,
financial position, liquidity and cash flows.

Instability in the shipping industry or a shortage of qualified truck drivers could increase our costs, result in delays in the
receipt or loss of merchandise and adversely impact our results of operations.

While we do not rely on a single ocean carrier company to transport our goods, disruption or instability among transportation
carriers could result in reduced capacity, increased rates, delay in the receipt of or the loss of goods. This, in turn, could
increase our costs, result in lost sales or sales at lower margins negatively impacting our operations, financial results, cash
flows and liquidity. In addition, a shortage of qualified truck drivers has impacted the trucking industry, causing delays and
increases in prices. While the Company transports most of its imports by rail, the driver shortage could make it more difficult to
hire trucks to transport rail shipments to us. If that were to occur, it would likely increase our costs, and possibly delay receipt
of merchandise which in turn could lead to lost sales and sales at lower margins negatively impacting our operations, financial
results, cash flows and liquidity.

Extreme and/or unseasonable weather conditions in the United States could have a disproportionate effect on our business,
results of operations and cash flows.

Extreme weather conditions in the areas in which our stores are located could negatively affect our business, financial
condition, results of operation and cash flows. For example, inclement weather or extreme conditions can make it difficult for
our customers to travel to our stores, result in temporary store closures and/or reduced hours of operation and may cause a
disruption in the shipment or receipt of merchandise. Our business is also susceptible to unseasonable weather conditions. For
example, extended periods of unseasonably warm temperatures during the winter season or cool weather during the summer
season could render a portion of our merchandise offerings incompatible with those unseasonable conditions in the affected
areas. Such unseasonable weather conditions could have an adverse effect on our sales, financial condition, results of
operations and cash flows.

Acts of terrorism, natural disasters, acts of war, other catastrophes or political unrest could have a material adverse effect on
our business.

The threat, or actual acts, of terrorism continue to be a significant risk to the global economy. Terrorism and potential military
responses, political unrest, natural disasters, pandemics and other health issues have disrupted or could in the future disrupt
commerce, impact our ability to operate our stores, offices or distribution centers in the affected areas or impact our ability to
provide critical functions or services necessary to the operation of our business. A disruption of commerce, or an inability to
recover critical functions or services from such a disruption, could interfere with the production, shipment or receipt of our
merchandise in a timely manner or increase our costs to do so, which could have a material adverse impact on our business,
operational results, financial position and cash flows. In addition, any of the above disruptions could undermine consumer
confidence, which could negatively impact consumer spending or customer traffic, and thus have an adverse effect on our
operational results.

Our ability to mitigate the adverse impact of any of the above disruptions also depends, in part, upon the effectiveness of our
planning and response. However, we cannot be certain that our plans will be adequate or implemented properly in the event of
an actual disaster or other catastrophic situation.

Costs of raw materials, commodities, transportation or labor may rise resulting in an increase in component and delivery costs,
and overall product costs, all of which could erode margins and impact our profitability.

The raw materials and labor used to manufacture our products, and our transportation and contract manufacturing labor costs
are subject to availability constraints and price volatility. The results of our business operations could suffer due to significant
increases or volatility in the prices of certain commodities, including but not limited to cotton, synthetics and other items used
in the production of our apparel, as well as increases in fuel, oil, natural gas or labor costs as well as shortages of skilled labor.
Price increases of these items or other inflationary pressures may result in significant cost increases for our raw materials,
product components and finished products, as well as increases in the cost of distributing merchandise to our retail locations.
To the extent that we cannot offset increases in the cost of goods with other cost reductions or efficiencies or the sale of
products at higher prices and with the desired level of gross margin, it could have a negative effect on our gross profits.
Additionally, substantially increased uncertainty with respect to trade relations, such as the imposition of unilateral tariffs on
imported products, could result in trade wars, higher barriers and tariffs, and higher product costs, all of which could have a
material adverse effect on our business, operational results, financial position, cash flows and liquidity.

2. OPERATIONAL RISKS

Improving our store productivity will be largely dependent upon the performance of our missy, petite and women’s format
(“MPW stores”) including our outlet stores.

Improving the performance of our existing stores and optimizing our store productivity is critical to improving our sales and
returning to profitability. Over the past several years, the Company has opened a number of outlet stores and converted existing
C&B and C.J. Banks’ stores into MPW stores such that approximately 86% of our stores (including outlets) at fiscal year-end
were in the MPW format. If we are unable to improve the overall performance and store productivity of the MPW stores, our
revenues, margins, liquidity, cash flows and results of operations could be adversely affected.

Our business underwent a number of leadership changes in fiscal 2018 resulting in changes to our strategies and tactical
initiatives. If we do not successfully implement and adapt to these changes, it could have a material adverse effect on our
business.

Keri L. Jones joined the Company as Chief Executive Officer in mid-March 2018. In July of 2018 we hired a new Chief
Financial Officer and a new Chief Merchandising Officer, and in December 2018 a new Chief Stores Officer. In connection
with these changes in management, there have been (and likely will be additional) changes to the Company’s operations and
also to some of our key strategies and tactical initiatives. If we do not successfully implement and adapt to these changes they
may not lead to the desired improvement in our business and results of operation. This in turn, could have a material adverse
effect on our business.

If we are unable to increase sales and achieve and sustain an acceptable level of gross margin, it could have a material adverse
impact on our business, profitability and liquidity.

For the recently completed fiscal year, total sales, comparable stores sales and gross margin rate were below our expectations.
Our ability to reverse this trend is subject to a variety of challenges. If we cannot increase our comparable store sales and
improve our gross margin rate; it could have a material adverse effect on our results of operations, cash flows, liquidity and
financial condition.

Our fiscal 2019 plan to improve the Company’s financial performance is dependent upon our ability to successfully implement
our strategic and tactical initiatives.

The Company’s fiscal 2019 operational plan contemplates growth in comparable store sales; improved selling, general and
administrative expense leverage; and gross margin rate improvement intended to result in improved financial results as
compared to fiscal 2018. We plan to achieve this through a variety of initiatives, including enhancing and simplifying her
shopping experience, executing a disciplined promotional strategy, continuing to expand our omni-channel capabilities,
building our customer base and reducing our cost structure. Our ability to achieve this plan depends upon a variety of factors,
including a number of factors that are beyond our control. If we are unable to successfully implement and execute the strategic
and tactical initiatives underlying our fiscal 2019 plan, our results of operations, financial condition, cash flows and liquidity
could be adversely affected.

Our sales and results of operations could be adversely affected if we fail to attract, retain or recruit key personnel as well as
attract, develop and retain qualified employees.

Our performance is highly dependent on attracting and retaining qualified employees, including our new executives, and other
key personnel. A significant amount of turnover of management employees with specific knowledge relating to our operations
and industry could result in a loss of organizational focus and an inability to identify or properly execute key strategies and
tactical initiatives. Also, if we are unable to attract and retain a sufficient number of qualified sales associates at acceptable
wage levels that may impair our efficiency and effectiveness in serving our customers and in generating sales. That, in turn,
could adversely impact our results of operations, financial condition, cash flows and liquidity.

We may be unable to maintain our brand image, engage new and existing customers or gain market share.

Our ability to maintain our brand image and reputation is integral to our business as well as the implementation of strategies to
expand it. Maintaining, promoting and growing our brand will depend largely on the success of our merchandising and marketing
efforts and our ability to provide a consistent, high-quality customer experience that retains existing customers and attracts a
sufficient level of new customers to shop our brand, both in-store and online. In addition, our business and results of operations
could be adversely affected if we fail to achieve these objectives for any of our brands. Our ability to address the challenges of
declining store traffic at our brick-and-mortar stores, in a highly promotional, low growth environment may impact our ability to
maintain or gain market share and also impact our sales, business, operational results, financial position and cash flows.

Further, the use of social media by the Company and consumers has also increased the risk that the Company’s image and reputation
could be negatively impacted. The availability of information, reviews and opinions on social media is immediate, as is its impact.
The opportunity for dissemination of information, including inaccurate and inflammatory information and opinion, is nearly
infinite. Even if we react quickly and appropriately to negative social media about us or our brands, our reputation and customers’
perception of our brands could be negatively impacted. Damage to the brand image and reputation of the Company in any aspect
of its operations could have a material adverse effect on our business, operational results, financial position and cash flows.

Our business depends on effective marketing, advertising and promotional programs.

Customer traffic and demand for our merchandise is influenced by our advertising, marketing, promotional and social media
activities, the name recognition and reputation of our brands, and the location and service offered in our stores. Although we
use marketing, advertising and promotional programs to attract customers through various media, including social media, our
competitors may spend more or use different approaches, which could provide them with a competitive advantage. If our
marketing, advertising and promotional expenses increase, if our programs become less effective than that of our competitors,
or if we do not adequately leverage technology and data analytic capabilities needed to generate concise and effective
competitive insight, our business, operational results, financial position and cash flows could be adversely impacted.

Customer tastes and fashion apparel trends tend to change rapidly. Our ability to anticipate or react to changing consumer
preferences in a timely and accurate manner and offer a compelling product at an attractive price impacts our sales, gross
margins, financial condition, results of operations, cash flows and liquidity.

Our success depends on our ability to consistently gauge and respond on a timely basis to fashion trends and customer
preferences. Forecasting consumer demand for our merchandise and allocating the right amount and sizes of such merchandise
to individual stores and to our eCommerce business can be challenging. In addition, our merchandise assortment differs from
season to season. This may involve changes in our overall mix of fashion versus core merchandise which in turn may impact
our overall product cost as the average unit cost of fashion product is generally higher than that of core product. Because the
lead times required for many of our design and purchase decisions must be made well in advance of the applicable selling
season, we are vulnerable to changes in consumer trends, preferences, price shifting, and the optimal selection and timing of
merchandise purchases.

If we are unable to successfully identify or react to changing styles or trends or misjudge the market for our products or any
new product lines, our sales and gross margins may be lower and the Company may be faced with a significant amount of
unsold finished goods inventory. In response, the Company may be forced to increase its marketing promotions or price
markdowns, which could have a material adverse effect on our financial condition, results of operations, cash flows and
liquidity.

On the other hand, if we underestimate demand for our merchandise, we may experience inventory shortages, resulting in
missed sales opportunities and lost revenues.

There are risks associated with our eCommerce business.

We sell merchandise over the Internet through our web site, www.christopherandbanks.com, which represents a growing
percentage of our overall net sales. The successful operation of our eCommerce business depends on our ability to maintain the
continuous operation of our eCommerce website and our fulfillment operations, and to provide a shopping experience that will
generate both orders and return visits to our site. Our eCommerce operations are subject to numerous risks, including:

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disruption to the Internet;
unanticipated operating problems;
rapid technological change;
the successful implementation of, and costs to implement, new systems and upgrades including those related to the
operation of our website platform;
inability to maintain efficient and uninterrupted order-taking and fulfillment processes;
reliance on third parties with respect to the operation of the website, order fulfillment and customer service and such
third parties' infrastructure;
diversion of sales from our stores;
liability for online content;
lack of compliance with, or violations of, applicable state or federal laws and regulations;
increased or unfavorable governmental regulation of eCommerce (which may include regulation of privacy, data
protection, eCommerce payment services, content, accessibility and other related subjects);
credit card fraud;
the ability to process credit card transactions;
system failures or disruptions and security breaches and the costs to address and remedy such failures, disruptions or
breaches;
computer viruses or malware;
lack of sufficient levels of inventory of product or sizes to meet online demand; and
untimely delivery of our merchandise to our customers by third parties.

If we fail to successfully address and respond to these risks, it could negatively impact our brand and reputation and have a
material adverse effect on our eCommerce sales, operating results, financial position, liquidity and cash flows. There also can
be no assurance that our eCommerce operations will meet our sales and profitability plans, and the failure to do so also could
negatively impact our revenues, earnings, cash flows and liquidity.

If we are unable to successfully implement and optimize our omni-channel retail strategy, our financial results would be
adversely affected.

We are committed to growing our business through our omni-channel retail strategy. Our omni-channel initiatives include
exploring additional ways to develop an omni-channel shopping experience, including further direct channel integration, use of
advance analytics, customer personalization, and the assessment and implementation of emerging technologies. These
initiatives involve significant investments in information technology systems, operational changes, and employee resources.
Our goal is to offer our customers seamless access to our brands and merchandise whenever and wherever she chooses to shop.
In that regard, the Company in fiscal 2018 implemented “buy on-line, ship to store”, and “buy anywhere, ship from store” and
intends to launch “buy on-line pick up in store” this fiscal year.

Our success in the omni-channel arena also depends on our ability to anticipate and implement innovations in sales and
marketing strategies to appeal to existing and potential customers who increasingly rely on multiple channels to meet their
shopping needs and on our third-party service provider's ability to adapt to and implement system improvements in response. In
addition, our competitors are also investing in omni-channel programs, some of which may be more successful than our own.
Failing to successfully implement and optimize our omni-channel retail strategy or if we do not realize our expected return on
our investment in these initiatives could have a material adverse effect on our business, operational results, financial position
and cash flows.

Our reliance on foreign sources of production poses various risks.

Because a significant portion of our merchandise is produced overseas, primarily in China, Indonesia and Vietnam, we are
subject to the additional risks of doing business in foreign markets and importing merchandise from abroad, such as:

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the ability to find qualified vendors and access products in a timely and efficient manner;
delays in the delivery of cargo;
new and additional U.S. government initiatives may be proposed or implemented that may have an impact on the
trading status of certain countries and may include retaliatory duties, tariffs or other trade sanctions that, if enacted,
could increase the cost of products purchased from suppliers in such countries or restrict the importation of products
from such countries;
violation of applicable laws or regulations including but not limited to violations under the U.S. Foreign Corrupt
Practices Act or similar laws or regulations by us, our subsidiaries or our local agents;
the adoption of new legislation or regulations in the U.S or foreign countries that make it more difficult, more costly or
impossible to continue our foreign activities;
financial or political instability in any of the countries in which our merchandise is manufactured;
significant fluctuations in the value of the dollar against foreign currencies or restrictions on the transfer of funds;
supply chain security initiatives undertaken by the United States or foreign governments that delay or impede the
delivery of imports and the normal flow of product;
delayed receipt or non-delivery of goods due to the failure of suppliers to comply with applicable import regulations;
delayed receipt or non-delivery of goods due to labor strikes or unexpected or significant port congestion at United
States or foreign ports;
potential recalls or cancellations of orders for any merchandise that does not meet our quality standards;
inability to meet our production needs due to labor shortages; and
natural disasters, extreme weather, political or military conflicts, terrorism, disease epidemics and public health related
concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and embargoing or
increased scrutiny (and the resulting delays) of goods produced in affected areas.

Any of the foregoing factors, or a combination of them, could increase our costs or result in our inability to obtain sufficient
quantities of merchandise, thereby negatively impacting our sales, gross profit, operating income, financial condition and
liquidity.

It is also possible that restrictions on or the inability of our suppliers to access credit may cause them or their factors to extend
less favorable terms to us, which could adversely affect our cash flows, gross margins, financial condition and liquidity.
Additionally, delays by our vendors in supplying our inventory needs could cause us to incur more expensive transportation
charges, which may adversely affect our margins.

A significant portion of our merchandise is ordered through a small number of suppliers and our business could suffer if we
needed to replace them.

We do not own or operate any manufacturing facilities. Instead we depend on independent third parties to manufacture our
merchandise. For the most recently completed fiscal year, our ten largest suppliers accounted for approximately 67% of the
merchandise we purchased, and we purchased 16% and 10% of our goods, respectively, from our two largest suppliers.

We generally maintain non-exclusive relationships with the suppliers that manufacture our merchandise, and we compete with
other companies for production facilities. As a result, we have no contractual assurances of continued supply or pricing, and
any supplier, including our key suppliers, could discontinue selling to us at any time. Moreover, a key supplier may not be able
to supply our inventory needs due to capacity constraints, financial instability or other factors beyond our control, or we could
decide to stop using a supplier due to quality or other performance or cost issues. If we determine to cease doing business with
one or more of our key suppliers or if a key supplier becomes unable to supply desired merchandise in sufficient quantities on
acceptable terms, we could experience delays in the receipt of inventory until alternative supply arrangements are secured; such
delays could result in lost sales and adversely affect our financial condition, results of operations, cash flows and liquidity.

If third parties with whom we do business do not adequately perform, or are unable or unwilling to perform, their functions, we
might experience disruptions in our business, resulting in decreased profits, or losses, and damage to our reputation.

We depend upon independent third parties, both domestic and foreign, for the manufacture of all of the goods that we sell. The
inability of a manufacturer to ship orders in a timely manner or to meet our standards could have a material adverse impact on
our business.

We are party to contracts, transactions and business relationships with various third parties, including vendors, suppliers,
service providers and lenders, pursuant to which such third parties have performance, payment and other obligations to us. In
some cases, the Company depends upon such third parties to provide essential products, services or other benefits in order to
operate the Company’s business in the ordinary course.

Adverse economic, industry or market conditions could result in an increased risk to the Company associated with the potential
financial distress or insolvency of such third parties. Failure by any of these third parties to perform these functions effectively,
properly and timely, or any disruption in our business relationships with any of these third parties, could negatively impact our
operations, profitability, cash flows and reputation.

Our business and reputation could suffer if one or more of our suppliers or the factories they use fails to comply with
applicable laws, follow acceptable labor practices or is accused of such non-compliance.

Our success depends, in part, on the suppliers of our goods and the factories that they use to operate in compliance with
applicable laws and regulations and to comply with our vendor code of conduct. Each of our purchase orders requires
adherence to accepted labor practices, applicable laws and compliance with our vendor code of conduct. However, we do not
supervise or control our suppliers or the factories that produce the merchandise we sell or their labor and business practices. We
rely on the staff of third-party auditing services and our non-exclusive buying agents to periodically visit and monitor the
operations of a number of our independent factories to, among other things, assess compliance with our vendor code of conduct
and applicable laws. Moreover, apparel companies can, in some cases, be held jointly liable for the wrongdoings of the
suppliers of their products. In addition, we cannot control the public’s perceptions of such suppliers or factories, even if they
are compliant with applicable law but are nonetheless viewed in a negative light by the public. Their failure to comply with our
vendor code of conduct, applicable laws or to otherwise avoid creating negative consumer perceptions about their
manufacturing methods and work environment, could damage our reputation, interrupt or disrupt the shipment of products,
result in a decrease in customer traffic to our stores and website, and adversely affect our sales and consequently our results of
operations.

There are risks relating to the operation of the ports through which our goods are shipped and to the transportation of our
merchandise to our distribution center, to our eCommerce fulfillment center, to our stores, and to our eCommerce customers.

The vast majority of our products are shipped by ocean from overseas. There are risks associated with a disruption in the
operation of ports through which our products are shipped, which are primarily ports on the West Coast. If that were to occur,
we are likely to experience delays in the receipt of products, and we or our suppliers may have to find alternative shipping
methods, possibly at greater expense and costs as shipping by air is significantly more expensive. Similarly shipping to
alternate destinations in the United States could lead to increased lead times and overall costs for our products. We currently
rely upon independent third-party transportation providers for substantially all of our merchandise shipments, including
shipments to our distribution center, our stores, our eCommerce fulfillment center and our eCommerce customers. Our use of
outside delivery services for shipments is subject to a variety of risks which may impact a shipper's ability to provide delivery
services that adequately meet our shipping needs at an acceptable cost. If we change shipping companies, we could face
logistical difficulties that could adversely impact deliveries and we would incur costs and expend resources in connection with
such a change. Moreover, we may not be able to obtain terms as favorable as those received from the independent third-party
transportation providers we currently use, which would increase our costs. If we were to experience any of these risks, it could
adversely affect our costs, results of operations, gross profit, financial condition and cash flows.

We depend on a single facility to conduct our operations and distribute our merchandise. Our business could suffer a material
adverse effect if this facility’s operations was shut down or severely disrupted.

Our corporate headquarters, data center and our only distribution facility are located in one facility in Plymouth, Minnesota
which facility is more than 45 years old. Our distribution facility supplies merchandise to our retail stores and our third party
eCommerce fulfillment center. Any serious disruption to our distribution facility or a facility closure for any reason, could
delay shipments to stores and our eCommerce fulfillment center and result in inventory shortages which could negatively
impact our sales, results of operations and cash flows. In addition, our main data center and all of our senior management,
including critical resources dedicated to merchandising, operations, marketing, finance, information technology and
administrative functions, are located at our corporate headquarters. In the event of a disaster or other calamity impacting our
corporate facility or data center, our management and staff would have to find and operate out of other suitable locations and/or
rely on alternative sources for computer, telecommunications and data storage systems. We have little experience operating
essential functions away from our main corporate office and are uncertain what effect operating such satellite facilities might
have on business, personnel and results of operations.

Although we maintain business interruption and property insurance, we cannot be assured that our insurance coverage will be
sufficient or that any insurance proceeds will be timely paid to us if our distribution center or corporate office were shut down
for any unplanned reason.

We are heavily dependent on our information technology systems and our ability to maintain and upgrade these systems from
time-to-time and operate them in a secure manner.

The efficient operation of our business is heavily dependent on our information technology systems (“IT systems”). In
particular, we rely (i) on point-of-sale terminals, which provide information to our host analysis systems used to track sales and
inventory; (ii) on our eCommerce website through which we sell merchandise to our customers and (iii) on a third party to
process payroll for our employees. Although our data is backed up and securely stored off-site, our main data center is located
at our headquarters in Plymouth, Minnesota. The data center and our operations are vulnerable to damage or interruption due to
a variety of factors.

The reliability and capacity of our IT systems (including third-party hardware and software systems or services) are critical to our
continued operations. Despite our precautionary efforts, our IT systems, as well as those of our services providers, are vulnerable
to damage or interruption from a variety of sources, including natural or man-made disasters, technical malfunctions, inadequate
systems capacity, power outages, computer viruses, malicious human acts, security breaches and similar disruptive problems,
which may require significant investment to fix or replace, and we may suffer loss of critical data and interruptions or delays to
our operations.

Any disruption in the operation of our IT systems, our inability to maintain sufficient staffing levels, the loss of key employees
knowledgeable about such systems or our failure to continue to effectively integrate, monitor and enhance such systems could
interrupt our operations resulting in the temporary loss of or ability to access data or interfere with our ability to sell goods at
our stores, which could result in reduced sales and affect our operations and financial performance. In addition, any interruption
in the operation of our website could cause us to lose sales due to the temporary inability of customers to purchase merchandise
through our website.

Periodically, we improve and upgrade portions of our IT systems and the functionality of our Internet website in an effort to
ensure they meet our evolving business and security needs and are adequate to handle business growth. If we are unable to
effectively maintain, operate, secure and timely upgrade our IT systems and our website, our business, financial condition and
results of operations could be materially and adversely affected. While we believe that we are diligent in selecting vendors,
systems and third party providers to assist us in maintaining the integrity of our IT systems, we realize that there are risks and
no assurance can be provided that future disruptions, service outages and failures or unauthorized intrusions will not occur.
Any failure, interruption or compromise of these systems could have a material adverse effect on our business, results of
operation and cash flows.

We are subject to cyber security risks and may incur additional expenses in order to mitigate such risks or in response to
unauthorized access to our data. In addition, an incident in which we or our third-party service providers fail to protect our
customers' or employee’s information against a security breach could result in costly government enforcement actions and
monetary damages against us from private litigation. Such an incident could otherwise damage our reputation, harm our
business and adversely impact our results of operations, financial condition and liquidity.

The Company and our third-party service providers, which manage portions of the Company’s data, are subject to cyber
security risks. The nature of our business involves the receipt and transmission, and in some cases storage by us or third parties
on our behalf, of customers’ personal information, shopping preferences and our customers’ credit card information, in addition
to employee information and the Company’s financial and strategic data. The protection of our customers’ data, as well as
confidential Company data is vitally important to the Company. The Company and its third-party service providers employ
systems and/or websites that are intended to protect the storage and/or transmission of proprietary or confidential information
by us and these third-party service providers. While the Company has implemented measures to prevent and detect security
breaches and cyber incidents and to monitor its computer network, any failure of these measures and any failure of third parties
that assist the Company in managing its data could adversely affect the Company's business, financial condition and results of
operations.

Although the Company expects our third-party service providers to implement and use reasonable security measures to protect
the proprietary and confidential information once it is received by them, we cannot control these service providers and cannot
guarantee that a security breach will not occur in the future either at their location or within their systems.

Because the techniques used to obtain unauthorized access to data, disable or degrade storage service, or sabotage systems
evolve and change frequently and may be difficult to detect, we and the service providers we use may be unable to anticipate
these techniques or implement adequate preventive measures. Unauthorized parties may also attempt to gain access to our
systems or facilities, or those of third parties acting on our behalf, through fraud, trickery or other forms of deceiving our
employees or those of our third-party providers. Despite our preventative efforts and those of our third-party service providers,
we may be vulnerable to targeted or random security breaches, privacy or denial of service attacks, acts of vandalism, computer
viruses, misplaced or lost data, programming and/or human errors, or other similar events which could expose us and our third-
party service providers to a risk of loss or misuse of proprietary and confidential information, litigation and potential liability.
Cyber security attacks may be targeted at us, our third-party service providers, or our customers. Actual or anticipated attacks
may cause us to incur significant additional expense, including costs to deploy additional personnel and protection
technologies, train employees, and engage third-party experts and consultants. Any cyber security or security breaches,
including any breaches that result in theft, transfer or unauthorized disclosure of customer, employee or company information,
or our lack of compliance with information security and privacy laws and regulations, may result in significant legal and
financial exposure, including claims for unauthorized purchases with stolen credit card information, impersonation or other
similar fraud claims, and considerable other additional expenses. Although we maintain cyber-security insurance there can be
no assurance that our insurance coverage will cover the particular cyber incident at issue or that such coverage will be
sufficient, or that insurance proceeds will be paid to us in a timely manner.

Consumer awareness and sensitivity to privacy breaches and cyber security threats is prevalent. Any misappropriation of
confidential or personally identifiable information gathered, stored or used by us or our service providers, be it intentional or
accidental, could have a material impact on the operation of our business, including severely damaging our reputation and our
relationships with our customers, employees and investors. Should customers lose confidence in our ability to protect their
information, they may discontinue shopping in our stores or on our website.

Our ability to maintain the value of our trademarks impacts our business and financial performance.

We believe that our “christopher & banks”, “cj banks” and related trademarks are important to our success. Even though we
take actions to protect our trademarks and other proprietary rights, we cannot be sure that we will be successful or that others
will not imitate or infringe upon our intellectual property rights. In addition, we cannot assure that others will not seek to block
the sale of our products as infringements of their trademark and proprietary rights. If we cannot adequately protect our existing
and future trademarks or prevent infringement of them, our business and financial performance could suffer.

3. CAPITAL RISKS

The sufficiency and availability of our sources of liquidity may be affected by a variety of factors.

The sufficiency and availability of our sources of liquidity may be affected by a variety of factors, including, without limitation:
(i) the level of our operating cash flows, which is impacted by our overall sales and gross margins, general economic conditions
and the level of consumer discretionary spending; (ii) our capital expenditures; and (iii) our ability to maintain borrowing
availability and to comply with applicable covenants contained in our amended and restated credit agreement ("the Credit
Facility").

Our ability to return to profitability and to generate positive cash flows is dependent upon many factors, including favorable
economic conditions and consumer confidence and our ability to successfully execute our financial plan and strategic and
tactical initiatives in order to improve overall sales levels and gross margins. There can be no assurance that our cash flows
from operations will be sufficient at all times to support our Company without additional financing or credit availability. An
inability to generate sufficient cash flows could have important consequences. For example, it could:

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increase our vulnerability to general adverse economic and industry conditions;
limit the amount of orders our vendors will produce, or their factors will allow them to produce for us, or result in their
imposing unfavorable business terms or possibly refusing to do future business with us;
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limit our ability to borrow money or to invest in our business operations;
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require us to incur significant additional indebtedness.

Should we be unable in the future to borrow under the Credit Facility, it is possible, depending on the cause of our inability to
borrow, that we may not have sufficient cash resources for our operations. If that were to occur, our liquidity would be
significantly impaired, which would have a material adverse effect on our business, financial condition and results of
operations.

Our amended revolving credit agreement contains various covenants that impose restrictions that may affect our ability to operate
our businesses.

The amended revolving credit agreement contains various affirmative and negative covenants that, subject to certain
exceptions, restrict the ability of the Company and its subsidiaries to, among other things, have liens on their property, change
the nature of their business, transact business with affiliates or sell or convey certain of their assets to any one person. In
addition, the agreement contains a financial covenant that requires the Company to maintain certain financial ratios related to
its borrowing base. The ability of the Company and its subsidiaries to comply with these provisions may be affected by our
operating results as well as events beyond our control. Failure to comply with these covenants could result in an event of
default, which, if not cured or waived, could cause our lenders to restrict or eliminate access to funds under the Credit Facility.

Access to additional financing from the capital markets may be limited.

Changes in the credit and capital markets, including market disruptions, limited liquidity and interest rate fluctuations, may
increase the cost of financing or restrict the Company’s access to potential sources of future liquidity. As a result of general
unpredictability in the global financial markets, there can be no assurance that our liquidity will not be affected or that our
capital resources will at all times be sufficient to satisfy our liquidity needs. Although we believe that our existing cash and
cash equivalents, cash provided by operations, and our availability under our amended revolving credit agreement, will be
adequate to satisfy our capital needs for the foreseeable future, any renewed tightening of the credit or capital markets could
make it more difficult for us to access funds, enter into an agreement for new indebtedness or obtain funding through the
issuance of our securities. Our amended Credit Facility has covenants and restrictions which, if not met, may limit our ability to
access funds.

While we have availability under our Credit Facility to bolster our liquidity, we may need additional capital to fund our
operations, particularly if our cash flows from operating activities were to decrease or if the Credit Facility were unavailable or
used to capacity. The sale of additional equity securities or convertible debt securities in order to improve our liquidity could
result in additional dilution to our stockholders. If we borrow under our Credit Facility or incur other debt, our expenses will
increase and we could be subject to additional restrictions that may limit our operating flexibility. Newly issued securities may
have rights, preferences and privileges that are senior or otherwise superior to those of our common stock. There is no
assurance that equity or debt financing will be available in amounts or on terms acceptable to us. Without sufficient liquidity,
we will be more vulnerable to any future downturns in our business or the general economy. Future increases in interest rates or
other tightening of the credit markets, or future turmoil in the financial markets, could make it more difficult for us to access
funds, to refinance our indebtedness (if necessary), to enter into agreements for new indebtedness, or to obtain funding through
the issuance of our securities. Also, if we are unable to obtain credit on commercially reasonable terms in the future that could
adversely impact our liquidity and results of operations.

We may incur additional indebtedness in the future, which may require us to use a substantial portion of our cash flows to
service debt and limit our financial and operating flexibility in important ways.

We may incur additional indebtedness in the future. Any borrowings under any future debt financing will require interest
payments and need to be repaid or refinanced, could require us to divert funds identified for other purposes to debt service and
would create additional cash demands and could impair our liquidity position and add financial risk for us. Diverting funds
identified for other purposes for debt service may adversely affect our business and growth prospects. If we cannot generate
sufficient cash flows from operations to service our debt, we may need to refinance our debt, dispose of assets or issue equity to
obtain necessary funds. We do not know whether we would be able to take any of these actions on a timely basis, on terms
satisfactory to us, or at all.

Our stock price may be volatile.

The Company’s stock price has experienced volatility over time and this volatility may continue, in part due to factors such as
those discussed in this Item 1A of this Annual Report. Stock volatility may adversely affect stockholder confidence, as well as
associate morale and retention for those associates who receive equity grants as part of their compensation packages, which
could have a material adverse effect on our business, operational results, financial position and cash flows.

Future announcements or disclosure by us or others could affect the market price for our common stock, including but not
limited to:
•

our ability to accomplish our tactical initiatives or operating goals and to do so in accordance with the timing estimates
we have publicly announced;
the performance of third-party contract manufacturers and suppliers;
actual or anticipated variations in our results of operations or those of our competitors;
sales of common stock or other securities by us or our stockholders in the future;
additions or departures of key management or personnel;
the trading volume of our common stock;
changes in earnings estimates or recommendations by securities analysts, failure to obtain or maintain analyst
coverage of our common stock or our failure to achieve analyst earnings estimates;
decreases in market valuations of other retailers; and
general market conditions and other factors unrelated to our operating performance or the operating performance of
our competitors.

•
•
•
•
•
•

•
•

In addition, the stock market has experienced price and volume fluctuations that have affected the market price of many retail
and other stocks that have been unrelated or disproportionate to the operating performance of these companies. This volatility
could affect the price at which shares of our stock could be sold. Securities class action litigation has often been instituted
against companies following periods of volatility in the overall market and in the market price of such company’s securities.
Such litigation could result in substantial costs, divert our management’s attention and resources and have a material adverse
effect on our business, operational results, financial position and cash flows.

4. LEGAL AND REGULATORY RISKS

If our long-lived assets become impaired, we may need to record significant non-cash impairment charges.

Periodically, we review our long-lived assets for impairment whenever economic events or changes in circumstances indicate
that the carrying value of an asset may not be recoverable. If an individual store location is unable to generate sufficient future
cash flows, we may be required to record a partial or full impairment of that store’s assets. In addition, significant negative
industry or general economic trends, disruptions to our business and unexpected significant changes or planned changes in our
use of the assets (such as store relocations or closures) may also result in impairment charges. Any such impairment charges, if
significant, could adversely affect our financial position and results of operations.

Laws on privacy continue to evolve and further limits on how we collect or use customer information could adversely affect our
business.

We collect and store customer information primarily for marketing purposes and to improve the services we provide. The use or
retention of certain customer information is subject to applicable privacy laws. As privacy, data protection and information
security laws, are interpreted and applied, compliance costs may increase, particularly in the context of providing adequate data
protection and adequate data transfer mechanisms. Individual states are increasingly adopting or revising privacy, data
protection and information security laws, that could have significant impact on our current and planned privacy, data protection
and information security-related practices, our collection, use, sharing, retention and safeguarding of customer and/or employee
information, and some of our current or future business plans. New legislation or regulation, and the interpretation and
application of existing laws and regulations, could increase our costs of compliance, technology and business operations and
could reduce revenues from certain business initiatives. Moreover, the application of existing or new laws to existing
technology and practices can be uncertain and may lead to additional compliance risk and cost.

In recent years, there has been increasing regulatory enforcement and litigation activity in the area of privacy, data protection
and information security in the United States. Our failure to comply with privacy, data protection and information security laws
could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions,
ongoing regulatory monitoring customer attrition, which could have a material adverse impact on our business, operational
results, financial position and cash flows. In addition to the extent our or our business partners’ security procedures and
protection of customer information prove to be insufficient or inadequate, we may become subject to litigation or other claims,
which could expose us to liability and cause damage to our reputation, brand, results of operations and liquidity.

A failure to comply with the Payment Card Industry Data Security Standards could adversely affect our business, financial
condition and results of operations.

We are highly dependent on the use of credit and debit cards to complete sale transactions in our stores and through our
website, and because of such use are subject to the Payment Card Industry Data Security Standards (“PCI Standards”). If we or
our business partners fail to comply with the PCI Standards or to adequately protect sensitive customer information, we may
become subject to fines or limitations on our ability to accept credit or debit cards, which could adversely affect our sales,
operating income, brand and reputation. Also, any changes we may be required to make to our private label credit card program
in the future could adversely affect the promotional financing arrangements available to our credit card customers and therefore
our operating results.

Changes in accounting rules and regulations could adversely affect our results of operations, financial condition and cash
flows.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and
interpretations with regards to a wide range of matters that are relevant to our business are highly complex and involve many
subjective assumptions, estimates and judgments. Changes in these rules or their interpretation or changes in underlying
assumptions, estimates or judgments could significantly change or increase volatility of our reported or expected financial
performance or financial condition. See Note 1, “Nature of Business and Significant Accounting Policies,” in the Notes to our
Consolidated Financial Statements included herein for a description of recently issued accounting pronouncements, and
“Critical Accounting Policies,” included herein which discusses accounting policies considered to be important to our
operational results and financial condition. These and other future changes to accounting rules or regulations could have an
adverse impact on our business, operational results, financial position and cash flows.

Union attempts to organize our employees could negatively affect our business.

None of our employees are currently subject to a collective bargaining agreement. It is possible unions may attempt to organize
all or part of our employee base at certain stores or within certain regions. Responding to such organization attempts may
distract management and employees and may have a negative financial impact on individual stores, or on our business as a
whole.

We incur significant costs as a result of operating as a public company, and our management is required to devote
substantial time to compliance initiatives.

As a public company, we incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act of 2002
(the "Sarbanes-Oxley Act"), as well as rules subsequently implemented by the SEC and the New York Stock Exchange
("NYSE"), have imposed various requirements on public companies, including establishment and maintenance of effective
disclosure and financial controls and changes in corporate governance practices. Our management and other personnel devote a
substantial amount of time to these compliance initiatives. Moreover, these rules and regulations result in increased legal and
financial compliance costs and will make some activities more time-consuming and costly.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and
disclosure. In particular, we are required to perform system and process evaluation and testing of our internal controls over
financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as
required by Section 404 of the Sarbanes-Oxley Act. Our testing may reveal deficiencies in our internal controls over financial
reporting that are deemed to be material weaknesses.

We have incurred and continue to expect to incur significant expense and devote substantial management effort toward
ensuring compliance with Section 404. Moreover, if we do not comply with the requirements of Section 404 the market price of
our stock could decline and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory
authorities, which would entail expenditure of additional financial and management resources.

Provisions in our charter documents and Delaware law may inhibit a takeover. We are entitled to certain other protective
provisions under Delaware law.

We are a Delaware corporation and the anti-takeover provisions of Delaware law impose various impediments to the ability of
a third-party to acquire control of the Company, even if a change of control would be beneficial to our existing stockholders. In
addition, our amended and restated certificate of incorporation and by-laws contain provisions that may discourage, delay or
prevent a merger or acquisition involving us that our stockholders may consider favorable by, among other things:

•
•
•
•
•

prohibiting cumulative voting in the election of directors;
authorizing the Board to designate and issue "blank check" preferred stock;
limiting persons who can call special meetings or the Board of Directors or stockholders;
prohibiting stockholder action by written consent; and
establishing advance notice requirements for nominations for election to the Board of Directors or for proposing
matters that can be acted on by stockholders at a stockholders' meeting.

Increases in labor costs related to changes in employment laws and regulations could impact our business, operational results,
financial position and cash flows.

Our retail store operations are subject to federal, state and local laws governing such matters as minimum wages, working
conditions, work scheduling, healthcare reform, paid time off, overtime pay and workers’ compensation.

A number of factors could adversely affect our operating costs, including additional government-imposed regulations regarding
minimum wages, overtime, sick pay, predictive scheduling, paid leaves of absence, mandated health benefits, and changing
regulations from the National Labor Relations Board or other agencies. In fact, recent changes in minimum wage laws have
resulted in higher starting wage levels at a number of our stores. Complying with new legislation or regulations could be time
consuming and expensive and if we are unable to offset increased labor costs by increased sales or improved gross margins, it
could have a material adverse impact on our business, operational results, financial position and cash flows.

We are currently out of compliance with the NYSE listing requirements, and we are at risk of the NYSE delisting our common
stock, which could materially impair the liquidity and value of our common stock.

We are currently listed on the NYSE. On June 14, 2018, we received written notice from the NYSE that we are not in
compliance with the continued listing standards set forth in Section 8 of the NYSE Listed Company Manual. The Company is
considered below the criteria established by the NYSE for continued listing because (i) its average market capitalization has
been less than $50 million over a consecutive 30 trading-day period, and at the same time its stockholders’ equity was less than
$50 million; and (ii) its 30-day average closing price was below $1.00. As a result, we are required to bring our share price and
consecutive 30 trading-day average share price, as measured on the last trading day of any calendar month during the sixth
month period following receipt of the NYSE notice, above $1.00 per share or the NYSE may commence suspension and
delisting procedures, unless shareholder approval is required for corporate action, such as a reverse stock split, at the
Company’s next annual meeting which is anticipated to be held in June 2019. In addition, if our common stock price remains
below the $1.00 per share threshold and falls to the point where the NYSE considers the stock price to be “abnormally low”, or
our market capitalization falls below $15.0 million over a consecutive 30-day trading period, the NYSE has the discretion to
begin delisting procedures immediately.

We have submitted a continued listing plan (“Plan”) to the NYSE that outlines the steps we are taking to regain compliance
with the market capitalization and stockholders’ equity listing standard within eighteen months. On August 23, 2018 the NYSE
notified us that they accepted our Plan, subject to quarterly reviews by the NYSE Listing and Compliance Committee to ensure
progress against the Plan. Our most recent quarterly update was provided to the NYSE on January 18, 2019 and accepted by
the NYSE a few days later. The Company’s common stock continues to trade on the NYSE. The current noncompliance with
the standards described above does not affect the Company’s ongoing business operations or its reporting requirements with the
SEC. If our common stock is delisted and we are not able to list our common stock on another national securities exchange, we
expect our securities would be quoted on an over-the-counter market.

If the NYSE were to delist our common stock and we were unable to list our stock on another national securities exchange, it
could, among other things: (i) reduce the liquidity and, quite possibly, the market price of our common stock; (ii) reduce the
number of institutional investors willing to hold or acquire our common stock, which could negatively affect our ability to raise
equity financing; (iii) limit our access to public capital markets; (iv) impair our ability to provide equity incentives that would
be attractive to our employees; (v) result in a limited availability for market quotations for our common stock; and (vi) result in
the loss of analyst coverage of the Company.

Our business could be impacted as a result of actions by activist stockholders or others.

We may be subject, from time to time, to legal and business challenges in the operation of our Company due to proxy contests,
shareholder proposals, media campaigns and other actions instituted by activist shareholders or others. Responding to such
actions can be costly and time-consuming, disrupt our operations, may not align with our business strategies and could divert
the attention of our Board of Directors and senior management from the pursuit of our current or future business strategies.
Perceived uncertainties as to our future direction as a result of stockholder activism or potential changes to the composition of
the Board of Directors or senior management may lead to the perception of instability in our business and may also make it
more difficult to attract and retain qualified and experienced senior management and Board members.

We may be subject to adverse outcomes in current or future litigation matters or regulatory proceedings which could result in
the unexpected expenditure of time and resources.

From time-to-time, we may be involved in litigation, regulatory actions and other claims against our business. There are also
other types of claims that could be asserted against us based on litigation that has been asserted against others, particularly in
the retail industry such as intellectual property infringement (as discussed below) customer and employment claims, including
class action claims or lawsuits alleging violations of federal or state laws. These matters could raise complex factual and legal
issues requiring significant management time and, if determined to be adverse to the Company, could subject the Company to
material liabilities.

In recent years, there has been increasing activity by companies which have acquired intellectual property rights, but do not
practice those rights (sometimes referred to as “patent trolls”), to engage in very broad licensing programs aimed at a large
number of companies in a wide variety of businesses, or at retail companies specifically. These efforts typically involve
proposing licenses in exchange for a payment of money and may also include the threat or actual initiation of litigation. Any
such litigation can be costly to defend, even if unsubstantiated or invalid. It is not possible to predict the impact, if any, of such
claims on our business and operations.

An unfavorable outcome in any such litigation, claims or regulatory proceedings could have a material adverse impact on our
business, financial condition and results of operations and/or our reputation. In addition, regardless of the outcome of any legal
or regulatory proceedings, such proceedings can be expensive and require that we devote substantial resources and executive
time to them, thereby diverting management’s attention and resources that are needed to successfully run our business.

ITEM 1B. UNRESOLVED STAFF COMMENTS

There are no matters which are required to be reported under Item 1B.

ITEM 2. PROPERTIES

Store Locations

Our stores are located primarily in shopping malls and retail centers in smaller to mid-sized cities and suburban
areas. Approximately 77% of our stores are located in enclosed malls that typically have numerous specialty stores and two or
more general merchandise chains or department stores as anchor tenants. The remainder of our Christopher & Banks, C.J.
Banks and MPW stores are located in power, strip and lifestyle shopping centers.

At February 2, 2019, MPW stores, outlet stores, Christopher & Banks stores, and C.J. Banks stores averaged approximately
3,900, 4,000, 3,300 and 3,600 square feet, respectively. Approximately 84% of the total aggregate store square footage is
allocated to selling space.

At February 2, 2019, we operated 455 stores in 45 states as follows:

State
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
Wisconsin
West Virginia
Wyoming

TOTAL

C.J. Banks
—
—
—
—
2
—
—
—
—
—
1
2
2
2
2
1
—
—
1
—
—
2
—
3
—
—
—
1
—
1
2
—
—
—
—
1
—
—
1
—
1
—
4
1
—

Total Stores
1
6
3
4
15
3
2
7
3
6
22
19
23
14
11
5
6
1
27
30
1
17
5
13
3
1
2
22
6
7
29
5
9
29
3
8
13
6
10
3
9
13
23
8
2

455

MPW

Outlet

Christopher
& Banks

—
3
1
—
3
2
1
4
2
—
1
3
2
1
1
1
1
—
4
4
1
3
—
—
2
1
—
4
4
—
4
1
4
5
2
—
3
1
2
1
1
3
4
—
—

—
—
—
—
2
—
—
—
—
—
1
2
2
2
2
1
—
—
2
—
—
2
—
3
—
—
1
1
—
1
3
—
—
—
—
1
—
—
1
—
1
—
4
1
—

1
3
2
4
8
1
1
3
1
6
19
12
17
9
6
2
5
1
20
26
—
10
5
7
1
—
1
16
2
5
20
4
5
24
1
6
10
5
6
2
6
10
11
6
2

312

Store Leases

All of our store locations are leased. Lease terms typically include a rental period of 10 years and may contain a renewal
option. Certain leases do not have a specified termination date and operate on a month-to-month term. Leases generally require
payments of fixed minimum rent and/or contingent percentage rent, calculated based on a percent of sales in excess of a
specified threshold, as well as other typical charges such as common area maintenance, media/marketing funds, real estate
taxes and insurance. Most of our leases allow the Company to exercise a sales volume kick-out prior to the end of the lease if
certain sales thresholds are not achieved.

The following table, which covers all of the stores operated by us at February 2, 2019, indicates the number of leases expiring
during the periods indicated and the number of such leases with renewal options. The number of stores with leases expiring in
the next fiscal year includes stores which currently are operating on month-to-month terms.

Fiscal Years
2019
2020
2021
2022
2023
2024 and thereafter
Total

Number of Leases Expiring
200
58
48
9
19
121
455

Number with Renewal
Options

—
2
—
4
—
10
16

For leases that expire in a given period, we plan to evaluate the projected future performance of each store location prior to
lease expiration to determine if we will seek to negotiate a new lease for that particular location, potentially, with a shorter
term, identify an alternate location or close the store.

Corporate Office and Distribution Center Facility

Our 221,000 square foot corporate office and distribution center facility is located in Plymouth, Minnesota. We utilize the entire
facility for our corporate office and distribution center requirements to receive and distribute all of our merchandise for all of
our stores through this facility. Management believes our corporate office and distribution center facility space is sufficient to
meet our requirements for the next fiscal year.

On April 27, 2018, we completed the sale of and entered into an agreement to leaseback the Plymouth, Minnesota corporate
headquarters and distribution facility. The agreement provided for the sale of the facility for a purchase price of $13.7 million
and the subsequent leaseback of the facility for a 15-year period, excluding a 5-year renewal option (see additional information
regarding this sale and leaseback transaction in Note 11 - Lease Commitments to our Consolidated Financial Statements for the
fiscal year ended February 2, 2019 included as part of this Annual Report).

ITEM 3. LEGAL PROCEEDINGS

We are subject, from time to time, to various claims, lawsuits or actions that arise in the ordinary course of business. We accrue
for loss contingencies associated with outstanding litigation or legal claims for which management has determined it is
probable that a loss contingency exists and the amount of the loss can be reasonably estimated. If we determine an unfavorable
outcome is not probable or reasonably estimable, we do not accrue a potential loss contingency. The ultimate resolution of
matters can be inherently uncertain and for some matters, we may be unable to predict the ultimate outcome, determine whether
a liability has been incurred or make an estimate of the reasonably possible liability that could result from an unfavorable
outcome because of these uncertainties. We do not, however, currently believe that the resolution of any pending matter will
have a material adverse effect on our financial position, results of operations or liquidity.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information regarding our executive officers as of March 14, 2019:

Name
Keri Jones
Richard Bundy
Monica Dahl
Andrea Kellick
Luke Komarek
Cindy Stemper
Carmen Wamre

Age
55
39
52
56
65
61
49

Positions and Offices
President and Chief Executive Officer
Senior Vice President, Chief Financial Officer
Senior Vice President, Chief Marketing Officer, Omni-Channel and Public Relations
Senior Vice President, Chief Merchandising Officer
Senior Vice President, General Counsel and Corporate Secretary
Senior Vice President, Chief Human Resources Officer
Senior Vice President, Chief Stores Officer

Keri Jones has served as our President and Chief Executive Officer ("CEO") and a director since March 12, 2018. From May
2017 until February 2018, Ms. Jones served as Executive Vice President, Chief Merchant of Dick's Sporting Goods. Prior to
Dick's, Ms. Jones spent 27 years at Target Corporation, where she served in a variety of leadership roles, including as Executive
Vice President, Global Supply Chain, from 2015 to 2016; Executive Vice President, Merchandise Planning and Operations,
from 2014 to 2015; Senior Vice President, Merchandise Planning, from 2011 to 2014; Senior Vice President, Health and
Beauty, from 2008 to 2011; and Vice President, General Merchandise Manager, Toys and Sporting Goods, from 2001 to 2008.

Richard Bundy joined the Company as Senior Vice President, Chief Financial Officer in July 2018. Mr. Bundy was with
Chico’s FAS, Inc. for approximately ten years serving in a variety of ever increasing financial roles, including as Vice
President, Brand Finance & Strategy, Chico’s from 2015 to May 2018; Senior Director, Brand Finance & Strategy, Soma
Intimates from 2014 to 2015 and Director, Brand Finance & Strategy, Soma Intimates from 2013 to 2014. Prior to joining
Chico’s FAS, Inc., Mr. Bundy served as a financial analyst at Limited Brands, Inc. and Albertsons Companies, Inc. and as a
project resource analyst with NASA.

Monica Dahl has served as Senior Vice President, Chief Marketing Officer, Omni-Channel and Public Relations since April
2016 and previously served as Senior Vice President, Marketing, Omni-Channel and Public Relations from November 2014 to
April 2016. From April 2013 to November 2014, she was Senior Vice President, Marketing (SVP, Marketing”). Ms. Dahl
joined the Company in 2004 and served in a variety of roles prior to becoming SVP, Marketing in 2013. Before joining the
Company, Ms. Dahl held various positions with Wilsons Leather and Arthur Andersen LLP.

Andrea Kellick joined the Company as Senior Vice President, Chief Merchandising Officer in July 2018. Ms. Kellick was with
Target Corporation for approximately sixteen years serving in a variety of merchandising and planning roles including jewelry,
accessories, domestics and apparel, most recently as Vice President, Women’s Apparel from 2016 to March 2018 and Vice
President, Bedding, Bath & Home Decor from 2011 to 2015. Prior to joining Target Corporation, Ms. Kellick served in various
merchandising and sourcing roles for Old Navy, Express, Inc. and Spiegel Inc.

Luke Komarek has served as Senior Vice President, General Counsel since May 2007. He was named Corporate Secretary in
August 2007. Prior to joining the Company, Mr. Komarek served as General Counsel, Chief Compliance Officer and Secretary
at PNA Holdings, an office imaging and parts supplier, from March 2004 to May 2007. Previously, Mr. Komarek served as
Vice President of Legal Affairs and Compliance at Centerpulse Spine-Tech Inc. from February 2003 to March 2004. Mr.
Komarek was employed by FSI International, Inc., a semiconductor equipment company, from 1995 to 2002, most recently
serving as Vice President, General Counsel and Corporate Secretary.

Cindy Stemper has served as the Company's Senior Vice President, Chief Human Resources Officer since April 2016 and
previously served as Senior Vice President, Human Resources from April 2013 to April 2016. From September 2010 to April
2013, she served as the Company’s Vice President, Human Resources. Prior to joining the Company, Ms. Stemper worked at
MoneyGram International for approximately 25 years in a variety of Human Resources roles, most recently as Executive Vice
President, Human Resources and Corporate Services from 2005 to 2009.

Carmen Wamre joined the Company as Senior Vice President, Chief Stores Officer in December 2018. Ms. Wamre was with
Express, Inc. for approximately 28 years in a variety of leadership roles including as Zone Vice President from 2008 to 2017
and as a Regional Director from 2002 to 2008.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the New York Stock Exchange ("NYSE") under the symbol “CBK”.

As of March 15, 2019, there were approximately 132 holders of record of our common stock. The last reported sales price on
the NYSE of our common stock on March 15, 2019 was $0.39.

The following table summarizes information in connection with purchases made by, or on behalf of, the Company or any
affiliated purchaser of the Company, of shares of the Company’s common stock during the 13 week period ended February 2,
2019.

Period

Total Number of
Shares Purchased

Average Price Paid
per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)

Approximate Dollar
Value of Shares that
May Yet be
Purchased Under
the Program

November 4, 2018 - December 1, 2018

December 2, 2018 - January 5, 2019
January 6, 2019 - February 2, 2019

Total

— $

111,505
76,574

188,079

$
$

—

0.50
0.57

0.53

— $

111,505
76,574

188,079

$
$

—

1,944,738
1,901,012

1,901,012

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

ITEM 6. SELECTED FINANCIAL DATA

Not required.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in
conjunction with our Consolidated Financial Statements and related Notes included in Item 8, Financial Statements and
Supplementary Data, of this Annual Report. Unless otherwise noted, transactions and other factors significantly impacting our
financial condition, results of operations and liquidity are discussed in order of magnitude. We refer to the 52 weeks ended
February 2, 2019 and the 53 weeks ended February 3, 2018 in this MD&A as “fiscal 2018” and “fiscal 2017”, respectively.

Executive Overview

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

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

As of February 2, 2019, we operated 455 stores in 45 states, including 312 Missy, Petite, Women ("MPW") stores, 80 outlet
stores, 33 Christopher & Banks ("CB") stores, and 30 C.J. Banks ("CJ") stores. Our CB brand offers unique fashions and
accessories featuring exclusively designed assortments of women’s apparel in sizes 4 to 16 and in petite sizes 4P to 16P. Our
C.J. Banks brand offers similar assortments of women’s apparel in sizes 14W to 26W. Our MPW concept and outlet stores offer
an assortment of both Christopher & Banks and C.J. Banks apparel servicing the Missy, Petite and Women-sized customer in
one location.

Other Developments

On February 1, 2018, the Company announced that its Board of Directors had elected Keri Jones as Chief Executive Officer
(“CEO”) and as a member of the Board effective as of her March 12, 2018 start date. In connection with the election of Ms.
Jones as CEO of the Company, Joel Waller ceased serving as interim President and CEO when Ms. Jones commenced
employment but has continued as a Board member.

In addition, during fiscal year 2018, the Company had the following other additions to its executive leadership team: Richard
Bundy (Senior Vice President, Chief Financial Officer in July 2018); Andrea Kellick (Senior Vice President, Chief
Merchandising Officer in July 2018); and Carmen Wamre (Senior Vice President, Chief Stores Officer in December 2018).

Strategic Priorities

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

• Enhance the customer shopping experience;
• Improve marketing and promotional effectiveness;
• Leverage omni-channel capabilities;
• Build loyalty and grow our customer file;
• Optimize our real estate portfolio; and
• Right-size our cost structure.

Enhance the Customer Shopping Experience

Improve Marketing and Promotional Effectiveness

Leverage Omni-Channel Capabilities

Our integrated, omni-channel strategy is designed to provide customers with a seamless retail experience, allowing her to shop
whenever, however and wherever she chooses. In January of 2018, we launched “Buy online ship to store,” and in November
of 2018, we launched “Buy online ship from store.” We currently are fulfilling eCommerce orders from 170 of our stores. We
plan on launching “Buy online pick up in store” during the first quarter of fiscal 2019. These flexible fulfillment options not
only meet a customer need, they allow us to better leverage our inventory across our chain.

Build Loyalty and Grow our Customer File

Optimize our Real Estate Portfolio

Right-size our Cost Structure

Performance Measures

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

Comparable sales

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

Our comparable sales calculation includes merchandise sales for:

• Stores operating for at least 13 full months;
• Stores relocated within the same center; and
• eCommerce sales.

Our comparable sales calculation excludes:

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

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

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

Other performance measures

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

Results of Operations

The following table presents selected consolidated financial data for each of the past two fiscal years:

Net Change

Percent of Net Sales

52 Weeks
Ended
February 2,
2019

53 Weeks
Ended
February 3,
2018

Amount

Percent

February 2,
2019

February 3,
2018

348,900

$ 365,906

(17,006)

(4.6)%

100.0 %

246,269
102,631

252,399
113,507

120,371
10,158
4,384
134,913
(32,282)
(183)
—
(32,465)
374
(32,839) $

123,398
12,434
318
136,150
(22,643)
(154)
—
(22,797)
(773)
(22,024) $

(6,130)
(10,876)

(3,027)
(2,276)
4,066
(1,237)
(9,639)
(29)
—
(9,668)
1,147
(10,815)

(2.4)%
(9.6)%

(2.5)%
(18.3)%
1,278.6 %
(0.9)%
42.6 %
18.8 %
— %
42.4 %
(148.4)%
49.1 %

70.6 %
29.4 %

34.5 %
2.9 %
1.3 %
38.7 %
(9.3)%
(0.1)%
— %
(9.3)%
0.1 %
(9.4)%

69.0 %
31.0 %

33.7 %
3.4 %
0.1 %
37.2 %
(6.2)%
— %
— %
(6.2)%
(0.2)%
(6.0)%

Fiscal 2018

Fiscal 2017

29.4 %
34.5 %
2.9 %
(9.3)%

31.0 %
33.7 %
3.4 %
(6.2)%

(dollars in thousands)

Net sales

Merchandise, buying and occupancy
costs
Gross profit
Other operating expenses:

Selling, general and administrative
Depreciation and amortization
Impairment of long-lived assets
Total other operating expenses

Operating loss
Interest expense, net
Other income
Loss before income taxes
Income tax provision (benefit)
Net loss

Rate trends as a percentage of net sales
Gross margin
Selling, general, and administrative
Depreciation and amortization
Operating loss

Fiscal 2018 Summary

• Net sales decreased 4.6% compared to the same period last year primarily due to the prior year containing $5.0 million of
sales attributable to the 53rd week, a 2.5% decline in units sold per transaction, and a 2.6% decline in average store count.
These declines were partially offset by a 1.2% increase in average retail sales dollars per unit sold;

• Comparable sales in fiscal 2018 decreased 2.6%, compared to a 2.5% decrease in fiscal 2017;
• eCommerce comparable sales increased 15.3% in fiscal 2018 compared to a 13.7% increase in fiscal 2017;
• Net sales per store decreased 2.0% and net sales per square foot decreased 2.7% in fiscal 2018 compared to fiscal 2017;
• Gross margin rate decreased 161 basis points compared to the same period last year primarily driven by higher product
costs in the early part of the year, markdowns of higher beginning of year inventory and lower than anticipated sales for
fiscal 2018. Additionally, the gross margin rate declined due to higher fulfillment expense resulting from increased sales
penetration in the eCommerce channel and the launch of the Ship from Store initiative;

• Net loss of $32.8 million, a $0.88 loss per share, in fiscal 2018 compared to a net loss of $22.0 million, a $0.59 loss per

share, in fiscal 2017;

• As of February 2, 2019, we held $10.2 million of cash and cash equivalents, compared to $23.1 million as of February 3,

2018.

Net Sales

The components of the 4.6% net sales decrease in fiscal 2018 compared to fiscal 2017 were as follows:

Sales driver change components
Number of transactions
Store count
Units per transaction
Average unit retail
53rd week impact

Total sales driver change decrease

Comparable sales
Comparable sales

Fiscal 2018

0.1 %
(1.1)%
(3.1)%
0.7 %
(1.2)%
(4.6)%

Fiscal 2018

(2.6)%

Sales decreased primarily due to a 2.5% decrease in units per transaction, a 2.7% decline in the average number of stores and
the fact that fiscal 2017 sales contained $5.0 million of sales attributable to a 53rd week. The number of transactions in 2018
was slightly higher than in 2017, though transactions in stores were down due to continued weakness in store traffic while
eCommerce transactions were up. These declines were partially offset by an increase of 1.2% in average unit retail sales.

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

Store metrics
Net sales per store % change
Net sales per square foot % change

Fiscal 2018

(2.0)%
(2.6)%

Net sales per store and net sales per square foot decreased consistently with the overall decline in sales.

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

Stores by Format
MPW
Outlet
Christopher and Banks
C.J. Banks
Total Stores
________________________________________

February 3,
2018

Store Count

Square Footage (1)

Open

MPW
Conversions

February 2,
2019

Avg Store
Count

February 2,
2019

February 3,
2018

314
78
37
34
463

5
5
—
—
10

(7)
(3)
(2)
(2)
(14)

—
(2)
(2)
(4)

312
80
33
30
455

314
79
35
33
461

1,227
321
109
109
1,766

1,225
314
122
123
1,784

(1)

Square footage presented in thousands.

Gross Profit

Gross margin rate decreased 161 basis points compared to the same period last year primarily driven by higher product costs in
the early part of the year, markdowns of higher beginning of year inventory and lower than anticipated sales for fiscal 2018.
Additionally, the gross margin rate declined due to higher fulfillment expense resulting from increased sales penetration in the
eCommerce channel and the launch of the Ship from Store initiative.

Selling, General, and Administrative ("SG&A") Expenses

SG&A decreased by $3.0 million, driven by lower store operating expenses of $4.1 million, lower net employee compensation
expense of $0.5 million, lower insurance expenses of approximately $0.8 million and lower executive search fees of
approximately $0.5 million. Approximately $1.7 million of these SG&A expense reductions were attributable to fiscal 2018
being a 52-week year versus fiscal 2017 being a 53-week year. These SG&A expense decreases were partially offset by
increases of approximately $1.6 million in outside professional services and $1.1 million of eCommerce operating expenses. As
a percent of net sales, SG&A expenses increased by 78 basis points to 34.5%.

Depreciation and Amortization

Depreciation and amortization expense decreased primarily due to the sale-leaseback of the corporate facility in April 2018, a
decrease in average store count and a decline in depreciation due to the impairment charges expensed in the third and fourth
quarters of fiscal 2018 for store fixed assets.

Impairment of Long-Lived Assets

We recorded non-cash impairment charges totaling $4.4 million during the third and fourth quarters of fiscal year 2018 as
leasehold improvements and equipment at certain under-performing stores were written down to their estimated fair value.

Operating Loss

Our operating loss increase in fiscal 2018 compared to fiscal 2017 was primarily due to a $17.0 million decline in net sales,
$5.0 million of which is attributable to the inclusion of a 53rd week of sales in fiscal 2017, a 161 basis point decline in gross
margin, and an increase of $4.1 million in impairment charges. The increases in the operating loss were partially offset by a
$3.0 million decrease in SG&A expenses.

Interest expense, net

The change in interest expense, net is not material.

Income Tax Expense (Benefit)

The income tax benefit in 2017 resulted from the repeal of the Alternative Minimum Tax ("AMT") under the Tax Cuts and Jobs
Act ("the Act") enacted in December 2017. In conjunction with the Act, previous AMT payments resulted in carryforward tax
credits that will be refundable over time. Income tax expense during fiscal 2018 primarily reflected current state income taxes
and minimum fees, net changes in the income tax valuation allowance.

Net earnings

Our net loss increase in fiscal 2018 compared to our net loss in 2017 was primarily due to a gross margin rate decline, a net
sales decrease, impairment charges related to long-lived assets, and an increase in income tax expense. These items were
partially offset by a decline in SG&A expenses.

Fiscal 2019 Outlook

Sales for the early part of the fiscal 2019 first quarter have been trending below plan, largely attributable to an overall decline
in traffic related to the extremely cold and snowy weather in the Upper Midwest and Great Lakes area where a majority of our
stores are located. In response to the sales trends to-date we have adjusted our marketing and promotional calendar and as the
weather improves we expect sales to trend more in line with our expectations for the remainder of the first quarter. Despite the
recent pressure on sales, the Company is maintaining its overall fiscal 2019 guidance, as it believes that the headwinds created
largely by weather are mostly behind it and that its strategic initiatives will yield improved financial performance as the year
progresses. In addition, the Company expects:

• Net sales to increase 2% to 3% as the result of expanded omni-channel capabilities, enhancements to the overall product
assortment, and more impactful marketing promotions to drive customer file growth. Gross margin expansion of 300 to
350 basis points as a result of improved inventory management including supply chain and omni-channel initiatives,
greater discipline around promotions and the continued reduction of occupancy costs.

• SG&A as a percentage of sales to decline 150 to 200 basis points due to ongoing cost reduction initiatives.
• Inventory turns to improve as compared to fiscal 2018.

Liquidity and Capital Resources

Summary

We expect to operate our business and execute our strategic initiatives principally with funds generated from operations and
from our Credit Facility, subject to compliance with the financial covenant and the other terms of the Company’s Credit Facility
with Wells Fargo Bank N.A (“Wells Fargo”).

Our cash and cash equivalents balance as of the end of fiscal 2018 and 2017 was $10.2 million and $23.1 million, respectively.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for each of the past three
fiscal years:

(in thousands)
Net cash (used in) provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents

Operating Activities

Fiscal 2018

Fiscal 2017

(21,508) $
9,035
(365)
(12,838) $

(6,745)
(5,158)
(26)
(11,929)

The change in cash used in operating activities in fiscal 2018 compared to fiscal 2017 was primarily due to an increase in the
net loss, excluding non-cash expenses. Uses of cash for working capital increased for the period primarily due to changes in
inventories and accounts payable.

Investing Activities

The increase in cash from investment activities in fiscal 2018 is driven primarily by the Company completing the sale and
leaseback of its corporate headquarters facility and distribution center. The agreement provided for the sale of the facility for a
purchase price of $13.7 million and the subsequent leaseback of the facility for a 15-year period. As part of the transaction, the
Company deposited $1.7 million in escrow for certain repairs to the building of which approximately $1.0 million was spent
prior to February 2, 2019. Store-related capital expenditures declined $2.7 million from the prior year as the Company utilized
more used furniture and fixtures in conjunction with new store openings. Information technology capital expenditures increased
approximately $0.8 million from 2017 due primarily to eCommerce initiatives.

Financing Activities

In December 2018, the Company's Board of Directors authorized a Stock Repurchase Program (the “Program”) to repurchase
up to $2.0 million of the Company’s outstanding common stock during the period ending December 31, 2019. The shares may
be repurchased from time to time through open market purchases, block transactions, privately negotiated transactions or
derivative transactions in a manner consistent with applicable securities laws and regulations. The Program may be modified,
suspended or terminated at any time by the Board of Directors.

During fiscal 2018, the Company repurchased 188,079 shares at a cost of approximately $0.1 million. As of February 2, 2019,
approximately $1.9 million remains available for use under the Program.

We have not paid any dividends since 2010.

Sources of Liquidity

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

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

In addition to these changes, the amendment removed the Company's real property from the borrowing base, as this property
was the subject of a sale-leaseback transaction during fiscal 2018.

The total borrowing base at February 2, 2019, was approximately $26.7 million. As of February 2, 2019, the Company had
open on-demand letters of credit of approximately $6.9 million. Accordingly, after reducing the borrowing base for the open
letters of credit and the required minimum availability of the greater of $3.0 million, or 10.0% of the borrowing base, the net
availability of revolving credit loans under the Credit Facility was approximately $19.4 million at February 2, 2019.

See Note 5 - Credit Facility for additional details regarding our Credit Facility.

Off-Balance Sheet Obligations

We do not have relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or special purposes entities, which would have been established for the purpose of facilitating off-balance
sheet financial arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any
financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Sourcing

We directly imported approximately 52% and 39% of our merchandise purchases during fiscal 2018 and fiscal 2017,
respectively. A significant amount of our merchandise was manufactured overseas during each of these fiscal periods, primarily
in China and Vietnam. Our reliance on sourcing from foreign countries may cause us to be exposed to certain risks as indicated
below and in Part I, “Item 1A. Risk Factors” in this Annual Report.

We do not have long-term purchase commitments or arrangements with any of our suppliers or buying agents. Our ten largest
vendors represented approximately 67% and 71% of our total merchandise purchases in fiscal 2018, and fiscal 2017,
respectively. One of our suppliers accounted for approximately 16% and 27% of our purchases during fiscal 2018, and fiscal
2017, respectively. Another supplier accounted for approximately 10% and 9% of our purchases during fiscal 2018, and fiscal
2017, respectively. No other vendor supplied greater than 10% of the Company's merchandise purchases during the last two
fiscal years.

Import restrictions, including tariffs and quotas, and changes in such restrictions, could affect the importation of apparel and
might result in increased costs, delays in merchandise receipts or reduced supplies of apparel available to us, and could have an
adverse effect on our financial condition, results of operations and liquidity. Our merchandise flow could also be adversely
affected by political instability in any of the countries where our merchandise is manufactured or by changes in the United
States government’s policies toward such foreign countries. In addition, merchandise receipts could be delayed due to
interruptions in air, ocean, and ground shipments.

Seasonality

Inflation

We do not believe that inflation had a material effect on our results of operations in the last two fiscal years.

Critical Accounting Policies and Estimates

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

Our significant accounting policies can be found in Note 1 - Nature of Business and Significant Accounting Policies, in the
Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report. We believe that the following
accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they
require our most challenging and complex judgments, resulting from the need to make estimates about the effect of matters that
are inherently uncertain.

Inventory valuation

Merchandise inventories are stated at the lower of cost or market utilizing the retail inventory method. The retail inventory
method inherently requires management judgments and estimates, such as the amount and timing of permanent markdowns to
clear unproductive or slow-moving inventory, which may impact the ending inventory valuation as well as gross margins.

Permanent markdowns designated for clearance activity are recorded when the utility of the inventory has diminished. Factors
considered in the determination of permanent markdowns include current and anticipated demand, customer preferences, age of
the merchandise and fashion trends. When a decision is made to permanently mark down merchandise, the resulting gross
profit reduction is recognized.

Physical inventories are taken annually, and inventory records are adjusted accordingly, resulting in the recording of actual
shrinkage. Physical inventories are taken at all store locations approximately three weeks before the end of the fiscal year.
Shrinkage is estimated as a percentage of net sales at interim periods and for this approximate three-week period, based on
historical shrinkage rates.

We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we
use to calculate our inventory markdowns or shrinkage rates. However, if estimates regarding consumer demand are inaccurate
or actual physical inventory shrink differs significantly from our estimate, our operating results could be materially affected.

Long-lived assets

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

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

When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level
for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For long-lived assets
deployed at store locations, we review for impairment at the individual store level. These reviews involve comparing the
carrying value of all leasehold improvements, fixtures and equipment located at each store to the net cash flow projections for
each store. In addition, we conduct separate impairment reviews at other levels as appropriate. For example, shared assets such
as our corporate office and distribution center would be evaluated by reference to the aggregate assets, liabilities and projected
residual cash flows of all areas of the businesses utilizing those shared assets.

discount rate that reflects the risk inherent in future cash flows. If actual results are not consistent with our estimates and
assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material.
However, we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions
we use to calculate long-lived asset impairment losses.

We recorded long-lived asset impairment charges of approximately $4.4 million and $0.3 million in fiscal 2018, and fiscal
2017, respectively, related to underperforming store locations.

Customer loyalty program

The Company’s Friendship Rewards loyalty program grants customers the ability to accumulate points based on purchase
activity. Once a Friendship Rewards member achieves a certain point level, the member earns award certificates that may be
redeemed towards future merchandise purchases. Points are accrued as unearned revenue and recorded as a reduction of net
sales and a current liability as they are accumulated by members and certificates are earned. The liability is recorded net of
estimated breakage based on historical redemption patterns and trends. Revenue and the related cost of sales are recognized
upon redemption of the reward certificates, which expire approximately six weeks after issuance.

A customer loyalty liability of $3.8 million and $3.5 million is included in accrued liabilities as of the end of fiscal 2018 and
fiscal 2017, respectively.

Income taxes

Our income tax returns are subject to or are in the process of being audited by various taxing authorities. To the extent our
estimates of settlements change or the final tax outcome is different from the amounts recorded, such differences will impact
the income tax provision in the period in which such determinations are made. Our income tax expense includes changes in our
estimated liability for exposures associated with our various tax filing positions. Although we believe that our judgments are
reasonable, actual results could differ, and we may be exposed to losses or gains that could be material.

We record a valuation allowance against our deferred tax assets when it is more likely than not that some portion or all of our
deferred tax assets will not be realized. In determining the need for a valuation allowance, management is required to make
judgments regarding future income, taxable income, and the potential effects of the mix of income or losses in the jurisdictions
in which we operate.

Forming a conclusion that a valuation allowance is not needed is difficult when negative evidence such as cumulative losses
exists. Based on available objective evidence and cumulative losses, management believes it is more likely than not that the
deferred tax assets are not recognizable and will not be recognized until the Company has sufficient taxable income.
Accordingly, the net deferred tax assets with the exception of certain deferred state benefits, have been offset by a valuation
allowance. The valuation allowance increased by $5.5 million and decreased by $11.0 million during the years ended February
2, 2019 and February 3, 2018, respectively. The increase in the valuation allowance in the current year is a result of the
increase in deferred taxes. The valuation allowance does not have any impact on cash and does not prevent the Company from
using the deferred tax assets in future periods when profits are realized.

We have analyzed equity ownership changes and determined our net operating losses will not be limited under Section 382.

Forward-Looking Statements

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

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

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such
statements are made. In addition, we wish to advise readers that the factors listed in Item 1A of this Annual Report, as well as
other factors, could affect our performance and could cause our actual results for future periods to differ materially from any
opinions or statements expressed. We undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

Page

38
39
40
41
42
43

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Christopher & Banks Corporation

Opinion on the Financial Statements

We have audited the accompanying Consolidated Balance Sheets of Christopher & Banks Corporation and subsidiaries (the
“Company”) as of February 2, 2019, and February 3, 2018, the related Consolidated Statements of Operations, Comprehensive
Loss, Stockholders' Equity, and Cash Flows, for each of the two years in the period ended February 2, 2019, and the related
notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of February 2, 2019 and February 3, 2018, and the results of its
operations and its cash flows for each of the two years in the period ended February 2, 2019, in conformity with accounting
principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota
March 18, 2019

We have served as the Company's auditor since 2017.

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable

Merchandise inventories

Prepaid expenses and other current assets

Income taxes receivable

Total current assets

February 2, 2019

February 3, 2018

10,239

2,767

41,039

3,372

268

57,685

23,077

2,626

41,361

2,715

172

69,951

Property, equipment and improvements, net

31,643

47,773

Other non-current assets:

Deferred income taxes
Other assets

Total other non-current assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued salaries, wages and related expenses

Accrued liabilities and other current liabilities

Total current liabilities

Non-current liabilities:

Deferred lease incentives

Deferred rent obligations

Other non-current liabilities

Total non-current liabilities

Commitments

Stockholders’ equity:

Preferred stock — $0.01 par value, 1,000 shares authorized, none outstanding

Common stock — $0.01 par value, 74,000 shares authorized, 48,365 and 47,625 shares

issued, and 38,386 and 37,834 shares outstanding at February 2, 2019 and
February 3, 2018, respectively

Additional paid-in capital

Retained earnings

Common stock held in treasury, 9,979 and 9,791 shares at cost at February 2, 2019 and

February 3, 2018, respectively

Total stockholders’ equity

Total liabilities and stockholders’ equity

See Notes to Consolidated Financial Statements

499
1,276

1,775

597
1,043

1,640

91,103

119,364

17,834

4,954

25,894

48,682

6,267

6,661

8,970

21,898

—

20,825

5,309

26,201

52,335

7,762

6,621

2,237

16,620

—

481

128,714

4,137

475

127,652

34,993

(112,809)
20,523

(112,711)
50,409

91,103

119,364

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)

Fiscal Year Ended

February 2,
2019

February 3,
2018

(52 weeks)

(53 weeks)

348,900

246,269

102,631

120,371

10,158

4,384

134,913
(32,282)
(183)
(32,465)
374
(32,839) $

365,906

252,399

113,507

123,398

12,434

318

136,150
(22,643)
(154)
(22,797)
(773)
(22,024)

(0.88) $

37,492

(0.59)
37,212

(0.88) $

37,492

(0.59)
37,212

Net sales

Merchandise, buying and occupancy costs

Gross profit

Other operating expenses:

Selling, general and administrative

Depreciation and amortization

Impairment of long-lived assets

Total other operating expenses

Operating loss

Interest expense, net

Loss before income taxes

Income tax provision (benefit)

Net loss and comprehensive loss

Basic loss per share:

Net loss

Basic shares outstanding

Diluted loss per share:

Net loss

Diluted shares outstanding

See Notes to Consolidated Financial Statements

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)

Treasury

Common Stock

January 28, 2017

Net loss
Issuance of restricted stock, net of
forfeitures
Stock-based compensation expense

February 3, 2018

Net loss
Issuance of restricted stock, net of
forfeitures
Stock-based compensation expense
Acquisition of common stock held in
treasury, at cost
Cumulative effect of accounting change

February 2, 2019

Amount
Held
$ (112,711)
—

Shares
Outstanding
37,634
—

Amount
Outstanding
473
$
—

Shares
Held

9,791
—

—
—
9,791
—

—
—

—
—
$ (112,711)
—

—
—

200
—
37,834
—

740
—

188
—
9,979

(98)
—
$ (112,809)

(188)
—
38,386

Additional
Paid-in
Capital
$ 126,516
—

Retained
Earnings

57,017
(22,024)

(28)
1,164
$ 127,652
—

—
—
34,993
(32,839)

(39)
1,101

—
—

—
$ 128,714

1,983
4,137

Total
71,295
(22,024)

(26)
1,164
50,409
(32,839)

(32)
1,101

(99)
1,983
20,523

2
—
475
—

7
—

(1)
—
481

See Notes to Consolidated Financial Statements

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Cash flows used by operating activities:

Net loss

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Impairment of long-lived assets

Deferred income taxes, net

Amortization of financing costs

Deferred lease-related liabilities

Stock-based compensation expense

Loss on disposal of assets

Changes in operating assets and liabilities:

Accounts receivable

Merchandise inventories

Prepaid expenses and other assets

Income taxes receivable

Accounts payable

Accrued liabilities

Other liabilities

Net cash used by operating activities

Cash flows provided from (used by) investing activities:

Purchases of property, equipment and improvements

Proceeds from sale of assets

Net cash provided from (used by) investing activities

Cash flows used by financing activities:

Issuance of restricted stock, net of forfeitures

Proceeds from short-term borrowings

Payments of short-term borrowings

Acquisition of common stock held in treasury, at cost

Payment of deferred financing costs

Net cash used by financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period
Supplemental cash flow information:

Interest paid

Income taxes paid (refunded)

Accrued purchases of property, equipment and improvements

See Notes to Consolidated Financial Statements

Fiscal Year Ended

February 2, 2019

February 3, 2018

(52 weeks)

(53 weeks)

(32,839) $

(22,024)

10,158

4,384

61
(950)
1,101

(141)
323
(605)
(96)
(2,857)
251
(399)
(21,508)

(4,294)
13,329

9,035

(32)
9,100
(9,100)
(99)
(234)
(365)
(12,838)
23,077

10,239

190

147

156

12,434

318
(276)
62
(1,322)
1,164

—

(77)
(4,527)
242

344

6,796
(1,293)
1,414
(6,745)

(5,158)
—
(5,158)

(26)
—

—

—
(26)
(11,929)
35,006

23,077

188
(243)
324

CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Nature of Business and Significant Accounting Policies

Christopher & Banks Corporation, through its wholly owned subsidiaries (collectively referred to as “Christopher & Banks”,
“the Company”, “we” or “us”), operates retail stores selling women’s apparel and accessories in the United States ("U.S."). The
Company operated 455 and 463 stores as of February 2, 2019 and February 3, 2018, respectively. The Company also operates
an eCommerce website for its Christopher & Banks and C.J. Banks brands at www.christopherandbanks.com.

Fiscal year and basis of presentation

The Company follows the standard fiscal year of the retail industry, which is a fifty-two or fifty-three week period ending on
the Saturday closest to January 31, and is designated by the calendar year in which the fiscal year commences. The fiscal year
ended February 2, 2019 ("fiscal 2018") consisted of fifty-two weeks while the fiscal year ended February 3, 2018 ("fiscal
2017") consisted of fifty-three weeks.

The Consolidated Financial Statements include the accounts of Christopher & Banks Corporation and its wholly owned
subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and
expenses during reporting periods. As a result, actual results could differ because of the use of these estimates and assumptions.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and in banks and investments purchased with an original maturity of ninety
days or less.

Accounts Receivable

Accounts receivable consist primarily of amounts receivable from customers and other receivables. Credit card receivables
relate to amounts due from payment processing entities that are collected one to five days after the related sale transaction
occurs.

Accounts receivable consisted of the following (in thousands):

Credit card receivables
Other receivables

Total accounts receivable

Inventory valuation

February 2, 2019
1,999
$
768
2,767

February 3, 2018
2,229
$
397
2,626

Physical inventories are generally taken annually, and inventory records are adjusted accordingly, resulting in the recording of
actual shrinkage. Physical inventories are taken at all store locations approximately three weeks before the end of the fiscal
year. Shrinkage is estimated as a percentage of net sales at interim periods and for this approximate three-week period based on
historical shrinkage rates.

Merchandise inventory consisted of the following (in thousands):

Merchandise - in store/eCommerce
Merchandise - in transit

Total merchandise inventories

Property, equipment and improvements, net

February 2, 2019
29,859
$
11,180
41,039

February 3, 2018
34,225
$
7,136
41,361

Property, equipment and improvements are initially recorded at cost. Property and equipment is depreciated on a straight-line
basis over its estimated useful life as follows:

Description
Building and building improvements
Computer hardware and software
Equipment, furniture and fixtures

Store leasehold improvements

Estimated Useful Lives
25 years
3 to 5 years
3 to 10 years
Shorter of the useful life or term of the lease, typically 10
years

Repairs and maintenance which do not extend an asset’s useful life are expensed as incurred. When assets are retired or
otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or
loss is reflected in income for that period.

Long-lived assets

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

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

Revenue recognition

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

Sales are recognized at the point of purchase when a customer takes possession of the merchandise and pays for the purchase
with cash, credit card, debit card or gift card. The Company records eCommerce revenue upon the estimated date the customer
receives the merchandise. Shipping and handling revenues are included in net sales. Sales are recognized net of a sales return
reserve, which is based on historical sales return data. Sales taxes collected from customers are remitted to the appropriate
taxing jurisdictions and are excluded from net sales.

Gift cards are recorded as a liability when issued and until they are redeemed, at which point a sale is recorded. Unredeemed
gift cards (“gift card breakage”) is recognized as a reduction of merchandise, buying and occupancy costs when the likelihood
of a gift card being redeemed by a customer in the future is deemed remote and the Company determines that there is no legal
obligation to remit the value of the unredeemed gift card to any state or local jurisdiction as unclaimed or abandoned
property. The Company utilizes historical redemption patterns in order to estimate the rate and timing of breakage associated
with gift cards.

Customer loyalty program

Private label credit card program

The Company has a private label credit card program with Comenity Bank which provides for the issuance of credit cards
bearing the Christopher & Banks and C.J. Banks brands. The sponsoring bank manages and extends credit to the Company's
customers and is the sole owner of the accounts receivable generated under the program.

In April 2017, the Company entered into a second amendment to the private label credit card plan agreement. As part of the
amendment, the Company received a signing bonus of approximately $2 million from Comenity Bank and also earns revenue
based on card usage by its customers. In addition, the sponsoring bank reimburses the Company for certain marketing
expenditures related to the program, subject to an annual cap on the amount of reimbursable expenses.

Vendor allowances

At certain times the Company receives allowances or credits from its merchandise vendors primarily related to goods that do
not meet our quality standards. These allowances or credits are reflected as a reduction of merchandise inventory in the period
they are received. The majority of merchandise is produced exclusively for the Company. Accordingly, the Company does not
enter into any arrangements with vendors where payments or other consideration might be received in connection with the
purchase or promotion of a vendor’s products such as buy-down agreements or cooperative advertising programs.

Merchandise, buying and occupancy costs

Merchandise, buying and occupancy costs include the cost of merchandise, markdowns, shrink, freight, shipping and handling
charges, buyer and distribution center salaries, buyer travel, rent and other occupancy related costs, various merchandise design
and development costs, miscellaneous merchandise-related expenses and other costs related to the Company's distribution
network. Merchandise, buying and occupancy costs do not include any depreciation or amortization expense.

Selling, general and administrative expenses

Selling, general and administrative expenses include salaries, with the exception of buyer and distribution center salaries, other
employee benefits, marketing, store supplies, payment processing fees, information technology-related costs, insurance,
professional services, non-buyer travel and miscellaneous other selling and administrative related expenses. Selling, general
and administrative expenses do not include any depreciation or amortization expense.

Rent expense, deferred rent obligations and deferred lease incentives

The Company leases its headquarters and distribution center building and all of its store locations under operating leases. Most
of the store lease agreements contain tenant improvement allowances, funded by landlord cash incentives or rent abatements,
which are recorded as a deferred lease incentive liability and amortized as a reduction of rent expense over the term of the
lease. For purposes of recognizing landlord incentives and minimum rental expense, the Company utilizes the date that it
obtains the legal right to use and control the leased space, which is generally when the Company enters the space and begins to
make improvements in preparation for opening a new store location.

Certain lease agreements contain rent escalation clauses which provide for scheduled rent increases during the lease term or for
rental payments commencing at a date other than the date of initial occupancy. Such escalating rent expense is recorded on a
straight-line basis over the lease term, not including any renewal option periods, and the difference between the recognized rent
expense and amounts payable under the lease are recorded as deferred rent obligations.

The Company's leases may also provide for contingent rents, which are determined as a percentage of sales in excess of
specified levels. When specified levels have been achieved or when management determines that achieving the specified levels
during the fiscal year is probable, the Company records a current accrued liability along with the corresponding rent expense.

A small portion of our leases contain renewal options that generally allow us to extend the lease for an additional five years.

Lease termination costs

Discounted liabilities for future lease costs and the fair value of related subleases of closed locations are recorded when the
stores are closed prior to the expiration of the lease or execution of a lease termination agreement. In assessing the discounted
liabilities for future costs of obligations related to closed stores, the Company makes assumptions regarding amounts of future
subleases. If these assumptions or their related estimates change in the future, the Company may be required to record
additional exit costs or reduce exit costs previously accrued. Actual settlements may vary substantially from recorded
obligations. As of February 2, 2019 and February 3, 2018, our lease termination liability is not material.

Advertising

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising costs for
fiscal 2018 and fiscal 2017, were approximately $8.7 million and $8.4 million, respectively.

Fair value measurements

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

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable; and
Level 3 – Unobservable inputs that are significant to the fair value of the asset or liability.

Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value
measurement.

Certain of the Company's financial assets and liabilities are recorded at their carrying amounts which approximate fair value,
based on their short-term nature. These financial assets and liabilities include cash and cash equivalents, accounts receivable
and accounts payable. The Company measures certain of its long-lived assets at fair value on a non-recurring basis.

Long-lived asset impairment charges recorded during fiscal 2018 and fiscal 2017 were measured at fair value using Level 3
inputs.

Stock-based compensation

Stock-based compensation is calculated using the estimated fair value of stock options on the date of grant, the Company uses
the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the Company to estimate key
assumptions such as expected term, volatility, risk-free interest rates and dividend yield to determine the fair value of stock
options, based on both historical information and management judgment regarding market factors and trends. The Company
recognizes stock-based compensation expense on a straight-line basis over the corresponding vesting period of the entire
award, net of estimated forfeiture rates. The Company estimates expected forfeitures of share-based awards at the grant date
and recognizes compensation cost only for those awards expected to vest.

In estimating expected forfeitures, the Company analyzes historical forfeiture and termination information and considers how
future termination rates are expected to differ from historical termination rates. The Company ultimately adjusts this forfeiture
assumption to actual forfeitures. Any changes in the forfeiture assumptions do not impact the total amount of expense
ultimately recognized over the vesting period. Instead, different forfeiture assumptions only impact the timing of expense
recognition over the vesting period. If the actual forfeitures differ from management estimates, additional adjustments to
compensation expense are recorded.

Restricted stock awards are generally subject to forfeiture if employment or service terminates prior to the lapse of the
restrictions. In addition, certain restricted stock awards have performance-based vesting provisions and are subject to forfeiture,
in whole or in part, if these performance conditions are not achieved. Management assesses, on an ongoing basis, the
probability of whether the performance criteria will be achieved and, once it is deemed probable, compensation expense is
recognized over the relevant performance period. For those awards not subject to performance criteria, the cost of the restricted
stock awards is expensed, which is determined to be the fair market value of the shares at the date of grant, on a straight-line
basis over the vesting period. Time-based grants of restricted stock participate in dividend payments to the extent dividends are
declared and paid prior to vesting.

Income taxes

Income taxes are calculated using the asset and liability method. Under this method, deferred tax assets and liabilities are
recognized for the future income taxes attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. We record a valuation allowance against our deferred tax assets when it is
more likely than not that some portion or all of our deferred tax assets will not be realized. In determining the need for a
valuation allowance, management is required to make judgments regarding future income, taxable income and the potential
effects of the mix of income or losses in jurisdictions in which we operate. Deferred tax assets and liabilities are measured
using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date of such change.

Comprehensive Loss

Comprehensive loss is the change in equity (net assets) of a business entity during a period from transactions and other events
and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners. Comprehensive loss is the sum of net loss from operations and other items
that must bypass the Statement of Operations because they have not been realized, including items like an unrealized holding
gain or loss from available for sale securities and foreign currency translation gains or losses. There was no difference between
the reported net loss and comprehensive loss for fiscal years ended February 2, 2019 and February 3, 2018.

Net loss per common share

The Company utilizes the two-class method of calculating earnings per share (“EPS”) where nonvested share-based payment
awards that contain non-forfeitable rights to receive dividends or dividend equivalents (whether paid or unpaid) are
participating securities, and thus, are included in the two-class method of computing EPS. Participating securities include
nonvested employee restricted stock awards with time-based vesting, which contain non-forfeitable rights to receive dividend
payments.

Basic EPS is computed based on the weighted average number of shares of common stock outstanding during the applicable
period, while diluted EPS is computed based on the weighted average number of shares of common and common equivalent
shares outstanding.

Segment reporting

The Company reports its operations as one reportable segment, Retail Operations, which consists of one operating segment.
The Company defines an operating segment on the same basis that it uses to evaluate performance and to allocate resources.
The Company has also considered its organizational structure and design of its executive compensation programs. Therefore,
the Company reports results as a single segment, which includes the operation of its retail stores, outlet stores, and online
purchases.

Recently issued accounting pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases, related to leases to increase transparency and comparability
among organizations by requiring the recognition of right-of-use (ROU) assets and lease liabilities on the balance sheet. Most
prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases
classified as operating leases under current U.S. GAAP. Leases will be classified as either finance or operating, with
classification affecting the pattern of expense recognition in the income statement. Under the new standard, disclosures are
required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash
flows arising from leases.

The guidance permits the use of a modified retrospective approach, which requires an entity to recognize and measure leases
existing at, or entered into after, the beginning of the earliest comparative period presented. Alternatively, the guidance permits
a “Comparatives Under 840 Option” that changes the date of initial application to the beginning of the period of adoption. We
will be electing the Comparatives Under 840 Option in which we will apply ASC 840 to all comparative periods, including
disclosures, and recognize the effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings as of the
effective date (date of initial application). We will elect the package of practical expedients permitted under the transition
guidance within the new standard, which among other things, allows us to carryforward the historical lease classification. In
addition, we elected certain practical expedients and accounting policies including the lessee practical expedient to not separate
lease components. We will also make an accounting policy election to keep leases with an initial term of 12 months or less off
of the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations on a straight-line
basis over the lease term.

The standard will have a material impact on our Consolidated Balance Sheets, but will not have a material impact on our
Consolidated Statement of Operations and Statements of Cash Flows. The most significant impact will be the recognition of
ROU assets and lease liabilities for operating leases, while our accounting for capital leases remains substantially unchanged.

Adoption of the standard will result in the recognition of ROU assets and lease liabilities for operating leases of approximately
$135 million and $154 million, respectively, as of February 3, 2019, the date of initial application. We currently estimate the
cumulative pre-tax impact of these changes to increase retained earnings by approximately $3.5 million, which includes the
recognition of the deferred gain on the sale-leaseback transaction of our corporate headquarters facility, see Note 3 - PPE. We
do not believe the standard will materially affect our consolidated net earnings.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) Improvements to
Employee Share-Based Payment Accounting. ASU 2016-09 addresses simplification of several aspects of the accounting for
share-based payment transactions, including the income tax consequences, classification of awards as either equity or
liabilities, and classification on the Statement of Cash Flows. ASU 2016-09 was adopted in the current year on a prospective
basis. The adoption of ASU 2016-09 did not have a material impact on the Company's Consolidated Financial Statements
mostly due to the impact of the tax valuation allowance.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18
requires that a Statement of Cash Flows explain the change during the period among the total of cash, cash equivalents, and
amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 is effective for public companies for
fiscal years and interim periods within those years beginning after December 15, 2017. There was no adjustment to prior year
financial statements as the Company had no restricted cash in prior years. As of February 2, 2019, the Company included $0.8
million of restricted cash in cash and cash equivalents within the Statement of Cash Flows related to cash held in escrow in
conjunction with the sale leaseback transaction.

In August 2018, the SEC adopted a final rule under SEC Release No. 33-10532, Disclosure Update and Simplification that
amends certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The
amendments also expanded the disclosure requirements on the analysis of shareholders' equity for interim financial statements,
in which registrants must now analyze changes in shareholders’ equity, in the form of reconciliation, for the current and
comparative year-to-date periods, with subtotals for each interim period. This final rule was effective on November 5, 2018.
The Company has adopted all relevant disclosure requirements, with the exception of the shareholders’ equity interim
disclosures, which is allowed to be adopted in a future interim period. The Company will include a Consolidated Statement of
Stockholders' Equity with its interim financial statements beginning with the fiscal quarter ending April 4, 2019.

Recently adopted accounting pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The Company adopted
ASC 606, and all the related amendments on February 4, 2018 using the modified retrospective method for all contracts. The
additional disclosures required by the ASC 606 have been included in Note 2 - Revenue. Results for reporting periods
beginning February 4, 2018 reflect the application of ASC Topic 606, while the results for prior reporting periods were
prepared under the guidance of ASC Topic 605, Revenue Recognition. We recorded a net increase to opening equity of $2.0
million as of February 4, 2018 due to the cumulative impact of adopting the new standard, with the impact primarily related to
the recognition of gift card breakage. For further detailed discussion, see Note 2 - Revenue.

We reviewed all other recently issued accounting pronouncements and concluded they are either not applicable to our
operations, or that no material effect is expected on our Consolidated Financial Statements as a result of future adoption.

NOTE 2 — Revenue

On February 4, 2018 (the first day of fiscal 2018), we adopted ASC 606. In general, this ASC requires an entity to allocate the
transaction price received from customers to each separate and distinct performance obligation and recognize revenue as these
performance obligations are satisfied.

We adopted ASC 606 using the modified retrospective method for all contracts. Accordingly, results for reporting periods
beginning February 4, 2018 reflect the application of ASC 606, while the results for prior reporting periods were prepared
under previous revenue recognition guidance. We recorded a net increase to opening equity of approximately $2.0 million as of
February 4, 2018 due to the cumulative impact of adopting ASC 606, with the impact primarily related to the recognition of gift
card breakage as discussed below. Further, as a result of applying the modified retrospective method, the following adjustments
were made to accounts on the Consolidated Balance Sheet as of February 4, 2018 (in thousands):

Assets:

Merchandise inventories

Prepaid expenses and other current asset

Liabilities:

February 3,
2018

ASC 606
Adjustments

February 4,
2018

41,361

2,715

(482) $
482

40,879

3,197

Accrued liabilities and other current liabilities

26,201

(1,983)

24,218

Equity:

Retained earnings

34,993

1,983

36,976

Impact on Financial Statements

The following summarize the impact of adopting ASC 606 on the Company’s Consolidated Financial Statements as of and for
the 52 weeks ended February 2, 2019 (in thousands):

Consolidated Balance Sheets

Assets

Merchandise inventories

Prepaid expenses and other current assets

Liabilities

February 2, 2019

Balance without
adoption of ASC
606

Effect of change
higher (lower)

As reported

41,039

41,552

3,372

2,859

513
(513)

Accrued liabilities and other current liabilities

25,894

27,640

1,746

Equity

Retained earnings

Consolidated Statements of Operations

Net sales

Net loss

Net loss per share -- basic

Net loss per share -- diluted

Merchandise sales

4,137

2,391

(1,746)

52 Weeks Ended February 2, 2019

As reported

Balance without
adoption of ASC
606

Effect of change
higher (lower)

348,900
(32,839)

348,466
(32,603)

(0.88) $
(0.88) $

— $

(434)
236

(0.88)
(0.88)

Right of return

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

Friendship® Rewards Program

The Company established its Friendship® Rewards Program as a loyalty program where customers earn points towards future
discount certificates based on their purchase activity. We have identified the additional benefits received from this program as a
separate performance obligation within a sales contract in the form of the discount certificates earned by customers.
Accordingly, we assess any incremental discounts issued to our customers through the program and allocate a portion of the
transaction price associated with merchandise sales from the loyalty program members to the future discounts earned. The
transaction price allocated to future discounts is recorded as deferred revenue until the discounts are used or forfeited. In
addition, the Company estimates breakage on the points earned within the program that will not be used by customers for future
discounts. The Company estimates breakage based on the historical redemption rate and considers industry trends. Breakage is
recorded as a reduction to the deferred revenue associated with the program. As of February 2, 2019, and February 3, 2018, the
Company recorded $3.8 million and $3.5 million, respectively, in deferred revenue associated with the program, which is
included in accrued liabilities and other current liabilities in the Consolidated Balance Sheets.

Gift card revenue

The Company sells gift cards to customers which can be redeemed for merchandise within our brick and mortar and
eCommerce sales channels. Gift cards are recorded as deferred revenue when issued and are subsequently recorded as revenue
upon redemption. The Company estimates breakage related to gift cards when the likelihood of redemption is remote. This
estimate utilizes historical trends based on the vintage of the gift card. Breakage on gift cards is recorded as revenue in
proportion to the rate of gift card redemptions by vintage. This represents a change in the methodology used to estimate
breakage as, prior to the adoption of ASC 606, we had historically recognized breakage for the portion of the gift card balances
that remained outstanding following 36 months of issuance. As of February 2, 2019, the Company had $4.6 million of deferred
revenue associated with the issuance of gift cards. The deferred gift card revenue is included in accrued liabilities and other
current liabilities in the Consolidated Balance Sheets.

Private label credit card

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

As part of the agreement, the Company received a signing bonus. We have determined that the benefits associated with signing
the agreement are recognized over time throughout its term. This is the most accurate depiction of the transfer of services as the
customer receives and consumes the benefits by obtaining and having the ability to use financing through Comenity Bank for
purchases within our brick and mortar and eCommerce sales channels throughout the agreement's term. The deferred signing
bonus is included in other liabilities and is being recognized in net sales ratably over the term of the contract. The other revenue
based on customer usage of the card is recognized in net sales in the periods in which the related customer transaction occurs.
As of February 2, 2019, the Company had $1.6 million recorded as deferred revenue associated with the signing bonus, of
which $0.3 million is included in accrued liabilities and other current liabilities and the remaining $1.3 million is included in
Other non-current liabilities in the Consolidated Balance Sheets. The Company recorded $0.3 million of revenue for the fiscal
year ended February 2, 2019 associated with the signing bonus.

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

The Company receives a performance bonus based on the total amount of new PLCC accounts that are opened during the year.
We have determined that this is a form of variable consideration. Variable consideration is recorded if, in the Company’s
judgment, it is probable that a significant future reversal of revenue under the contract will not occur. For the fiscal year ended
February 2, 2019, the Company met certain performance metrics within the contract and recorded a small amount of revenue
associated with performance bonuses.

Disaggregation of revenue

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

Brick and mortar stores

eCommerce sales

Other

Net sales

52 Weeks Ended
February 2, 2019

53 Weeks Ended
February 3, 2018

262,143

289,439

84,808

1,949

348,900

75,053

1,414

365,906

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

Contract balances

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

Contract Liabilities

February 2, 2019

February 4, 2018

Current

Non-Current

Current

Non-Current

Right of return

Friendship Rewards Program

Gift card revenue

Private label credit card

Total

1,176

3,768

4,646

274

— $

—

1,348

1,079

3,501

4,986

274

—

1,622

9,864

9,840

The Company recognized revenue of $4.5 million in the fifty-two week period ended February 2, 2019, related to contract
liabilities recorded at the beginning of the period. Such revenues were comprised of the redemption and forfeiture of Friendship
Rewards Program discount certificates, redemption of gift cards, and amortization of the PLCC signing bonus. The Company
does not have any material contract assets as of February 2, 2019. For the fifty-two week period ended February 2, 2019, the
Company did not recognize any revenue resulting from changes in the estimated variable consideration to be received
associated with performance obligations satisfied or partially satisfied in prior periods.

Transaction price allocated to remaining performance obligations

The following table includes the estimated revenue expected to be recognized in future periods related to performance
obligations that are unsatisfied or partially unsatisfied as of February 2, 2019:

Private label credit card

Total

Contract Costs

Revenue Expected to be Recognized by Period

Total

Less than 1
year

1-3 years

3-5 years

1,348

274

822

252

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

NOTE 3 — Property, Equipment and Improvements, Net

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

Description
Land
Corporate office, distribution center and related building improvements
Store leasehold improvements
Store furniture and fixtures
Corporate office and distribution center furniture, fixtures and equipment
Computer and point of sale hardware and software
Construction in progress
Total property, equipment and improvements, gross
Less accumulated depreciation and amortization

Total property, equipment and improvements, net

Sale-Leaseback

February 2, 2019
$

— $
—
50,305
70,815
6,179
33,098
419
160,816
(129,173)
31,643

February 3, 2018
1,597
12,753
50,094
70,447
5,053
33,126
1,275
174,345
(126,572)
47,773

On April 27, 2018, the Company completed the sale of and entered into an agreement to leaseback its corporate headquarters
facility, including the distribution center, in Plymouth, Minnesota. The agreement provided for the sale of the facility for a
purchase price of $13.7 million and the subsequent leaseback of the facility for a 15-year period. The lease is classified as an
operating lease. As a result of this transaction, the Company recorded a deferred gain of $7.7 million. The Company is
recognizing this deferred gain on a straight-line basis over the term of the lease. Through February 2, 2019, the Company has
recognized $0.4 million of this deferred gain in the Consolidated Statements of Operations. As of February 2, 2019, the
unamortized deferred gain is $7.3 million of which $6.8 million is reflected in the Consolidated Balance Sheets in Other non-
current liabilities, with the remaining $0.5 million included in Accrued liabilities and other current liabilities. As part of the
transaction, the Company deposited $1.7 million in escrow for certain repairs to the building. As of February 2, 2019, $0.8
million remained in escrow for repairs to the building. This amount is considered to be restricted cash and is included within
cash and cash equivalents on the Consolidated Balance Sheets.

Impairment of long-lived assets

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

Due to declining sales and continued operating losses, the Company performed impairment analyses during the fiscal year
ended February 2, 2019. Leasehold improvements, store furniture and fixtures at certain underperforming stores, and stores
identified for closure were analyzed for impairment. As a result of these analyses, the Company recorded $4.4 million of long-
lived asset impairment during the 52 weeks ended February 2, 2019. The Company recorded long-lived asset impairment of
$0.3 million during the 53 weeks ended February 3, 2018. See Note 9 - Fair Value Measurements, for further additional
discussion.

NOTE 4 — Accrued Liabilities and Other Current Liabilities

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

Gift card and store credit liabilities
Accrued Friendship Rewards Loyalty Program liability
Accrued income, sales and other taxes payable
Accrued occupancy-related expenses
Sales return reserve
eCommerce obligations
Other accrued liabilities

Total accrued liabilities and other current liabilities

NOTE 5 — Credit Facility

February 2, 2019
4,646
$
3,768
911
3,700
1,176
6,194
5,499
25,894

February 3, 2018
6,931
$
3,539
1,587
3,432
1,079
3,824
5,809
26,201

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

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

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

In addition to these changes, the Second Amendment eliminates availability against the Company's real property, which was the
subject of a sale-leaseback transaction on April 27, 2018. The Company has recorded approximately $0.2 million of deferred
financing costs during the fifty-two weeks ended February 2, 2019 in connection with the Second Amendment. The deferred
financing costs have been combined with the balance of the deferred financing costs remaining from the prior amendment
entered into on September 8, 2014. Deferred financing costs are included in other assets on the Consolidated Balance Sheets
and are being amortized as interest expense over the related term of the Second Amendment.

The Credit Facility contains customary events of default and various affirmative and negative covenants. The sole financial
covenant contained in the Credit Facility requires the Company to maintain Availability at least equal to the greater of (a) ten
percent (10%) of the borrowing base or (b) $3.0 million. In addition, the Credit Facility permits the payment of dividends to the
Company's stockholders if certain financial conditions are met. The Company was in compliance with all financial covenants
and other financial provisions of the Credit Facility as of February 2, 2019.

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

There were no outstanding borrowings under the Credit Facility as of February 2, 2019 and February 3, 2018. The total
borrowing base at February 2, 2019 was approximately $26.7 million. As of February 2, 2019, the Company had open on-
demand letters of credit of approximately $6.9 million. Accordingly, after reducing the borrowing base for the open letters of
credit and the required minimum availability of the greater of $3.0 million, or 10.0% of the borrowing base, the net availability
of revolving credit loans under the Credit Facility was approximately $19.4 million at February 2, 2019.

NOTE 6 — Stockholder's Equity and Stock-Based Compensation

Dividends

The Credit Facility allows payment of dividends to the Company's stockholders if certain financial conditions are met. We
have paid no dividends since 2010.

Share repurchase program

During fiscal 2018, the Company repurchased 188,079 shares at a cost of approximately $0.1 million. As of February 2, 2019,
approximately $1.9 million remains available under this Program for future purchases of common stock.

Stock-based compensation

The Company maintains the following stock plans approved by stockholders: the 2013 Directors' Equity Incentive Plan (the
"2013 Stock Plan") and the 2018 Stock Incentive Plan (the “2018 Stock Plan”).

On June 13, 2018, the Company adopted, after stockholder approval, the 2018 Stock Plan. With the adoption of the 2018 Stock
Plan, no further awards may be made under the 2014 Stock Incentive Plan (the “2014 Stock Plan”). The aggregate number of
shares that may be issued under all stock-based awards made under the 2018 Stock Plan will be (i) the sum of 3,000,000 and
(ii) any shares subject to any outstanding award under the 2014 Stock Plan that after June 13, 2018 are not purchased, are
forfeited or are reacquired by the Company due to the termination or cancellation of such award. In general, if an award entitles
the holder thereof to receive or purchase shares, the number of shares covered by such award will be counted on the date of
grant against the aggregate number of shares available under the 2018 Stock Plan. If awards under the 2018 Stock Plan or, after
June 13, 2018, awards under the 2014 Stock Plan that expire or otherwise terminate without being exercised, the shares of
common stock not acquired pursuant to such awards again become available for issuance under the 2018 Stock Plan in
accordance with the share counting provisions in the 2018 Stock Plan. However, under the share counting provisions of the
2018 Stock Plan, the following shares will not again be available for issuance: (i) shares unissued due to a “net exercise” of a
stock option, (ii) any shares withheld or shares tendered to satisfy tax withholding obligations under any award, (iii) shares
covered by a SAR that is not settled in shares upon exercise and (iv) shares repurchased using stock option exercise proceeds.

On June 13, 2018, the 2013 Stock Plan was amended and restated to increase the number of shares authorized by 500,000
shares of common stock.

Under the 2018 Stock Plan and the 2013 Stock Plan, the Company may grant options to purchase common stock to employees
and non-employee members of the Board, respectively, at a price not less than 100% of the fair market value of the common
stock on the option grant date. In general, (i) time-based stock options granted to employees vest over three years and are
exercisable up to 10 years from the date of grant; and (ii) performance-based stock options vest, 50% following a determination
that the performance criteria have been met and 50% on the second anniversary of the date of grant, with the number of options
vesting based on the extent to which, if at all, the performance criteria have been achieved.

The Company may also grant shares of restricted stock or units representing the right to receive shares of stock to its employees
and non-employee members of the Board. The grantee cannot transfer the shares or units before the respective shares or units
vest. Shares of nonvested restricted stock are considered to be currently issued and outstanding, but units representing the right
to receive stock are not. Grants to employees of restricted stock or restricted stock units generally have original vesting
schedules of one to three years, while restricted grants to Directors typically vest approximately one year after the date of grant.
On June 13, 2018, restricted stock and unit awards for 250,000 shares, in the aggregate, were granted to Directors.

Approximately 1.5 million and 3.0 million shares were authorized for issuance under the 2013 Stock Plan and the 2018 Stock
Plan, respectively. As of February 2, 2019, there were approximately 0.6 million and 2.7 million shares available for future
grants under the 2013 Stock Plan and the 2018 Stock Plan, respectively.

As an inducement to join the Company, our new Chief Executive Officer, Keri Jones, was awarded 500,000 shares of non-
qualified stock options and 250,000 shares of time-based restricted stock on March 12, 2018 outside of the above plans. Each
of the awards vests 1/36th each month and the non-qualified stock option has a ten-year term.

The total pre-tax compensation expense related to all stock-based awards for fiscal 2018 and fiscal 2017 was approximately
$1.1 million and $1.2 million, respectively. Stock-based compensation expense is included in merchandise, buying and
occupancy expenses for the buying and distribution employees, and in selling, general and administrative expense for all other
employees.

Black-Scholes assumptions

The Company uses the Black-Scholes option-pricing model to value stock options for grants to employees and non-employee
directors. Using this option-pricing model, the fair value of each stock option award is estimated on the date of grant and is
expensed on a straight-line basis over the vesting period, as the stock options are subject to pro-rata vesting. The expected
volatility assumption is based on the historical volatility of the Company’s stock over a term equal to the expected term of the
option granted. The expected term of stock option awards granted is derived from the Company’s historical experience and
represents the period of time that awards are expected to be outstanding. The risk-free interest rate is based on the implied yield
on a U.S. Treasury constant maturity with a remaining term equal to the expected term of the option granted.

The table below shows the weighted average assumptions relating to the valuation of stock options granted during fiscal 2018
and fiscal 2017.

Expected dividend yield
Expected volatility
Risk-free interest rate
Expected term

Stock-Based Compensation Activity — Stock Options

The following tables present a summary of stock option activity for fiscal 2018:

Fiscal 2018
—%
70.16-77.24%
2.64-3.05%
3.00-5.00 years

Fiscal 2017
—%
76.65-84.94%
1.66-2.05%
3.00-5.00 years

Outstanding, beginning of period

Granted
Exercised
Canceled - Vested
Canceled - Nonvested (Forfeited)

Outstanding, end of period
Exercisable, end of period

Nonvested, beginning of period

Granted
Vested
Forfeited

Nonvested, end of period

Number of Shares
3,543,826
2,312,303
—
(349,670)
(1,221,559)
4,284,900
1,888,430

Weighted Average
Exercise Price

Aggregate
Intrinsic Value
(in thousands)

Weighted Average
Remaining
Contractual Life

$
$

2.19
0.99
—
3.50
1.32
1.68
2.44

$
$

—
—

6.36 years
4.51 years

Number of Shares
2,231,750
2,312,303
(926,024)
(1,221,559)
2,396,470

Weighted Average
Grant Date
Fair Value

0.74
0.57
0.72
0.72
0.59

The weighted average fair value for options granted during fiscal 2018 and fiscal 2017 was $0.57 and $0.74, respectively. The
grant date fair value of options vesting during fiscal 2018 and fiscal 2017 was approximately $0.72 and $0.84, respectively.
There were no options exercised during fiscal 2018 and fiscal 2017.

As of February 2, 2019, there was approximately $0.8 million of total unrecognized compensation expense related to nonvested
stock options granted, which is expected to be recognized over a weighted average period of approximately 1.98 years.

During fiscal 2018, as part of its Annual Incentive Plan, the Company made awards of performance-based non-qualified stock
options to a limited number of employees which entitles these employees to receive an option to purchase a specified number
of shares of the Company's common stock at the specified option price, provided that the performance criteria are met. This
performance criteria involves meeting the designated threshold for operating income and generating positive cash flow. These
stock options vest, in whole or in part, on the vesting date if the operating income threshold under the Stock Option Award
agreement is met or exceeded for fiscal 2018 and the Company generated positive cash flow. The weighted average fair value
of the options upon the grant date was $0.73. At February 2, 2019, options for approximately 574,534 shares remain
outstanding.

The Company made similar awards of performance-based non-qualified stock options to a limited number of employees in
fiscal 2017. In March 2018, all of the outstanding awards of non-qualified stock options granted in fiscal 2017 were forfeited as
the Company failed to achieve the threshold operating income goal.

Stock-Based Compensation Activity — Restricted Stock

The following table presents a summary of restricted stock activity for fiscal 2018:

Nonvested, beginning of period

Granted
Vested
Forfeited

Nonvested, end of period

Number of Shares
544,933
848,203
(365,981)
(21,717)
1,005,438

Weighted Average
Grant Date Fair
Value

Aggregate
Intrinsic Value
(in thousands)

1.48
0.85
1.43
1.43
0.97

575

The weighted average fair value for restricted stock granted during fiscal 2018 and fiscal 2017 was $0.85 and $1.34,
respectively. The total grant date fair value of restricted stock vested during fiscal 2018 and fiscal 2017 was approximately $0.6
million and $0.7 million, respectively. The aggregate intrinsic value of restricted stock vested during fiscal 2018 and fiscal
2017 was approximately $0.2 million and $0.3 million, respectively.

As of February 2, 2019, there was approximately $0.5 million of unrecognized stock-based compensation expense related to
nonvested restricted stock awards, which is expected to be recognized over a weighted average period of approximately 1.91
years.

Other Stock-Based Awards

During fiscal 2017, as part of the Company's Long-Term Incentive Plan, the Company made awards of non-qualified stock
options to a limited number of employees which entitles these employees to receive an option to purchase a specified number
of shares of the Company's common stock at the specified option price. The actual number of options issued on the vesting
dates could range from zero to 465,900 shares. The weighted average grant date fair value of the options is $0.74.

Employee Inducement Awards

In connection with the appointment of Joel Waller as interim President and Chief Executive Officer effective January 17, 2017,
the Company granted to Mr. Waller employee inducement equity awards, including 200,000 shares of performance-based,
restricted common stock. One tranche of 100,000 shares will vest if, on any date prior to the "Vesting Date" (as defined in the
award agreement), the Company’s common stock has a closing price equal to or greater than $3.00 on the NYSE, and the
second tranche of 100,000 shares will vest if, on any date prior to the Vesting Date, the Company’s common stock has a closing
price equal to or greater than $4.00 on the NYSE. If a threshold is not met, the tranche of shares of restricted stock subject to
such threshold will be forfeited during fiscal 2019.

NOTE 7 — Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act ("the Act") tax reform legislation was enacted. This legislation marked
significant change in U.S. tax law including a reduction in the corporate tax rates, changes to net operating loss carryforwards
and carrybacks and a repeal of the corporate Alternative Minimum Tax ("AMT"). The Securities and Exchange Commission
("SEC") staff issued Staff Accounting Bulletin No. 118 ('SAB 118') that allows companies to record provisional estimates of the
impacts of the Act during a measurement period of up to one year from the enactment. For fiscal 2017, the Company estimated
the effects of the Act.

The Act reduced the U.S. corporate tax rate from 35% to 21% as of January 1, 2018. As a result of the enacted law, the
Company was required to revalue deferred tax assets and liabilities at the enacted rate. This revaluation resulted in additional
expense of $20.7 million and a corresponding offset of $20.7 million to the valuation allowance within continuing operations of
the Company. Although the net expense represented what the Company believed was a reasonable estimate of the impact of the
income tax effects of the Act on the Company as of February 3, 2018, it was considered provisional. During fiscal 2018, the
Company finalized its accounting for this matter and concluded that no material adjustments were required.

The phase-in of the lower corporate tax rate resulted in a blended rate of 33.8% for the Company for fiscal 2017. At February 3,
2018 we had not fully completed our accounting for the tax effects of enactment of the Act; however, we made a reasonable
estimate of the effects on our existing deferred tax balances and valuation allowances. We remeasured U.S. deferred tax assets
and liabilities based on the rates at which they are expected to reverse in the future.

The Act eliminated the corporate Alternative Minimum Tax (AMT) and deemed accumulated AMT credits to be fully
refundable by the year 2022. As of February 2, 2019, accumulated AMT tax credits totaled $0.4 million of which we now
expect to be refunded.

The components of the provision (benefit) for income taxes for fiscal 2018 and fiscal 2017 were as follows (in thousands):

Current:

Federal tax benefit
State tax expense (benefit)
Current tax expense (benefit)
Deferred tax expense (benefit)
Income tax provision (benefit)

Fiscal 2018

Fiscal 2017

(78) $
354
276
98
374

(439)
(59)
(498)
(275)
(773)

The reconciliations of the federal statutory tax rate to the Company's effective tax rate for fiscal 2018 and fiscal 2017 are as
follows:

Federal income tax at statutory rate
State income tax, net of federal benefit
Change in valuation allowance
Reserve for unrecognized tax benefits
Officer's compensation
Impact of tax rate change on deferred taxes
Tax credits
Prior year true-ups
Other

Effective income tax rate

Fiscal 2018

Fiscal 2017

21.0 %
(2.5)
(17.0)
0.2
—
—
0.3
(2.9)
(0.3)
(1.2)%

33.8%
1.4
56.7
0.4
1.3
(89.7)
—
(0.5)
—
3.4%

Significant components of the Company's deferred income tax assets and liabilities are as follows (in thousands):

Deferred tax assets:

Accrued Friendship Rewards loyalty liability
Accrued gift card liability
Merchandise inventories
Deferred rent and deferred lease incentives
Stock-based compensation expense
Net operating loss carryforwards
Contribution carryforwards
Tax credit carryforwards
Depreciation and amortization
Other accrued liabilities

Total deferred tax assets
Less: Valuation allowance
Deferred tax assets, net of valuation allowance

Deferred tax liabilities:

Depreciation and amortization
Accrued gift card liability
Other

Total deferred tax liabilities

Net deferred tax assets

February 2, 2019

February 3, 2018

772
—
827
3,829
749
34,819
176
859
746
1,189
43,966
(43,060)
906

—
(127)
(280)
(407)
499

773
495
845
4,147
769
30,550
226
766
—
1,152
39,723
(37,555)
2,168

(1,235)
—
(336)
(1,571)
597

Deferred income tax assets represent potential future income tax benefits. Realization of these assets is ultimately dependent
upon future taxable income. ASC Topic 740 Income Taxes ("ASC Topic 740") requires that deferred tax assets be reduced by a
valuation allowance if, based on all available evidence, it is considered more likely than not that some or all of the recorded
deferred tax assets will not be realized in a future period. Forming a conclusion that a valuation allowance is not needed is
difficult when negative evidence such as cumulative losses exists. Based on available objective evidence and cumulative losses,
management believes it is more likely than not that the deferred tax assets are not recognizable and will not be recognized until
the Company has sufficient taxable income. Accordingly, the net deferred tax assets, with the exception of certain deferred state
benefits, have been offset by a valuation allowance. The valuation allowance increased $5.5 million and decreased $11.0
million during the fiscal years ended February 2, 2019 and February 3, 2018, respectively.

As of February 2, 2019, the Company has gross federal and state net operating loss carryforwards of approximately $145.5
million and $73.6 million, respectively. A portion of the federal net operating loss carryforwards will begin to expire in 2032.
The state net operating loss carryforwards have carryforward periods of 5 to 20 years and begin to expire in 2019. The
Company also has federal tax credits of $0.9 million which will begin to expire in 2030 and gross charitable contribution
carryforwards of $0.7 million that will begin to expire in 2020.

A company’s ability to utilize a portion of its net operating loss carryforwards to offset future taxable income may be subject to
certain limitations under Section 382 of the Internal Revenue Code due to changes in the equity ownership of the Company.
The Company has analyzed equity ownership changes and determined its net operating losses will not be limited under Section
382.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):

Balance at January 28, 2017

Additions based on tax positions related to the current year

Additions for tax positions of previous years

Reductions for tax positions of previous years

Reductions for tax positions of previous years due to lapse of applicable statute of limitations

Balance at February 3, 2018

Additions based on tax positions related to the current year

Additions for tax positions of previous years

Reductions for tax positions of related to the current years

Reductions for tax positions of previous years due to lapse of applicable statute of limitations

Balance at February 2, 2019

1,033

—
(300)
(161)
627

128
(161)
(159)
443

The Company's liability for unrecognized tax benefits is recorded within the Consolidated Balance Sheets in Other non-current
liabilities. The total amount of gross unrecognized tax benefits that, if recognized, would affect the effective tax rate as of
February 2, 2019 and February 3, 2018 were $0.3 million and $0.3 million, respectively.

Interest and penalties related to unrecognized tax benefits of approximately $(47) thousand and $27 thousand were recognized
as components of income tax expense in fiscal 2018 and fiscal 2017, respectively. At February 2, 2019 and February 3, 2018,
approximately $47 thousand and $93 thousand, respectively, were accrued for the potential payment of interest and penalties.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. In March 2017,
the Company settled the IRS examination of the fiscal 2013 tax year. Both settlements were related to certain issues which the
Company had previously reflected net of tax within deferred tax assets. The settlements did not result in any cash payments nor
any impact to tax expense. As of February 2, 2019, with few exceptions, the Company or its subsidiaries are no longer subject
to examination prior to fiscal 2011.

NOTE 8 — Earnings Per Share ("EPS")

The calculation of EPS shown below excludes the income attributable to participating securities from the numerator.

Numerator (in thousands):

Net loss attributable to Christopher & Banks Corporation
Income allocated to participating securities
Net loss available to common stockholders

Denominator (in thousands):

Weighted average common shares outstanding - basic
Dilutive shares
Weighted average common and common equivalent shares outstanding - diluted

Net loss per common share:

Basic
Diluted

Fiscal 2018

Fiscal 2017

$
$

(32,839) $
—
(32,839) $

(22,024)
—
(22,024)

37,492
—
37,492

37,212
—
37,212

(0.88) $
(0.88) $

(0.59)
(0.59)

Total stock options of approximately 3.9 million and 2.9 million were excluded from the shares used in the computation of
diluted earnings per share for fiscal 2018 and fiscal 2017, respectively, as they were anti-dilutive.

NOTE 9 — Fair Value Measurements

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

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

Long-Lived Assets Held and Used (in thousands):
Carrying value
Fair value measured using Level 3 inputs
Impairment charge

Fiscal 2018

Fiscal 2017

4,829
445
4,384

$
$
$

318
—
318

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

Fixed asset fair values were derived using a discounted cash flow ("DCF") model to estimate the present value of net cash
flows that the asset or asset group is expected to generate. The key inputs to the DCF model generally included our forecasts of
net cash generated from revenue, expenses and other significant cash outflows, such as capital expenditures, as well as an
appropriate discount rate. In the case of assets for which the impairment was the result of restructuring activities, no future cash
flows have been assumed as the assets will cease to be used and expected sale values are nominal.

NOTE 10 — Employee Benefit Plans

401(k) Plan

The Company has established a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code for the
benefit of all employees who meet certain eligibility requirements, which are primarily age, length of service and hours of
service. The plan allows eligible employees to invest from 1% to 60% of their compensation, subject to dollar limits as
established by the federal government. The plan allows for discretionary Company matching contributions. The Company
made no matching contributions during fiscal 2018. During fiscal 2017, the Company made matching contributions of
approximately $0.5 million. The Company does not offer any other post-retirement, post-employment or pension benefits to
directors or employees.

NOTE 11 — Lease Commitments

The Company leases its store locations and vehicles under operating leases. The store lease terms, including rental period,
renewal options, escalation clauses and rent as a percentage of sales, vary among the leases. Most store leases require the
Company to pay real estate taxes and common area maintenance charges.

Total rental expense for all leases was as follows for the fiscal periods ended (in thousands):

Minimum rent
Contingent rent
Maintenance, taxes and other
Amortization of deferred lease incentives

Total rent expense

Fiscal 2018

Fiscal 2017

36,370
1,033
15,194
(1,635)
50,962

39,903
790
16,483
(1,792)
55,384

Future minimum rental payments as of February 2, 2019, and the estimated timing and effect that such obligations are expected
to have on the Company’s liquidity and cash flows for operating leases are as follows (in thousands):

Payments Due by Period

Contractual Obligations
Operating leases (1)
Vehicle operating leases

Total obligations

Fiscal 2019
$ 36,821
144
$ 36,965

Fiscal 2020
$ 25,828
59
$ 25,887

Fiscal 2021
$ 21,370
16
$ 21,386

Fiscal 2022
$ 18,439
—
$ 18,439

Fiscal 2023
$ 17,811
—
$ 17,811

Thereafter
$ 38,827
—
$ 38,827

Total
$159,096
219
$159,315

(1)

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

NOTE 12 — Legal Proceedings

NOTE 13 — Quarterly Financial Data (Unaudited)

(in thousands, except per share data)
Net sales
Gross profit
Net loss

Net loss per share data:
Basic
Diluted

(in thousands, except per share data)
Net sales
Gross profit
Net (loss) income

Net (loss) income per share data:
Basic
Diluted

Fiscal 2018 Quarters (1)

First

Second

Third

Fourth

85,901
27,344
(5,319)

87,418
24,872
(7,426)

91,288
27,193
(8,817)

84,293
23,222
(11,277)

(0.14) $
(0.14) $

(0.20) $
(0.20) $

(0.24) $
(0.24) $

(0.30)
(0.30)

Fiscal 2017 Quarters (1)

First

Second

Third

Fourth

88,556
30,538
(3,688)

86,618
24,628
(7,889)

98,468
33,239
(1,622)

92,265
25,102
(8,825)

(0.10) $
(0.10) $

(0.21) $
(0.21) $

(0.05) $
(0.05) $

(0.23)
(0.23)

$
$

__________________________________________
(1)

The summation of quarterly per share data may not equate to the calculation for the full fiscal year as quarterly calculations are performed on a discrete
basis.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by the
Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the
Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to
allow timely decisions regarding required disclosure. Under the supervision and with the participation of the Company’s
management, including its CEO and CFO, management evaluated the effectiveness of the Company’s disclosure controls and
procedures as of February 2, 2019. Based on that evaluation, the Company’s CEO and its CFO concluded that the Company’s
disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) were
effective as of February 2, 2019.

Management Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting,
as that term is defined in Rule 13a-15(f) and 15d-15(f) of the Securities Exchange Act. Under the supervision and with the
participation of the Company’s management, including the CEO and CFO, the Company conducted an evaluation of the
effectiveness of internal control over financial reporting based on the framework in Internal Control- Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s testing
and evaluation under the framework in Internal Control - Integrated Framework (2013), management concluded that our
internal control over financial reporting was designed and operated effectively as of February 2, 2019.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our registered public accounting firm because as a
smaller reporting company we are not subject to Section 404(b) of the Sarbanes Oxley Act of 2002.

Inherent Limitations on Control Systems

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, will be or have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management
override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

During our fourth fiscal quarter, there were no changes in our internal control over financial reporting that materially affected,
or are likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

There are no matters which are required to be reported under Item 9B.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information regarding our directors required by Item 10 is incorporated herein by reference to the section entitled, “Item 1-
Election of Directors,” in the Proxy Statement. Information regarding our executive officers is included in Part I, Item 4A of
this Annual Report on Form 10-K in the section entitled “Executive Officers of the Registrant.” Information concerning
compliance with Section 16(a) of the Exchange Act is included in the Proxy Statement under the section entitled
“Section 16(a) Beneficial Ownership Reporting Compliance,” and such information is incorporated herein by reference.
Information regarding our Audit Committee and audit committee financial experts is included in the Proxy Statement under the
section entitled “Meetings and Committees of the Board of Directors - The Audit Committee,” and such information is
incorporated by reference.

We have adopted a Code of Conduct (the “Code”) applicable to all of our employees, directors and officers, including our
principal executive officer, principal financial officer, principal accounting officer, controller and other employees performing
similar functions. The Code is available on our website at www.christopherandbanks.com — under the “Investor Relations”
link and then the “Corporate Governance” link — and is available in print to any stockholder who requests a copy from our
Corporate Secretary. Any changes or amendments to, or waiver from, a provision of the Code that applies to our principal
executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions
will be posted on our website at the address and location specified above.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference to the sections entitled “Executive Compensation,”
“Meetings and Committees of the Board of Directors — Compensation Program for Non-Employee Directors” and “Meetings
and Committees of the Board of Directors —Non-Employee Director Compensation for Fiscal 2018” in the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED
STOCKHOLDER MATTERS

The information required by Item 12 is incorporated herein by reference to the sections entitled “Security Ownership” and
“Equity Compensation Plan Information” in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is incorporated herein by reference to the sections entitled “Certain Relationships and
Related Transactions” and “Information Regarding the Board and Corporate Governance — Director Independence” in the
Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is incorporated by reference to the sections entitled “Audit Committee Report and
Payment of Fees to Our Independent Registered Public Accounting Firm — Independent Registered Public Accounting Firm
Fees” and “Audit Committee Report and Payment of Fees to Our Independent Registered Public Accounting Firm — Auditor
Services Pre-Approval Policy” in the Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following documents are filed as a part of this Report:

(1) Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Page

All schedules omitted are not applicable or the required information is shown in the financial statements or notes thereto.

(3)

Exhibits:

Exhibit
No.
3.1

3.2

3.3

4.1

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

Exhibit Description
Restated Certificate of Incorporation of Christopher & Banks
Corporation (Registration No. 333-174509)

Seventh Amended and Restated By-Laws of Christopher & Banks
Corporation, effective December 20, 2013

First Amendment to Seventh Amended and Restated By-Laws of
Christopher & Banks Corporation, effective February 24, 2016

Form of certificate for shares of common stock of Christopher &
Banks Corporation
Amended and Restated Christopher & Banks Corporation 2005
Stock Incentive Plan**
Second Amended and Restated Christopher & Banks Corporation
2005 Stock Incentive Plan, effective July 27, 2010**

Form of Qualified Stock Option Agreement under our 2005 Stock
Incentive Plan**

Form of Nonqualified Stock Option Agreement under our 2005
Stock Incentive Plan**

Form of Nonqualified Stock Option Agreement under our Second
Amendment and Restated 2005 Stock Incentive Plan**

Amended and Restated Credit and Security Agreement by and
between Christopher & Banks, Inc., Christopher & Banks
Company and Christopher & Banks Services Company and Wells
Fargo Bank, National Association, acting through its Wells Fargo
Business Credit Operating Division dated November 4, 2005

Form of Stock Option Agreement (Nonqualified Stock Option)
under the Second Amended and Restated Christopher & Banks
Corporation 2005 Stock Incentive Plan**

Second Amended and Restated Credit Agreement, dated as of July
12, 2012, among Christopher & Banks Corporation, as the Lead
Borrower For The Borrowers Named Herein, The Guarantors from
time to time party hereto, and Wells Fargo Bank, National
Association, as Lender
Security Agreement by Christopher & Banks Corporation, as Lead
Borrower, and The Other Borrowers and Guarantors Party Hereto
From Time to Time, and Wells Fargo Bank, National Association,
as Lender, dated as of July 12, 2012

10.12

Christopher and Banks Corporation 2014 Stock Incentive Plan**

10.13

Christopher and Banks Corporation 2014 Annual Incentive Plan**

10.14

First Amendment, dated September 8, 2014, to the Second
Amended and Restated Credit Agreement, dated July 12, 2012, by
and among Christopher & Banks Corporation, Christopher &
Banks, Inc. and Christopher & Banks Company and Wells Fargo
Bank, National Association

10.15

Christopher & Banks Corporation Non-Employee Director
Deferred Stock Plan, Amended and Restated effective December 8,
2014**

10.16

Form of Time-Based Restricted Stock Agreement under the
Christopher & Banks Corporation 2014 Stock Incentive Plan**

Incorporated by Reference

Form
S-8

Exhibit
4.1

Filing Date
May 26, 2011

8-K

10-Q

8-K

3.1

4.1

10.2

December 24, 2013

February 29, 2016

October 7, 2010

August 5, 2008

August 2, 2010

10-K

10.15

May 12, 2011

10-K

10.16

May 12, 2011

10-K

10.17

May 12, 2011

10-K

10.18

May 12, 2011

8-K

10.1

April 15, 2011

10-K

10.48

May 12, 2011

8-K

10.1

March 30, 2012

8-K

10.1

July 16, 2012

8-K

10.2

July 16, 2012

8-K

10.1

10.2

June 27, 2014

10.1

September 8, 2014

8-K

10.1

December 10, 2014

8-K

10.2

March 26, 2015

10.17

10.18

10.19

Form of Severance Agreement between Christopher & Banks
Corporation and certain of its Executive Officers**

Severance Agreement between Christopher & Banks Corporation
and Marc Ungerman**

Support Agreement dated March 10, 2016, by and among
Christopher & Banks Corporation; Macellum Retail Opportunity
Fund, LP; Macellum Capital Management, LLC; Macellum
Advisors GP, LLC; Macellum Management, LP; MCM Managers,
LLC; MCM Management, LLC; and Jonathan Duskin

8-K

10.1

April 10, 2015

10.1

November 13, 2015

10.1

March 10, 2016

10.20

Form of Severance Agreement between Christopher & Banks
Corporation and certain of its Executive Officers**

8-K

10.1

March 18, 2016

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

10.38

Christopher & Banks Corporation 2013 Directors’ Equity Incentive
Plan, as amended June 30, 2016**

Form of Restricted Stock Award Agreement under the Christopher
& Banks 2013 Directors’ Equity Incentive Plan**

Form of Non-Qualified Stock Option Agreement under the
Christopher & Banks Corporation 2014 Stock Incentive Plan**
Form of Time-Based Restricted Stock Agreement under the
Christopher & Banks Corporation 2014 Stock Incentive Plan**

Employment Agreement made effective as of January 17, 2017, by
and between Christopher & Banks Corporation and Joel N.
Waller**

Non-Qualified Stock Option Agreement made effective as of
January 17, 2017, between Christopher & Banks Corporation and
Joel N. Waller**

Performance-Based Restricted Stock Agreement made effective as
of January 17, 2017, between Christopher & Banks Corporation
and Joel N. Waller**

Form of Performance Based Non-Qualified Stock Option
Agreement under the Christopher & Banks Corporation 2014 Stock
Incentive Plan**

Form of Christopher & Banks Corporation Indemnification
Agreement**

8-K

10.1

10.2

10.1

10.2

July 5, 2016

August 26, 2016

8-K/A

10.1

February 24, 2017

8-K/A

10.2

February 24, 2017

8-K/A

10.3

February 24, 2017

8-K

10.1

March 16, 2017

8-K

10.1

June 20, 2017

Retention Agreement, effective as of July 25, 2017, by and between
Christopher & Banks Corporation and Marc A. Ungerman**

8-K/A

10.1

July 26, 2017

Form of Non-Qualified Stock Option Agreement under the
Christopher & Banks Corporation 2014 Stock Incentive Plan**

Form of Time-Based Restricted Stock Agreement under the
Christopher & Banks Corporation 2014 Stock Incentive Plan**

Form of Christopher & Banks Corporation Severance Agreement
for Officers**

Amended Employment Agreement between Christopher & Banks
Corporation and Joel N. Waller effective as of January 15, 2018**

Non-Qualified Stock Option Agreement made effective as of
January 15, 2018, between Christopher & Banks Corporation and
Joel N. Waller**

Performance Bonus Award Agreement made effective as of January
15, 2018, between Christopher & Banks Corporation and Joel N.
Waller**

Amendment No. 1 to the Amended Employment Agreement
between Christopher & Banks Corporation and Joel N. Waller
effective as of February 1, 2018**

Employment Agreement between Christopher & Banks
Corporation and Keri L. Jones, entered into as of February 1,
2018**

8-K

10.1

September 21, 2017

10.2

September 21, 2017

10.1

December 8, 2017

10.1

10.2

January 16, 2018

8-K

10.3

January 16, 2018

8-K

10.1

February 2, 2018

8-K

10.1

February 6, 2018

10.39

10.40

10.41

10.42

10.43

10.44

10.45

10.46

10.47

10.48

10.49

10.50

10.51

10.52

10.53

Form of Performance Based Non-Qualified Stock Option
Agreement under the Christopher & Banks Corporation 2014 Stock
Incentive Plan**

Non-Qualified Stock Option Agreement made effective as of March
12, 2018, between Christopher & Banks Corporation and Keri L.
Jones**

Form of Christopher & Banks Company Purchase and Sales
Agreement

Form of Christopher & Banks Corporation Lease Agreement

Form of Christopher & Banks Corporation Escrow Agreement

Form of Christopher & Banks Corporation Collateral Access
Agreement

Christopher & Banks Corporation 2018 Stock Incentive Plan**

Christopher & Banks Corporation 2013 Directors' Equity Incentive
Plan, as amended April 26, 2018**

Form of Restricted Stock Award Agreement under the Christopher
& Banks 2013 Directors' Equity Incentive Plan**

Form of Restricted Stock Unit Agreement under the Christopher &
Banks 2013 Directors' Equity Incentive Plan**
Form of Non-Qualified Stock Option Agreement under the
Christopher & Banks Corporation 2018 Stock Incentive Plan**

Form of Time-Based Restricted Stock Agreement under the
Christopher & Banks 2018 Stock Incentive Plan**

Non-Qualified Stock Option Agreement made effective July 9,
2018, between Christopher & Banks Corporation and Richard
Bundy**

Time-Based Restricted Stock Agreement made effective July 9,
2018, between Christopher & Banks Corporation and Richard
Bundy**

Second Amendment, dated August 3, 2018, to the Second Amended
and Restated Credit Agreement, dated July 12, 2012, by and among
Christopher & Banks Corporation, Christopher & Banks, Inc. and
Christopher & Banks Company and Wells Fargo Bank, National
Association

10.54

Amendment No. 2 to the Amended Employment Agreement
between Christopher & Banks Corporation and Joel N. Waller
effective as of October 17, 2018**

10.55

Form of Non-Qualified Stock Option Agreement under the
Christopher & Banks 2018 Stock Incentive Plan**

Form of Performance Based Non-Qualified Stock Option
Agreement under the Christopher & Banks 2018 Stock Incentive
Plan**

8-K/A

10.1

March 13, 2018

8-K

10.1

March 13, 2018

8-K

10.1

10.2

10.3

10.4

10.1

10.2

10.3

10.4

10.1

10.2

May 2, 2018

June 18, 2018

June 27, 2018

8-K/A

10.1

July 11, 2018

8-K/A

10.2

July 11, 2018

8-K

10.1

August 6, 2018

8-K

10.1

October 19, 2018

8-K

10.1

March 15, 2019

8-K

10.2

March 15, 2019

Code of Conduct of Christopher & Banks Corporation

Subsidiaries of Christopher & Banks Corporation

8-K

10-K

14.1

21.1

November 18, 2016

May 15, 2008

Consent of Deloitte & Touche LLP

Powers of Attorney

Certification of Chief Executive Officer pursuant to
Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Rule 13a-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
Certification of the Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002

10.56

14.1

21.1

23.1*

24.1*

31.1*

31.2*

32.1*

32.2*

101*

Certification of the Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Financial statements from the Annual Report on Form 10-K of
Christopher & Banks Corporation for the fiscal year ended
February 2, 2019, formatted in Extensible Business Reporting
Language ("XBRL"): (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Operations and Comprehensive Net
Loss; (iii) the Consolidated Statements of Stockholders' Equity, (iv)
the Consolidated Statements of Cash Flows and (v) the Notes to
Consolidated Financial Statements

________________________________________________
*
** Management agreement or compensatory plan or arrangement

Filed herewith

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized on March 18, 2019.

SIGNATURES

CHRISTOPHER & BANKS CORPORATION

By:

/s/ Keri L. Jones

Keri L. Jones

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Keri L. Jones
Keri L. Jones

/s/ Richard Bundy
Richard Bundy

Kent Kleeberger

Jonathan Duskin

Seth Johnson

William F. Sharpe, III

Laura Weil

*
Joel Waller

President, Chief Executive Officer and Director
(Principal Executive Officer)

Senior Vice President, Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

March 18, 2019

Non-Executive Chair and Director

Director

*By:

/s/ Richard Bundy

Richard Bundy

Attorney-in-Fact pursuant to Powers of Attorney filed herewith

BOARD OF DIRECTORS

Kent A. Kleeberger
Chair of the Board, Christopher & Banks Corporation;
Former Executive Vice President, Chief Operating Officer,
Chico’s FAS, Inc.

Jonathan Duskin
Chief Executive Officer,
Macellum Capital Management LLC

Seth R. Johnson
Former Chief Executive Officer, Pacific Sunwear

Keri L. Jones
President and Chief Executive Officer,
Christopher & Banks Corporation

William F. Sharpe, III
Partner, Pathfinder Companies LLC

Joel N. Waller
Former President and
Chief Executive Officer,
Christopher & Banks Corporation

Laura A. Weil
Founder, Village Lane Advisory LLC;
Former Executive Vice President and
Chief Operating Officer,
New York & Company, Inc.

EXECUTIVE OFFICERS

Keri L. Jones
President and
Chief Executive Officer

Richard R. Bundy
Senior Vice President,
Chief Financial Officer

Andrea Kellick
Senior Vice President,
Chief Merchandising Officer

Luke R. Komarek
Senior Vice President,
General Counsel and Corporate Secretary

Cindy J. Stemper
Senior Vice President,
Chief Human Resources Officer

Carmen L. Wamre
Senior Vice President,
Chief Stores Officer