Tailored Brands Annual Report 2017

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FY2017 Annual Report · Tailored Brands

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

(Mark One)
☒

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

For the fiscal year ended February 3, 2018

☐

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

For the transition period from to
Commission file number 1‑16097
TAILORED BRANDS, INC.
(Exact Name of Registrant as Specified in its Charter)

Texas

(State or Other Jurisdiction of
Incorporation or Organization)

6380 Rogerdale Road

Houston, Texas
(Address of Principal Executive Offices)

47‑4908760
(IRS Employer
Identification Number)

77072‑1624
(Zip Code)

(281) 776‑7000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, par value $.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 ☒. No ☐.
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 ☐ . No ☒.
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 ☒. No ☐.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes ☒. No ☐.
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 the 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, a smaller reporting
company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
Large accelerated filer ☒

Smaller reporting company ☐

Accelerated filer ☐

Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐. No ☒.
The aggregate market value of the voting stock held by non‑affiliates of the registrant, based on the closing price of shares of common
stock on the New York Stock Exchange on July 29, 2017, was approximately $607.4 million.
The number of shares of common stock of the registrant outstanding on March 23, 2018 was 49,292,856.

Non‑accelerated filer ☐
(Do not check if a
smaller reporting company)

Notice and Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held June 21, 2018

Document

Incorporated as to
Part III: Items 10, 11, 12, 13 and 14

DOCUMENTS INCORPORATED BY REFERENCE

Table of Contents

10‑K Part and Item
No.
PART I

FORM 10‑K REPORT INDEX

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.

Item 6.
Item 7.

Item 7A.
Item 8.
Item 9.

Item 9A.
Item 9B.

PART III

Item 10.
Item 11.
Item 12.

Item 13.
Item 14.
PART IV
Item 15.
Item 16.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

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
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

Exhibits, Financial Statement Schedules
Form 10-K Summary

Page
No.

3
11
21
22
23
23

24
26

28
42
44

88
88
90

90
90

90
90
90

91
91

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Effective January 31, 2016, Tailored Brands, Inc., a Texas corporation (“Tailored Brands” or the “Company”), became the
successor reporting company to The Men’s Wearhouse, Inc. (“Men’s Wearhouse”) pursuant to a holding company
reorganization (the “Reorganization”).

Unless the context otherwise requires, references in this report to “Company,” “we,” “us” and “our” for periods prior to
January 31, 2016, refer to Men’s Wearhouse which was the parent company and the registrant prior to the Reorganization,
and, for periods after the Reorganization, to Tailored Brands, which is the current parent holding company, in each case
including its consolidated subsidiaries. References herein to years are to the Company’s 52‑week or 53‑week fiscal year, which
ends on the Saturday nearest January 31 in the following calendar year. The periods presented in our financial statements are
the fiscal years ended February 3, 2018 (“fiscal 2017”), January 28, 2017 (“fiscal 2016”), and January 30, 2016 (“fiscal
2015”). Each of these periods had 52 weeks except for fiscal 2017, which consisted of 53 weeks.

Forward‑Looking and Cautionary Statements

Certain statements made in this Annual Report on Form 10‑K or in other materials we have filed or will file with the Securities
and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to
be made by us) contains or may contain forward‑looking statements (as defined in the Private Securities Litigation Reform Act
of 1995), including, but not limited to, statements regarding our future financial performance and financial condition. Words
such as “expects,” “anticipates,” “envisions,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,”
forward-looking
“estimates,” variations of such words and similar expressions are
statements. Forward‑looking statements reflect our current views regarding certain events that could affect our financial
condition or results of operations and may include, but are not limited to, references to future sales, comparable sales, margins,
costs, earnings, number and costs of store openings, closings, remodels, refreshes, relocations and expansions, capital
expenditures, potential acquisitions or divestitures, synergies from acquisitions, business strategies, demand for clothing or
rental product, economic conditions, market trends in the retail and corporate apparel clothing business, currency fluctuations,
inflation and various political, legal, regulatory, social, economic and business trends. Forward‑looking statements are based
upon management’s current beliefs or expectations and are inherently subject to significant business, economic and
competitive risks, uncertainties and contingencies and third party approvals, many of which are beyond our control.

identify such

intended

Any forward‑looking statements that we make herein and in future reports are not guarantees of future performance, and
actual results may differ materially from those in such forward‑looking statements as a result of various factors. Factors that
might cause or contribute to such differences include, but are not limited to: actions or inactions by governmental entities;
domestic and international macro‑economic conditions; inflation or deflation; the loss of, or changes in, key personnel;
success, or lack thereof, in formulating or executing our internal strategies and operating plans including new store and new
market expansion plans; cost reduction initiatives and revenue enhancement strategies; changes in demand for clothing or
rental product; market trends in the retail business; customer confidence and spending patterns; changes in traffic trends in
our stores; customer acceptance of our merchandise strategies, including custom clothing; performance issues with key
suppliers; disruptions in our supply chain; severe weather; foreign currency fluctuations; government export and import
policies; advertising or marketing activities of competitors; the impact of cybersecurity threats or data breaches and legal
proceedings.

Forward‑looking statements are intended to convey the Company’s expectations about the future, and speak only as of the date
they are made. We undertake no obligation to publicly update or revise any forward‑looking statements that may be made
from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable
law. However, any further disclosures made on related subjects in our subsequent reports on Forms 10-K, 10-Q and 8-K
should be consulted. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995, and all
written or oral forward-looking statements that are made by or attributable to us are expressly qualified in their entirety by the
cautionary statements contained or referenced in this section.

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ITEM 1. BUSINESS

General

PART I

We are the leading specialty retailer of men’s tailored clothing and the largest men’s formalwear provider in the United States
(“U.S.”) and Canada and help men dress for work and special occasions. We serve our customers through an expansive omni-
channel network that includes over 1,400 locations in the U.S. and Canada as well as our branded e-commerce websites at
www.menswearhouse.com, www.josbank.com, and www.josephabboud.com.

Our Brands and Products

Our U.S. retail stores are operated under the Men’s Wearhouse, Men’s Wearhouse and Tux, Jos. A. Bank, Joseph Abboud and
K&G brand names and are operated in 50 states, the District of Columbia and Puerto Rico. Our Canadian stores are operated
under the Moores brand name and operate in 10 Canadian provinces. As of February 3, 2018, the Company operated 1,477
stores throughout the U.S., Puerto Rico and Canada. In addition, at February 3, 2018, we operated 38 retail dry cleaning,
laundry and heirlooming facilities through MW Cleaners in Texas. These operations comprise our retail segment. On February
28, 2018, we entered into a definitive agreement to divest our MW Cleaners business for approximately $18.0 million, subject
to certain adjustments, and the transaction closed on March 3, 2018.

We also own and operate a factory located in New Bedford, Massachusetts that manufactures quality U.S. made tailored
clothing primarily under the Joseph Abboud and Reserve labels consisting of designer suits (including custom suits), tuxedos,
sport coats and slacks that we sell in our Men’s Wearhouse or Jos. A. Bank stores as well as our Joseph Abboud flagship store
and via our e-commerce websites. We also sell Joseph Abboud branded tailored clothing in our Moores stores, which is
produced by a third party in Canada.

Additionally, we operate an international corporate apparel business with operations in both the United Kingdom (“UK”) and
the U.S. Our UK-based business is the largest provider of corporate apparel in the UK under the Dimensions, Alexandra and
Yaffy brands. In the U.S., our corporate apparel business operates under the Twin Hill brand name. Our corporate apparel
business provides corporate clothing uniforms and workwear to workforces through multiple channels including managed
corporate accounts, catalogs and the internet at www.dimensions.co.uk, www.alexandra.co.uk, and www.twinhill.com.

For information on store closings and openings, see “Item 6. Selected Financial Data” in this Annual Report on
Form 10‑K. Financial information concerning business segments and geographic area is contained in “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and under Note 17 to our consolidated financial
statements both included in this Annual Report on Form 10‑K.

Retail Segment

Overview

In our retail segment, we offer our products and services primarily through our retail brands—Men’s Wearhouse, Men’s
Wearhouse and Tux, Jos. A. Bank, Moores, Joseph Abboud, and K&G—and the internet at www.menswearhouse.com,
www.josbank.com, and www.josephabboud.com. Men’s Wearhouse, Moores and K&G each operate as a house of brands
carrying a wide selection of exclusive and non‑exclusive merchandise brands. Jos. A. Bank is a branded house where
substantially all merchandise is sold under the exclusive Jos. A. Bank label. Joseph Abboud is our premium brand which is sold
under various labels at Men’s Wearhouse, Jos. A. Bank and Moores and in our Joseph Abboud flagship store in New York.

MW Cleaners is also included in the retail segment as these operations have not had a significant effect on our revenues or
expenses.

In June 2015, we entered into an agreement with Macy’s, Inc. to operate men’s tuxedo rental shops inside Macy’s department
stores. During the first quarter of fiscal 2017, we reached an agreement with Macy’s to wind down these operations. All 170
tuxedo shops within Macy’s closed in the second quarter of 2017.

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Men’s Wearhouse, Men’s Wearhouse and Tux and Moores

Men’s Wearhouse and Moores target the male consumer (18 to 65 years old) by providing superior, personalized customer
service and offering a broad selection of exclusive and non‑exclusive merchandise brands at regular and sale prices that we
believe are competitive with specialty retailers and traditional department stores. Our merchandise includes suits, suit
separates, sport coats, slacks, formalwear, business casual, denim, sportswear, outerwear, dress shirts, shoes and accessories in
classic, modern and slim fits and in a wide range of sizes including a selection of “Big and Tall” product.

Although basic styles comprise our core offerings, each season’s merchandise reflects current fit, fabric style and color trends.
The inventory mix at our Men’s Wearhouse and Moores stores includes business, formalwear, business casual and casual
merchandise designed to meet the demand of our customers. The broad merchandise selection creates increased sales
opportunities by permitting a customer to purchase substantially all of his wardrobe and accessory requirements at our retail
apparel stores. Based on our experience, we believe that the depth of selection of our merchandise offerings provides us with an
advantage over our competitors.

During fiscal 2016, we introduced a new collection of custom apparel consisting of suits, sport coats, slacks, shirts, tuxedos and
vests, which are personalized to each customer’s specifications. In fiscal 2017, we experienced a significant increase in sales
for custom clothing and believe it is a key growth initiative going forward. See “Business Strategy” for additional information
on the performance of custom clothing and other strategic initiatives for 2018 and beyond.

We also offer a full selection of special occasion offerings including tuxedo and suit rental product (collectively, “rental
product”). We believe our rental product broadens our customer base by drawing first‑time and younger customers into our
stores. During fiscal 2017, we experienced an increase in the consumer’s preference to purchase suits or formalwear for their
special occasion needs instead of renting product. We believe this trend is favorable for our business as customers who
purchase rather than rent tend to have a higher lifetime value for our business. Regardless of whether our customer chooses to
purchase or rent their special occasion clothing, we believe we are well-positioned to meet our customers’ special occasion
needs.

At February 3, 2018, we operated 718 Men’s Wearhouse retail apparel stores in 50 states, the District of Columbia and Puerto
Rico. These stores are referred to as “Men’s Wearhouse stores” or “full line stores” that offer a full selection of retail
merchandise and rental product. Men’s Wearhouse stores are primarily located in regional strip and specialty retail shopping
centers or in freestanding buildings as we believe that men prefer direct and easy store access that enables our customers to
park near the entrance of the store.

At February 3, 2018, we also operated another 51 stores in 23 states branded as Men’s Wearhouse and Tux. These stores are
referred to as “rental stores” and offer a full selection of rental product and a limited selection of retail merchandise, and are
located primarily in regional malls and lifestyle centers. Since 2013, we have closed 197 Men’s Wearhouse and Tux stores,
consistent with our strategy and as we continued to experience a consumer driven shift of rental revenues to our full line stores
located in close proximity to the rental stores.

At February 3, 2018, we operated 126 Moores retail apparel stores in 10 Canadian provinces. Moores stores are primarily
located in regional strip and specialty retail shopping centers.

Jos. A. Bank

Jos. A. Bank targets the male consumer (25 to 65 years old) emphasizing superior service, high quality tailored business and
formal attire, substantially all of which is Jos. A. Bank branded product including our Reserve and 1905 labels. Jos. A. Bank
merchandise consists of suits, suit separates, sport coats, slacks, formalwear, business casual, denim, sportswear, outerwear,
dress shirts, shoes and accessories in primarily classic styles and in a wide range of sizes including a selection of “Big and Tall”
product. Although the target gender and age of the Jos. A. Bank customer are similar to Men’s Wearhouse, we believe the Jos.
A. Bank customer and the Men’s Wearhouse customer are distinct and, based on information from our loyalty programs, we
believe that there is minimal overlap between the Jos. A. Bank customer and the Men’s Wearhouse customer.

Our merchandising strategy is focused on classic styling with attention to detail in quality materials and workmanship. Based
on our experience, we believe that the depth of selection of our merchandise offerings provides us with an advantage over our
competitors.

During fiscal 2016, we also introduced custom apparel at Jos. A. Bank consisting of suits, sport coats, slacks, shirts, tuxedos
and vests, which are personalized to each customer’s specifications. Similar to Men’s Wearhouse and Moores, we experienced
a significant increase in sales for custom clothing and believe it is a key aspect of our business strategy.

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We also offer a full selection of special occasion rental product at Jos. A. Bank and believe our rental product offering provides
the opportunity to broaden our customer base by drawing first‑time and younger customers into our stores. As is the case at
Men’s Wearhouse, we believe Jos. A. Bank is well-positioned to meet its customers’ special occasion needs, through retail
clothing offerings, rental product or custom offerings.

At February 3, 2018, we operated 491 Jos. A. Bank retail apparel stores in 42 states and the District of Columbia. Jos. A. Bank
stores are primarily located in specialty retail centers. In addition, as of February 3, 2018, there are 14 franchise stores.

K&G

K&G stores offer a more value‑oriented superstore approach that we believe appeals to the more price‑sensitive customer in the
apparel market. K&G offers first‑quality, current‑season apparel and accessories comparable in quality to that of traditional
department stores, at prices we believe are typically up to 60% below the regular prices charged by such stores. K&G’s
merchandising strategy emphasizes broad assortments across all major categories of both men’s and women’s career and casual
apparel in a wide range of sizes including “Big and Tall” and “Women’s plus sizes” as well as tailored clothing, dress
furnishings, sportswear, accessories, shoes and children’s apparel. This merchandise selection, which includes exclusive and
non‑exclusive merchandise brands, positions K&G to attract a wide range of customers in each of its markets.

At February 3, 2018, we operated 90 K&G stores in 27 states, 86 of which offer women’s career apparel, sportswear,
accessories, shoes and children’s apparel. K&G stores are “destination” stores located primarily in second generation strip
shopping centers that are easily accessible from major highways and thoroughfares.

Business Strategy

Our plan for positioning Tailored Brands for long-term sustainable growth includes our strategy to tailor our products and
services to our customers’ lifestyles. In the near term, this plan includes:

Expanding our portfolio of exclusive offerings, particularly custom clothing;

Increasing new customer acquisition and enhancing existing customer loyalty through brand-building marketing
that educates consumers about our superior product and service experience; and

Enhancing our omni‑channel capabilities.

Expanding Our Portfolio of Exclusive Offerings, Particularly Custom Clothing

We believe that expanding the number of exclusive offerings that we carry will increase our sales and profitability. In
particular, we believe our ability to make custom clothing, particularly custom suits, as easy and affordable to buy as “off-the-
rack” tailored clothing represents an opportunity to grow our market share in men’s apparel.

In fiscal 2017, our custom clothing business more than doubled versus the prior year to over $100 million, or approximately
4% of retail clothing product net sales. Our custom clothing offerings are available at all Men’s Wearhouse, Jos. A. Bank and
Moores locations with two price points: an entry-level offering and a premium offering. Our custom clothing offering is
designed to personalize both the clothing and the shopping experience and to foster a long-term relationship with our
customers. Our research shows that men who buy custom suits from us are more satisfied with their purchase, shop more
frequently and spend more in a year than off-the-rack customers.

In 2018, we plan to accelerate the growth of our custom clothing business by increasing our advertising spending to more
broadly promote our custom clothing offerings as well as improving our in-store presentation of our custom clothing offerings.

We believe we have superior competitive advantages with respect to custom clothing because we have: 1) a convenient U.S.
and Canada store footprint staffed by expert wardrobe consultants and tailors; 2) supply chain advantages with our owned
factory that manufactures our premium custom clothing in the U.S. and strong relationships and scale advantages with foreign
manufacturers for our entry level custom clothing; and 3) unique design capabilities creating exclusive brands and products for
our customers.

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In addition to custom clothing, we plan to continue to focus on growth through product innovation. This includes performance
fabrics such as our Kenneth Cole AWEAR-TECH offerings available at Men’s Wearhouse and Moores stores and our Jos. A.
Bank TravelTech offering. We also plan to continue to develop brands that will resonate with millennial customers, such as our
1905 line at Jos. A. Bank and socially responsible brands including our “Awearness Kenneth Cole” at Men’s Wearhouse and
Moores. A contribution from all “Awearness Kenneth Cole” products sold goes toward helping veterans transition back into
the workforce.

Increasing New Customer Acquisition and Enhancing Existing Customer Loyalty

We believe our strategy to engage more customers across all channels and to drive customer traffic helped us deliver
improvement in comparable sales and we plan to build on these strategies. For example, in 2018, we plan to continue to shift
our marketing strategies to emphasize the reasons why men should shop with us. We also expect to continue to dedicate a
greater share of our marketing mix to digital channels to expand our marketing reach. In addition, we plan to strengthen our
company reputation for social responsibility and grow brand affinity through our National Suit Drive, Canadian Suit Drive,
merchandise donations and social cause campaigns that resonate with our target customers including those that support our
veterans and certain cancer prevention efforts.

We will continue to focus on our in-store experience to promote a more engaged, personalized shopping experience that
features our wardrobe consultants who help men create their personal style. We intend to build customer loyalty by gaining a
greater understanding of our customer’s needs, helping him meet those needs, and giving him confidence in the way he looks.
We have formalized a customer satisfaction measurement and feedback loop at the store level that elevates and standardizes
the customer experience and focuses our stores on building long-term relationships with our customers.

We also expect to promote our loyalty programs to encourage new members and entice existing members to shop with us more
frequently. Through our loyalty programs, we reward our loyal customers and are able to leverage the data our customers share
with us to deliver a relevant and engaging experience that considers their lifestyles and preferences.

Enhancing Our Omni‑channel Capabilities

We plan to drive growth by providing an online sales experience that combines the advantages of our physical stores with an
information-rich online shopping experience via our mobile-friendly websites and mobile applications. We are channel
agnostic and want our customers to be able to shop whenever, wherever and however they choose across all channels in a
seamless, connected way. As a result, we are focused on improving our omni-channel strategies, as described in more detail
below, to provide our customers with more options to make their shopping experience easy.

Our current omni-channel capabilities include ‘virtualized inventory’ that enables our customers to order items through our
websites when not available at the store. We can also ship online purchases from our stores to further enhance our customer’s
online shopping experience and reduce delivery times. In 2016, we expanded our distribution center in Houston, Texas, to
facilitate our ability to achieve delivery within two business days for most U.S. and Canada orders for Men’s Wearhouse and
Jos. A. Bank.

In 2017, we made significant progress advancing our e-Commerce capabilities, including refining product recommendations
and introducing a new guided shopping experience called “Look Finder”. These enhancements have increased both conversion
rates and average order values.

In 2018, we intend to continue to build on delivering personalized, high-tech, high-touch service online. We also expect to
continue to make investments in technologies, business processes and personnel to deepen our customer relationships, enhance
the customer journey and increase our share of their closet.

Customer Service and Marketing

Men’s Wearhouse, Men’s Wearhouse and Tux, Jos. A. Bank, Joseph Abboud and Moores sales personnel are trained as
consultants to provide customers with assistance and advice on their apparel needs, including product style, color coordination,
fabric choice and garment fit. Wardrobe consultants are encouraged to offer guidance to the customer at each stage of the
decision‑making process, making every effort to earn the customer’s confidence and to create a professional relationship that
will continue beyond the initial visit.

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K&G stores are designed to allow customers to select and purchase apparel by themselves. For example, each merchandise
category is clearly marked and organized by size, and suits are specifically tagged as a means of further assisting customers to
easily select their styles and sizes. K&G employees are also available to assist customers with merchandise selection, including
correct sizing.

Substantially all of our retail apparel stores offer tailoring services to facilitate timely alterations at a reasonable cost to
customers. In addition, we utilize our regional tailor shops, which receive merchandise from stores to perform tailoring services
and return the merchandise to the selling store for customer pickup.

We offer our “Perfect Fit” loyalty program to our Men’s Wearhouse, Men’s Wearhouse and Tux and Moores customers. In
October 2015, we launched the “Bank Account” loyalty program for Jos. A. Bank customers, which offers the same benefits
and operates in the same manner as the “Perfect Fit” loyalty program. Under the loyalty programs, customers receive points for
purchases. Points are generally equivalent to dollars spent on a one‑for‑one basis, excluding any sales tax dollars. Upon
reaching 500 points, customers are issued a $50 rewards certificate that they may use to make purchases at our stores or online.
All customers who register for our loyalty programs are eligible to participate and earn points for purchases. We believe that
the loyalty programs facilitate our ability to cultivate long‑term relationships with our customers.

Our advertising strategy primarily consists of television, email, online (including social media), mobile, direct mail,
telemarketing and bridal shows. In fiscal 2017, we updated our advertising messaging, placing more emphasis on our product
offerings and the customer experience, including our wardrobe consultants and tailoring services, and less emphasis on
promotional messaging. We also plan to continue to dedicate a greater share of our marketing mix to digital channels to target a
broader customer segment. We believe our updated advertising strategy is the most effective means of both attracting and
reaching potential new customers as well as reinforcing the positive attributes of our various brands with our existing customer
base. In addition, for Jos. A. Bank, we periodically distribute a catalog to communicate the Jos. A. Bank image, to provide
customers with fashion guidance in coordinating outfits and to generate traffic in all of Jos. A. Bank’s sales channels.

Purchasing and Distribution

For the Men’s Wearhouse, Jos. A. Bank and Moores brands and, to a lesser extent, our K&G brand, our vertical direct sourcing
model with third‑party manufacturers covers design, product development, manufacturing, testing, quality control, and all
necessary logistics required to get merchandise from the factory to the sales floor. We purchase merchandise and rental product
from a broad base of manufacturers and do not believe that the loss of any manufacturer would cause a significant negative
impact to us. We have no material long‑term merchandise manufacturing contracts and typically transact business on a
purchase order‑by‑purchase order basis either directly with manufacturers and fabric mills or with trading companies. We have
developed long‑term and reliable relationships with most of our direct manufacturers and fabric mills, which we believe
provides stability, quality and price leverage. We also have a subsidiary in Hong Kong to facilitate our sourcing efforts for our
products. Furthermore, we work with trading companies that support our relationships with manufacturers for our direct-
sourced merchandise and contract agent offices that provide administrative functions on our behalf. The agent offices provide
all quality control inspections and ensure that our operating procedures manuals are adhered to by our manufacturers.

We are committed to social responsibility and environmental stewardship and have long supported the work of international
agencies and organizations that seek to implement internationally recognized standards for labor practices. We have developed
and implemented a Supplier Code of Conduct that sets forth the compliance requirements that all suppliers must meet to do
business with us. Our risk management department oversees our factory compliance efforts, and we also use the services of an
outside audit company to conduct regular audits of factories we use. We strive to work collaboratively with our clothing
factories to positively influence them to embed compliance into their daily operations. We also maintain standards and
guidelines related to human trafficking and slavery and our managers with direct responsibility for supply chain management
have attended training, particularly with respect to mitigating these risks within the supply chain. For additional information
regarding our commitment to improving factory working conditions, please review our 2017 Sustainability Report, which is
available at ir.tailoredbrands.com.

In fiscal 2017, our retail brands sourced approximately 66% of direct sourced merchandise from Asia (39% from China) while
11% was sourced in the U.S. (primarily from our U.S. factory), 6% was sourced in Mexico and 17% was sourced in other
regions. Substantially all of our foreign purchases are negotiated and paid for in U.S. dollars.

In 2016, to optimize our shipping and freight costs for our Men’s Wearhouse and Jos. A. Bank brands, we began the process of
transitioning to a regional distribution center approach to leverage the geographic locations of our main distribution centers in
Texas and Maryland, as well as the hub facilities described below. In early 2017, we commenced with our regional distribution
center strategy. Merchandise received into these regional distribution centers is either placed in back‑stock or allocated to a
store for shipping. In the majority of our larger markets, we also have separate hub distribution facilities or space within certain
stores used as redistribution facilities for their respective areas. Merchandise for Moores is distributed to the stores from our
distribution center in Montreal, Quebec. The majority of merchandise for our K&G stores is direct shipped by suppliers to the
stores with the remainder of K&G merchandise being managed via a third‑party logistics firm.

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Our rental product is located in our Houston, Texas distribution center and in six additional distribution facilities located in the
U.S. (five) and Canada (one). The six additional distribution facilities also receive limited quantities of retail product, primarily
formalwear accessories, that is sold in our Men’s Wearhouse, Men’s Wearhouse and Tux, Jos. A. Bank and Moores stores.

All retail merchandise and new rental product transported from suppliers to our distribution facilities is done so via common
carrier or on a dedicated fleet of long‑haul vehicles. This dedicated fleet is also used to transport product from our distribution
centers to the hub facilities and a fleet of leased or owned smaller vehicles is used to transport product from the hub facilities to
our stores within a given geographic region.

Competition

We compete against a broad spectrum of other men’s clothing stores. Our primary competitors include traditional department
stores, other specialty men’s clothing stores, online retailers, online formalwear rental providers, off‑price retailers,
manufacturer‑owned and independently‑owned outlet stores, independently-owned formalwear rental stores, and all of their
respective e-commerce channels. We believe that the principal competitive factors in the men’s apparel market are
merchandise assortment, quality, value, garment fit, merchandise presentation, store location and customer service, including
on‑site tailoring.

We believe that our merchandise offerings, including exclusive brands and custom clothing, and emphasis on customer service
distinguish us from other retailers. Certain of our competitors (principally department stores) may be larger and may have
substantially greater financial, marketing and other resources than we have and therefore may have certain competitive
advantages.

Corporate Apparel

Overview

Our international corporate apparel business operates under the Dimensions, Alexandra and Yaffy brands primarily in the UK
and Europe, and Twin Hill in the U.S., and provides corporate clothing uniforms and workwear to workforces. We offer our
corporate apparel clothing products through multiple channels including managed corporate accounts, catalogs and the internet
at www.dimensions.co.uk, www.alexandra.co.uk, and www.twinhill.com. We offer a wide variety of customer branded apparel
such as shirts, blouses, trousers, skirts and suits as well as a wide range of other products from aprons to safety vests to high
visibility police outerwear. With respect to our managed contracts, we generally provide complete management of our
customers’ corporate clothing programs.

Customer Service and Marketing

Our customer base includes companies and organizations in the airline, retail grocery, retail, banking, quick service restaurants,
car rental, distribution, travel and leisure, postal, security, healthcare and public sectors. Sector characteristics and economics
tend to impact the corporate wear requirements of our individual customers. For example, retail customers typically have high
staff turnover levels resulting in large replenishment volumes and significant seasonal demand, while banking customers
generally have lower turnover and replenishment requirements but refresh or rebrand uniforms more frequently.

Our managed contract customers are generally organizations with larger numbers of uniform-wearing employees or those that
use uniforms as a form of brand identity. We have long established relationships with many of the UK’s top employers and we
currently maintain approximately 30 managed accounts with an average account size greater than 15,000 wearers.

Under our managed contracts, we take responsibility for dressing our customers’ employees and are the exclusive supplier of
corporate wear to many of our customers. Because of the nature of the managed contract model, we ensure that we are fully
involved in all of our customers’ uniform requirements, from daily replenishment requirements to longer term rebranding plans
and wider corporate wear strategy. As a result, our relationship and level of interaction with our customers is generally far
deeper and more embedded than conventional customer‑supplier relationships.

Managed contracts are generally awarded through a request for proposal or tender process for multi‑year contracts. Our teams
continually monitor market opportunities to obtain access to such contracts. Regular contact with corporate wear buyers is
supplemented with mail campaigns, attendance at trade fairs and trade magazine advertisements. From time to time, we provide
each managed contract customer with a specific account manager who often works one or two days a week on‑site at our larger
customers’ offices. In addition to maintaining customer requirements, the account manager is also responsible for suggesting
and implementing ways of improving the customer’s corporate wear process.

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Our catalogs are distributed electronically, via mail and by sales representatives to current and potential customers. The
catalogs offer a full range of our products and offer further branding or embellishment of most products ordered. Catalog orders
can be placed via phone, mail, fax or direct contact with our sales representatives and, in the U.S., via client‑specific websites.
Our UK e‑commerce platforms also allow online ordering via our websites and provide 24‑hour functionality, with a full list of
our products and their details. Our typical catalog customers are small to medium sized organizations with a relatively smaller
number of employees or organizations where brand differentiation is not imperative. In addition, we regularly develop
dedicated websites for our corporate clients for use by their employees in ordering their company specific corporate wear.

Merchandising

In our corporate apparel business, we work with our customers to create custom apparel programs designed to support and
enhance their respective brands. Our comprehensive apparel collections, including basic apparel categories such as shirts,
blouses, trousers, skirts and suits as well as a wide range of other products from aprons to safety vests to high visibility police
outerwear, feature designs with sizes and fits that meet the performance needs of our customers’ employees and utilize the latest
technology in long‑wearing fabrications. Career wear, casual wear and workwear make up an increasingly significant portion of
the product mix as service industry customers continue to grow.

Under our managed contracts, our customers work with our in‑house design and technical teams to design and develop uniforms
or other corporate wear that creates strong brand identity. We utilize our management information and garment tracking system
to highlight trends, identify issues and provide benchmark data for the customer at all levels from individual wearer to
enterprise‑wide. This system also allows us to identify potential cost savings and develop solutions on behalf of our customers
and to respond quickly to trends or other changing needs.

With respect to our UK catalog and internet operations, customers can design an off‑the‑rack program that provides custom
alterations and embroidery on any of our standard, ready‑to‑wear clothing. We work with such customers to create a distinctive,
branded program that may include the addition of a company logo or other custom trim.

Purchasing and Distribution

All corporate apparel garment production is outsourced to third‑party manufacturers, including fabric mills, through our direct
sourcing programs. We have developed long‑term relationships with most of our direct manufacturers and fabric mills, which
we believe provides stability, quality and reliability. We do not have any material long‑term contracts with our manufacturers
and we do not believe that the loss of any manufacturer would significantly impact us. We work with contract agent offices
that support our relationships with our direct source suppliers and provide administrative functions on our behalf. In addition,
the agent offices assist with quality control inspections and ensure that our manufacturers adhere to our operating procedures
manuals. Also, we operate a dedicated liaison office in Bangladesh to perform these functions.

During 2017, approximately 65% of our corporate wear product purchases was sourced in Asia (primarily China, Pakistan,
Bangladesh, and Indonesia) while approximately 35% was sourced from Europe and other regions. Our foreign purchases from
Asia are negotiated and paid for in U.S. dollars, while our purchases from Europe and other regions are negotiated and paid for
in British pounds or Euros.

As a member of the Ethical Trading Initiative (“ETI”) since 2007, our UK-based supply chain operations have adopted the
internationally recognized ETI Base Code of labor practice as part of their efforts to improve working conditions and uphold
human rights in an environmentally friendly workplace for the benefit of manufacturers. In addition our UK operations have
written and published on their website their Modern Slavery Statement in accordance with the UK’s Modern Slavery Act of
2015.

To oversee compliance with our Supplier Code of Conduct, we use internal resources as well as third party companies to audit
the factories producing our garments. We strive to work collaboratively with clothing factories to positively influence them to
embed compliance into their daily operations.

Corporate apparel merchandise is received into our distribution facilities located in Long Eaton and Glasgow for the UK
operations and Houston, Texas and Bakersfield, California for U.S. operations. Customer orders are dispatched to the customer
or individual wearers employed by the customer via common carrier or pursuant to other arrangements specified by the
customer.

Competition

Our UK corporate apparel group provides workwear and uniforms to more UK employees than any of our corporate apparel
competitors, which consist mostly of smaller, niche providers or companies that focus more on catalog business. The U.S.
corporate wear market is more fragmented with several U.S. competitors being larger and having more resources than Twin
Hill. We believe that the competitive factors in the corporate wear market are merchandise assortment, quality, price, lead
times, customer service and delivery capabilities. We believe that our proven capability in the provision of corporate apparel
programs to businesses and organizations of all sizes alongside our catalog and internet operations position us well with our
existing customers and should enable us to continue to gain new catalog accounts and managed contracts.

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Seasonality

Our sales and net earnings are subject to seasonal fluctuations and may vary by brand. Our rental product revenues are heavily
concentrated in the second and third quarters (prom and wedding season) while the fourth quarter is the seasonal low
point. With respect to corporate apparel sales and operating results, seasonal fluctuations are not significant but the acquisition
of new customers or existing customer decisions to rebrand or revise their corporate wear programs can cause significant
variations in period results. Because of these fluctuations, results for any quarter are not necessarily indicative of the results that
may be achieved for the full year.

Trademarks and Service Marks

We are the owner in the U.S. and selected other countries of the numerous trademarks and service marks we use including,
without limitation, MEN’S WEARHOUSE, MW MEN’S WEARHOUSE (and design), JOS. A. BANK, and JOSEPH
ABBOUD and of U.S. and foreign registrations for such marks. Our rights in the MEN’S WEARHOUSE, JOS. A. BANK,
JOSEPH ABBOUD, and other marks and their respective variations are a significant part of our business, as the marks have
become well known through our use of the marks in connection with our retail and formalwear rental services and products
(both in store and online) and our advertising campaigns. We are also the owner of various other trademarks and service marks,
and corresponding trademark registrations in the U.S., Canada and abroad under which our stores and corporate apparel
business operate or which are used to label the products we sell or rent. We intend to maintain and protect our marks and the
related registrations.

We also license the JOSEPH ABBOUD brand to certain third parties for limited products in the U.S. and Canada, and for a
broader range of products in select countries abroad.

We are the licensee for certain designer labels on various products such as men’s suits, men’s formalwear or men’s shirts. We
generally pay a royalty for the use of the label, based on cost for the relevant product or a percentage of related sales. We
monitor the performance of these licensed labels compared to their cost and may elect to selectively terminate any license, as
provided in the particular agreement.

Employees

At February 3, 2018, we had approximately 21,000 employees, consisting of approximately 18,600 in the U.S. and 2,400 in
foreign countries, of which approximately 15,400 were full‑time employees. Seasonality affects the number of part‑time
employees as well as the number of hours worked by full‑time and part‑time personnel.

At February 3, 2018, approximately 660 of our employees at the factory located in New Bedford, Massachusetts are members
of Unite Here, a New England based labor union. The current union contract expires in April 2019. At February 3, 2018,
approximately 25 of our employees at our distribution center located in Quebec, Canada are members of Service Employees
Union, Local 800. The current union contract expires in April 2018.

Also, approximately 230 employees working in the Jos. A. Bank Hampstead, Maryland tailoring overflow shop and distribution
centers are represented by the Mid‑Atlantic Regional Joint Board, Local 806. The current union contract expires in February
2020. Lastly, approximately 100 Jos. A. Bank sales associates in New York City and four surrounding New York counties are
represented by Local 340, New York New Jersey Regional Joint Board, Workers United. Our most recent collective bargaining
agreement covering these employees expires in April 2020.

We believe our relationship with our union and non-union employees is good and we have no reason to believe that we will
experience any interruption in our business upon the expiration of these collective bargaining agreements. At Tailored Brands,
we strive every day to create a safe and inclusive workplace and work to create a culture that fosters the needs of our diverse
employee family.

Available Information

Our corporate website address is www.tailoredbrands.com. No information contained on any of our websites is intended to be
included as part of, or incorporated by reference into, this Annual Report on Form 10‑K. Through the investor relations section
of our website, we provide free access to our annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on
Form 8‑K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with
or furnished to the Securities and Exchange Commission (the “SEC”). In addition, copies of the Company’s annual reports will
be made available, free of charge, upon written request. The SEC maintains a website that contains the Company’s filings and
other information regarding issuers who file electronically with the SEC at www.sec.gov.

Men’s Wearhouse began operations in 1973 as a partnership and was incorporated as Men’s Wearhouse under the laws of
Texas in May 1974. Effective January 31, 2016, Tailored Brands became the successor reporting company to Men’s
Wearhouse, pursuant to the Reorganization. Our principal corporate and executive offices are located at 6380 Rogerdale Road,
Houston, Texas 77072‑1624 (telephone number 281‑776‑7000) and at 6100 Stevenson Blvd., Fremont, California 94538‑2490
(telephone number 510‑657‑9821), respectively.

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ITEM 1A. RISK FACTORS

There are many risks and uncertainties that could adversely affect our business. These risks and uncertainties include, but are
not limited to, the risks described below and elsewhere in this report, particularly found in “Forward‑Looking and Cautionary
Statements.” The following is not intended to be a complete discussion of all potential risks or uncertainties, as it is not
possible to predict or identify all risk factors. Unknown or unidentified additional risks and uncertainties could also adversely
affect our business. In addition, the risks described below are not listed in order of the likelihood that the risk might occur or
the severity of the impact if the risk should occur.

Risks Associated with our Business Strategy

As noted on page 5, our overall business strategy is focused on several initiatives. If we cannot successfully execute our
business strategy, our consolidated financial condition, results of operations and cash flows could be materially adversely
impacted. There are numerous risks associated with this strategy including, but not limited to, the following:

Our success depends, in part, on our ability to meet the changing preferences of our customers and manage merchandise
lead times.

We believe that men’s attire is characterized by infrequent and more predictable fashion changes when compared to other
apparel sectors. Our success, however, is dependent in part upon our ability to gauge the tastes of our customers and to provide
merchandise that satisfies customer demand in a timely manner. As some of our businesses are seasonal, we must purchase and
carry a significant amount of inventory prior to peak selling seasons.

We issue purchase orders for the purchase and manufacture of merchandise well in advance of the applicable selling season. As
a result, we are vulnerable to demand and pricing shifts. In addition, lead times for many of our purchases are lengthy, which
may make it more difficult for us to respond quickly to new or changing merchandise trends or consumer acceptance of our
products. As a result, there could be a material adverse effect on our business, financial condition and results of operations if we
fail to meet the changing preferences of our customers and manage merchandise lead times appropriately.

We believe our overall product mix makes our business less vulnerable to changes in merchandise trends than many
fashion‑forward and specialty apparel retailers; however, our sales and profitability depend upon our continued ability to
effectively manage a variety of competitive challenges, including:

anticipating and quickly responding to changing trends and consumer demands including casualization of
workplace attire and a consumer shift to purchasing suits for special occasions instead of renting product;

· maintaining favorable brand recognition and effectively marketing our products to consumers in several diverse

market segments;

developing innovative, high‑quality new products and/or product and brand extensions in sizes, colors and styles
that appeal to consumers of varying age groups and tastes, including custom clothing;

competitively pricing our products and providing superior service and value to our customers;

countering the promotional or other pricing activities of our competitors; and

providing strong and effective marketing support.

Increased competition or our failure to meet these competitive challenges could result in price reductions, increased marketing
expenditures and loss of market share, any of which could have a material adverse effect on our business, financial condition
and results of operations.

Certain of our strategies, including product innovations and expanding our exclusive offerings, may present greater risks.

We are continuously assessing opportunities to improve store productivity and develop new store concepts and complementary
products and services related to our core business, including product innovations and exclusive offerings. We may expend both
capital and personnel resources on such business opportunities which may or may not be successful. Additionally, any new
concept is subject to certain risks, including customer acceptance, competition, product differentiation and the ability to obtain
suitable sites. There can be no assurance that we will be able to develop and grow new concepts, including product innovations
and exclusive offerings to a point where they will become profitable or generate positive cash flow.

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Our investments in omni‑channel initiatives may not deliver the results we anticipate.

One of our strategic priorities is to further develop an omni‑channel shopping experience for our customers through the
integration of our store and digital shopping channels. We continue to explore additional ways to enhance our omni‑channel
shopping experience, including further digital integration and customer personalization. These initiatives involve significant
investments in information technology systems. If the implementation of our omni‑channel initiatives is not successful, or we
do not realize the return on our omni‑channel investments that we anticipate, our operating results would be adversely affected.

We face challenges in managing our store fleet, including limited new store growth potential.

Our growth is dependent, in large part, on our ability to successfully manage our store fleet, including new stores and expansion
or remodeling of existing stores and closure of underperforming stores. We expect to continue opening new stores to increase
our sales volume and profitability; however, we believe that our ability to increase the number of new stores in the U.S. and
Canada may be limited. Therefore, we may not be able to achieve the same rate of growth that we have historically.

In addition, our ability to manage our store fleet will depend on our ability to obtain suitable locations, negotiate acceptable
lease terms, hire qualified personnel and open and operate new stores on a timely and profitable basis. Further, the results
achieved by our existing stores may not be indicative of the performance or market acceptance of stores in other locations and
the opening of new stores in existing markets may adversely affect sales and/or profitability of established stores in those same
markets.

Any future acquisitions or divestitures could result in operating difficulties and could harm our operating results.

From time to time, we may evaluate potential acquisitions or divestitures that would further our strategic objectives. With
respect to acquisitions, we will be subject to a variety of risks, including risks associated with an ability to integrate acquired
assets, systems or operations into our existing operations, diversion of management’s attention from core operational matters,
higher costs, or unexpected difficulties or problems with acquired assets or entities, outdated or incompatible technologies,
labor difficulties or an inability to realize anticipated synergies and efficiencies, whether within anticipated time frames or at
all.

With respect to potential divestitures, we will also be subject to a variety of risks, including risks associated with difficulty in
finding acquirers or alternative exit strategies on terms that are favorable to us, liabilities for activities of the divested business
before the transaction, including litigation claims and disputes, the need to provide transition services to a divested business
which may result in the diversion of management resources and focus and potential impairment charges.

If one or more of these risks are realized, it could have an adverse impact on our financial condition and results of operations.

Risks Associated with General Economic Conditions

Numerous economic conditions, all of which are outside of our control, could negatively affect the level of consumer spending
on the merchandise that we offer. If these economic conditions persist for a sustained period, our consolidated financial
condition and results of operations could be materially adversely impacted. These economic conditions include, but are not
limited to, the following:

Our business is particularly sensitive to economic conditions and consumer confidence.

Our performance is subject to changes in U.S., Canadian, UK and global economic and political conditions, particularly their
impact on the level of consumer discretionary spending and consumer confidence. Some of the factors that may influence
consumer spending include high levels of unemployment, increases in the cost of non-discretionary consumer goods, increases
in consumer debt levels and applicable interest rates, uncertainties regarding future economic prospects or a decline in
consumer confidence or credit availability. Consumer confidence may also be adversely affected by national and international
security concerns such as war, terrorism, public health events or natural disasters (or the threat of any of these). In addition, our
reliance on certain external partners leaves us subject to certain risks should one or more of these external partners encounter
financial distress or become insolvent.

During an actual or perceived economic downturn, fewer customers may shop with us and those who do shop may limit the
amounts of their purchases. As a result, we could be required to take significant markdowns and/or increase our marketing and
promotional expenses in response to the lower than anticipated levels of demand for our products. In addition, promotional
and/or prolonged periods of deep discount pricing by our competitors could have a material adverse effect on our business.
Also, as a result of adverse market, political or economic conditions, customers may delay or postpone indefinitely roll‑outs of
new corporate wear programs, which could have a material adverse effect on our corporate apparel segment.

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We have experienced fluctuations in our sales and expect our sales to fluctuate in the future.

Our success over the long-term depends in large part on our ability to increase sales. For example, if sales at Men’s Wearhouse
were to decrease, the effect on our consolidated financial results would be more significant than if sales were to decrease at any
of our other brands. We believe that a variety of factors affect our sales and comparable sales results including, but not limited
to, consumer confidence and the level of consumer discretionary spending, changes in economic conditions and consumer
disposable income, spending patterns and debt levels, consumer credit availability, weather conditions, the timing of certain
holiday seasons, the number and timing of new store openings, changes in the popularity of a retail center, the timing and level
of promotional pricing or markdowns, store closings, refreshes, relocations and remodels, changes in fashion trends (including
casualization of workplace attire and custom clothing) and our merchandise mix or other competitive factors. Comparable sales
fluctuations may impact our ability to leverage our fixed direct expenses, including store rent and store asset depreciation,
which may adversely affect our financial condition or results of operations.

Some of our businesses are seasonal.

Economic conditions and regulatory changes leading up to and following the United Kingdom’s likely exit from the
European Union could have a material adverse effect on our corporate apparel’s business and results of operations.

In June 2016, the UK held a referendum in which voters approved an exit from the European Union (the “E.U.”), commonly
referred to as “Brexit.” Negotiations are ongoing to determine the future terms of the UK’s relationship with the E.U.

The announcement of Brexit adversely impacted global markets, including currencies, and resulted in a sharp decline in the
value of the British pound, as compared to the U.S. dollar and other currencies. Volatility in exchange rates is expected to
continue as the UK negotiates its exit from the European Union. A weaker British pound compared to the U.S. dollar during a
reporting period causes local currency results of our UK operations to be translated into fewer U.S. dollars. In fiscal 2017, net
sales of our UK operations constituted approximately 6% of our consolidated net sales.

Future adverse consequences arising from Brexit may include economic uncertainty, continued volatility in current exchange
rates, potential changes to duties and tariffs and legal uncertainty and potentially divergent national laws and regulations as the
UK determines which E.U. laws to replace or replicate. Any of these effects of Brexit, among others, could materially
adversely affect our business, results of operations and financial condition.

Risks Associated With Our Sourcing and Distribution Strategies

Our sourcing and distribution strategies are subject to numerous risks that could materially adversely impact our consolidated
financial condition and results of operations. These risks include, but are not limited to, the following:

The loss of, or disruption in, our distribution centers could result in delays in the delivery of merchandise to our stores.

We rely on our distribution centers to manage the receipt, storage, sorting, packing and distribution of our merchandise. As
such, we depend on the overall effective management of our distribution center operations including adherence to shipping
schedules and proper functioning of our information technology and inventory control systems. Events, such as disruptions in
operations due to fire or other catastrophic events, government shutdowns, delays in customs clearances, software
malfunctions, employee matters or shipping problems, may result in delays in the delivery of merchandise to our stores or
directly to customers. For example, given our proximity to the Texas gulf coast, it is possible that a hurricane or tropical storm
could damage the Houston, Texas distribution center, result in extended power outages or flood roadways into and around the
distribution center, any of which would disrupt or delay deliveries to the Houston distribution center and to our stores.

Although we have disaster recovery plans and maintain business interruption and property insurance, there can be no assurance
that these plans will work as intended, that our insurance will be sufficient, or that insurance proceeds will be paid timely to us,
in the event any of our distribution centers are damaged or shut down for any reason, or if we incur higher costs and longer lead
times in connection with a disruption at one or more of our distribution centers.

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Our business is global in scope and can be impacted by factors beyond our control.

As a result of our international operations and our sourcing of merchandise and rental product from manufacturers located
outside of the U.S., we face the possibility of greater losses from a number of risks inherent in doing business in international
markets and from a number of factors which are beyond our control. Such factors that could harm our financial condition and
results of operations include, among other things:

political instability, civil strife or insurrection, or acts of terrorism, which disrupt trade with the countries where
we operate or in which our contractors, suppliers or customers are located;

recessions in foreign economies;

infrastructure deficiencies, logistic and other challenges in managing our foreign operations;

imposition of new legislation or rules relating to imports that may limit the quantity of goods which may be
imported into the U.S. from certain countries or regions;

obligations associated with being an importer of record, including monitoring and complying with all
corresponding legal requirements;

imposition of new or higher duties, taxes, tariffs, quotas or other charges on imports;

delays in shipping due to port security considerations, labor disputes or other restrictions;

issues relating to compliance with domestic or international labor standards which may result in adverse
publicity;

· migration of our manufacturers, which can affect where our raw materials and/or products are or will be

produced;

volatile global economic, market or political environments;

volatile shipping availability, fuel supplies and related costs;

the fluctuation in the value of the U.S. dollar relative to the local currencies used by our manufacturers; and

increased difficulty in protecting our intellectual property rights in foreign jurisdictions.

In addition, if we were unexpectedly required to change manufacturers or if a manufacturer were unable to supply acceptable
merchandise in sufficient quantities on acceptable terms, particularly as it relates to custom clothing, we could experience a
disruption in the supply of merchandise or may not be able to fulfill certain customer orders.

Failure of manufacturers to adhere to applicable laws and regulations including our internal policy requirements could
harm our business.

We require our third-party manufacturers to operate in compliance with applicable laws and regulations and our internal policy
requirements. Our business could be adversely affected if our suppliers do not comply with applicable legal requirements, our
supplier policies and practices generally acceptable in the U.S. regarding social and ethical matters and acceptable labor and
sourcing practices (collectively, “Supplier Requirements”).

The violation of our Supplier Requirements by any of our suppliers could disrupt our supply chain. In addition, any such
violation could damage our reputation, which may result in decreased customer traffic to our stores, websites and call center. In
the event of any violations, we may decide that it is necessary or desirable to seek alternative suppliers, which could adversely
affect our business, financial condition and results of operations.

Our business could be adversely affected by increased costs of the raw materials and other resources that are important to
our business.

The raw materials used to manufacture our products are subject to availability constraints and price volatility caused by high
demand for fabrics, catastrophic events, weather conditions, supply conditions, government regulations, economic climate and
other unpredictable factors. In addition, our transportation and labor costs are subject to price volatility caused by the price of
oil, supply of labor, labor disputes, governmental regulations, economic climate and other unpredictable factors. Increases in
demand for, or the price of, raw materials, distribution services and labor, including federal and state minimum wage rates,
could have a material adverse effect on our business, financial condition and results of operations.

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The increase in the costs of wool and other raw materials significant to the manufacturer of apparel and the costs of
manufacturing could materially affect our results of operations to the extent they cannot be mitigated through price increases
and relocation to lower cost sources of supply or other cost reductions. These increased costs could particularly impact our
managed contract corporate apparel business which tends to have more long-term contractually committed customer sales
arrangements with limited price flexibility.

Any significant interruption in raw materials could cause interruptions at our U.S. tailored clothing factory.

The principal raw material used by our U.S. tailored clothing factory is fabric. Most of the factory’s supply arrangements are
seasonal. The factory does not have any long‑term agreements in place with its fabric suppliers; therefore, there can be no
assurance that any of such suppliers will continue to do business with us in the future. If a particular mill were to experience a
delay due to fire or natural disaster and become unable to meet the factory’s supply needs, it could take a period of up to several
months for us to arrange for and receive an alternate supply of such fabric. In addition, import and export delays caused, for
example, by an extended strike at the port of entry, could prevent the factory from receiving fabric or other raw materials
shipped by its suppliers. Therefore, there could be a negative effect on the ability of the factory to meet its production goals if
there is an unexpected loss of a supplier of fabric or other raw materials or a long interruption in shipments from any fabric or
other raw material supplier.

Labor union disputes could impact our business.

Should a labor dispute arise at any one of our union work sites, we could experience shortages in product to sell in our stores or
other operational disruptions. In addition, our corporate apparel business sells uniforms to companies with union workforces. It
is possible that our corporate apparel business could be adversely impacted if a labor dispute arises between a company we
supply uniforms to and its union.

Risks Associated with Our Information Technology Systems

We rely on various information technology systems to manage our operations. Information technology systems are subject to
numerous risks including unanticipated operating problems, system failures, rapid technological change, failure of the systems
to operate as anticipated, reliance on third‑party technologies, the lack of available expertise for legacy systems, network and
software providers, computer viruses, telecommunication failures, data breaches, denial of service attacks, spamming, phishing
attacks, and other similar disruptions, any of which could materially adversely impact our consolidated financial condition and
results of operations. Additional risks include, but are not limited to, the following:

If we are unable to operate information systems and implement new technologies effectively, our business could be disrupted
or our sales or profitability could be reduced.

The efficient operation of our business is dependent on our information systems, including our ability to operate them
effectively and successfully implement new technologies, systems, controls and adequate disaster recovery systems. We also
maintain multiple internet websites in the U.S. and Europe. In addition, we must protect the confidentiality of our and our
customers’ data. The failure of our information systems to perform as designed or our failure to implement and operate them
effectively could disrupt our business or subject us to liability and thereby harm our profitability.

We are subject to data security risks, which could have an adverse effect on our results of operations and consumer
confidence in our security measures.

Cybersecurity incidents and data breaches, particularly in the retail industry, have been well publicized. Like other retailers,
we are subject to cybersecurity risks. Cybersecurity refers to the combination of technologies, processes, and procedures
established to protect information technology systems and data from unauthorized access, use, manipulation, exfiltration, or
damage. As part of our normal operations, we maintain and transmit confidential information as well as proprietary Company
information, including credit card information, and information about our customers, our employees and other third parties. As
a result, like other retailers, our business may be targeted more than other businesses because third parties may focus on the
amount and type of personal and business information that we maintain and transmit.

We are focused on safeguarding and protecting personal and business information, and we devote significant resources to
maintain and regularly update our systems and processes including providing employee awareness training around cyber risks
and security breaches. However, while we have implemented measures reasonably designed to detect and prevent security
breaches and cyber incidents, our systems or our third‑party service providers’ systems may still be vulnerable to privacy and
security incidents including attacks by unauthorized users, corruption by computer viruses or other malicious software code,
emerging cybersecurity risks, inadvertent or intentional release of confidential or proprietary information, or other similar
events. The occurrence of any security breach involving the misappropriation, loss

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or other unauthorized disclosure of information about us or our customers, whether by us or by one of our third‑party service
providers, could, among other things:

cause damage to our reputation;

allow competitors access to our proprietary business information;

subject us to liability for a failure to safeguard customer data;

subject us to financial and legal risks, including regulatory action or litigation;

impact our ability to process credit card transactions; and

require significant capital and operating expenditures to investigate and remediate the breach.

Furthermore, the storage and transmission of such data is regulated at the international, federal, state and local levels. Privacy
and information security laws and regulation changes, and compliance with those changes, may result in cost increases due to
system changes and the development of new administrative processes. For example, the E.U.’s General Data Protection
Regulation ("GDPR"), which will become effective in May 2018, imposes significant new requirements on how we collect,
process and transfer personal data with failure to meet GDPR requirements resulting in penalties of up to 4% of our worldwide
revenue. If we or our employees fail to comply with existing laws and regulations or experience a data security breach, our
reputation could be damaged, possibly resulting in lost future business, and we could be subjected to fines, penalties,
administrative orders and other legal risks as a result of a breach or non‑compliance.

Other Risks Affecting Our Business

Our business is subject to numerous other risks that could materially adversely impact our consolidated financial condition and
results of operations. These risks include, but are not limited to, the following:

We may be negatively impacted by competition.

Both the men’s retail and the corporate apparel industries are highly competitive with numerous participants. We compete with
traditional department stores, other specialty men’s clothing stores, online retailers, online formalwear rental providers,
off‑price retailers, manufacturer‑owned and independently‑owned outlet stores, independently-owned formalwear rental stores
and other corporate apparel providers, as well as their respective e-commerce channels. In addition, some of our primary
competitors sell their products in stores that are located in the same shopping malls or retail centers as our stores, which results
in competition for favorable site locations and lease terms in these shopping malls and retail centers. Increased competition or
our failure to meet these competitive challenges could result in price reductions, increased marketing expenditures and loss of
market share, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our success depends on our ability to attract and retain key personnel.

Our success depends upon the personal efforts and abilities of our senior management team and other key personnel. Although
we believe we have a strong management team with significant industry expertise, we face intense competition in hiring and
retaining these personnel and the extended loss of the services of key personnel could have a material adverse effect on our
business, financial condition and results of operations. In addition, our business is subject to employment laws and regulations,
including minimum wage requirements, overtime pay, sick pay, paid time off and healthcare benefits. The implementation of
potential regulatory changes relating to these items, among other things, could result in increased labor costs to our business
and negatively impact our operating results.

Also, our continued success and the achievement of our expansion goals are dependent upon our ability to attract and retain
additional qualified employees. If we are unable to retain and motivate our current personnel and attract talented new
personnel, our business, financial condition and results of operations could be adversely affected.

The occurrence of an event that impacts our reputation could have a material adverse effect on our brands.

Our ability to maintain our reputation is critical to our brands. Our reputation could be jeopardized if we fail to maintain high
standards for merchandise quality and integrity and customer service. Any negative publicity about these types of concerns
may reduce demand for our merchandise. Failure to comply with ethical, social, product, labor, health and safety or
environmental standards could also jeopardize our reputation and potentially lead to various adverse consumer actions,
including boycotts. Public perception about our company as a whole, our products or our stores, whether justified or not, could
impair our reputation, involve us in litigation, damage our brand and have a material

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adverse effect on our business. Failure to comply with local laws and regulations, to maintain an effective system of internal
controls and provide accurate and timely financial statement information, or to prevent security breaches could also hurt our
reputation. Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material
adverse effect on our results of operations and financial condition, as well as require additional time and resources to rebuild
our reputation.

War, acts of terrorism, public health crises, or weather catastrophes (whether or not caused by climate change) could have a
material adverse effect on our business.

In the event of war, acts of terrorism or the threat of terrorist attacks, public health crises, or weather catastrophes (whether or
not caused by climate change), consumer spending could significantly decrease for a sustained period. In addition, local
authorities or shopping center management could close in response to any immediate security concern, public health concern or
weather catastrophe such as hurricanes, earthquakes, or tornadoes. Similarly, war, acts of terrorism, threats of terrorist attacks,
or a weather catastrophe could severely and adversely affect our offices, distribution centers, or our entire supply chain.

Fluctuations in exchange rates may cause us to experience currency exchange losses.

We are subject to exposure from fluctuations in multiple currency exchange rates including, without limitation, U.S.
dollar/British pound (“GBP”) exchange rates, U.S. dollar/Canadian dollar (“CAD”) exchange rates and U.S. dollar/Euro
exchange rates as a result of our direct sourcing programs and our operations in foreign countries.

Moores, our Canadian subsidiary, conducts most of its business in CAD but purchases a significant portion of its merchandise
in U.S. dollars. Historically, the exchange rate between CAD and U.S. dollars has fluctuated. A decline in the value of the CAD
as compared to the U.S. dollar may adversely impact our Canadian operations as the revenues and earnings of our Canadian
operations will be reduced when they are translated to U.S. dollars. Also, the value of our Canadian net assets as expressed in
U.S. dollars may decline. We utilize foreign currency hedging contracts related to our merchandise purchases to limit exposure
to changes in U.S. dollar/CAD exchange rates; however, these hedging activities may not adequately protect our Canadian
operations from exchange rate risk.

Our UK‑based corporate apparel operations sell their products and conduct their business primarily in GBP but purchase most
of their merchandise in U.S. dollars or Euros. Historically, the exchange rate between the GBP, Euro and U.S. dollar has
fluctuated. A decline in the value of the GBP as compared to the Euro or U.S. dollar may adversely impact our UK operating
results as the cost of merchandise purchases will increase, particularly in relation to longer term customer contracts that have
little or no pricing adjustment provisions, and the revenues and earnings of our UK operations will be reduced when they are
translated to U.S. dollars. Also, the value of our UK net assets as expressed in U.S. dollars may decline. We utilize foreign
currency hedging contracts as well as price renegotiations to limit exposure to some of this risk; however, these activities may
not adequately protect our UK operations from exchange rate risk.

Compliance with ever-changing legal, regulatory and corporate governance requirements and standards for accounting
could result in increased administrative expenses or litigation and could adversely impact our business, results of operations
and reported financial results.

Our policies, procedures and internal controls are designed to help us comply with all applicable laws, regulations, accounting
and reporting requirements, including those imposed by the Sarbanes‑Oxley Act of 2002, the Dodd‑Frank Wall Street Reform
and Consumer Protection Act, the Affordable Care Act, the payment card industry (PCI), the Public Company Accounting
Oversight Board, the SEC and the NYSE. In addition, our business is subject to laws, rules and regulations promulgated by
international, national, state and local authorities, including laws, rules and regulations relating to privacy, use of consumer
information, credit cards and advertising. All of these laws, rules and regulations and their interpretation are subject to change
and often their application may be unclear. As a result, from time to time, we are subject to inquiries, investigations, and/or
litigation, including class action lawsuits, and administrative actions related to compliance with these laws, rules and
regulations.

Shareholder activism, the current political environment, financial reform legislation and the current high level of government
intervention and regulatory reform has led, and may continue to lead, to substantial new regulations and compliance obligations.
Any changes in regulations, the imposition of additional regulations or the enactment of any new legislation that affects
employment and labor, trade, product safety, transportation and logistics, health care, privacy, or environmental issues, among
other things, may increase the complexity of the regulatory environment in which we operate and the related cost of
compliance.

Failure to comply with the various laws and regulations, as well as changes in laws and regulations, could have an adverse
impact on our reputation, financial condition or results of operations.

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Changes in applicable tax regulations and resolutions of tax disputes could negatively affect our financial results.

We are subject to taxation in the U.S. and numerous foreign jurisdictions. We record tax expense based on our estimates of
future payments, which include reserves for estimates of probable settlements of foreign and domestic tax audits. At any one
time, many tax years are subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing
authorities may affect the ultimate settlement of these issues. As a result, we expect that throughout the year there could be
ongoing variability in our quarterly tax rates as taxable events occur and exposures are evaluated. In addition, our effective tax
rate in any given financial reporting period may be materially impacted by changes in the mix and level of earnings or losses
by taxing jurisdictions or by changes to existing accounting rules or regulations.

For example, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted in December 2017, which significantly changes
how the U.S. taxes corporations. As a result, we made certain judgments in interpreting the provisions of the Act as well as
significant estimates in calculations used in preparing our fiscal 2017 operating results. The U.S. Treasury Department, the
IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the Tax Reform Act will be
applied or otherwise administered that is different from our interpretation. Therefore, the ultimate impact of the Tax Reform
Act on our results in future periods may change due to changes in interpretations and assumptions we have made, guidance that
may be issued, and other actions that we may take as a result of the Tax Reform Act.

Changes to accounting standards and estimates could materially impact our results of operations, financial position, and
cash flows.

Generally accepted accounting principles and the related authoritative guidance for many aspects of our business, including
revenue recognition, inventories, goodwill and intangible assets, leases and income taxes, are complex, continually evolving
and involve subjective judgments. For example, recently issued authoritative guidance for lease accounting will result in a
significant increase in our long-term assets and liabilities given we have a considerable number of operating leases and may
cause the perception that we are more highly leveraged. These and other future changes in accounting rules or changes in the
underlying estimates, assumptions or judgments by our management could have a material impact on our results of operations,
financial position and cash flows.

We could incur losses due to impairment on long‑lived assets, goodwill and intangible assets.

Under generally accepted accounting principles, 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. Identifiable intangible assets with
an indefinite useful life, including goodwill, are not amortized but are evaluated annually for impairment. A more frequent
evaluation is performed if events or circumstances indicate that impairment could have occurred. In fiscal 2015, we recorded
$1.24 billion of goodwill and intangible asset impairment charges related to Jos. A. Bank. In the future, significant negative
industry or general economic trends, disruptions to our business and unexpected significant changes or planned changes in our
use of the assets may result in additional impairments to our goodwill, intangible assets and other long‑lived assets. Any
reduction in or impairment of the value of goodwill or intangible assets will result in a charge against earnings, which could
have a material adverse impact on our reported results of operations and financial condition.

Our advertising, marketing and promotional activities have been the subject of review by state regulators and subject to
lawsuits, specifically at Jos. A. Bank.

Jos. A. Bank has in the past been, and may from time to time in the future be, required to respond to inquiries from State
Attorneys General related to its advertising practices. These advertising practices have also been, and continue to be, the
subject of class action litigation. In addition, it is possible that the advertising, marketing and promotional activities of all our
brands may be reviewed by state or other regulators or become the subject of litigation. Although we endeavor to monitor and
comply with all applicable laws and regulations to ensure that all advertising, marketing and promotional activities comply with
all applicable legal requirements, many of the applicable legal requirements involve subjective judgments. It is possible that
any resolution we may reach with any governmental authority or the results of any litigation may materially impact our current
or future planned marketing program and could have an adverse impact on our business.

We are subject to various proceedings, lawsuits, disputes, and claims, from time to time, which could adversely affect our
results of operations, financial position, and cash flows.

As a multinational company, we are subject to various proceedings, lawsuits, disputes, and claims (“Actions”) arising in the
ordinary course of business. Many of these Actions raise complex factual and legal issues and are subject to numerous
uncertainties. Actions are filed against us from time to time and include commercial, securities, intellectual property, customer,
employment and data privacy claims, including class action lawsuits. Current Actions are in various procedural stages and
some are covered in whole or in part by insurance. We cannot predict with assurance the outcome of any of the Actions
brought against us and an adverse result in any Actions could have an adverse impact on our financial results.

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Rights of our shareholders may be negatively affected if we issue any of the shares of preferred stock which our Board of
Directors has authorized for issuance.

We have available for issuance 2,000,000 shares of preferred stock, par value $.01 per share. Our Board of Directors is
authorized to issue any or all of this preferred stock, in one or more series, without any further action on the part of
shareholders. The rights of our shareholders may be negatively affected if we issue a series of preferred stock in the future that
has preference over our common stock with respect to the payment of dividends or distribution upon our liquidation,
dissolution or winding up. See Note 13 of Notes to Consolidated Financial Statements for more information.

Risks Associated with Our Indebtedness

There are numerous risks associated with our indebtedness including, but not limited to, the following:

Our current level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit
our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate
debt and prevent us from meeting our obligations under the Credit Facilities or the indenture governing the Senior Notes.

In 2014, we entered into a $1.1 billion aggregate principal amount senior secured facility (the “Term Loan Facility”). In
October 2017, we amended our then existing $500.0 million asset‑based revolving facility in part to increase the principal
amount available to $550.0 million and extend the maturity date to October 2022 (the amended “ABL Facility”) (the ABL
Facility together with the Term Loan Facility, the “Credit Facilities”). In addition, in 2014, we issued $600.0 million in
aggregate principal amount of our 7.0% Senior Notes due 2022 (the “Senior Notes”). As of February 3, 2018, our total
indebtedness is approximately $1.4 billion. In addition, we have up to $505.5 million of additional borrowing availability under
the ABL Facility, excluding letters of credit totaling approximately $37.3 million issued and outstanding.

Our indebtedness could have important consequences, including:

increasing our vulnerability to adverse economic, industry or competitive developments;

requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and
interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital
expenditures and future business opportunities;

· making it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to
comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing
conditions, could result in an event of default under the Credit Facilities and the indenture governing the Senior
Notes;

restricting us from making strategic acquisitions or causing us to make non‑strategic divestitures;

limiting our ability to obtain additional financing for working capital, capital expenditures, product development,
debt service requirements, acquisitions and general corporate or other purposes; and

limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing
us at a competitive disadvantage compared to our competitors who have less debt than we do and who therefore
may be able to take advantage of opportunities that our indebtedness prevents us from exploiting.

Despite our high indebtedness level, we will still be able to incur significant additional amounts of debt, which could
exacerbate the risks associated with our substantial indebtedness.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the Credit Facilities
and the indenture governing the Senior Notes contain restrictions on the incurrence of additional indebtedness, these
restrictions are subject to a number of significant qualifications and exceptions, and, under certain circumstances, the amount of
indebtedness that could be incurred in compliance with these restrictions could be substantial. If new debt is added to our and
our subsidiaries’ existing debt levels, the related risks that we now face would increase. In addition, the Credit Facilities and
the indenture governing the Senior Notes will not prevent us from incurring obligations that do not constitute indebtedness
under those agreements.

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We may not be able to generate sufficient cash to service all of our indebtedness and fund our working capital and capital
expenditures, and we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be
successful.

Our ability to make scheduled payments on our indebtedness will depend upon our future operating performance and on our
ability to generate cash flow in the future, which is subject to general economic, financial, business, competitive, legislative,
regulatory and other factors that are beyond our control. There can be no assurance that our business will generate sufficient
cash flow from operations, or that future borrowings, including borrowings under the ABL Facility, will be available to us in an
amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity
problems and could be forced to reduce or delay investment and capital expenditures or to dispose of material assets or
operations, seek additional equity capital or restructure or refinance our indebtedness. We may not be able to affect any such
alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions
may not allow us to meet our scheduled debt service obligations. The Credit Facilities and the indenture that governs the Senior
Notes contain restrictions on our ability to dispose of assets and use the proceeds from any such disposition.

In addition, we rely on our subsidiaries to generate cash. Accordingly, repayment of our indebtedness, is dependent, to a certain
extent, on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt
repayment or otherwise. Each of our subsidiaries are distinct legal entities and they do not have any obligation to pay amounts
due on the notes or to make funds available for that purpose (other than the subsidiary guarantors in connection with their
guarantees) or other obligations in the form of loans, distributions or otherwise. Our subsidiaries may not generate sufficient
cash from operations to enable us to make principal and interest payments on our indebtedness or to fund our and our
subsidiaries’ other cash obligations.

If we cannot make scheduled payments on our debt, we will be in default and, as a result, the holders of the Senior Notes could
declare all outstanding principal and interest to be due and payable, the lenders under the Credit Facilities could declare all
outstanding amounts under such facilities due and payable and, with respect to the ABL Facility, terminate their commitments
to loan money, and, in each case, foreclose against the assets securing the borrowings under the Credit Facilities, and we could
be forced into bankruptcy or liquidation.

If our indebtedness is accelerated, we may need to refinance all or a portion of our indebtedness before maturity. There can be
no assurance that we will be able to refinance any of our indebtedness, including the Credit Facilities, on commercially
reasonable terms or at all. There can be no assurance that we will be able to obtain sufficient funds to enable us to repay or
refinance our debt obligations on commercially reasonable terms, or at all.

The agreements and instruments governing our debt impose restrictions that may limit our operating and financial
flexibility.

The Credit Facilities and the indenture governing the Senior Notes contain a number of significant restrictions and covenants
that may limit our ability to:

incur additional indebtedness;

sell assets or consolidate or merge with or into other companies;

pay dividends or repurchase or redeem capital stock;

· make certain investments;

issue capital stock of our subsidiaries;

incur liens;

prepay, redeem or repurchase subordinated debt; and

enter into certain types of transactions with our affiliates.

These covenants could have the effect of limiting our flexibility in planning for or reacting to changes in our business and the
markets in which we compete. In addition, the ABL Facility requires us to comply with a financial maintenance covenant under
certain circumstances. Operating results below current levels or other adverse factors, including a significant increase in interest
rates, could result in our being unable to comply with the financial covenants contained in the ABL Facility, if applicable. If we
violate this covenant and are unable to obtain a waiver from our lenders, our debt under the ABL Facility would be in default
and could be accelerated by our lenders. Because of cross‑default provisions in the agreements and instruments governing our
indebtedness, a default under one agreement or instrument could result in a default under, and the acceleration of, our other
indebtedness. In addition, the lenders under the Credit Facilities could proceed against the collateral securing that indebtedness.

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If our indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we
are able to obtain new financing, it may not be on commercially reasonable terms, on terms that are acceptable to us, or at all.
If our debt is in default for any reason, our business, financial condition and results of operations could be materially and
adversely affected. In addition, complying with these covenants may also cause us to take actions that make it more difficult
for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase.

We are exposed to interest rate risk through our variable rate borrowings under the Credit Facilities. Borrowings under such
facilities bear interest at a variable rate, based on a LIBOR rate, plus an applicable margin. Interest rates are currently at
historically low levels but are expected to increase. As interest rates increase, our debt service obligations on the variable rate
indebtedness increase even though the amount borrowed remains the same, and our net income and cash flows, including cash
available for servicing our indebtedness, will correspondingly decrease. As LIBOR is above the 1% LIBOR floor provision on
our Term Loan, we are exposed to interest rate risk on our Term Loan. To partially mitigate such interest rate risk, we entered
into interest rate swaps to exchange variable interest rate payments for fixed interest rate payments for a portion of the
outstanding Term Loan balance. At February 3, 2018, the notional amount of the interest rate swaps totaled $410.0 million. In
addition, in 2015, we entered into the Incremental Facility Agreement No. 1 to the credit agreement governing the Term Loan
to refinance $400.0 million principal amount of term loans that bore interest at a variable rate with $400.0 million principal
amount of new term loans, which bear interest at a fixed rate of 5.0% per annum.

After consideration of the swaps and the refinancing, as of February 3, 2018, 87% of our total debt was at a fixed rate with the
remainder at a variable rate. As a result, we believe our interest rate risk is substantially mitigated. At February 3, 2018, the
effect of a one percentage point change in interest rates would result in an approximate $1.8 million change in annual interest
expense on our Term Loan. At February 3, 2018, assuming all capacity under the ABL Facility is fully drawn, each one
percentage point change in interest rates would result in approximately a $5.5 million change in annual interest expense.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES
As of February 3, 2018, we operated 1,351 retail apparel and rental stores in 50 states, the District of Columbia and Puerto Rico
and 126 retail apparel stores in ten Canadian provinces. As of February 3, 2018, our stores aggregated approximately 9.3
million square feet. Almost all of these stores are leased, generally for five to ten year initial terms with one or more renewal
options after our initial term. The following tables set forth the location, by state, territory or province, of these stores:
Men’s
Wearhouse Jos. A.

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United States
Texas
California
Florida
New York
Pennsylvania
Illinois
Ohio
Virginia
Michigan
Maryland
North Carolina
Georgia
New Jersey
Massachusetts
Indiana
Colorado
Connecticut
Tennessee
Missouri
Washington
Alabama
Arizona
South Carolina
Minnesota
Louisiana
Wisconsin
Kansas
Kentucky
Oregon
Utah
Iowa
Oklahoma
Mississippi
New Hampshire
Nevada
Arkansas
Nebraska
New Mexico
District of Columbia
Delaware
Rhode Island
West Virginia
Idaho
North Dakota
Alaska
Maine
Montana
South Dakota
Hawaii
Puerto Rico
Vermont
Wyoming
Total

(1)

Men’s
Wearhouse
62
80
47
43
29
32
25
19
23
18
17
20
19
23
14
14
12
14
13
16
11
15
11
14
12
13
7
7
11
8
9
5
6
5
6
5
4
4
2
3
1
2
3
3
2
2
2
2
1
1
1
1
719

1
1

1
2
3
1
1

1
3
6
1
4
3
3
4
5
3
5
1
1
1
1
1

12
1
5
4
3
6
5
3
7
6
4
5
5
3
2
2
2
2
1
2
1

45
29
37
25
30
21
19
25
14
21
22
21
22
18
9
8
11
9
9
4
10
7
9
5
4
4
4
6
2
4
2
5
3
4
3
3
3
2
3
2
3
3
1

and Tux Bank K&G Total
120
113
95
73
66
62
52
51
49
48
48
47
47
45
26
25
25
25
24
23
22
22
22
21
20
18
14
14
13
12
11
11
9
9
9
8
7
6
5
5
5
5
4
3
2
2
2
2
1
1
1
1
1,351

491

2
1

(1)

Includes one Joseph Abboud store in New York.

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Canada
Ontario
Quebec
British Columbia
Alberta
Manitoba
Nova Scotia
New Brunswick
Saskatchewan
Newfoundland
Prince Edward Island

Total

Moores
54
25
16
15
5
4
3
2
1
1
126

We own or lease properties in various parts of the U.S. and Canada to facilitate the distribution of retail and rental product to
our stores. We own or lease properties in various parts of the U.S. and UK to facilitate the distribution of our corporate apparel
product. Total leased and owned space for distribution is approximately 2.3 million square feet and 3.3 million square feet,
respectively.

In addition, we have primary office locations in Houston, Texas, Fremont, California, New York, New York and Hampstead,
Maryland with additional satellite offices in other parts of the U.S., Canada, Europe and Asia. We lease approximately
0.5 million square feet and own approximately 0.3 million square feet of office space.

ITEM 3. LEGAL PROCEEDINGS

We are involved in various routine legal proceedings, including ongoing litigation. Management believes that none of these
matters will have a material adverse effect on our financial position, results of operations or cash flows. See Note 18 of Notes to
Consolidated Financial Statements for a discussion of our legal proceedings.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock trades on the NYSE under the symbol “TLRD.” The following table sets forth, on a per share basis for the
periods indicated, the high and low sale prices per share for our common stock as reported by the NYSE and the quarterly
dividends declared on each share of common stock:

High Low Dividend

Fiscal Year 2017
First quarter
Second quarter
Third quarter
Fourth quarter
Fiscal Year 2016
First quarter
Second quarter
Third quarter
Fourth quarter

$ 24.11 $ 12.00 $ 0.18
0.18
0.18
0.18

14.35
16.78
26.03

9.40
10.00
14.57

$ 19.21 $ 11.68 $ 0.18
0.18
10.90
0.18
13.06
0.18
14.12

17.93
17.38
28.76

On March 23, 2018, there were approximately 885 shareholders of record and approximately 11,700 beneficial shareholders of
our common stock.

The quarterly cash dividend of $0.18 per share declared by our Board of Directors (the “Board”) in January 2018 is payable on
March 29, 2018 to shareholders of record on March 19, 2018.

The Credit Facilities and the indenture governing the Senior Notes contain covenants that, among other things, currently limit
the Company’s ability to pay dividends on the Company’s common stock in excess of $10.0 million per quarter. See Note 6 of
Notes to Consolidated Financial Statements for additional information on our financing arrangements.

The information required by this item regarding securities authorized for issuance under equity compensation plans is
incorporated by reference from Item 12 of this Form 10‑K.

Issuer Purchases of Equity Securities

We did not purchase any of our equity securities during the fourth quarter of fiscal 2017. In March 2013, the Board approved a
share repurchase program for our common stock. At February 3, 2018, the remaining balance available under the Board’s
authorization was $48.0 million.

Sales of Unregistered Securities

During fiscal 2015, we issued 8,804 shares of common stock to Joseph Abboud pursuant to the terms of the consulting
agreement between the Company and Mr. Abboud. The shares of common stock were not registered under the Securities Act of
1933, as amended (the “Securities Act”) pursuant to the exemption from registration requirements provided by Section 4(a)(2)
of the Securities Act, as a transaction by an issuer not involving a public offering. The offering was not a “public offering” as
defined in Section 4(a)(2) due to the insubstantial number of persons involved in the transaction, size of the offering, manner of
the offering and number of securities offered.

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Performance Graph

The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the
Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the
Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically
incorporates it by reference into such filing.

The following graph compares, as of each of the dates indicated, the percentage change in the Company’s cumulative total
shareholder return on its common stock with the cumulative total return of the S&P 500 Index and a subset of companies in the
S&P Retail Select Index (“Select Group”).

The graph assumes that the value of the investment in our common stock and each index was $100 at February 2, 2013 and that
all dividends paid by those companies included in the indices were reinvested.

February
2,
2013

February
1,
2014

January
31,
2015

January 30, January 28,

2016

2017

February
3,
2018

Measurement Period (Fiscal Year Covered)

Tailored Brands, Inc.
S&P 500 Index
Select Group

(1)

$ 100.00 $ 167.71 $ 164.61 $
120.30
113.40

137.42
138.35

100.00
100.00

49.64 $
136.50
141.85

73.62 $ 91.61
202.66
164.99
152.79
139.29

(1) For purposes of this graph, the select group currently consists of the following companies: Abercrombie & Fitch Co.,
American Eagle Outfitters, Inc., Burlington Stores, Inc., Caleres, Inc., Chico’s FAS, Inc., DSW, Inc., Express, Inc., Finish
Line, Inc., Foot Locker, Inc., Genesco, Inc., Guess?, Inc., L Brands, Inc., Ross Stores, Inc., The Buckle, Inc., The Cato
Corporation, The Children’s Place, Inc., The Gap, Inc., The TJX Companies, Inc. and Urban Outfitters, Inc.

The foregoing graph is based on historical data and is not necessarily indicative of future performance.

Table of Contents

ITEM 6. SELECTED FINANCIAL DATA

The following selected statement of earnings (loss) data and, balance sheet and cash flow information for the fiscal years
indicated has been derived from our audited consolidated financial statements. The Selected Financial Data should be read in
conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the
Consolidated Financial Statements and notes thereto. References herein to years are to the Company’s 52‑week or 53‑week
fiscal year, which ends on the Saturday nearest January 31 in the following calendar year. For example, references to “2017”
mean the fiscal year ended February 3, 2018. All fiscal years for which financial information is included herein had 52 weeks
with the exception of fiscal 2017, which ended on February 3, 2018 and had 53 weeks.

2017

2016

2015

2014

2013

(Dollars and shares in thousands, except per share and per
square foot data)

Statement of Earnings (Loss) Data :
(1)

Total net sales
Total gross margin
Goodwill and intangible asset impairment

charges

(2)

Operating income (loss)
Net earnings (loss) attributable to common

shareholders

Per Common Share Data:

Diluted net earnings (loss) per common share

allocated to common shareholders

Cash dividends declared
Weighted-average common shares

outstanding—diluted
Operating Information:

Percentage increase/(decrease) in comparable

(3)

sales :
Men’s Wearhouse
Jos. A. Bank
Moores
K&G

Average net sales per square foot

(4)

Men’s Wearhouse
Jos. A. Bank
Moores
K&G

Average square footage :

(5)

Men’s Wearhouse
Men’s Wearhouse and Tux
Jos. A. Bank
Moores
K&G

3,304,346 $ 3,378,703 $ 3,496,271 $ 3,252,548 $ 2,473,233
1,089,010
1,408,766

1,358,614

1,441,468

1,484,423

1,500
229,416

—
132,826

1,243,354
(1,077,296)

—
73,210

11,349
129,628

96,703

24,956

(1,026,719)

(387)

83,791

$
$

1.95 $
0.72 $

0.51 $
0.72 $

(21.26) $
0.72 $

(0.01) $
0.72 $

1.70
0.72

49,468

48,786

48,288

47,899

49,162

(1.1)%
5.4%
(2.0)%
(3.1)%

(0.6)%
(9.5)%
(2.6)%
(2.4)%

4.9%
(16.3)%
(1.7)%
5.0%

$
$
$
$

407 $
267 $
355 $
156 $

407 $
252 $
368 $
156 $

411 $
261
370 $
160 $

3.9%
—
8.6%
3.7%

399 $
—
372 $
152 $

5,620
1,483
4,715
5,897
23,226

5,642
1,397
4,665
6,289
23,619

5,667
1,387
4,653
6,334
23,784

5,616
1,510
4,698
6,250
22,945

0.7%
—
(4.1)%
(5.5)%

386
—
345
145

5,710
1,387
—
6,358
23,710

Table of Contents

Number of retail stores:

(7)

(6)

Open at beginning of the period
Acquired from Jos. A. Bank
Opened
Closed
Open at end of the period
Men’s Wearhouse
Men’s Wearhouse and Tux
Tuxedo Shops @ Macy’s
Jos. A. Bank
(6)
Moores
K&G
Total

(8)

Cash Flow Information :
(1)
Capital expenditures
Depreciation and amortization
Repurchases of common stock

Balance Sheet Information :
(1)
Cash and cash equivalents
Inventories
Working capital
Total assets
Long-term debt, including current portion
Total equity (deficit)

2017

2016

2015
(Dollars in thousands)

2014

2013

1,667
—
4
(194)
1,477
719
51
—
491
126
90
1,477

1,724
—
178
(235)
1,667
716
58
170
506
126
91
1,667

1,758
—
42
(76)
1,724
714
160
12
625
124
89
1,724

1,124
624
60
(50)
1,758
698
210
—
636
123
91
1,758

1,143
—
25
(44)
1,124
661
248
—
—
121
94
1,124

94,958 $

99,694 $ 115,498 $

106,493
—

115,205
—

132,329
277

96,420 $108,200
88,749
152,129

112,659
251

February 3,

January 28,

January 30,

January 31,

February 1,

2018

2017

2016

2015

2014

70,889 $

29,980 $

62,261 $

103,607 $
851,931
669,809
1,999,955
1,396,808
2,192

955,512
705,797
2,097,872
1,595,529
(107,618)

1,022,504
723,593
2,244,319
1,655,924
(100,086)

938,336
752,261
3,508,212
1,648,686
969,789

59,252
599,486
479,808
1,555,230
97,500
1,023,149

(1)

Includes amounts related to the Jos. A. Bank acquisition since June 18, 2014 and the JA Holding acquisition since
August 6, 2013.

(2) See Note 7 to the consolidated financial statements for additional information.

(3) Comparable sales is defined as net sales from stores open at least twelve months at period end, excluding stores where the
square footage has changed by more than 25% within the past year and, beginning in 2013, include e‑commerce net sales.
We operate our business using an omni‑channel approach and do not differentiate e‑commerce sales from our other
channels. Comparable sales percentages for Moores are calculated using Canadian dollars. Comparable sales for Jos. A.
Bank are calculated in the same manner as our other brands except that for fiscal 2015, it is based on Jos. A. Bank’s
entire fiscal 2014, a portion of which was prior to our acquisition on June 18, 2014. In addition, as a result of our
decision to close all factory stores at Jos. A. Bank in fiscal 2016, we have excluded the results of these stores from our
comparable sales calculation for Jos. A. Bank for all periods presented. For fiscal 2017, the calculation excludes the 53
week.

(4) Average net sales per square foot is calculated by dividing total square footage for all stores owned or open the entire
year into net sales for those stores. The calculation for Men’s Wearhouse includes Men’s Wearhouse and Tux stores and
excludes tuxedo shops within Macy’s. For comparability purposes, the calculation for Jos. A. Bank excludes factory
stores for all periods presented. The calculation for Moores is based upon the Canadian dollar. For fiscal 2017, the
calculation excludes total sales for the 53 week.

(5) Average square footage is calculated by dividing the total square footage for all stores open at the end of the period by
the number of stores open at the end of such period. For comparability purposes, the Jos. A. Bank information excludes
factory stores for all periods presented.

(6) For 2017, 2016, 2015 and 2014 excludes 14, 14, 14 and 15 franchise stores, respectively.

(7) For 2016 and 2015 includes 158 and 12 tuxedo shops within Macy’s, respectively.

(8) For 2017, 2016 and 2015, includes one Joseph Abboud store.

Table of Contents

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

OPERATIONS

Executive Overview

Background

Our U.S. retail stores are operated under the Men’s Wearhouse, Men’s Wearhouse and Tux, Jos. A. Bank, Joseph Abboud and
K&G brand names and are operated in 50 states, the District of Columbia and Puerto Rico. Our Canadian stores are operated
under the Moores brand name and operate in 10 Canadian provinces. As of February 3, 2018, the Company operated 1,477
stores throughout the U.S., Puerto Rico and Canada. In addition, at February 3, 2018, we operated 38 retail dry cleaning,
laundry and heirlooming facilities through MW Cleaners in Texas. On February 28, 2018, we entered into a definitive
agreement to divest our MW Cleaners business for approximately $18.0 million, subject to certain adjustments, and the
transaction closed on March 3, 2018.

We operate two reportable segments as determined by the way we manage, evaluate and internally report our business
activities: Retail and Corporate Apparel. See Item 1, “Business” of this Annual Report on Form 10‑K as well as Note 17 of
Notes to Consolidated Financial Statements and the discussion included in “Results of Operations” below for additional
information and disclosures regarding our reporting segments.

All fiscal years for which financial information is included herein had 52 weeks with the exception of fiscal 2017, which ended
on February 3, 2018 and had 53 weeks.

Summary of Financial Performance

During fiscal 2017, we delivered positive comparable sales for our retail brands as a whole, with Men’s Wearhouse comparable
sales improving throughout the year and turning positive in our fourth quarter, and Jos. A. Bank reporting positive mid-single-
digit comparable sales for the year. We believe our strategy to engage more customers across all channels and to drive
customer traffic helped us deliver improvement in comparable sales and we plan to build on these strategies.

We launched new marketing campaigns to build awareness about the products and services we provide to men of all shapes and
sizes which we believe is bringing new customers into our stores where we provide them with superior service and selection,
including custom suiting at a highly competitive price. In fiscal 2017, we also continued to grow our custom business and
enhance our omni-channel capabilities, both online and in-store. These initiatives are part of our strategy to deliver a superior
customer experience in order to increase market share and drive long-term sustainable growth. In fiscal 2017, our custom
clothing business more than doubled versus the prior year to over $100 million, or approximately 4% of retail clothing product
net sales.

We also continued to make progress toward strengthening our balance sheet. During fiscal 2017, we reduced our outstanding
debt by approximately $200 million by repurchasing and retiring over $150 million face value of our senior notes and repaying
over $50 million on our term loan. In 2018, we plan to further reduce our debt, invest behind our growth initiatives and return
cash to our shareholders via our dividend.

Table of Contents

Key operating metrics for the year ended February 3, 2018 include:

· Net sales decrease of 2.2% primarily due to the impact of last year’s store closures as well as the anniversarying
of last year’s rollout of a large new uniform program for our corporate apparel segment. These decreases were
partially offset by the impact of the 53rd week and an increase in retail segment comparable sales.

Comparable sales increased 5.4% at Jos. A. Bank while comparable sales decreased 1.1% at Men’s Wearhouse,
2.0% at Moores and 3.1% at K&G. Overall comparable sales for our retail segment increased 0.1%.

· Operating income of $229.4 million, compared to operating income of $132.8 million in fiscal 2016.

· Diluted earnings per share of $1.95, compared to diluted earnings per share of $0.51 in fiscal 2016.

Key liquidity metrics for the year ended February 3, 2018 include:

Cash provided by operating activities was $350.8 million in fiscal 2017 compared to $242.6 million in fiscal
2016.

Capital expenditures were $95.0 million in fiscal 2017 compared to $99.7 million in fiscal 2016.

· We repurchased and retired $153.8 million face value of our senior notes, repaid $53.4 million on our term loan,

and had no borrowings outstanding on our revolving credit facility as of February 3, 2018.

· Dividends paid totaled $35.8 million in fiscal 2017.

Items Affecting Comparability of Results

The comparability of our results has been impacted by certain items, including costs to terminate our tuxedo rental license
agreement with Macy’s, restructuring and other costs related to our store rationalization program and profit improvement
programs, asset impairment charges related to tuxedo shops within Macy’s, the 2015 impairment of Jos. A. Bank’s goodwill
and other intangible assets, and purchase accounting, acquisition and integration costs for Jos. A. Bank. A summary of the
effect of these items on pretax income for each applicable fiscal year is presented below (dollars in millions):

(1)

Costs to terminate Macy's agreement
Asset impairment charges related to tuxedo shops within Macy's
Impairment of goodwill and intangible assets
Restructuring and other charges
Integration costs related to Jos. A. Bank
Purchase accounting charges related to Jos. A. Bank
Loss on extinguishment of debt
Other
Total

(3)

(2)

2017

Fiscal Year

2016

2015

16.0 $
1.2
1.5
—
—
—
—
—
18.7 $

— $
—
14.0
—
—
1,243.4
68.1
35.9
8.8
18.7
—
10.7
—
12.7
7.1
5.4
96.3 $ 1,328.5

(1) See Note 2 to the consolidated financial statements for additional information.

(2) See Note 4 to the consolidated financial statements for additional information.

(3) Consisting of other costs including various strategic projects, separation costs with former executives and cost reduction

initiatives. Also, includes $1.8 million gain on the sale of property in 2015.

The following table summarizes the costs in the above table by line item in our statements of earnings (loss):

Cost of sales
Selling, general and administrative expenses
Goodwill and intangible asset impairment charges
Asset impairment charges
Loss on extinguishment of debt
Total

2017

Fiscal Year
2016

2015

1.4 $
14.6
1.5
1.2
—
18.7 $

(1.3) $
14.4
78.2
30.8
—
1,243.4
19.4
27.2
—
12.7
96.3 $ 1,328.5

Table of Contents

2018 Initiatives

In fiscal 2018, we remain focused on three key growth strategies: expand our custom business and make buying a custom suit
as easy and affordable as buying a suit off the rack, strengthen our brands and grow market share by communicating the quality
selection and service we provide at a great value, and enhance our omni-channel experience by combining the high-touch
service we offer in our stores with the convenience of online shopping.

Store Information

During fiscal 2017, we opened four Men’s Wearhouse stores and closed 194 stores/tuxedo shops (170 shops within Macy’s, 15
Jos. A. Bank stores, seven Men’s Wearhouse and Tux stores, one Men’s Wearhouse store and one K&G store). The closure of
the 194 stores was largely the result of our agreement with Macy’s to wind down operations of our tuxedo shops within
Macy’s. In the future, we will continue to monitor our store fleet for opportunities to optimize our cost structure.

In fiscal 2018, we plan to open approximately three new Men’s Wearhouse stores and to relocate approximately eight existing
stores across our retail brands. We also plan to close eight Jos. A. Bank stores, two Men’s Wearhouse and Tux stores, two
K&G stores and one Men’s Wearhouse store.

Results of Operations

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

Net sales:

Retail clothing product
Rental services
Alteration and other services

Total retail sales
Corporate apparel clothing product

Total net sales

Cost of sales :

(2)

Retail clothing product
Rental services
Alteration and other services
Occupancy costs

Total retail cost of sales
Corporate apparel clothing product

Total cost of sales

Gross margin :

(2)

Retail clothing product
Rental services

Alteration and other services
Occupancy costs

Total retail gross margin
Corporate apparel clothing product

Total gross margin

Advertising expense
Selling, general and administrative expenses
Goodwill and intangible asset impairment charges
Asset impairment charges
Operating income (loss)
Interest income
Interest expense
Gain (loss) on extinguishment of debt, net
Earnings (loss) before income taxes
Provision (benefit) for income taxes
Net earnings (loss)

(1) Percentage line items may not sum to totals due to the effect of rounding.
(2) Calculated as a percentage of related sales.

Fiscal Year

(1)

2017

2016

2015

73.8 %
13.0
5.6
92.4
7.6

72.4 % 74.4 %
13.5
5.8
91.7
8.3

12.7
6.0
93.0
7.0

100.0 % 100.0 % 100.0 %

44.4
16.3
75.7
13.6
56.0
73.8
57.4

55.6
83.7
24.3

(13.6)
44.0
26.2
42.6
5.2
30.3
0.0
0.1
6.9
0.0
(3.0)
0.2
4.1
1.2
2.9 %

44.7
18.1
70.2
13.9
56.3
68.7
57.3

55.3
81.9
29.8

44.6
17.3
69.7
14.0
56.5
71.1
57.5

55.4
82.7
30.3

(13.9)
43.7
31.3
42.7
5.6
32.5
—
0.6
3.9
0.0
(3.1)
0.1
0.9
0.2
0.7 % (29.4)%

(14.0)
43.5
28.9
42.5
5.9
31.1
35.6
0.8
(30.8)
0.0
(3.0)
(0.4)
(34.2)
(4.8)

Table of Contents

2017 Compared with 2016

Net Sales

Total net sales decreased $74.4 million, or 2.2%, to $3,304.3 million for fiscal 2017 as compared to fiscal 2016.

Total retail sales decreased $45.4 million, or 1.5%, to $3,053.0 million for fiscal 2017 as compared to fiscal 2016 due to a
$6.1 million decrease in clothing product revenues, a $29.1 million decrease in rental services revenue and a $10.2 million
decrease in alteration and other services revenues. The decrease in total retail sales is further described below:

(in millions)

Amount attributed to

(18.4)
34.5
(9.6)
(4.1)
(80.3)
3.2
40.7
(11.4)
(45.4)

1.1% decrease in comparable sales at Men's Wearhouse.
5.4% increase in comparable sales at Jos. A. Bank.
3.1% decrease in comparable sales at K&G.
2.0% decrease in comparable sales at Moores .
(1)
Decrease in non-comparable sales (primarily due to closed stores).
Increase in net sales resulting from change in U.S./Canadian dollar exchange rate.
Increase in net sales resulting from 53rd week in fiscal 2017.
Other (primarily decrease in alteration revenues).
Decrease in total retail sales.

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

Comparable sales is defined as net sales from stores open at least twelve months at period end, excluding stores where the
square footage has changed by more than 25% within the past year, and includes e-commerce sales. We operate our business
using an omni‑channel approach and do not differentiate e‑commerce sales from our other channels.

The decrease in comparable sales at Men's Wearhouse resulted primarily from a decrease in transactions and units per
transaction, partially offset by an increase in average unit retail (net selling prices). At Men's Wearhouse, rental service
comparable sales decreased 2.0% primarily reflecting a consumer shift to purchase suits for special occasions. The increase at
Jos. A. Bank resulted primarily from an increase in transactions partially offset by a decrease in average unit retail, while units
per transaction were flat. The decrease at K&G resulted primarily from lower transactions partially offset by increases in units
per transaction and average unit retail. The decrease at Moores resulted primarily from decreases in both units per transaction
and average unit retail that more than offset a slight increase in transactions.

Total corporate apparel clothing product sales decreased $29.0 million for fiscal 2017 as compared to fiscal 2016 primarily due
to anniversarying last year's rollout of a large new uniform program and the impact of a weaker British pound this year
compared to last year of approximately $5.6 million, partially offset by a $5.0 million benefit from the 53 week.

Gross Margin

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

Our total gross margin decreased $32.7 million, or 2.3%, to $1,408.8 million for fiscal 2017 as compared to fiscal 2016
primarily due to the decrease in corporate apparel net sales. Total retail segment gross margin decreased $10.8 million, or 0.8%,
in fiscal 2017 as compared to fiscal 2016 primarily due to the decrease in rental services revenue.

For the retail segment, total gross margin as a percentage of related sales increased to 44.0% in fiscal 2017 from 43.7% in fiscal
2016. The increase in the retail segment gross margin percentage was primarily the result of leverage from occupancy costs.

Occupancy costs decreased $15.3 million primarily due to our store rationalization efforts. Occupancy costs as a percentage of
retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities,
repairs and maintenance, security, property taxes and depreciation, decreased to 13.6% in fiscal 2017 from 13.9% in fiscal
2016.

Corporate apparel gross margin decreased $21.9 million, or 24.9%, to $65.8 million for fiscal 2017 compared to fiscal 2016.
For the corporate apparel segment, total gross margin as a percentage of related sales decreased to 26.2% in fiscal 2017 from
31.3% in fiscal 2016 primarily due to the impact of last year's rollout of a large new uniform program as well as the impact of
unfavorable currency fluctuations on previously negotiated pricing arrangements with our UK customers.

Table of Contents

Advertising Expense

Advertising expense decreased to $173.4 million in fiscal 2017 from $190.0 million in fiscal 2016, a decrease of $16.5 million
or 8.7%. The decrease in advertising expense was driven primarily by reductions in television advertising reflecting a shift to
digital advertising. As a percentage of total net sales, advertising expense decreased to 5.2% in fiscal 2017 from 5.6% in fiscal
2016.

Selling, General and Administrative Expenses

SG&A expenses decreased to $1,000.9 million in fiscal 2017 from $1,099.3 million in fiscal 2016, a decrease of $98.4 million
or 9.0%. As a percentage of total net sales, these expenses decreased to 30.3% in fiscal 2017 from 32.5% in fiscal 2016. The
components of this 2.2% decrease in SG&A expenses as a percentage of total net sales and the related dollar changes were as
follows:

%
(1.9)

in millions

(63.6)

(0.3)

(0.0)

(21.2)

(13.6)

(2.2)

(98.4)

Attributed to
Decrease in restructuring, integration and other items as a percentage of sales to 0.4% in fiscal
2017 from 2.3% in fiscal 2016. In fiscal 2017, these costs totaled $14.6 million related to costs
to terminate the Macy's agreement. In fiscal 2016, these costs totaled $78.2 million related
primarily to restructuring and other costs including our store rationalization and profit
improvement programs.
Store salaries decreased $21.2 million primarily due to our store rationalization efforts and
decreased as a percentage of sales to 12.5% in fiscal 2017 from 12.8% in fiscal 2016.
Other SG&A expenses as a percentage of sales was 17.4% in both fiscal 2017 and fiscal
2016. Other SG&A expenses decreased $13.6 million primarily due to decreases in employee-
related benefit costs as well as decreases in store-related costs resulting from our store
rationalization efforts partially offset by increased incentive compensation expense.
Total

In the retail segment, SG&A expenses as a percentage of related net sales decreased to 24.7% in fiscal 2017 from 27.1% in
fiscal 2016. Retail segment SG&A expenses decreased $86.0 million primarily due to decreases in store-related costs from our
store rationalization efforts as well as a decrease in restructuring and other costs, primarily related to last year’s lease
termination costs partially offset by costs to terminate Macy’s agreement in 2017.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales decreased to 21.1% in fiscal 2017 from
21.7% in fiscal 2016. Corporate apparel segment SG&A expenses decreased $7.7 million primarily due to the impact of a
weaker British pound this year compared to last year.

Shared service expenses represent costs not specifically related to the operations of our business segments and are included in
SG&A. Shared service SG&A expenses as a percentage of total net sales decreased to 5.8% in fiscal 2017 from 5.9% in fiscal
2016. Shared service SG&A expenses decreased $4.7 million primarily due to decreases in costs associated with last year’s
profit improvement program partially offset by increased incentive compensation expense.

Goodwill Impairment Charge

The goodwill impairment charge of $1.5 million in fiscal 2017 related to the divestiture of our MW Cleaners business. No
such charges were incurred in fiscal 2016.

Asset Impairment Charges

Non‑cash asset impairment charges were $3.5 million in fiscal 2017 as compared to $19.4 million in fiscal 2016. The asset
impairment charges in fiscal 2017 primarily consist of $2.3 million related to underperforming stores and $1.2 million related
to fixed assets in our tuxedo shops within Macy’s. The asset impairment charges in fiscal 2016 primarily consist of $14.0
million related to fixed assets in our tuxedo shops within Macy’s, $2.5 million primarily related to stores closed as part of our
store rationalization program and $2.9 million related to a long-lived asset reclassified as held for sale. See Impairment of
Long‑Lived Assets as discussed in “Critical Accounting Polices and Estimates” and Note 1 of Notes to Consolidated Financial
Statements for further details.

Interest Expense

Interest expense decreased to $100.5 million in fiscal 2017 from $103.1 million in fiscal 2016, a decrease of $2.7 million or
2.6%, due to repayment of our indebtedness including repurchase and retirement of $153.8 million face value of our senior
notes and $53.4 million of payments on our term loan.

Table of Contents

Net Gain on Extinguishment of Debt

Net gain on extinguishment of debt was $5.4 million in fiscal 2017 compared to $1.7 million in fiscal 2016. Net gains on
extinguishment of debt primarily relate to the repurchasing of our senior notes.

Provision for Income Tax

In December 2017, the U.S. enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the
“Tax Reform Act”). The changes included in the Tax Reform Act are broad and complex, which impacted our consolidated
financial statements in fiscal 2017 including, but not limited to: reducing the U.S. federal corporate tax rate from 35% to 21%
effective January 1, 2018 and requiring a one-time transition tax on certain unrepatriated earnings of non-U.S. subsidiaries that
may electively be paid over eight years. The transition tax will result in certain previously untaxed non-U.S. earnings being
included in the U.S. federal and state 2017 taxable income. As a result, we have recorded a provisional discrete net tax benefit
of $0.3 million related to the Tax Reform Act in fiscal 2017.

Furthermore, as a result of the Tax Reform Act, we analyzed our global working capital requirements and the potential tax
liabilities that would be incurred if certain non-U.S. subsidiaries made distributions, which include local country withholding
tax and potential U.S. state taxation. In prior years, no provision for U.S. income taxes or Canadian withholding taxes had been
made on the cumulative undistributed earnings of foreign companies because we intended to permanently reinvest all the
foreign earnings outside the U.S. In response to the Tax Reform Act, we no longer intend to permanently reinvest our foreign
earnings. As a result, the Company has included a provisional estimate of incremental withholding liabilities on its investment
in foreign earnings totaling $17.3 million.

The final transition impacts of the Tax Reform Act may differ from the estimates provided elsewhere in this report, possibly
materially, due to, among other things, changes in interpretations of the Tax Reform Act, any legislative action to address
questions that arise because of the Tax Reform Act, any changes in accounting standards for income taxes or related
interpretations in response to the Tax Reform Act, or any updates or changes to estimates we have utilized to calculate the
transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign
subsidiaries.

In fiscal 2017, our effective income tax rate was 28.3% and is lower than the U.S. statutory rate primarily due to foreign
earnings and the lower tax rates in these jurisdictions and the release of specific uncertain tax position liabilities. These rate
reductions are partially offset by the change in our position on permanently reinvested foreign earnings and certain valuation
allowances. Our foreign jurisdictions in which we operate had taxable income, which requires us to provide for income tax,
specifically, our operations in Canada, Hong Kong, and the UK. For fiscal 2017, the statutory tax rates were approximately
26% in Canada, 16% in Hong Kong, and 19% in the UK. For fiscal 2017, tax expense for our operations in foreign
jurisdictions totaled $28.7 million.

Our income tax expense and effective income tax rate in future periods may be impacted by many factors, including our
geographic mix of earnings, changes in tax law and rates, such as the Tax Reform Act, changes in rules related to accounting
for income taxes, or adverse outcomes from tax audits that are in process or future tax audits in various jurisdictions in which
we operate. Currently, we expect our effective tax rate in future periods to be close to the statutory U.S. combined federal and
state tax rate, or approximately 25%.

In addition, if our financial results in fiscal 2018 generate a loss or certain deferred tax liabilities decrease, we may need to
establish a valuation allowance on our U.S. deferred tax assets, which could have a material impact on our financial condition
and results of operations.

Net Earnings

Net earnings were $96.7 million for fiscal 2017 compared with net earnings of $25.0 million for fiscal 2016.

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2016 Compared with 2015

Net Sales

Total net sales decreased $117.6 million, or 3.4%, to $3,378.7 million for fiscal 2016 as compared to fiscal 2015.

Total retail sales decreased $154.1 million, or 4.7%, to $3,098.4 million for fiscal 2016 as compared to fiscal 2015 due mainly
to a $154.0 million decrease in retail clothing product revenues primarily at our Jos. A. Bank brand as we transitioned away
from the Jos. A. Bank historical promotional model. Total retail sales were also impacted by a $14.2 million decrease in
alteration and other services revenues offset by a $14.1 million increase in rental services revenues. The decrease in total retail
sales is further described below:

(in millions)

Amount Attributed to

(9.7)
(70.8)
(7.6)
(5.5)
(37.5)
(3.7)
(19.3)
(154.1)

0.6% decrease in comparable sales at Men's Wearhouse.
9.5% decrease in comparable sales at Jos. A. Bank.
2.4% decrease in comparable sales at K&G.
2.6% decrease in comparable sales at Moores .
(1)
Decrease in non-comparable sales (primarily due to closed stores).
Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
Other (primarily decrease in alteration revenues).
Decrease in total retail sales.

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

The decrease in comparable sales at Men’s Wearhouse resulted primarily from decreased transactions that more than offset
increased average unit retail while units per transaction were essentially flat. At Men’s Wearhouse, rental service comparable
sales increased 3.0% primarily due to an increase in rental rates.The decrease at Jos. A. Bank was driven by decreased
transactions that more than offset increased units per transaction and a slight increase in average unit retail. The decrease at
Moores was driven by decreased transactions and units per transaction that more than offset increased average unit retail. The
decrease at K&G was driven by decreased transactions that more than offset increased units per transaction and average unit
retail.

Total corporate apparel clothing product sales increased $36.5 million to $280.3 million for fiscal 2016 as compared to fiscal
2015 primarily due to the impact of a large new uniform program. The rollout of the new uniform program commenced in
June 2016 and was completed during the third quarter of 2016. The increase in corporate apparel sales was partially offset by
the impact of a weaker British pound this year compared to fiscal 2015 of approximately $26.1 million.

Gross Margin

Our total gross margin decreased $43.0 million, or 2.9%, to $1,441.5 million for fiscal 2016 as compared to fiscal 2015. Total
retail segment gross margin decreased $60.3 million, or 4.3%, in fiscal 2016 as compared to fiscal 2015 primarily due to lower
sales at Jos. A. Bank.

For the retail segment, total gross margin as a percentage of related sales increased from 43.5% in fiscal 2015 to 43.7% in fiscal
2016. The slight increase in the retail segment gross margin percentage was primarily the result of the mix effect of higher
margin rental services revenue and slight leverage on occupancy costs.

Occupancy costs decreased $24.2 million primarily due to our store rationalization efforts. Occupancy costs as a percentage of
retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities,
repairs and maintenance, security, property taxes and depreciation, decreased slightly to 13.9% in fiscal 2016 from 14.0% in
fiscal 2015.

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Corporate apparel gross margin increased $17.3 million or 24.6% from fiscal 2015 to $87.7 million in fiscal 2016. For the
corporate apparel segment, total gross margin as a percentage of related sales increased from 28.9% in fiscal 2015 to 31.3% in
fiscal 2016 primarily due to the impact of a large new uniform program as well as pre-tax gains on foreign currency hedging
transactions.

Advertising Expense

Advertising expense decreased to $190.0 million in fiscal 2016 from $205.0 million in fiscal 2015, a decrease of $15.0 million
or 7.3%. The decrease in advertising expense was driven by reductions in marketing spend, primarily in television and digital
advertising, in response to the softening sales trend, primarily in the fourth quarter of fiscal 2016. As a percentage of total net
sales, these expenses decreased from 5.9% in fiscal 2015 to 5.6% in fiscal 2016.

Selling, General and Administrative Expenses

SG&A expenses increased to $1,099.3 million in fiscal 2016 from $1,085.9 million in fiscal 2015, an increase of $13.4 million
or 1.2%. As a percentage of total net sales, these expenses increased from 31.1% in fiscal 2015 to 32.5% in fiscal 2016. The
components of this 1.4% net increase in SG&A expenses as a percentage of total net sales and the related dollar changes were
as follows:

%
1.7

in millions
$

55.5

(0.4)

(32.2)

0.1

(9.9)

Attributed to
Increase in restructuring, integration and other items as a percentage of sales from 0.6% in fiscal 2015
to 2.3% in fiscal 2016. For fiscal 2016, these costs totaled $78.2 million, related primarily to
restructuring and other costs including our store rationalization and profit improvement programs. For
fiscal 2015, these costs totaled $22.7 million related primarily to Jos. A. Bank acquisition and
integration costs, separation costs with former executives and costs associated with our profit
improvement plan, partially offset by a $1.8 million gain on the sale of property.
Decrease in other SG&A expenses as a percentage of sales from 17.8% in fiscal 2015 to 17.4% in
fiscal 2016. Other SG&A expenses decreased $32.2 million primarily due to cost reduction initiatives,
the impact of store closures and a decrease in amortization of intangible assets as a result of the
impairment charges recorded in fiscal 2015.
Store salaries decreased $9.9 million primarily due to cost reduction initiatives and the impact of store
closures yet increased as a percentage of sales from 12.7% in fiscal 2015 to 12.8% in fiscal 2016
primarily due to deleverage resulting from lower retail sales.

1.4 % $

13.4 Total

In the retail segment, SG&A expenses as a percentage of related net sales increased from 26.4% in fiscal 2015 to 27.1% in
fiscal 2016 primarily due to deleverage resulting from lower retail sales. Retail segment SG&A expenses decreased $19.3
million primarily due to cost reduction initiatives and the impact of store closures partially offset by lease termination costs.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales decreased from 24.9% in fiscal 2015 to
21.7% in fiscal 2016 primarily due to leverage from higher sales. Corporate apparel segment SG&A expenses increased $0.1
million.

Shared service expenses represent costs not specifically related to the operations of our business segments and are included in
SG&A. Shared service SG&A expenses as a percentage of total net sales increased from 4.7% in fiscal 2015 to 5.9% in fiscal
2016. Shared service SG&A expenses increased $32.6 million primarily due to costs associated with our profit improvement
program and higher incentive compensation accruals.

Goodwill and Intangible Asset Impairment Charges

There were no goodwill and intangible asset impairment charges recorded in fiscal 2016. For further details on fiscal 2015
goodwill and intangible asset impairment charges, see Goodwill and Other Indefinite-Lived Intangible Assets as discussed in
“Critical Accounting Polices and Estimates” and Note 7 of Notes to Consolidated Financial Statements for further details.

Asset Impairment Charges

Non‑cash asset impairment charges were $19.4 million in fiscal 2016 as compared to $27.5 million in fiscal 2015. The asset
impairment charges in fiscal 2016 primarily consist of $14.0 million related to fixed assets in our tuxedo shops within Macy’s,
$2.5 million primarily related to stores closed as part of our store rationalization program and $2.9 million related to a long-
lived asset reclassified as held for sale. The asset impairment charges in fiscal 2015 resulted primarily from our store
rationalization program, which resulted in store closures in fiscal 2016. See Impairment of Long‑Lived Assets as discussed in
“Critical Accounting Polices and Estimates” and Note 1 of Notes to Consolidated Financial Statements for further details.

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Interest Expense

Interest expense decreased to $103.1 million in fiscal 2016 from $106.0 million in fiscal 2015, a decrease of $2.8 million or
2.7%, due to repayment of our indebtedness including $42.5 million on our term loan and repurchase and retirement of $25.0
million face value of our senior notes.

Provision for Income Tax

In fiscal 2016, our effective income tax rate was 21.0% and is lower than the U.S. statutory rate primarily due to foreign
earnings and the lower tax rates in these jurisdictions. Our foreign jurisdictions in which we operate had taxable income, which
requires us to provide for income tax, specifically, our operations in Canada and the UK. For fiscal 2016, the statutory tax rates
in Canada and the UK were approximately 27% and 20%, respectively, which negatively impacted our effective tax rate due to
the loss in the U.S. For fiscal 2016, tax expense for our operations in foreign jurisdictions totaled $10.3 million.

Net Earnings (Loss)

Net earnings were $25.0 million for fiscal 2016 compared with a net loss of $1,026.7 million for fiscal 2015.

Liquidity and Capital Resources

Our primary sources of working capital are cash flows from operations and available borrowings under our revolving credit
agreement, as described below. The following table provides details on our cash and cash equivalents and working capital
position as of February 3, 2018 and January 28, 2017 (in thousands):

Cash and cash equivalents
Working capital

February 3, January 28,

2017
2018
$ 103,607 $
70,889
$ 669,809 $ 705,797

We hold cash and cash equivalents at various foreign subsidiaries, which totaled $49.6 million at February 3, 2018. As a result
of reductions to the U.S. taxation of dividends from foreign subsidiaries under the Tax Reform Act, in future years, we may
decide to repatriate amounts from our foreign subsidiaries. Although the cash and cash equivalents held by our foreign
subsidiaries may be more readily available to meet domestic cash requirements, they would continue to be subject to applicable
foreign withholding tax that would be incurred upon repatriation.

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

In October 2017, we amended our then existing $500.0 million ABL Facility in part to increase the principal amount available
to $550.0 million and extend the maturity date to October 2022. See Credit Facilities section below for additional information.

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including fixed charge
coverage ratios, total leverage ratios and secured leverage ratios. In addition, we are currently restricted on our ability to pay
dividends on our common stock in excess of $10.0 million per quarter. Historically, our total leverage ratio and secured
leverage ratio were above the maximums specified in the agreements. As a result, we were subject to certain additional
restrictions, including limitations on our ability to make significant acquisitions and incur additional indebtedness. As of
February 3, 2018, our total leverage ratio and secured leverage ratio were below the maximums specified in the agreements and
we believe these ratios will remain below the maximums specified in the agreements, which will result in the elimination of
these additional restrictions.

Credit Facilities

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interest rate swap agreement to exchange variable rate payments under a portion of the Term Loan for a fixed rate. At February
3, 2018, the total notional amount under our interest rate swaps is $410.0 million. See Note 16 for additional information on our
interest rate swaps.

As a result of the interest rate swaps and the Incremental Agreement, we have converted a significant portion of the variable
interest rate under the Term Loan to a fixed rate and, as of February 3, 2018, the Term Loan had a weighted average interest
rate of 5.22%.

In October 2017, we amended our ABL Facility, which now provides for a senior secured revolving credit facility of
$550.0 million, with possible future increases to $650.0 million under an expansion feature, that matures in October 2022, and
is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The ABL Facility has several
borrowing and interest rate options including the following indices: (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate
(“CDOR”) rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the New York
Federal Reserve Bank (“NYFRB”) rate plus 0.5% or adjusted LIBOR for a one-month interest period plus 1.0%). Advances
under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to
1.75%. The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit
which range from 1.25% to 1.75%, and a fee on unused commitments of 0.25%. As of February 3, 2018, there were no
borrowings outstanding under the ABL Facility. During fiscal 2017, we borrowed and repaid amounts under our ABL Facility
with the maximum borrowing outstanding at any point in time totaling $34.7 million.

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

We utilize letters of credit primarily as collateral for workers compensation claims and to secure inventory purchases. At
February 3, 2018, letters of credit totaling approximately $37.3 million were issued and outstanding. Borrowings available
under the ABL Facility as of February 3, 2018 were $505.5 million.

Senior Notes

The Senior Notes are guaranteed, jointly and severally, on an unsecured basis by Tailored Brands, Inc. and certain of our U.S.
subsidiaries. The Senior Notes and the related guarantees are senior unsecured obligations of The Men’s Wearhouse, Inc. and
the guarantors, respectively, and will rank equally with all of The Men’s Wearhouse, Inc.’s and each guarantor’s present and
future senior indebtedness. The Senior Notes will mature in July 2022. Interest on the Senior Notes is payable on January 1
and July 1 of each year.

We may redeem some or all of the Senior Notes at any time on or after July 1, 2017 at the redemption prices set forth in the
indenture governing the Senior Notes. Upon the occurrence of certain specific changes of control, we may be required to offer
to purchase the Senior Notes at 101% of their aggregate principal amount plus accrued and unpaid interest thereon to the date
of purchase.

Cash Provided by Operating Activities

Net cash provided by operating activities was $350.8 million and $242.6 million for 2017 and 2016, respectively. The
$108.1 million increase was driven by higher net earnings compared to last year, planned reductions in inventory and rental
product purchases, primarily resulting from our store rationalization efforts, partially offset by a decrease in other assets related
to prior year income tax refunds.

Net cash provided by operating activities was $242.6 million and $131.7 million for 2016 and 2015, respectively. The
$110.9 million increase was driven by changes in other assets related to income tax refunds as well as a decrease in inventory
purchases as we normalized inventory levels, particularly at Jos. A. Bank. These favorable impacts were partially offset by
lower net earnings, after adjusting for non-cash items including goodwill, intangible and other asset impairment charges and
related changes in deferred taxes. In addition, there were unfavorable fluctuations in accounts payable, accrued expenses and
other current liabilities primarily due to timing.

Cash Used in Investing Activities

Net cash used in investing activities was $89.9 million and $99.1 million for 2017 and 2016, respectively. The $9.1 million
decrease was primarily driven by a decrease in capital expenditures in 2017 compared to 2016 primarily due to last year’s
investments to expand our distribution center capacity and an increase in proceeds from sales of property and equipment in
2017 compared to 2016.

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Net cash used in investing activities was $99.1 million and $112.9 million for 2016 and 2015, respectively. The $13.8 million
decrease was primarily driven by a decrease in capital expenditures in 2016 compared to 2015 primarily due to fewer full line
store openings.

Cash Used in Financing Activities

Net cash used in financing activities was $236.9 million and $98.8 million for 2017 and 2016, respectively. The $138.1 million
increase primarily reflects the impact of an increase of $134.4 million in debt repayment in 2017 compared to 2016.

Net cash used in financing activities was $98.8 million and $46.8 million for 2016 and 2015, respectively. The $52.0 million
increase primarily reflects the impact of a $35.5 million prepayment on our Term Loan and the repurchase of $25.0 million of
our Senior Notes, which were consummated via borrowings on our ABL Facility.

Share repurchase program— In March 2013, our Board of Directors (the “Board”) approved a share repurchase program for
our common stock. At February 3, 2018, the remaining balance available under the authorization was $48.0 million. During
fiscal 2017, 2016, and 2015, no shares were repurchased in open market transactions under the Board’s authorization.

During fiscal 2015, 5,799 shares were repurchased in private transactions to satisfy minimum tax withholding obligations
arising upon the vesting of certain restricted stock.

Dividends— Cash dividends paid were approximately $35.8 million, $35.2 million and $35.0 million during fiscal 2017, 2016
and 2015, respectively. In fiscal 2017, 2016 and 2015, a dividend of $0.18 per share was declared in each quarter, for an annual
dividend of $0.72 per share, respectively.

The quarterly cash dividend of $0.18 per share declared by our Board in January 2018 is payable on March 29, 2018 to
shareholders of record on March 19, 2018 and is included in accrued expenses and other current liabilities on the consolidated
balance sheet as of February 3, 2018.

Future sources and uses of cash

Our primary uses of cash are to finance working capital requirements of our operations and to repay our indebtedness. In
addition, we will use cash to fund capital expenditures, income taxes, dividend payments, operating leases and various other
commitments and obligations, as they arise.

Capital expenditures are anticipated to be approximately $100.0 million for 2018. This amount includes the anticipated costs to
open approximately three Men’s Wearhouse stores and to relocate approximately eight stores across our retail brands. The
balance of the capital expenditures for 2018 will be used for store refreshes and other enhancements of our store fleet,
investments in computer equipment and systems, distribution facilities improvements, and investment in other corporate assets.

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

As described more fully in Item 1A, current and future domestic and global economic conditions could negatively affect our
future operating results as well as our existing cash and cash equivalents balances. In addition, conditions in the financial
markets could limit our access to further capital resources, if needed, and could increase associated costs. We believe based on
our current business plan that our existing cash and cash flows from operations and availability under our ABL Facility will be
sufficient to fund our operating cash requirements, repayment of current indebtedness, and capital expenditures.

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Contractual Obligations

As of February 3, 2018, we are obligated to make cash payments in connection with our long‑term debt, non‑cancelable
operating leases and other contractual obligations in the amounts listed below. In addition, we utilize letters of credit primarily
as collateral for workers compensation claims and to secure inventory purchases. At February 3, 2018, letters of credit totaling
approximately $37.3 million were issued and outstanding.

(In millions)
Contractual obligations
Long-term debt
Operating lease base rentals
Other contractual obligations
Total contractual obligations
(4)

(1)

(2)

(3)

Payments Due by Period

Total

<1 Year 1 - 3 Years 4 - 5 Years

$ 1,789.1 $ 108.8 $ 201.9 $ 1,478.4 $

1,111.0
75.2

249.6
39.6

406.6
34.6

269.1
1.0

$ 2,975.3 $ 398.0 $ 643.1 $ 1,748.5 $

> 5 Years
—
185.7
—
185.7

(1)

Includes interest payments of $101.8 million within one year, $189.7 million between one and three years and
$83.0 million between four and five years, at current interest rates including the impact of our interest rate swaps. The
payments due by period do not consider amounts which may become payable under the excess cash flow provision of our
Term Loan. See Notes 6 and 16 of Notes to Consolidated Financial Statements for additional information.

(2) We lease retail business locations, office and warehouse facilities and equipment under various non‑cancelable operating

leases. See Note 18 of Notes to Consolidated Financial Statements for additional information.

(3) Other contractual obligations consist primarily of commitments for products and services used in the normal course of
business as well as minimum payments under our agreement with Vera Wang that gives us the exclusive right to “Black
by Vera Wang” tuxedo products, our partnership with Kenneth Cole and our marketing agreement with David’s Bridal,
Inc. Pursuant to our marketing agreement with David’s Bridal, Inc., there are performance conditions that may impact
future payments; therefore, these potential future payments are not included in the table above as such amounts are not
readily determinable.

(4) Excluded from the table above is $1.2 million related to uncertain tax positions. These amounts are not included due to
our inability to predict the timing of the settlement of these amounts. See Note 8 of Notes to Consolidated Financial
Statements for additional information.

In the normal course of business, we issue purchase orders to suppliers for merchandise. The purchase orders represent
executory contracts requiring performance by the suppliers, including the delivery of the merchandise prior to a specified
cancellation date and compliance with product specifications, quality standards and other requirements. In the event of the
supplier’s failure to meet the agreed upon terms and conditions, we may cancel the order.

Off‑Balance Sheet Arrangements

Other than the non‑cancelable operating leases, other contractual obligations and letters of credit discussed above, we do not
have any off‑balance sheet arrangements that are material to our financial position or results of operations.

Inflation

We believe the impact of inflation on the results of operations during the periods presented has been minimal. However, there
can be no assurance that our business will not be affected by inflation in the future.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires the appropriate application of accounting policies in
accordance with generally accepted accounting principles. In many instances, this also requires management to make estimates
and assumptions about future events that affect the amounts and disclosures included in our financial statements. We base our
estimates on historical experience and various assumptions that we believe are reasonable under our current business model.
However, because future events and conditions and their effects cannot be determined with certainty, actual results will differ
from our estimates and such differences could be material to our financial statements.

Our accounting policies are described in Note 1 of Notes to Consolidated Financial Statements. We consistently apply these
policies and periodically evaluate the reasonableness of our estimates in light of actual events. Historically, we have found our
accounting policies to be appropriate and our estimates and assumptions reasonable. Our critical accounting policies, which are
those most significant to the presentation of our financial position and results of operations and those that require significant
judgment or complex estimates by management, are discussed below.

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Revenue Recognition—Clothing product revenue is recognized at the time of sale and delivery of merchandise, net of actual
sales returns and a provision for estimated sales returns. For e‑commerce sales, revenue is recognized at the time we estimate
the customer receives the product, which incorporates shipping terms and estimated delivery times. Revenues from rental,
alteration and other services are recognized upon completion of the services. Amounts related to shipping and handling
revenues billed to customers are recorded in net sales, and the related shipping and handling costs are recorded in cost of sales.

We present all non‑income government‑assessed taxes (sales, use and value added taxes) collected from our customers and
remitted to governmental agencies on a net basis (excluded from net sales) in our consolidated financial statements. The
government‑assessed taxes are recorded in accrued expenses and other current liabilities until they are remitted to the
government agency.

Inventories—Our inventory is carried at the lower of cost and net realizable value. Cost is determined based on the average
cost method. Our inventory cost also includes estimated procurement and distribution costs (warehousing, freight, hangers and
merchandising costs) associated with the inventory, with the balance of such costs included in cost of sales. Procurement and
distribution costs are generally allocated to inventory based on the ratio of annual product purchases to inventory cost. If this
ratio were to change significantly, it could materially affect the amount of procurement and distribution costs included in cost
of sales. We make assumptions, based primarily on historical experience, as to items in our inventory that may be damaged,
obsolete or salable only at marked down prices to reflect the net realizable value of these items. If actual damages,
obsolescence or market demand is significantly different from our estimates, additional inventory write‑downs could be
required.

Impairment of Long‑Lived Assets—Long‑lived assets, such as property and equipment and identifiable intangibles with finite
useful lives, are periodically evaluated for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level of which there
are identifiable cash flows, which is generally at a store level. Assets are reviewed using factors including, but not limited to,
our future operating plans and projected cash flows. The determination of whether impairment has occurred is based on an
estimate of undiscounted future cash flows directly related to the assets, compared to the carrying value of the assets. If the
sum of the undiscounted future cash flows of the assets does not exceed the carrying value of the assets, full or partial
impairment may exist. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by
which the carrying amount exceeds the fair value of the asset. Fair value is determined using an income approach, which
requires discounting the estimated future cash flows associated with the asset. Estimating future cash flows requires
management to make assumptions and to apply judgment, including forecasting future sales, costs and useful lives of assets.
Significant judgment is also involved in selecting the appropriate discount rate to be applied in determining the estimated fair
value of an asset. Changes to our key assumptions related to future performance, market conditions and other economic factors
can significantly affect our impairment evaluation and result in future impairment charges. For example, unanticipated
long‑term adverse market conditions can cause individual stores to become unprofitable and can result in an impairment charge
for the property and equipment assets in those stores. See Notes 1, 2, and 4 to the consolidated financial statements for
additional information.

Goodwill and Other Indefinite‑Lived Intangible Assets —Goodwill and other indefinite‑lived intangible assets are initially
recorded at their fair values. Identifiable intangible assets with an indefinite useful life, including goodwill, are not amortized
but are evaluated annually for impairment. A more frequent evaluation is performed if events or circumstances indicate that
impairment could have occurred. Such events or circumstances could include, but are not limited to, significant negative
industry or economic trends, unanticipated changes in the competitive environment, decisions to significantly modify or
dispose of operations and a significant sustained decline in the market price of our stock.

During fiscal 2015, we changed the date of our annual impairment assessment from the last day of our fiscal year to the last day
of the second month of our fiscal fourth quarter. The change in date had no impact on our annual impairment test as both the
new and old testing dates are within the same fiscal quarter. We changed the assessment date to allow for more time to
complete the impairment assessment process before our fiscal year end.

For purposes of our goodwill impairment evaluation, the reporting units are our operating segments identified in Note 17 of
Notes to Consolidated Financial Statements. Goodwill has been assigned to the reporting units based on prior business
combinations related to the brands.

Our goodwill assessment consists of either using a qualitative approach to determine whether it is more likely than not that the
fair value of the assets is less than their respective carrying values or a quantitative impairment test, if necessary. In performing
the qualitative assessment, we consider many factors in evaluating whether the carrying value of the asset may not be
recoverable, including macroeconomic conditions, retail industry considerations, recent financial performance and declines in
stock price and market capitalization. In 2017, we completed a quantitative impairment test for all of our reporting units that
have goodwill, except for MW Cleaners (see Note 3 of Notes to Consolidated Financial Statements for more information). In
2016, we applied the qualitative approach to all reporting units, except for the corporate apparel reporting unit for which we
completed a quantitative test.

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For our quantitative tests, we estimated the fair value of the reporting unit using a combined income and market comparable
approach. Our income approach uses projected future cash flows that are discounted using a weighted‑average cost of capital
analysis that reflects current market conditions. The market comparable approach primarily considers market price multiples of
comparable companies and applies those price multiples to certain key drivers of the reporting unit.

Management judgment is a significant factor in the goodwill impairment evaluation process. The computations require
management to make estimates and assumptions. Actual values may differ significantly from these judgments, particularly if
there are significant adverse changes in the operating environment for our reporting units. Critical assumptions that are used as
part of these evaluations include:

The potential future cash flows of the reporting unit. The income approach relies on the timing and estimates of
future cash flows. The projections use management’s estimates of economic and market conditions over the
projected period, including growth rates in revenue, gross margin and expense. The cash flows are based on our
most recent business operating plans and various growth rates have been assumed for years beyond the current
business plan period.

Selection of an appropriate discount rate. The income approach requires the selection of an appropriate
discount rate, which is based on a weighted‑average cost of capital analysis. The discount rate is affected by
changes in short‑term interest rates and long‑term yield as well as variances in the typical capital structure of
marketplace participants. Given current economic conditions, it is possible that the discount rate will fluctuate in
the near term. The weighted‑average cost of capital used to discount the cash flows for the 2017 quantitative
tests ranged from 10.0% to 13.0%.

Selection of comparable companies within the industry. For purposes of the market comparable approach,
valuations were determined by calculating average price multiples of relevant key drivers from a group of
companies that are comparable to the reporting unit being tested and applying those price multiples to the key
drivers of the reporting unit. While the market price multiple is not an assumption, a presumption that it provides
an indicator of the value of the reporting unit is inherent in the valuation. The determination of the market
comparable also involves a degree of judgment. Earnings multiples used in the market comparable approach for
the 2017 tests ranged from 5.5 to 10.0.

As discussed above, the fair values of reporting units in 2017 were determined using a combined income and market
comparable approach. We believe these two approaches are appropriate valuation techniques and we generally weight the
two values equally as an estimate of reporting unit fair value for the purposes of our impairment testing. However, we may
weigh one value more heavily than the other when conditions merit doing so.

The goodwill impairment evaluation process requires management to make estimates and assumptions with regard to the fair
value of reporting units. Actual values may differ significantly from these judgments, particularly if there are significant
adverse changes in the operating environment for our reporting units. Sustained declines in our market capitalization could also
increase the risk of goodwill impairment. Such occurrences could result in future goodwill impairment charges that would, in
turn, negatively impact our results of operations. However, any such goodwill impairments would be non‑cash charges that
would not affect our cash flows or compliance with our debt covenants.

Indefinite‑lived intangible assets are not subject to amortization but are reviewed at least annually for impairment. The
indefinite‑lived intangible asset impairment evaluation is performed by comparing the fair value of the indefinite‑lived
intangible assets to their carrying values. Similar to the goodwill approach described above, our annual impairment assessment
for indefinite-lived intangible assets contemplates the use of either a qualitative approach to determine whether it is more likely
than not that the fair value of the assets is less than their respective carrying values or a quantitative impairment test, if
necessary. In 2017, we completed a quantitative impairment test for all of our indefinite-lived assets.

The quantitative impairment test estimates the fair value of an intangible asset based on an income approach using the
relief‑from‑royalty method. This approach is dependent upon a number of factors, including estimates of future growth and
trends, royalty rates, discount rates and other variables. We base our fair value estimates on assumptions we believe to be
reasonable, but which are unpredictable and inherently uncertain.

Fiscal 2017 Impairment Assessment Results

On February 28, 2018, we entered into a definitive agreement to divest our MW Cleaners business for approximately
$18.0 million, subject to certain adjustments. During the fourth quarter of 2017, based on an indicator of fair value of the
business, we recorded a goodwill impairment charge of $1.5 million to write down the net assets related to MW Cleaners to
their fair market value.

As a result of our annual impairment evaluations for our other reporting units, as of February 3, 2018, we believe that none of
our goodwill and indefinite-lived intangible assets are impaired and all of our reporting units have fair values that significantly
exceed their carrying values and, therefore, no reporting units are currently deemed “at risk” for goodwill impairment.

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Rental Product—The cost of our rental product is amortized to cost of sales based on the cost of each unit rented, which is
estimated based on the number of times the unit is expected to be rented and the average cost of the rental product. Lost,
damaged and retired rental product is also charged to cost of sales. Rental product is amortized to expense generally over a four
year period. We make assumptions, based primarily on historical experience, as to the number of times each unit can be rented.
If the actual number of times a unit can be rented were to vary significantly from our estimates, it could materially affect the
amount of rental product amortization included in cost of sales.

Income Taxes—Income taxes are accounted for using the asset and liability method. Deferred tax liabilities or assets are
established for temporary differences between financial and tax reporting bases and are subsequently adjusted to reflect
changes in enacted tax rates expected to be in effect when the temporary differences reverse. The deferred tax assets are
reduced, if necessary, by a valuation allowance if the future realization of those tax benefits is not more likely than not.

Significant judgment is required in determining the provision for income taxes, related taxes payable and deferred tax assets
and liabilities since, in the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is
uncertain. Additionally, our tax returns are subject to audit by various domestic and foreign tax authorities that could result in
material adjustments or differing interpretations of the tax laws. Although we believe that our estimates are reasonable and are
based on the best available information at the time we prepare the provision, actual results could differ from these estimates
resulting in a final tax outcome that may be materially different from that which is reflected in our consolidated financial
statements.

For example, the changes included in the Tax Reform Act are broad and complex. The final transition impacts of the Tax
Reform Act may differ from the estimates provided elsewhere in this report, possibly materially, due to, among other things,
changes in interpretations of the Tax Reform Act, any legislative action to address questions that arise because of the Tax
Reform Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Reform Act,
or any updates or changes to estimates we have utilized to calculate the transition impacts, including impacts from changes to
current year earnings estimates and foreign exchange rates of foreign subsidiaries.

The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in
the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than
50% likelihood of being realized upon settlement. Additionally, interest and/or penalties related to uncertain tax positions are
recognized in income tax expense. Significant judgment is required in determining our uncertain tax positions. We have
established reserves for uncertain tax positions using our best judgment and adjust these reserves, as warranted, due to changing
facts and circumstances. A change in our uncertain tax positions, in any given period, could have a significant impact on our
financial position, results of operations and cash flows for that period.

Recent Accounting Pronouncements

Except as discussed in Note 1 of Notes to Consolidated Financial Statements, we have considered all new accounting
pronouncements and have concluded that there are no new pronouncements that may have a material impact on our results of
operations, financial condition, or cash flows, based on current information.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

Our UK‑based operations sell their products and conduct their business primarily in GBP but purchase most of their
merchandise in transactions paid in U.S. dollars or Euros. Historically, the exchange rate between the GBP, Euro and U.S.
dollar has fluctuated. A decline in the value of the GBP as compared to the Euro or U.S. dollar will adversely impact our UK
operating results as the cost of merchandise purchases will increase, particularly in relation to longer term customer contracts
that have little or no pricing adjustment provisions, and the revenues and earnings of our UK operations will be reduced when
they are translated to U.S. dollars. Also, the value of our UK net assets as expressed in U.S. dollars may decline. We utilize
foreign currency hedging contracts as well as price renegotiations to limit exposure to some of this risk; however these
activities may not adequately protect our UK operations from exchange rate risk.

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For information on our derivative instruments, see Note 16 of Notes to Consolidated Financial Statements. A hypothetical 10%
increase or decrease in applicable February 3, 2018 forward rates for these derivative financial instruments could impact their
fair value by $9.1 million. However, it should be noted that any change in the value of these contracts, whether real or
hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged item.

Interest Rate Risk

Borrowings under our Credit Facilities generally bear interest at a rate based on LIBOR plus an applicable margin. As such, our
Credit Facilities expose us to market risk for changes in interest rates. For information on our indebtedness, see Note 6 of Notes
to Consolidated Financial Statements.

The interest rate on our Term Loan is based on 1-month LIBOR, which was 1.58% at February 3, 2018, plus the applicable
margin which is currently 3.50%, resulting in a total interest rate of 5.08%. To mitigate future interest rate risk, in January 2015,
we entered into an interest rate swap agreement, in which the variable rate payments due under a portion of the Term Loan
were exchanged for a fixed rate. In April 2017, we entered into an additional interest rate swap agreement to exchange variable
rate payments under a portion of the Term Loan for a fixed rate. At February 3, 2018, the total notional amount under our
interest rate swaps is $410.0 million. Also, in April 2015, we refinanced $400.0 million aggregate principal of our Term Loan
from a variable rate to a fixed rate of 5.0%. After consideration of the swaps and refinancing, each one percentage point change
in interest rates would result in an approximate $1.8 million change in annual interest expense on our Term Loan.

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

We also have exposure to market rate risk for changes in interest rates as those rates relate to our cash and cash equivalents. We
do not believe our cash and cash equivalents are subject to material interest rate risk, however, future investment income earned
on our cash equivalents will fluctuate in line with short‑term interest rates.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Tailored Brands, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Tailored Brands, Inc. and subsidiaries (the "Company") as
of February 3, 2018 and January 28, 2017, the related consolidated statements of earnings (loss), comprehensive income (loss),
shareholders' equity (deficit), and cash flows, for each of the three years in the period ended February 3, 2018, 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 3, 2018 and January 28, 2017, and the results of its
operations and its cash flows for each of the three years in the period ended February 3, 2018, in conformity with accounting
principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of February 3, 2018, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 30, 2018, expressed an unqualified opinion on the Company's internal control over
financial reporting.

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 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. 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

Houston, Texas
March 30, 2018

We have served as the Company’s auditor since at least 1991, in connection with its initial public offering.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total current assets

PROPERTY AND EQUIPMENT, AT COST:

Land
Buildings
Leasehold improvements
Furniture, fixtures and equipment

Less accumulated depreciation and amortization

PROPERTY AND EQUIPMENT, net
RENTAL PRODUCT, net
GOODWILL
INTANGIBLE ASSETS, net
OTHER ASSETS

TOTAL ASSETS

February 3,
2018

January 28,
2017

103,607 $
79,783
851,931
78,252
1,113,573

70,889
65,714
955,512
73,602
1,165,717

19,752
149,880
620,600
656,094
1,446,326
(985,652)
460,674
123,730
120,292
168,987
12,699

20,689
148,623
590,897
621,045
1,381,254
(897,089)
484,165
152,610
117,026
171,659
6,695
$ 1,999,955 $ 2,097,872

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:

Accounts payable
Accrued expenses and other current liabilities
Income taxes payable
Current portion of long-term debt

Total current liabilities
LONG-TERM DEBT, net
DEFERRED TAXES, net AND OTHER LIABILITIES

Total liabilities

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):

145,106 $
285,537
6,121
7,000
443,764
1,389,808
164,191
1,997,763

177,380
267,899
1,262
13,379
459,920
1,582,150
163,420
2,205,490

Preferred stock, $0.01 par value, 2,000,000 shares authorized, no
shares issued
Common stock, $0.01 par value, 100,000,000 shares authorized,
49,287,856 and 48,783,700 shares issued
Capital in excess of par
Accumulated deficit
Accumulated other comprehensive loss
Total shareholders' equity (deficit)

—

492
491,648
(479,166)
(10,782)
2,192

487
470,801
(538,823)
(40,083)
(107,618)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
(DEFICIT)

$ 1,999,955 $ 2,097,872

The accompanying notes are an integral part of these consolidated financial statements.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

For the Years Ended
February 3, 2018, January 28, 2017, and January 30, 2016

(In thousands, except per share amounts)

2017

Fiscal Year
2016

2015

Net sales:

Retail clothing product
Rental services
Alteration and other services

Total retail sales

Corporate apparel clothing product

Total net sales

Cost of sales:

Retail clothing product
Rental services
Alteration and other services
Occupancy costs

Total retail cost of sales

Corporate apparel clothing product

Total cost of sales

Gross margin:

Retail clothing product
Rental services
Alteration and other services
Occupancy costs

Total retail gross margin

Corporate apparel clothing product

Total gross margin

Basic
Diluted

Weighted-average common shares outstanding:

Basic
Diluted

$2,439,817 $2,445,922 $ 2,599,934
443,290
209,250
3,252,474
243,797
3,496,271

428,355
184,849
3,053,021
251,325
3,304,346

457,444
195,035
3,098,401
280,302
3,378,703

1,084,266
69,973
139,840
415,981
1,710,060
185,520
1,895,580

1,093,639
82,764
136,904
431,298
1,744,605
192,630
1,937,235

1,160,323
76,726
145,852
455,486
1,838,387
173,461
2,011,848

1,355,551
358,382
45,009
(415,981)
1,342,961
65,805
1,408,766

173,411
1,000,892
1,500
3,547

229,416

564
(100,471)
5,445

1,352,283
374,680
58,131
(431,298)
1,353,796
87,672
1,441,468

1,439,611
366,564
63,398
(455,486)
1,414,087
70,336
1,484,423

189,956
1,099,328
—
19,358
132,826

204,985
1,085,900
1,243,354
27,480
(1,077,296)
187
167
(105,977)
(103,149)
(12,675)
1,737
(1,195,761)
31,581
6,625
(169,042)
24,956 $(1,026,719)

1.97 $
1.95 $

0.51 $
0.51 $

(21.26)
(21.26)

49,094
49,468

48,607
48,786

48,288
48,288

134,954
38,251
96,703 $

$
$

The accompanying notes are an integral part of these consolidated financial statements.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Years Ended
February 3, 2018, January 28, 2017 and January 30, 2016

(In thousands)

Fiscal Year

Net earnings (loss)
Currency translation adjustments
Unrealized gain (loss) on cash flow hedges, net of tax
Adjustment to minimum pension liability, net of tax
Comprehensive income (loss)

2017
$ 96,703 $

29,089
227
(15)

$ 126,004 $

2015

2016
24,956 $(1,026,719)
(22,427)
(342)
(46)
13,359 $(1,049,534)

(13,546)
1,925
24

The accompanying notes are an integral part of these consolidated financial statements.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(In thousands, except shares)

Common
Stock

Capital
in Excess
of Par

(Accumulated
Deficit)
Retained
Earnings

Accumulated
Other

Comprehensive Treasury
Stock, at
Cost

(Loss)
Income

Total
Equity
(Deficit)

(5,671) $ (3,192) $

BALANCES — January 31, 2015

Net loss
Other comprehensive loss
Cash dividends — $0.72 per share
Share-based compensation
Common stock issued under share-based award
plans and to stock discount plan — 307,142 shares
Tax payments related to vested deferred stock units
Tax benefit related to share-based plans
Repurchases of common stock — 5,799 shares
Treasury stock reissued — 8,804 shares

BALANCES — January 30, 2016

Net earnings
Other comprehensive loss
Cash dividends — $0.72 per share
Share-based compensation
Common stock issued under share-based award
plans and to stock discount plan — 336,746 shares
Tax payments related to vested deferred stock units
Tax deficiency related to share-based plans
Retirement of treasury stock — 120,291 shares

BALANCES —January 28, 2017

Net earnings
Other comprehensive income
Cash dividends — $0.72 per share
Share-based compensation
Common stock issued under share-based award
plans and to stock discount plan — 504,156 shares
Tax payments related to vested deferred stock units

BALANCES — February 3, 2018

482 $ 440,907 $
—
—
—
—

—
—
—
14,839

537,263 $

(1,026,719)
—
(35,143)
—

3
—
—
—
—
485
—
—
—
—

3
—
—
(1)
487
—
—
—
—

2,971
(4,538)
1,456
—
130
455,765
—
—
—
17,436

2,186
(1,362)
(3,224)
—
470,801
—
—
—
20,636

—
—
—
(277)
—
(524,876)
24,956
—
(35,930)
—

—
—
—
(2,973)
(538,823)
96,703
—
(37,046)
—

—
(22,815)
—
—

—
—
—
—
—
(28,486)
—
(11,597)
—
—

—
—
—
—
(40,083)
—
29,301
—
—

—
—
—
—

—
—
—
—
218
(2,974)
—
—
—
—

—
—
—
2,974
—
—
—
—
—

969,789
(1,026,719)
(22,815)
(35,143)
14,839

2,974
(4,538)
1,456
(277)
348
(100,086)
24,956
(11,597)
(35,930)
17,436

2,189
(1,362)
(3,224)
—
(107,618)
96,703
29,301
(37,046)
20,636

5
—
492 $ 491,648 $

1,898
(1,687)

—
—
(479,166) $

—
—
(10,782) $

—
—
— $

1,903
(1,687)
2,192

The accompanying notes are an integral part of these consolidated financial statements.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended

February 3, 2018, January 28, 2017 and January 30, 2016

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings (loss)
Adjustments to reconcile net earnings (loss) to net cash provided by operating
activities:

Depreciation and amortization
Rental product amortization
Goodwill and intangible asset impairment charges
(Gain) loss on extinguishment of debt, net
Amortization of deferred financing costs and discount on long-term debt
Loss on disposition of assets
Asset impairment charges
Share-based compensation
Excess tax benefits from share-based plans
Deferred tax benefit
Deferred rent expense and other

Changes in operating assets and liabilities:

Accounts receivable
Inventories
Rental product
Other assets
Accounts payable, accrued expenses and other current liabilities
Income taxes payable
Other liabilities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures
Acquisition of business, net of cash
Proceeds from sales of property and equipment
Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on term loan
Proceeds from asset-based revolving credit facility
Payments on asset-based revolving credit facility
Repurchase and retirement of senior notes
Deferred financing costs
Cash dividends paid
Proceeds from issuance of common stock
Tax payments related to vested deferred stock units
Excess tax benefits from share-based plans
Repurchases of common stock

Net cash used in financing activities

Effect of exchange rate changes
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Balance at beginning of period
Balance at end of period

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid (refunded) for:

Interest
Income taxes, net

2017

Fiscal Year
2016

2015

96,703 $

24,956 $ (1,026,719)

106,493
38,021
1,500
(5,445)
7,066
1,237
3,547
20,636
—
(5,763)
938

(9,440)
114,652
(9,582)
(5,956)
(10,843)
4,650

2,354
350,768

(94,958)
(457)
5,480
(89,935)

115,205

42,171
—
(1,737)
7,503
6,396
19,358
17,436
(11)
(23,988)
(1,725)

(5,593)
61,707
(41,779)
71,338
(44,630)
849

(4,828)
242,628

(99,694)
—
617
(99,077)

(53,379)
276,300
(276,300)
(145,371)
(2,580)
(35,761)
1,903
(1,687)
—
—
(236,875)
8,760
32,718
70,889
103,607 $

(42,451)
609,537
(609,537)
(21,924)
—
(35,240)
2,189
(1,362)
11
—
(98,777)
(3,865)
40,909
29,980
70,889 $

132,329
34,592
1,243,354
12,675
7,915
3,548
27,480
14,839
(1,584)
(184,841)
4,066

8,165
(94,889)
(65,866)
(8,815)
22,953
289

2,206
131,697

(115,498)
—
2,617
(112,881)

(8,000)
180,500
(180,500)
—
(3,566)
(34,980)
2,974
(4,538)
1,584
(277)
(46,803)
(4,294)
(32,281)
62,261
29,980

$ 106,372 $
$

96,408 $
39,537 $ (39,682) $

96,994
21,857

We had unpaid capital expenditure purchases included in accounts payable and accrued expenses and other current liabilities of
approximately $2.9 million, $12.2 million and $12.8 million in fiscal 2017, 2016 and 2015, respectively. Capital expenditure
purchases are recorded as cash outflows from investing activities in the consolidated statement of cash flows in the period in
which they are paid.

The accompanying notes are an integral part of these consolidated financial statements.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Tailored Brands and its subsidiaries (the “Company”, “we”, “us”, and “our”) is a specialty apparel retailer
offering suits, suit separates, sport coats, slacks, formalwear, business casual, denim, sportswear, outerwear,
dress shirts, shoes and accessories for men and tuxedo and suit rental product (collectively “rental
product”). We serve our customers through an expansive omni-channel network including over 1,400 locations
in
the United States (“U.S.”) and Canada as well as our branded e-commerce websites at
www.menswearhouse.com, www.josbank.com and www.josephabboud.com.

Our retail stores are operated under the Men’s Wearhouse, Men’s Wearhouse and Tux, Jos. A. Bank Clothiers
(“Jos. A. Bank”), Moores Clothing for Men (“Moores”), Joseph Abboud, and K&G names and carry a wide
selection of exclusive and non-exclusive merchandise brands. In addition, we offer our customers alteration
services and most of our K&G stores also offer women’s career and casual apparel, sportswear and accessories,
including shoes, and children’s apparel. Also, we conduct retail dry cleaning, laundry and heirlooming
operations through MW Cleaners in Texas. See Note 3 for information on our divestiture of MW Cleaners.

Additionally, we operate an international corporate apparel business with operations in both the United
Kingdom (“UK”) and the U.S. Our UK-based business is the largest provider of corporate apparel in the UK
under the Dimensions, Alexandra and Yaffy brands. In the U.S., our corporate apparel business operates under
the Twin Hill brand name. Our corporate apparel business provides corporate apparel uniforms and workwear
to workforces through multiple channels including managed corporate accounts, catalogs and the internet at
www.dimensions.co.uk, www.alexandra.co.uk, and www.twinhill.com.

We follow the standard fiscal year of the retail industry, which is a 52-week or 53-week period ending on the
Saturday closest to January 31. The periods presented in these financial statements are the fiscal years ended
February 3, 2018 (“fiscal 2017”), January 28, 2017 (“fiscal 2016”), and January 30, 2016 (“fiscal 2015”). Each
of these periods had 52 weeks except for fiscal 2017, which consisted of 53 weeks.

Principles of Consolidation— The consolidated financial statements include the accounts of Tailored Brands,
Inc. and its subsidiaries. Intercompany accounts and transactions have been eliminated in the consolidated
financial statements.

Use of Estimates— The preparation of financial statements in conformity with accounting principles generally
accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Cash and Cash Equivalents— Cash and cash equivalents includes all cash in banks, cash on hand and all
highly liquid investments with an original maturity of three months or less.

Accounts Receivable—Accounts receivable consists of our receivables from third‑party credit card providers
and other trade receivables, which consist primarily of receivables from our corporate apparel segment
customers. Collectability is reviewed regularly and recorded net of an allowance for uncollectible accounts,
which is adjusted as necessary.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Inventories—Inventories are valued at the lower of cost and net realizable value. Cost is determined based on
the average cost method. Our inventory cost also includes estimated procurement and distribution costs
(warehousing, freight, hangers and merchandising costs) associated with the inventory, with the balance of
such costs included in cost of sales. Procurement and distribution costs are generally allocated to inventory
based on the ratio of annual product purchases to inventory cost. We make assumptions, based primarily on
historical experience, as to items in our inventory that may be damaged, obsolete or salable only at marked
down prices to reflect the net realizable value of these items.

Property and Equipment—Property and equipment are stated at cost. Normal repairs and maintenance costs
are charged to earnings as incurred and additions and major improvements are capitalized. The cost of assets
retired or otherwise disposed of and the related allowances for depreciation are eliminated from the accounts in
the period of disposal and the resulting gain or loss is credited or charged to earnings.

Buildings are depreciated using the straight‑line method over their estimated useful lives of 10 to 25 years.
Depreciation of leasehold improvements is computed on the straight‑line method over the term of the lease,
which is generally five to ten years based on the initial lease term plus first renewal option periods that are
reasonably assured, or the useful life of the assets, whichever is shorter. Furniture, fixtures and equipment are
depreciated using primarily the straight‑line method over their estimated useful lives of two to 15 years.

Depreciation expense was $102.5 million, $110.4 million and $117.9 million for fiscal 2017, 2016 and 2015,
respectively.

Rental Product—Rental product is amortized to cost of sales based on the cost of each unit rented. The cost of
each unit rented is estimated based on the number of times the unit is expected to be rented and the average
cost of the rental product. Lost, damaged and retired rental product is also charged to cost of sales. Rental
product is amortized to expense generally over a four year period. We make assumptions, based primarily on
historical experience, as to the number of times each unit can be rented. Amortization expense was
$38.0 million, $42.2 million and $34.6 million for fiscal 2017, 2016 and 2015, respectively.

Asset impairment charges totaled $3.5 million, $19.4 million and $27.5 million for fiscal 2017, 2016 and 2015,
respectively. Of the $3.5 million of asset impairment charges recorded in fiscal 2017, all of which relates to
our retail segment, $1.2 million relates to fixed assets in our tuxedo shops within Macy’s (see Note 2 for
additional information) and the remainder relates to underperforming stores. Of the $19.4 million recorded in
fiscal 2016, $16.5 million relates to our retail segment, of which $14.0 million related to fixed assets in our
tuxedo shops within Macy’s, $2.5 million related primarily to stores closed as part of our store rationalization
program and $2.9 million relates to a long-lived asset reclassified as held for sale in our shared services
segment. Of the $27.5 million recorded in fiscal 2015, all of which relates to our retail segment, $23.1 million
related to stores closed in fiscal 2016 as a result of our store rationalization program (see Note 4 for additional
information). The remaining $4.3 million of asset impairment charges recorded in fiscal 2015 related to
underperforming stores, primarily at our Jos. A. Bank brand.

See Note 7 for additional discussion of impairment charges recorded in fiscal 2015 related to certain finite-
lived intangible assets for Jos. A. Bank.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill and Other Indefinite-Lived Intangible Assets—Goodwill and other indefinite-lived intangible assets
are initially recorded at their fair values. Identifiable intangible assets with an indefinite useful life, including
goodwill, are not amortized but are evaluated annually for impairment. A more frequent evaluation is
performed if events or circumstances indicate that impairment could have occurred. Such events or
circumstances could include, but are not limited to, significant negative industry or economic trends,
unanticipated changes in the competitive environment, decisions to significantly modify or dispose of
operations and a significant sustained decline in the market price of our stock.

During fiscal 2015, we changed the date of our annual impairment assessment from the last day of our fiscal
year to the last day of the second month of our fiscal fourth quarter. The change in date had no impact on our
annual impairment test as both the new and old testing dates are within the same fiscal quarter. We changed
the assessment date to allow for more time to complete the process before our fiscal year end.

In addition, in January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment . ASU 2017-04 eliminates
Step 2 from the goodwill impairment test and instead requires an entity to perform its annual, or interim,
goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The entity
should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting
unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit. We early adopted
ASU 2017-04 in the fourth quarter of fiscal 2017, and it had no material impact on the consolidated financial
statements.

For purposes of our goodwill impairment evaluation, the reporting units are our operating segments identified
in Note 17. Goodwill has been assigned to the reporting units based on prior business combinations related to
the segments. Our goodwill assessment consists of either using a qualitative approach to determine whether it
is more likely than not that the fair value of the assets is less than their respective carrying values or a
quantitative impairment test, if necessary. In performing the qualitative assessment, we consider many factors
in evaluating whether the carrying value of the asset may not be recoverable, including macroeconomic
conditions, retail industry considerations, recent financial performance and declines in stock price and market
capitalization.

As of February 3, 2018, our annual impairment evaluation of goodwill for all reporting units except for MW
Cleaners, did not result in an impairment charge. See Note 3 for discussion of a goodwill impairment charge
related to our divestiture of MW Cleaners.

Indefinite-lived intangible assets are not subject to amortization but are reviewed at least annually for
impairment. The indefinite-lived intangible asset impairment evaluation is performed by comparing the fair
value of the indefinite-lived intangible assets to their carrying values. Similar to the goodwill approach
described above, our annual impairment assessment for indefinite-lived intangible assets contemplates the use
of either a qualitative approach to determine whether it is more likely than not that the fair value of the assets
is less than their respective carrying values or a quantitative impairment test, if necessary.

We estimate the fair values of these intangible assets based on an income approach using the relief-from-
royalty method. This approach is dependent upon a number of factors, including estimates of future growth
and trends, royalty rates, discount rates and other variables. We base our fair value estimates on assumptions
we believe to be reasonable, but which are unpredictable and inherently uncertain. If the carrying value
exceeds its estimated fair value, an impairment loss is recognized in the amount by which the carrying amount
exceeds the estimated fair value of the asset. As of February 3, 2018, our annual impairment evaluation of
indefinite-lived intangible assets did not result in an impairment charge.

See Note 7 for additional discussion of our goodwill and indefinite-lived intangible assets including the results
of our fiscal 2015 assessment and related impairment charges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Derivative Financial Instruments—Derivative financial instruments are recorded in the consolidated balance
sheet at fair value as other current assets, accrued expenses and other current liabilities or other liabilities. For
derivative instruments for which hedge accounting was not designated, the gain or loss is recorded in cost of
sales in the consolidated statements of earnings (loss). For derivative instruments that qualify for hedge
accounting treatment, the effective portion of the derivative is recorded as a component of other
comprehensive income (loss) and reclassified to earnings in the period when the hedged item affects earnings.
See Note 16 for further information regarding our derivative instruments.

Self‑Insurance— We self‑insure significant portions of our workers’ compensation and employee medical
costs. We estimate our liability for future payments under these programs based on historical experience and
various assumptions as to participating employees, health care costs, number of claims and other factors,
including industry trends and information provided to us by our insurance broker. We also use actuarial
estimates. If the number of claims or the costs associated with those claims were to increase significantly over
our estimates, additional charges to earnings could be necessary to cover required payments.

Sabbatical Leave— We recognize compensation expense associated with a sabbatical leave or other similar
benefit arrangement over the requisite service period during which an employee earns the benefit. In fiscal
2016, employees can no longer earn a sabbatical leave and, as a result, we are no longer accruing benefits for
sabbatical leave. The accrued liability for sabbatical leave, which is included in accrued expenses and other
current liabilities in the consolidated balance sheets, was $3.6 million and $6.1 million as of fiscal 2017 and
2016, respectively.

Income Taxes—Income taxes are accounted for using the asset and liability method. Deferred tax liabilities or
assets are established for temporary differences between financial and tax reporting bases and subsequently
adjusted to reflect changes in enacted tax rates expected to be in effect when the temporary differences
reverse. The deferred tax assets are reduced, if necessary, by a valuation allowance if the future realization of
those tax benefits is not more likely than not.

In addition, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted in December 2017, which
significantly changes how the U.S. taxes corporations. As a result, we made certain judgments in interpreting
the provisions of the Act as well as estimates in calculations used in preparing our fiscal 2017 operating
results. See Note 8 for further information regarding income taxes.

Revenue Recognition—Clothing product revenue is recognized at the time of sale and delivery of
merchandise, net of actual sales returns and a provision for estimated sales returns. For e-commerce sales,
revenue is recognized at the time we estimate the customer receives the product, which incorporates shipping
terms and estimated delivery times. Revenues from rental, alteration and other services are recognized upon
completion of the services. Amounts related to shipping and handling revenues billed to customers are
recorded in net sales, and the related shipping and handling costs are recorded in cost of sales.

We present all non‑income government‑assessed taxes (sales, use and value added taxes) collected from our
customers and remitted to governmental agencies on a net basis (excluded from net sales) in our consolidated
financial statements. The government‑assessed taxes are recorded in accrued expenses and other current
liabilities until they are remitted to the government agency.

Gift Cards and Gift Card Breakage— Proceeds from the sale of gift cards are recorded as a liability and are
recognized as net sales from products and services when the cards are redeemed. Our gift cards do not have
expiration dates. We recognize income from breakage of gift cards when the likelihood of redemption of the
gift card is remote. We determine our gift card breakage rate based upon historical redemption patterns.
Breakage income is recognized for those cards for which the likelihood of redemption is deemed to be remote
and for which there is no legal obligation for us to remit the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

value of such unredeemed gift cards to any relevant jurisdictions. Gift card breakage estimates are reviewed on
a quarterly basis. Gift card breakage income is recorded as other operating income and is classified as a
reduction of selling, general and administrative expenses (“SG&A”) expenses in our consolidated statement of
earnings (loss). Pre-tax breakage income of $3.2 million, $2.9 million and $2.7 million was recognized during
fiscal 2017, 2016 and 2015, respectively.

Loyalty Program—We maintain a customer loyalty program for our Men’s Wearhouse, Men’s Wearhouse and
Tux, Jos. A. Bank and Moores brands in which customers receive points for purchases. Points are generally
equivalent to dollars spent on a one‑to‑one basis, excluding any sales tax dollars. Upon reaching 500 points,
customers are issued a $50 rewards certificate which they may redeem for purchases at our stores or online.
Generally, reward certificates earned must be redeemed no later than six months from the date of issuance. We
accrue the estimated costs of the anticipated certificate redemptions when the certificates are issued and charge
such costs to cost of sales. Redeemed certificates are recorded as markdowns when redeemed and no revenue
is recognized for the redeemed certificate amounts. The estimate of costs associated with the loyalty program
requires us to make assumptions related to the cost of product or services to be provided to customers when the
certificates are redeemed as well as redemption rates. The accrued liability for loyalty program reward
certificates, which is included in accrued expenses and other current liabilities in the consolidated balance
sheets, was $9.1 million and $9.8 million as of fiscal 2017 and 2016, respectively.

Operating Leases—Operating leases relate primarily to stores and generally contain rent escalation clauses,
rent holidays, contingent rent provisions and occasionally leasehold incentives. Rent expense for operating
leases is recognized on a straight‑line basis over the term of the lease, which is generally five to ten years
based on the initial lease term plus first renewal option periods that are reasonably assured. Rent expense for
stores is included in cost of sales as a part of occupancy cost and other rent is included in SG&A expenses. The
lease terms commence when we take possession with the right to control use of the leased premises, which
normally includes a construction period and, for stores, is approximately 60 days prior to the date rent
payments begin.

Deferred rent that results from recognition of rent expense on a straight‑line basis is included in other
liabilities. Landlord incentives received for reimbursement of leasehold improvements are recorded as deferred
rent and amortized as a reduction to rent expense over the term of the lease. Contingent rentals are generally
based on percentages of sales and are recognized as store rent expense as they accrue.

Advertising—Advertising costs are expensed as incurred or, in the case of media production costs, when the
advertisement first appears.

New Store Costs—Promotion and other costs associated with the opening of new stores are expensed as
incurred.

Store Closures and Relocations—Costs associated with store closures or relocations are charged to expense
when the liability is incurred. When we close or relocate a store, we record a liability for the present value of
estimated unrecoverable cost, which is substantially made up of the remaining net lease obligation.

Share‑Based Compensation—In recognizing share‑based compensation, we follow the provisions of the
authoritative guidance regarding share‑based awards. This guidance establishes fair value as the measurement
objective in accounting for stock awards and requires the application of a fair value based measurement
method in accounting for compensation cost, which is recognized over the requisite service period.

During the first quarter of fiscal 2017, we adopted ASU No. 2016-09, Compensation-Stock Compensation.
ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including
income tax consequences, classification of awards as either equity or liabilities, and classification on the
statement of cash flows. The recognition of excess tax benefits and deficiencies related to the vesting of stock-
based awards in the statement of earnings and presentation of excess tax benefits on the statement of cash
flows were adopted prospectively, with no adjustments made to prior periods. In addition, upon adoption, we
did not change our policy on accounting for forfeitures, which is to estimate the number of awards expected to
be forfeited and adjusting the estimate as needed. Overall, the adoption of ASU 2016-09 did not have a
material impact on our financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We use the Black-Scholes option pricing model to estimate the fair value of stock options on the date of
grant. The fair value of deferred stock units, performance units, and restricted stock is determined based on the
number of shares granted and the quoted closing price of our common stock on the date of grant. The fair
value of awards that contain a market condition is measured using a Monte Carlo simulation method. Awards
settled in cash are classified as liabilities and the fair value of awards settled in cash will be remeasured at each
reporting period until the awards are settled.

The value of the portion of the award that is ultimately expected to vest is recognized as expense over the
requisite service period. Compensation expense for performance-based awards is recorded based on the
amount of the award ultimately expected to vest and the level and likelihood of the performance condition to
be met. For grants with a service condition only that are subject to graded vesting, we recognize expense on a
straight-line basis over the requisite service period for the entire award.

Share‑based compensation expense, including cash settled awards, recognized for fiscal 2017 was
$25.2 million. Share-based compensation expense recognized for fiscal 2016 and 2015 was, $17.4 million and
$14.8 million, respectively. There were no cash settled awards granted during fiscal 2016 and 2015. Total
income tax benefit recognized in net earnings (loss) for share‑based compensation arrangements was
$9.5 million, $6.8 million and $5.8 million for fiscal 2017, 2016 and 2015, respectively. See Note 13 for
additional disclosures regarding share‑based compensation.

Foreign Currency Translation—Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at
the exchange rates in effect at each balance sheet date. Equity is translated at applicable historical exchange
rates. Income, expense and cash flow items are translated at average exchange rates during the year. Resulting
translation adjustments are reported as a separate component of comprehensive income (loss).

Comprehensive Income (Loss)—Comprehensive income (loss) includes all changes in equity during the
periods presented that result from transactions and other economic events other than transactions with
shareholders. We present comprehensive income (loss) in a separate statement in the accompanying
consolidated financial statements.

Earnings (loss) per share— In 2017, we calculated earnings (loss) per common share allocated to common
shareholders using the treasury stock method while in 2016 and 2015, we applied the two-class method. The
two-class method required an evaluation of whether instruments granted in share-based payment transactions
were participating securities, including unvested share-based payment awards that contain non-forfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) and how participating securities should be
included in the computation of earnings per common share allocated to common shareholders. See Note 5 for
disclosures regarding earnings (loss) per common share allocated to common shareholders.

Treasury stock— Treasury stock purchases are accounted for under the cost method whereby the entire cost of
the acquired stock is recorded as treasury stock. Gains and losses on the subsequent reissuance of shares are
credited or charged to capital in excess of par value using the average-cost method. Upon retirement of
treasury stock, the amounts in excess of par value are charged entirely to (accumulated deficit) retained
earnings.

Recent Accounting Pronouncements—We have considered all new accounting pronouncements and have
concluded that the following new pronouncements may have a material impact on our results of operations,
financial condition, or cash flows.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to
Accounting for Hedging Activities. ASU 2017-12 amends the existing hedge accounting model in order to
enable entities to better portray the economics of their risk management activities in their financial statements.
ASU 2017-12 is effective for public companies for annual reporting periods beginning after December 15,
2018, and interim periods within those fiscal years. Early adoption of ASU 2017-12 is permitted. We are
currently evaluating the impact ASU 2017-12 will have on our financial position, results of operations and
cash flows.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 increases transparency and
comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and
disclosing key information about leasing arrangements. The main difference between current U.S. GAAP and
ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as
operating leases under current U.S. GAAP. ASU 2016-02 is effective for public companies for annual
reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. Early
adoption of ASU 2016-02 is permitted. The guidance is required to be adopted using the modified
retrospective approach, with optional practical expedients. We are currently evaluating the impact ASU 2016-
02 will have on our financial position, results of operations and cash flows but expect that it will result in a
significant increase in our long-term assets and liabilities given we have a considerable number of operating
leases.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, to clarify the
principles used to recognize revenue for all entities. In August 2015, the FASB issued ASU No. 2015-14
which deferred the effective date of ASU 2014-09 by one year. As a result of this deferral, ASU 2014-09 is
effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted for
annual reporting periods beginning after December 15, 2016. The FASB has also issued several updates to
ASU 2014-09. The guidance allows for either a full retrospective or a modified retrospective transition method
and will also require additional disclosures. We will adopt ASU 2014-09 in the first quarter of fiscal 2018
using the modified retrospective method by recognizing a cumulative adjustment to retained earnings.

Based on our assessment, we determined that the adoption of ASU 2014-09 will impact the timing of revenue
recognition related to our customer loyalty programs, gift cards and e-commerce sales. For our customer
loyalty programs, we will no longer use the incremental cost method approach, rather we will use a deferred
revenue model. For gift card breakage, which is currently recognized as a reduction of SG&A when the
redemption of the gift card is remote, we will now classify breakage within net sales and it will be recognized
proportionately over the expected redemption period. For e-commerce sales, we will no longer recognize
revenue based on estimated customer receipt but will recognize revenue upon shipment to the customer.

In addition, for our corporate apparel segment, certain deferred revenue balances along with related inventory
amounts will be eliminated as part of the cumulative adjustment to retained earnings. Also, for estimated sales
returns, we will recognize allowances for estimated sales returns on a gross basis rather than net basis on the
consolidated balance sheets.

We expect the cumulative adjustment to retained earnings will be less than $40.0 million, net of tax. We do
not expect the adoption of ASU 2014-09 to have a material impact on our results of operations, financial
condition or cash flows on an ongoing basis.

2. TERMINATION OF TUXEDO RENTAL LICENSE AGREEMENT WITH MACY’S

During the first quarter of fiscal 2017, we reached an agreement with Macy's to wind down operations under
the tuxedo rental license agreement established between Macy's and The Men's Wearhouse in 2015. During
fiscal 2017, we completed the winding down of our operations related to our tuxedo shops within Macy's and
all tuxedo shops within Macy's closed in the second quarter of 2017.

As a result of the agreement, during the first quarter of fiscal 2017, we incurred $17.2 million of termination-
related costs, of which $14.6 million were cash charges. These costs included $12.3 million related to contract
termination, $1.4 million of rental product write-offs, $1.2 million of asset impairment charges and $2.3
million of other costs, all of which relate to our retail segment. Of the $17.2 million in termination-related
costs, $14.6 million is recorded in SG&A, $1.4 million is included in cost of sales and $1.2 million is included
in asset impairment charges in the consolidated statement of earnings. At February 3, 2018, all termination-
related costs have been paid.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. DIVESTITURE OF MW CLEANERS

On February 28, 2018, we entered into a definitive agreement to divest our MW Cleaners business for
approximately $18.0 million, subject to certain adjustments, and the transaction closed on March 3, 2018.

Additionally, we determined that the MW Cleaners business did not meet the held for sale criteria as of the end
of fiscal 2017. However, during the fourth quarter of 2017, based on an indicator of the fair value of the
business, we recorded a goodwill impairment charge of $1.5 million to write down the net assets related to
MW Cleaners to its estimated fair value, which relates to our retail segment. Total assets for MW Cleaners of
approximately $24.0 million primarily consist of accounts receivable, goodwill and property, plant and
equipment while total liabilities of approximately $6.0 million primarily consist of accrued expenses and
deferred tax liabilities.

4. RESTRUCTURING AND OTHER CHARGES

During the fourth quarter of fiscal 2015, we began implementing initiatives intended to reduce costs and
improve operating performance. These initiatives included a store rationalization program as well as a profit
improvement program to drive operating efficiencies and improve our expense structure. These programs were
substantially completed in fiscal 2016 and resulted in the closure of 75 Jos. A. Bank full line stores, the closure
of 56 factory and outlet stores at Jos. A. Bank and Men’s Wearhouse and the closure of 102 Men’s Wearhouse
and Tux stores.

No charges were incurred under these initiatives in fiscal 2017. Cumulative pre-tax restructuring and other
charges incurred in fiscal 2016 and 2015 related to these programs was $109.6 million, of which approximately
$68.1 million were cash expenses.

A summary of the charges incurred are presented in the table below (amounts in thousands):

Lease termination costs
Store asset impairment charges and
accelerated depreciation, net of deferred rent
Consulting costs
Inventory reserve charges
Severance and employee-related costs
Favorable lease impairment charges
Other costs

Total pre-tax restructuring and other
charges

(1)

Fiscal Year

2016

43,116 $

2015

Cumulative
43,116

— $

1,734
15,074
—
6,103
—
2,060

23,146
918
11,008
—
5,533
858

24,880
15,992
11,008
6,103
5,533
2,918

68,087 $

41,463 $ 109,550

(1) For fiscal 2016, consists of $71.9 million included in SG&A offset by a $3.8 million reduction in cost of
sales. For fiscal 2015, consists of $23.1 million included in asset impairment charges, $11.0 million in
cost of sales, $5.5 million of goodwill and intangible asset impairment charges and $1.8 million in
SG&A. For fiscal 2016, fiscal 2015 and cumulatively since inception of the initiatives, of the total
amounts recorded in the table above, $49.0 million, $39.9 million and $88.9 million, respectively, relate
to our retail segment and the remainder are recorded in shared services.

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

Beginning Balance, January 28, 2017
Charges, excluding non-cash items
Payments

Ending Balance, February 3, 2018

Lease

Termination Consulting Other

Costs

4,834 $
—
(4,557)

277 $

Costs Total
60 $ 25 $ 5,905
—
—
(5,628)
(60)
277
— $ — $

—
(25)

Severance and
Employee-
Related Costs
986 $
$
—
(986)

— $

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition to the restructuring costs described above, we incurred integration and other costs related to Jos. A.
Bank totaling $8.8 million and $18.7 million for fiscal years 2016 and 2015, respectively. Integration and
other costs for fiscal 2016 include $2.1 million recorded in cost of sales with the remainder recorded in
SG&A. Integration and other costs for fiscal 2015 include $0.9 million recorded in cost of sales with the
remainder recorded in SG&A.

5. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per common share allocated to common shareholders is computed by dividing net
earnings (loss) by the weighted-average common shares outstanding during the period. Diluted earnings (loss)
per common share reflect the more dilutive earnings per common share amount calculated using the treasury
stock method or the two-class method. For fiscal 2017, the treasury stock method is used to calculate diluted
earnings per common share while the two-class method was used for fiscal 2016 and 2015.

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

Numerator
Net earnings (loss)
Net earnings allocated to participating securities
(restricted stock and deferred stock units)
Net earnings (loss) allocated to common
shareholders
Denominator
Basic weighted-average common shares
outstanding
Dilutive effect of share-based awards
Diluted weighted-average common shares
outstanding
Net earnings (loss) per common share allocated to
common shareholders:

Basic

Diluted

Fiscal Year

2017

2016

2015

$96,703 $

24,956 $(1,026,719)

—

(28)

—

$96,703 $

24,928 $(1,026,719)

49,094
374

48,607
179

48,288
—

49,468

48,786

48,288

$
$

1.97
$
1.95 $

0.51
$
0.51 $

(21.26)
(21.26)

For fiscal 2017, 2016 and 2015, 1.8 million, 1.6 million, and 0.4 million anti‑dilutive shares of common stock
were excluded from the calculation of diluted earnings (loss) per common share allocated to common
shareholders, respectively.

6. DEBT

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

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In October 2017, we amended our then existing $500.0 million ABL Facility in part to increase the principal
amount available to $550.0 million and extend the maturity date to October 2022. See Credit Facilities section
below for additional information.

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including
fixed charge coverage ratios, total leverage ratios and secured leverage ratios. In addition, we are currently
restricted on our ability to pay dividends on our common stock in excess of $10.0 million per
quarter. Historically, our total leverage ratio and secured leverage ratio were above the maximums specified in
the agreements. As a result, we were subject to certain additional restrictions, including limitations on our
ability to make significant acquisitions and incur additional indebtedness. As of February 3, 2018, our total
leverage ratio and secured leverage ratio were below the maximums specified in the agreements and we
believe these ratios will remain below the maximums specified in the agreements, which will result in the
elimination of these additional restrictions.

Credit Facilities

The Term Loan is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S.
subsidiaries and will mature in 2021. The interest rate on the Term Loan is based on 1-month LIBOR, which
was 1.58% at February 3, 2018, plus the applicable margin which is currently 3.50%, resulting in a total
interest rate of 5.08%. In January 2015, we entered into an interest rate swap agreement, in which the variable
rate payments due under a portion of the Term Loan were exchanged for a fixed rate. In April 2017, we entered
into an additional interest rate swap agreement to exchange variable rate payments under a portion of the Term
Loan for a fixed rate. At February 3, 2018, the total notional amount under our interest rate swaps is $410.0
million. See Note 16 for additional information on our interest rate swaps.

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

As a result of the interest rate swaps and the Incremental Agreement, we have converted a significant portion
of the variable interest rate under the Term Loan to a fixed rate and, as of February 3, 2018, the Term Loan had
a weighted average interest rate of 5.22%.

In October 2017, we amended our ABL Facility, which now provides for a senior secured revolving credit
facility of $550.0 million, with possible future increases to $650.0 million under an expansion feature, that
matures in October 2022, and is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our
U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following
indices: (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate (“CDOR”) rate, (iii) Canadian prime rate or
(iv) an alternate base rate (equal to the greater of the prime rate, the New York Federal Reserve Bank
(“NYFRB”) rate plus 0.5% or adjusted LIBOR for a one-month interest period plus 1.0%). Advances under the
ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin
of up to 1.75%. The ABL Facility also provides for fees applicable to amounts available to be drawn under
outstanding letters of credit which range from 1.25% to 1.75%, and a fee on unused commitments of 0.25%. As
of February 3, 2018, there were no borrowings outstanding under the ABL Facility. During fiscal 2017, the
maximum borrowing outstanding under the ABL Facility was $34.7 million.

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

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We utilize letters of credit primarily as collateral for workers compensation claims and to secure inventory
purchases. At February 3, 2018, letters of credit totaling approximately $37.3 million were issued and
outstanding. Borrowings available under the ABL Facility as of February 3, 2018 were $505.5 million.

Senior Notes

The Senior Notes are guaranteed, jointly and severally, on an unsecured basis by Tailored Brands, Inc. and
certain of our U.S. subsidiaries. The Senior Notes and the related guarantees are senior unsecured obligations
of The Men’s Wearhouse and the guarantors, respectively, and will rank equally with all of The Men’s
Wearhouse’s and each guarantor’s present and future senior indebtedness. The Senior Notes will mature in
July 2022. Interest on the Senior Notes is payable on January 1 and July 1 of each year.

We may redeem some or all of the Senior Notes at any time on or after July 1, 2017 at the redemption prices
set forth in the indenture governing the Senior Notes. Upon the occurrence of certain specific changes of
control, we may be required to offer to purchase the Senior Notes at 101% of their aggregate principal amount
plus accrued and unpaid interest thereon to the date of purchase.

Long-Term Debt

In May 2017, we made a mandatory excess cash flow prepayment of $4.6 million on the Term Loan. In
January 2018, we also made an optional prepayment of $40.0 million on the Term Loan. As a result of these
prepayments, we recorded a loss on extinguishment of debt totaling $0.9 million consisting of the elimination
of unamortized deferred financing costs and OID related to the Term Loan.

In addition, during fiscal 2017, we repurchased and retired $153.8 million in face value of Senior Notes
through open market transactions, which were consummated via borrowings on our ABL Facility. As a result,
we recorded a net gain on extinguishment totaling $6.3 million, which reflects an $8.4 million gain upon
repurchase partially offset by the elimination of unamortized deferred financing costs of $2.1 million.

As a result of the repurchase and retirement of $153.8 million in face value of Senior Notes and our Term Loan
prepayments, we recorded a net gain on extinguishment totaling $5.4 million which reflects a $8.4 million gain
upon repurchase partially offset by the elimination of unamortized deferred financing costs of $3.0 million,
which is included as a separate line in the consolidated statement of earnings (loss).

The following table provides details on our long-term debt as of February 3, 2018 and January 28, 2017 (in
thousands):

Term Loan (net of unamortized OID of $3.0 million at
February 3, 2018 and $4.1 million at January 28, 2017)
Senior Notes
Less: Deferred financing costs related to the Term Loan and
Senior Notes
Total long-term debt, net
Current portion of long-term debt
Total long-term debt, net of current portion

February 3,
2018

January 28,
2017

$ 990,465 $1,042,660
575,000

421,209

(14,866)
1,396,808
(7,000)

(22,131)
1,595,529
(13,379)
$1,389,808 $1,582,150

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides principal payments due on long-term debt in the next five fiscal years and the
remaining years thereafter (in thousands):

Fiscal Year
2018
2019
2020
2021
2022
Thereafter
Total long-term debt
Deferred financing costs and unamortized OID
Total long-term debt, net

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill

7,000
5,250
7,000
974,170
421,209
—
1,414,629
(17,821)
$1,396,808

Goodwill allocated to our reportable segments and changes in the net carrying amount of goodwill for the
years ended February 3, 2018 and January 28, 2017 are as follows (in thousands):

Balance at January 30, 2016
Translation adjustment
Balance at January 28, 2017

Goodwill of acquired business
Goodwill impairment charge

Translation adjustment
Balance at February 3, 2018

Corporate
Apparel Total

Retail
$93,201 $ 25,385 $118,586
(1,560)
(2,870)
117,026
22,515
695
695
(1,500)
—
4,071
2,777
$94,305 $ 25,987 $120,292

1,310
94,511
—
(1,500)
1,294

The goodwill of acquired business resulted from an immaterial acquisition by our UK based operations. See
Note 3 for discussion of a goodwill impairment charge related to our divestiture of MW Cleaners.

As of February 3, 2018 and January 28, 2017, accumulated goodwill impairment totaled $780.0 million and
$778.5 million respectively, all within our retail segment.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible Assets

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

February 3, January 28,

2018

2017

Amortizable intangible assets:

Carrying amount:

Trademarks, tradenames and franchise agreements
Favorable leases
Customer relationships
Total carrying amount
Accumulated amortization:

Trademarks, tradenames and franchise agreements
Favorable leases
Customer relationships

Total accumulated amortization

Total amortizable intangible assets, net

$ 16,273 $
13,229
28,713
58,215

15,966
13,826
25,483
55,275

(10,558)
(5,010)
(17,992)
(33,560)
24,655

(10,055)
(3,961)
(13,804)
(27,820)
27,455

Indefinite-lived intangible assets:
Trademarks and tradename

Total intangible assets, net

144,332
144,204
$ 168,987 $ 171,659

The pre-tax amortization expense associated with intangible assets subject to amortization totaled
approximately $4.2 million, $4.8 million and $14.4 million for fiscal 2017, 2016 and 2015, respectively. Pre-
tax amortization expense associated with intangible assets subject to amortization at February 3, 2018 is
estimated to be approximately $3.8 million for fiscal year 2018, $3.6 million for fiscal year 2019, $3.5 million
for fiscal year 2020, $3.4 million for fiscal year 2021 and $2.1 million for fiscal year 2022.

Fiscal 2015 Goodwill and Indefinite-Lived Intangible Asset Impairment Assessment

During the second and third quarters of 2015, the effectiveness of the existing Jos. A. Bank promotional model
began to deteriorate quicker than we anticipated. As a result, we made the decision to accelerate the transition
away from the historical promotional cadence by removing, at the end of the third quarter of 2015, the most
excessive offers (the Buy-One-Get-Three or more Free events), and began seeking sustainable volume and
margin growth. While we expected some top-line volatility as we changed the promotional model, we did not
anticipate that the impact on sales from the traffic decline would occur to the degree it did. During the fourth
quarter of 2015, the performance of the Jos. A. Bank brand was far below our expectations.

As a result, the projections used in the fiscal 2015 annual quantitative goodwill impairment assessment were
significantly lower than the projections used in the fiscal 2014 assessment. In particular, the sales growth
assumptions were lowered to reflect the sales trend at Jos. A. Bank and the impact of our store rationalization
and profit improvement programs (see Note 4). Conversely, gross margin rates were increased compared to the
fiscal 2014 assessment to reflect our expectation that the transition away from the historical promotional model
will accelerate the realization of higher gross margins. In addition, our market capitalization decreased further
during the fourth quarter of 2015. Our consideration of all of these factors resulted in a significant reduction in
the estimated fair value of the Jos. A. Bank reporting unit with the estimated fair value decreasing significantly
below its carrying value, which required us to proceed to the second step of the quantitative goodwill
impairment test for Jos. A. Bank.

In the second step of the quantitative goodwill impairment test, we compared the implied fair value of the Jos.
A. Bank goodwill with its carrying amount. The estimated fair value of the Jos. A. Bank reporting unit was
allocated to its individual assets and liabilities in the same manner as if Jos. A. Bank was being acquired in a
business combination and the fair value was the purchase price paid to acquire Jos. A. Bank. As a result of
this valuation, it was determined that the entire carrying amount of Jos. A. Bank’s goodwill was impaired,
resulting in a non-cash pre-tax goodwill impairment charge of $769.0 million, which is included within
“Goodwill and intangible asset impairment charges” in our statements of earnings (loss).

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition, in connection with the second step of the quantitative goodwill impairment test, because of the
lower revenue assumptions discussed above, it was determined that the estimated fair value of the Jos. A. Bank
tradename had decreased below its carrying value. The fair value of the Jos. A. Bank tradename was estimated
using a relief from royalty method, which calculates the present value of savings resulting from the right to sell
products without having to pay a royalty fee. Critical assumptions that are used in this method include future
sales projections, an estimated royalty rate and a discount rate. Based on the estimated fair value of the Jos. A.
Bank tradename, we recognized total impairment charges of $425.9 million related to the Jos. A. Bank
tradename during 2015, which is included within “Goodwill and intangible asset impairment charges” in our
statements of earnings (loss). After giving effect to these impairment charges, the carrying value of the Jos. A.
Bank tradename was $113.2 million as of January 30, 2016.

Other Intangible Asset Impairments in Fiscal 2015

In addition to our fiscal 2015 assessment of goodwill and indefinite-lived intangible assets, we determined that
certain finite-lived intangible assets related to Jos. A. Bank were impaired. Specifically, it was determined that
the Jos. A. Bank customer relationship was impaired. The fair value of the Jos. A. Bank customer relationship
was estimated using a return on assets model. Critical assumptions that are used in this method include
estimated revenues and cash flows attributable to the Jos. A. Bank existing customer base and the expected
attrition of such customers over time. Based on the estimated fair value of the Jos. A. Bank customer
relationship, it was determined that the entire carrying value of the Jos. A. Bank customer relationship was
impaired, resulting in a non-cash pre-tax impairment charge of $41.5 million, which is included within
“Goodwill and intangible asset impairment charges” in our statements of earnings (loss).

Lastly, we determined that certain favorable lease intangible assets related to Jos. A. Bank were impaired. The
fair value of the Jos. A. Bank favorable leases was evaluated in conjunction with our long-lived asset
impairment process, whereby we group and evaluate assets at the lowest level of which there are identifiable
cash flows, which is generally at a store level. As a result of this process, we recognized an impairment charge
of $7.0 million, which is included within “Goodwill and intangible asset impairment charges” in our statements
of earnings (loss).

The following table summarizes the goodwill and other intangible asset impairment charges related to Jos. A.
Bank recorded in fiscal 2015 (amounts in thousands):

Goodwill impairment charge
Tradename impairment charge
Customer relationship impairment charge
Favorable lease impairment charge
Total goodwill and intangible asset impairment charges

$ 769,021
425,900
41,474
6,959
$1,243,354

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INCOME TAXES

Earnings (loss) before income taxes (in thousands):

United States
Foreign
Total

Fiscal Year

2017

2016

2015

90,399
44,555
134,954

(9,986)
41,567
31,581

(1,242,022)
46,261
(1,195,761)

The provision (benefit) for income taxes consists of the following (in thousands):

Current tax expense:

Federal
State
Foreign

Deferred tax (benefit) expense:

Federal and state
Foreign
Total

2017

Fiscal Year

2016

2015

25,701 $ 18,545 $
5,067
13,246

912
11,156

5,615
1,877
8,307

(21,187)
15,424
38,251 $

(23,135)
(185,440)
599
(853)
6,625 $ (169,042)

In December 2017, the U.S. enacted comprehensive tax legislation commonly referred to as the Tax Cuts and
Jobs Act (the “Tax Reform Act”). The changes included in the Tax Reform Act are broad and complex, which
impacted our consolidated financial statements in fiscal 2017 including, but not limited to: reducing the U.S.
federal corporate tax rate from 35% to 21% effective January 1, 2018 and requiring a one-time transition tax on
certain unrepatriated earnings of non-U.S. subsidiaries that may electively be paid over eight years. The
transition tax resulted in certain previously untaxed non-U.S. earnings being included in the U.S. federal and
state 2017 taxable income.

The Tax Reform Act also enacted new tax laws which include, but are not limited to: a Base Erosion Anti-
abuse Tax (“BEAT”), which is a new minimum tax, generally eliminating U.S. federal income taxes on
dividends from foreign subsidiaries, a provision designed to tax currently global intangible low taxed income
(“GILTI”), a provision that may limit the amount of currently deductible interest expense, the repeal of the
domestic production incentives, limitations on the deductibility of certain executive compensation,
and limitations on the utilization of foreign tax credits to reduce the U.S. income tax liability.

Shortly after the Tax Reform Act was enacted, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”)
which provides guidance on accounting for the Tax Reform Act’s impact. SAB 118 provides a measurement
period, which in no case should extend beyond one year from the Tax Reform Act enactment date, during
which a company acting in good faith may complete the accounting for the impacts of the Tax Reform Act. In
accordance with SAB 118, a company must reflect the income tax effects of the Tax Reform Act in the
reporting period in which the accounting is complete. To the extent that a company’s accounting for certain
income tax effects of the Tax Reform Act is incomplete, a company can determine a reasonable estimate for
those effects and record a provisional estimate in the financial statements in the first reporting period in which
a reasonable estimate can be determined.

As a result, we have recorded a provisional discrete net tax benefit of $0.3 million related to the Tax Reform
Act in fiscal 2017 which is made up of a benefit from the deferred tax remeasurement offset by additional
provision for the transition tax. While we have made a reasonable estimate of the impact of the Tax Reform
Act, we are continuing to finalize the consequences of tax reform, including the temporary differences that
existed on the date of enactment.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Furthermore, as a result of the Tax Reform Act, the Company is currently analyzing its global working capital
requirements and the potential tax liabilities that would be incurred if certain non-U.S. subsidiaries made
distributions, which include local country withholding tax and potential U.S. state taxation. In prior years, no
provision for U.S. income taxes or Canadian withholding taxes had been made on the cumulative undistributed
earnings of foreign companies because we intended to permanently reinvest all the foreign earnings outside the
U.S. In response to the Tax Reform Act, we no longer intend to permanently reinvest our foreign earnings. As
a result, the Company has included a provisional estimate of incremental withholding liabilities on its
investment in foreign earnings totaling $17.3 million.

Lastly, we are also currently analyzing other provisions of the Tax Reform Act that become effective in fiscal
2018. These provisions include eliminating U.S. federal income taxes on dividends from foreign subsidiaries,
the treatment of amounts in accumulated other comprehensive income, potential limitations on the amount of
currently deductible interest expense, and the limitations on the deductibility of certain executive
compensation. The impact of these provisions may result in future adjustments of estimates included in our
fiscal 2017 financial statements.

A reconciliation of the statutory federal income tax rate to our effective tax rate is as follows:

Federal statutory rate
State income taxes, net of federal benefit
Uncertain tax positions
Foreign tax rate differential
Amortizable tax goodwill
Goodwill impairment
Valuation allowance
Tax credits
Impact of change to permanent reinvestment of foreign
earnings
Impact of Tax Reform Act
Impact of ASU 2016-09
Adjustments to net tax accruals
Other

Fiscal Year
2017 2016 2015

33.7 % 35.0 % (35.0)%
(5.6)
1.2
1.0
(13.6)
(14.3)
(2.9)
(5.0)
(1.1)
—
—
10.3
7.1
(3.4)
(9.6)

(2.0)
0.1
(0.5)
(0.1)
22.5
0.5
—

—
12.8
—
(0.2)
—
2.1
4.4
—
(1.2)
(1.4)
28.3 % 21.0 % (14.1)%

—
—
—
0.5
(0.1)

In fiscal 2017, our effective income tax rate was 28.3% and is lower than the U.S. statutory rate primarily due
to foreign earnings and the lower tax rates in these jurisdictions and the release of specific uncertain tax
positions liabilities, partially offset by a change in our position on permanently reinvested foreign earnings and
valuation allowance changes. In fiscal 2016, our effective income tax rate was 21.0% and is lower than the
U.S. statutory rate primarily due to foreign earnings and lower tax rates in these jurisdictions. Our effective tax
rate is affected by recurring items, such as tax rates in foreign jurisdictions, which are lower than the federal
rate, and the amounts we earn in those jurisdictions.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not
that a portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this assessment. As of February 3, 2018,
it is more likely than not that we will realize the benefits of the deferred tax assets, except as discussed below.

At February 3, 2018 and January 28, 2017, we had net non-current deferred tax liabilities of $68.8 million and
$70.6 million, respectively. The decrease in the net deferred tax liabilities is primarily due to the change in the
federal statutory rate as a result of the Tax Reform Act. We have a valuation allowance of $19.5 million
against certain state deferred tax assets and foreign tax credits for which we have concluded it is more likely
than not that we will not recognize the asset.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total deferred tax assets and liabilities and the related temporary differences as of February 3, 2018 and
January 28, 2017 were as follows (in thousands):

Deferred tax assets:

Accrued rent and other expenses
Accrued compensation
Accrued inventory markdowns
Other
Tax loss and other carryforwards

Total deferred tax assets

Valuation allowance
Net deferred tax assets
Deferred tax liabilities:

Property and equipment
Capitalized inventory costs
Intangibles
Investment in foreign subsidiaries
Other

Total deferred tax liabilities

Net deferred tax liabilities

February 3, January 28,

2018

2017

$ 31,574 $ 53,851
28,530
8,330
2,902
23,361
116,974
(9,830)
107,144

16,475
3,616
608
28,605
80,878
(19,472)
61,406

(46,089)
(17,950)
(43,686)
(17,314)
(5,192)
(130,231)

(79,217)
(30,977)
(65,776)
—
(1,770)
(177,740)
$ (68,825) $ (70,596)

In accordance with the guidance regarding accounting for uncertainty in income taxes, we classify uncertain
tax positions as non‑current income tax liabilities unless expected to be paid within one year and recognize
interest and/or penalties related to income tax matters in income tax expense. As of February 3, 2018 and
January 28, 2017, the total amount of accrued interest related to uncertain tax positions was $0.2 million and
$1.5 million, respectively.

The following table summarizes the activity related to our uncertain tax positions (in thousands):

Gross uncertain tax positions, beginning balance

Increase in tax positions for prior years
Decrease in tax positions for prior years
Increase in tax positions due to business combinations
Increase in tax positions for current year
Decrease in tax positions for current year
Settlements
Lapse from statute of limitations

Gross uncertain tax positions, ending balance

February 3, January 28,

2018

2017

$ 19,450 $ 20,868
156
2,343
(17,908)
(2,321)
—
—
300
—
—
—
(350)
—
(1,440)
(494)
1,154 $ 19,450

Of the $1.2 million in uncertain tax positions as of February 3, 2018, $1.2 million, if recognized, would reduce
our income tax expense and effective tax rate. We do not expect material changes in the total amount of
uncertain tax positions within the next 12 months as the outcome of tax matters is uncertain and unforeseen
results can occur.

We are subject to routine compliance examinations on tax matters by various tax jurisdictions in the ordinary
course of business. Tax return years which are open to examinations range from fiscal 2012 through fiscal
2016. Our tax jurisdictions include the United States, Canada, the UK, The Netherlands, Hong Kong and
France as well as their states, territories, provinces and other political subdivisions. A number of U.S. state
examinations are ongoing.

At February 3, 2018, we had federal, state and foreign net operating loss (“NOL”) carryforwards of
approximately $12.5 million, $132.3 million and $1.5 million, respectively. The federal and state NOL
carryforwards will expire between fiscal 2018 and 2037; the foreign NOLs can be carried forward
indefinitely. At February 3, 2018, we also have $11.0 million of foreign tax credit carryforwards, which will
expire between fiscal 2019 and fiscal 2027.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. INVENTORIES

The following table provides details on our inventories as of February 3, 2018 and January 28, 2017 (in
thousands):

Finished goods
Raw materials and merchandise components
Total inventories

February 3, January 28,

2018

2017

$ 739,668 $ 846,585
108,927
$ 851,931 $ 955,512

112,263

10. OTHER CURRENT ASSETS, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
AND DEFERRED TAXES AND OTHER LIABILITIES

The following table provides details on our other current assets as of February 3, 2018 and January 28, 2017 (in
thousands):

Prepaid expenses
Tax receivable
Other

Total other current assets

February 3, January 28,

2018

2017

$ 47,545 $ 47,057
15,794
10,751
$ 78,252 $ 73,602

20,368
10,339

The following table provides details on our accrued expenses and other current liabilities as of February 3,
2018 and January 28, 2017 (in thousands):

February 3, January 28,

2018

2017

Accrued salary, bonus, sabbatical, vacation and other benefits $ 84,767 $ 72,589
28,384
Customer deposits, prepayments and refunds payable
40,865
Unredeemed gift cards
31,188
Sales, value-added, payroll, property and other taxes payable
31,609
Accrued workers compensation and medical costs
9,842
Accrued dividends
9,840
Loyalty program reward certificates
3,720
Accrued royalties
15,457
Accrued interest
4,834
Lease termination and other store closure costs
19,571
Other
$ 285,537 $ 267,899

59,633
39,609
29,409
25,244
11,128
9,106
5,032
3,281
427
17,901

Total accrued expenses and other current liabilities

The following table provides details on our deferred taxes, net and other liabilities as of February 3, 2018 and
January 28, 2017 (in thousands):

Deferred and other income tax liabilities, net
Deferred rent and landlord incentives
Unfavorable lease liabilities
Other

Total deferred taxes, net and other liabilities

February 3, January 28,

2018

2017

$ 95,314 $ 92,079
61,215
4,693
5,433
$ 164,191 $ 163,420

60,136
2,910
5,831

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table summarizes the components of accumulated other comprehensive (loss) income during
fiscal 2017, 2016 and 2015 (in thousands and net of tax):

Foreign

BALANCE— January 31, 2015

Other comprehensive loss before reclassifications
Amounts reclassified from accumulated other comprehensive
loss
Net other comprehensive loss
BALANCE— January 30, 2016

Other comprehensive (loss) income before reclassifications
Amounts reclassified from accumulated other comprehensive
loss
Net other comprehensive (loss) income

BALANCE— January 28, 2017

Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive
loss
Net other comprehensive income

BALANCE— February 3, 2018

Cash
Flow Pension

Currency
Translation Hedges Plan Total
$ (4,232) $(1,665) $

(22,427)

(1,566)

—
(22,427)
(26,659)
(13,546)

1,224
(342)
(2,007)
616

—
(13,546)
(40,205)
29,089

1,309
1,925
(82)
(3,397)

226 $ (5,671)
(24,039)
(46)

—
(46)
180
24

—
24
204
(15)

1,224
(22,815)
(28,486)
(12,906)

1,309
(11,597)
(40,083)
25,677

—
29,089
$ (11,116) $

3,624
227
145 $

3,624
—
(15)
29,301
189 $(10,782)

Amounts reclassified from other comprehensive (loss) income in fiscal 2017 related to changes in the fair
value of our interest rate swaps which is recorded in interest expense in the consolidated statement of earnings
(loss) and changes in the fair value of cash flow hedges related to inventory purchases, which is recorded
within cost of sales in the consolidated statement of earnings (loss). Amounts reclassified from other
comprehensive (loss) income in fiscal 2016 and fiscal 2015 related to changes in the fair value of our interest
rate swaps, which is recorded in interest expense in the consolidated statement of earnings (loss).

12. DIVIDENDS

Cash dividends paid were approximately $35.8 million, $35.2 million and $35.0 million during fiscal 2017,
2016 and 2015, respectively. In fiscal 2017, 2016 and 2015, a dividend of $0.18 per share was declared in each
quarter, for an annual dividend of $0.72 per share, respectively.

The quarterly cash dividend of $0.18 per share declared by our Board of Directors (the “Board”) in January
2018 is payable on March 29, 2018 to shareholders of record on March 19, 2018 and is included in accrued
expenses and other current liabilities on the consolidated balance sheet as of February 3, 2018.

13. EQUITY AND SHARE‑BASED COMPENSATION PLANS

Preferred Stock

Our Board is authorized to issue up to 2,000,000 shares of preferred stock and to determine the dividend rights
and terms, redemption rights and terms, liquidation preferences, conversion rights, voting rights and sinking
fund provisions of those shares without any further vote or act by Company shareholders. There was no issued
preferred stock as of February 3, 2018 and January 28, 2017, respectively.

Stock Plans

In June 2016, our shareholders approved the Tailored Brands, Inc. 2016 Long-Term Incentive Plan (the “2016
LTIP”), which will be used for equity grants after June 2016. As amended in 2017, the 2016 LTIP provides for
an aggregate of up to 9,300,000 shares, subject to adjustment, of our common stock (or the fair market value
thereof) with respect to which stock options, stock appreciation rights, restricted stock, deferred stock units and
performance based awards may be granted to full‑time key employees and to non‑employee directors of the
Company.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition, we continue to administer the 2004 Long-Term Incentive Plan (the “2004 LTIP”) and the 1996
Long‑Term Incentive Plan (“1996 Plan”) as a result of awards which remain outstanding pursuant to such
plans. Awards are no longer available for grant under the 2004 LTIP and 1996 Plan.

Options granted under these plans vest annually in varying increments over a period from one to ten years and
must be exercised within ten years of the date of grant. Grants of deferred stock units, performance units or
restricted stock generally vest over a period from one to three years; however, certain grants vest annually at
varying increments over a period up to ten years.

As of February 3, 2018, 6,700,667 shares were available for grant under the 2016 LTIP and 10,236,163 shares
of common stock were reserved for future issuance under the existing plans.

Non‑Vested Deferred Stock Units, Performance Units and Restricted Stock Shares

The following table summarizes the activity of time-based and performance-based (collectively, “DSUs”)
awards during fiscal 2017:

Non-Vested at January 28, 2017

Granted
Vested
Forfeited

(1)

Non-Vested at February 3, 2018

Units

Time-
Based
1,061,965
472,708
(456,758)
(63,226)
1,014,689

Performance-
Based

Weighted-Average
Grant-Date Fair Value
Time-
Based

Performance-
Based

523,948 $
542,528
—
(72,845)
993,631 $

24.31 $
11.48
25.38
19.70
18.13 $

28.28
11.45
—
22.01
19.55

(1)

Includes 126,064 shares relinquished for tax payments related to vested DSUs in fiscal 2017.

The following table summarizes additional information about DSUs:

DSUs issued
Weighted average grant date fair

2017
1,015,236

Fiscal Year
2016
1,315,140

2015

397,811

value

11.47

18.61

53.03

The fair value of shares vested was $11.6 million, $11.1 million and $10.2 million in fiscal 2017, 2016 and
2015, respectively. As of February 3, 2018, the intrinsic value of non‑vested DSUs was $47.2 million. Grants
of DSUs generally vest over a period of three years. DSUs earn dividends throughout the vesting period that
are subject to the same vesting terms as the underlying awards.

The 542,528 performance units granted in 2017 represent a contingent right to earn shares of common stock,
subject to the achievement of a Company-specific performance target for fiscal 2019. Assuming the
performance target is achieved, 100% of the award will vest on the three year anniversary of the grant date.
Performance units
lapse and be
forfeited. Performance units earn dividends throughout the vesting period that are subject to the same vesting
terms as the underlying awards.

the performance period will

that are unvested at

the end of

As of February 3, 2018, we have unrecognized compensation expense related to non‑vested DSUs of
approximately $17.5 million which is expected to be recognized over a weighted‑average period of 1.5 years.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes activity of restricted stock during fiscal 2017:

Non-Vested at January 28, 2017

Granted
Vested
Forfeited

Non-Vested at February 3, 2018

Weighted-
Average
Grant-Date
Fair Value

15.56
—
15.56
—
—

36,878 $
—
(36,878)
—
— $

These restricted stock awards received non-forfeitable dividends when paid to shareholders of record at the
payment date.

The following table summarizes additional information about restricted stock:

Stock issued
Weighted average grant date fair value
$
Fair value of shares vested (in millions) $

—
— $
0.6 $

2017

Fiscal Year
2016

18,646
17.37 $
0.7 $

2015

33,157
27.93
2.0

Stock Options

The following table summarizes the activity of stock options during fiscal 2017:

Outstanding at January 28, 2017

Granted
Exercised
Forfeited
Expired

Outstanding at February 3, 2018
Vested and expected to vest at February 3, 2018
Exercisable at February 3, 2018

Number of
Shares
1,194,690
630,083
(5,790)
(87,833)
(203,974)
1,527,176
1,500,002
576,616

Weighted-
Average
Exercise Price

Remaining
Contractual

Term

Intrinsic
Value
(in thousands)

$
$
$

29.70
11.54
17.43
15.78
37.88
21.97
22.14
32.28

7.4 Years $
7.4 Years $
5.1 Years $

9,369
9,079
939

The weighted‑average grant date fair value of stock options granted during fiscal 2017, 2016 and 2015 was
$3.86, $5.18 and $18.63, respectively. The fair value of options is estimated on the date of grant using the
Black‑Scholes option pricing model using the following weighted‑average assumptions:

Risk-free interest rates

Expected lives
Dividend yield
Expected volatility

2017
1.75%

5.0
years
4.69%
55.12%

Fiscal Year
2016

1.22%

5.0 years
4.13%
47.95%

2015

1.51%

5.0 years
1.38%
39.74%

The risk‑free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected
lives represents the period of time the options are expected to be outstanding after their grant date. The
dividend yield is based on the average of the annual dividend divided by the market price of our common stock
at the time of declaration. The expected volatility is based on historical volatility of our common stock. The
total intrinsic value of options exercised during fiscal 2017, 2016 and 2015 was less than $0.1 million, $0.1
million and $0.5 million, respectively. As of February 3, 2018, we have unrecognized compensation expense
related to non‑vested stock options of approximately $2.9 million which is expected to be recognized over a
weighted‑average period of 1.3 years.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash Settled Awards

During 2017, we granted stock-based awards to certain employees, which vest over a period of three years, and
will be settled in cash ("cash settled awards"). The fair value of the cash settled awards at each reporting
period is based on the price of our common stock and includes a market condition. The fair value of the cash
settled awards will be remeasured at each reporting period until the awards are settled. At February 3, 2018,
the liability associated with the cash settled awards was $4.6 million with $2.8 million recorded in accrued
expenses and other current liabilities and $1.8 million recorded in other liabilities in the consolidated balance
sheets.

The following table summarizes the activity of cash settled awards during fiscal 2017 (in thousands):

Non-Vested at January 28, 2017

Granted
Vested
Forfeited

Non-Vested at February 3, 2018

Cash Settled
Awards

—
8,502
—
(149)
8,353

As of February 3, 2018, we have unrecognized compensation expense related to non‑vested cash settled
awards of approximately $5.7 million which is expected to be recognized over a weighted‑average period of
1.5 years.

14. RETIREMENT AND STOCK PURCHASE PLANS

We have 401(k) savings plans which allow eligible employees to save for retirement on a tax deferred
basis. Employer matching contributions under the 401(k) savings plans are made based on a formula set by the
Board from time to time. During fiscal 2017, 2016 and 2015, our matching contributions for the plans charged
to operations were $2.7 million, $1.4 million and $1.2 million, respectively.

We also maintain a noncontributory defined benefit pension plan and a post-retirement benefit plan which
cover certain union and nonunion employees at Jos. A. Bank. The plans provide for eligible employees to
receive benefits based principally on years of service. Amounts related to the defined benefit pension and post-
retirement benefit plans were immaterial to our consolidated financial statements.

In addition, we have an Employee Stock Discount Plan (“ESDP”) which allows employees to authorize
after‑tax payroll deductions to be used for the purchase of up to 2,137,500 shares of our common stock at 85%
of the lesser of the fair market value of our common stock on the first day of the offering period or the fair
market value of our common stock on the last day of the offering period. We make no contributions to this
plan but pay all brokerage, service and other costs incurred. A participant may not purchase more than 125
shares during any calendar quarter.

During fiscal 2017, 2016 and 2015, employees purchased 167,673 shares, 167,237 shares and 87,537 shares,
respectively, under the ESDP, the weighted‑average fair value of which was $10.74, $11.66 and $26.23 per
share, respectively. We recognized approximately $0.6 million, $0.5 million and $0.7 million of share‑based
compensation expense related to the ESDP for fiscal 2017, 2016 and 2015, respectively. As of February 3,
2018, 230,956 shares were reserved for future issuance under the ESDP.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. FAIR VALUE MEASUREMENTS

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

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

Fair Value Measurements at Reporting Date
Using

Quoted Prices
in Active
Markets for
Identical

Significant
Other

Significant

Observable Unobservable

(in thousands)
February 3, 2018—

Assets:

Derivative financial instruments

Liabilities:

Derivative financial instruments

January 28, 2017—

Assets:

Derivative financial instruments

Liabilities:

Derivative financial instruments

Instruments
(Level 1)

Inputs
(Level 2)

Inputs
(Level 3)

Total

— $

4,019 $

— $4,019

— $

2,307 $

— $2,307

— $

460 $

— $ 460

— $

2,413 $

— $2,413

Derivative financial instruments are comprised of (1) foreign currency forward exchange contracts primarily
entered into to minimize our foreign currency exposure related to forecasted purchases of certain inventories
denominated in a currency different from the operating entity’s functional currency, (2) foreign currency
forward exchange contracts primarily entered into to minimize our foreign currency exposure related to
forecasted revenues from our UK operations denominated in a currency different from the UK’s functional
currency, (3) foreign currency forward exchange contracts primarily entered into to minimize our foreign
currency exposure related to intercompany loans denominated in a currency different from the operating
entity’s functional currency and (4) interest rate swap agreements to minimize our exposure to interest rate
changes on our outstanding indebtedness. These derivative financial instruments are recorded in the
consolidated balance sheets at fair value based upon observable market inputs, primarily pricing models based
on current market rates. Derivative financial instruments in an asset position are included within other current
assets in the consolidated balance sheets. Derivative financial instruments in a liability position are included
within accrued expenses and other current liabilities or noncurrent liabilities in the consolidated balance sheets.
See Note 16 for further information regarding our derivative instruments.

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

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

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As discussed in Note 1, during fiscal 2017, 2016 and 2015, we incurred $3.5 million, $16.5 million and $27.5
million, respectively, of asset impairment charges related to our retail segment. The estimated fair value of the
impaired long-lived assets was $0.7 million, $0.9 million and $1.6 million as of February 3, 2018, January 28,
2017 and January 30, 2016, respectively. We estimated the fair value of the long-lived assets based on an
income approach using projected future cash flows discounted using a weighted-average cost of capital
analysis that reflects current market conditions. The fair values of long‑lived assets are based on our own
judgments about the assumptions that market participants would use in pricing the asset and on observable
market data, when available. We classify these measurements as Level 3 within the fair value hierarchy.

During fiscal 2017, we recorded a goodwill impairment charge related to MW Cleaners totaling $1.5 million.
We estimated the fair value of the MW Cleaners business based on an estimate provided to us by a market
participant, which we classified as Level 2 within the fair value hierarchy.

In addition, during fiscal 2016, we recorded a $2.9 million impairment charge related to a long-lived asset
reclassified as held for sale, which is included within asset impairment charges in our consolidated statement
of earnings (loss). We estimated the fair value of the asset held for sale using market values for similar assets
which would fall within Level 2 of the fair value hierarchy. During fiscal 2017, we completed the sale of the
asset held for sale for $2.1 million in cash consideration.

Fair Value of Financial Instruments

Our financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses and other
current liabilities and long-term debt. Management estimates that, as of February 3, 2018 and January 28,
2017, the carrying value of cash, accounts receivable, accounts payable and accrued expenses and other current
liabilities approximated their fair value due to the highly liquid or short‑term nature of these instruments.

The fair values of our Term Loan were valued based upon observable market data provided by a third party for
similar types of debt, which we classify as a Level 2 input within the fair value hierarchy. The fair value of
our Senior Notes is based on quoted prices in active markets, which we classify as Level 1 input within the fair
value hierarchy. The table below shows the fair value and carrying value of our long-term debt (in thousands):

February 3, 2018

January 28, 2017

Long-term debt, including current portion

Carrying Estimated Carrying Estimated
Amount
Fair Value
$1,396,808 $1,407,449 $1,595,529 $1,556,200

Fair Value Amount

(1)

The carrying value of the long-term debt, including current portion is net of deferred financing costs of

$14.9 million and $22.1 million as of February 3, 2018 and January 28, 2017, respectively.

16. DERIVATIVE FINANCIAL INSTRUMENTS

As discussed in Note 6, in January 2015, we entered into an interest rate swap agreement on an initial notional
amount of $520.0 million that matures in August 2018 with periodic interest settlements. At February 3, 2018,
the notional amount totaled $70.0 million. Under this interest rate swap agreement, we receive a floating rate
based on the 3‑month LIBOR rate and pay a fixed rate of 5.03% (including the applicable margin of 3.50%) on
the outstanding notional amount. We have designated the interest rate swap as a cash flow hedge of the
variability of interest payments under the Term Loan due to changes in the LIBOR benchmark interest rate.

In addition, in April 2017, we entered into an interest rate swap agreement on an initial notional amount of
$260.0 million that matures in June 2021 with periodic interest rate settlements. At February 3, 2018, the
notional amount totaled $340.0 million. Under this interest rate swap agreement, we receive a floating rate
based on the 1‑month LIBOR rate and pay a fixed rate of 5.56% (including the applicable margin of 3.50%) on
the outstanding notional amount. We have designated the interest rate swap as a cash flow hedge of the
variability of interest payments under the Term Loan due to changes in the LIBOR benchmark interest rate.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At February 3, 2018, the fair value of the interest rate swaps was a net asset of $3.7 million with $3.8 million
recorded in other assets and $0.1 recorded in current assets, offset by $0.2 million recorded in accrued expenses
and other current liabilities in our consolidated balance sheet. At January 28, 2017, the fair value of the
interest rate swap was a liability of $1.1 million recorded in accrued expenses and other current liabilities in
our consolidated balance sheet. The effective portion of the swaps is reported as a component of accumulated
other comprehensive (loss) income. There was no hedge ineffectiveness at February 3, 2018 and January 28,
2017. Changes in fair value are reclassified from accumulated other comprehensive (loss) income into
earnings in the same period that the hedged item affects earnings.

Over the next 12 months, as interest payments are made, approximately $0.1 million of the effective portion of
the interest rate swaps is expected to be reclassified from accumulated other comprehensive (loss) income into
earnings within interest expense. If, at any time, either interest rate swap is determined to be ineffective, in
whole or in part, due to changes in the interest rate swap or underlying debt agreements, the fair value of the
portion of the interest rate swap determined to be ineffective will be recognized as a gain or loss in the
statement of earnings for the applicable period.

Also, we have entered into derivative instruments to hedge our foreign exchange risk, specifically related to
the British pound and Euro, primarily related to merchandise purchase commitments that are denominated in a
currency different from the functional currency of the operating entity. We have designated these instruments
as cash flow hedges of the variability in exchange rates for those foreign currencies. These cash flow hedges
mature at various dates through December 2019. At February 3, 2018, the fair value of these cash flow hedges
was a net liability of $1.7 million with $1.9 million in accrued expenses and other current liabilities offset by
$0.2 million recorded in other current assets in our consolidated balance sheet. At January 28, 2017, the fair
value of these cash flow hedges was a net liability of $0.8 million with $1.2 million in accrued expenses and
other current liabilities offset by $0.4 million recorded in other current assets in our consolidated balance
sheet. The effective portion of the hedges is reported as a component of accumulated other comprehensive
(loss) income. Hedge ineffectiveness at February 3, 2018 and January 28, 2017 was immaterial. Changes in
fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same
period that the hedged item affects earnings. Over the next 12 months, based on our estimate of when the
underlying inventory is sold, $2.4 million of the effective portion of the cash flow hedges is expected to be
reclassified from accumulated other comprehensive (loss) income into earnings within cost of sales.

Additionally, we are exposed to market risk associated with foreign currency exchange rate fluctuations as a
result of our direct sourcing programs and our operations in foreign countries. Our risk management policy is
to hedge a portion of forecasted merchandise purchases for our direct sourcing programs and certain
intercompany transactions that bear foreign exchange risk using foreign exchange forward contracts. We have
elected not to apply hedge accounting to these transactions denominated in a foreign currency. Amounts
related to these transactions were immaterial to our consolidated financial statements.

We had no derivative financial instruments with credit-risk-related contingent features underlying the
agreements as of February 3, 2018 or January 28, 2017, respectively.

17. SEGMENT REPORTING

In 2016, we revised our segment reporting presentation to reflect changes in how we manage our business,
including resource allocation and performance assessment. Specifically, we are now presenting expenses
related to our shared services platform separately from the results of our operating segments to promote
enhanced comparability of our operating segments. Previously, these shared service expenses were primarily
included in our retail segment. Comparable prior period information has been recast to reflect our revised
segment presentation.

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

The retail segment includes the results from our four retail merchandising brands: Men’s Wearhouse/Men’s
Wearhouse and Tux, Jos. A. Bank, Moores and K&G. These four brands are operating segments that have
been aggregated into the retail reportable segment. MW Cleaners is also aggregated in the retail segment as
these operations have not had a

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

significant effect on our revenues or expenses. Specialty apparel merchandise offered by our four retail
merchandising concepts include suits, suit separates, sport coats, slacks, formalwear, business casual, denim,
sportswear, outerwear, dress shirts, shoes and accessories for men. Women’s career and casual apparel,
sportswear and accessories, including shoes, and children’s apparel is offered at most of our K&G
stores. Rental product is offered at our Men’s Wearhouse/Men’s Wearhouse and Tux, Jos. A Bank and
Moores retail stores.

The corporate apparel segment includes the results from our corporate apparel and uniform operations
conducted by Dimensions, Alexandra and Yaffy in the UK and Twin Hill in the U.S., which provide corporate
apparel uniforms and workwear to workforces.

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

Additional net sales information is as follows (in thousands):

Net sales:
MW
(1)
Jos. A. Bank
K&G
Moores
MW Cleaners

Total retail segment
Total corporate apparel segment
Total net sales

2017

Fiscal Year
2016

2015

735,149
323,994
216,366
34,844
3,053,021
251,325

$1,742,668 $1,770,968 $ 1,791,249
866,882
749,869
338,359
329,954
222,574
214,470
33,410
33,140
3,252,474
3,098,401
243,797
280,302
$3,304,346 $3,378,703 $ 3,496,271

(1) MW includes Men’s Wearhouse and Men’s Wearhouse and Tux stores, tuxedo shops within Macy's and

Joseph Abboud.

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

Net sales:

Men's tailored clothing product
Men's non-tailored clothing product
Women's clothing product
Other

Total retail clothing product

Rental services
Alteration services
Retail dry cleaning services

Total alteration and other services
Corporate apparel clothing product

Total net sales

2017

Fiscal Year
2016

2015

$1,351,881 $1,343,875 $ 1,436,742
1,077,176
1,018,907
1,008,663
74,985
73,509
70,630
11,031
9,631
8,643
2,599,934
2,445,922
2,439,817
443,290
457,444
428,355
175,840
161,895
150,005
33,410
33,140
34,844
209,250
195,035
184,849
243,797
280,302
251,325
$3,304,346 $3,378,703 $ 3,496,271

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Fiscal Year

2017

2016

2015

Operating income (loss):
Retail
Corporate apparel

Shared service expense

Operating income (loss)
Interest income
Interest expense
Gain (loss) on extinguishment of debt, net
Earnings (loss) before income taxes

$ 411,258 $ 308,283 $

11,326
(193,168)
229,416
564
(100,471)
5,445

$ 134,954 $

(919,793)
7,767
25,315
(165,270)
(200,772)
(1,077,296)
132,826
187
167
(105,977)
(103,149)
(12,675)
1,737
31,581 $ (1,195,761)

Capital expenditures by reportable segment and shared services are as follows (in thousands):

Capital expenditures:
Retail
Corporate apparel
Shared services

Total capital expenditures

Fiscal Year

2017

2016

2015

$56,133 $ 39,059 $ 65,683
4,079
3,440
45,736
57,195
$94,958 $ 99,694 $115,498

3,663
35,162

Depreciation and amortization expense by reportable segment and shared services is as follows (in thousands):

Fiscal Year

2017

2016

2015

Depreciation and amortization expense:
Retail
Corporate apparel
Shared services

Total depreciation and amortization expense

$ 79,579 $ 75,284 $100,830
5,969
5,940
25,530
33,981
$106,493 $115,205 $132,329

6,197
20,717

Total assets by reportable segment and shared services are as follows (in thousands):

Segment assets:

Retail
Corporate apparel
Shared services
Total assets

(1)

February 3, January 28,

2018

2017

$1,434,992 $1,594,221
199,727
303,924
$1,999,955 $2,097,872

222,872
342,091

(1) Shared service assets consist primarily of cash and cash equivalents, assets related to our distribution

network and tax-related assets.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tables below present information related to geographic areas in which we operate, with net sales classified
based primarily on the geographic area where our customer is located (in thousands):

Fiscal Year

2017

2016

2015

Net sales:
U.S.
International

(1)

Total net sales

(1) Primarily in Canada and the UK.

$2,893,689 $2,973,177 $ 3,068,501
427,770
$3,304,346 $3,378,703 $ 3,496,271

410,657

405,526

February 3,
2018

January 28,
2017

531,915 $
52,489
584,404 $

582,995
53,780
636,775

Long-lived assets, net (including rental product):
U.S.
International

(1)

Total long-lived assets

(1) Primarily in Canada and the UK.

18. COMMITMENTS AND CONTINGENCIES

Lease commitments

We lease retail business locations, office and warehouse facilities, and equipment under various non-cancelable
operating leases expiring in various years through 2029. Rent expense for operating leases for fiscal 2017,
2016 and 2015 was $254.5 million, $261.5 million and $268.9 million, respectively, and includes contingent
rentals of $2.1 million, $2.0 million and $2.6 million, respectively. Sublease rentals of $1.2 million, $1.3
million, and $1.2 million were received in fiscal 2017, 2016 and 2015, respectively.

Minimum future rental payments under non‑cancelable operating leases as of February 3, 2018 for each of the
next five years and in the aggregate are as follows (in thousands):

Fiscal Year
2018
2019
2020
2021
2022
Thereafter
Total

Operating
Leases
$ 249,614
219,003
187,632
154,676
114,418
185,643
$1,110,986

The total minimum lease commitments above do not include minimum sublease rent income of $1.6 million
receivable in the future under non‑cancelable sublease agreements.

Leases on retail locations specify minimum rentals plus common area maintenance charges and possible
additional rentals based upon percentages of sales. Most of the retail location leases provide for renewal
options at rates specified in the leases. In the normal course of business, these leases are generally renewed or
replaced by other leases.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Legal matters

On March 29, 2016, a putative class action lawsuit was filed against the Company and its Chief Executive
Officer, Douglas S. Ewert, in the United States District Court for the Southern District of Texas (Case No.
4:16-cv-00838). The complaint attempts to allege claims under Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 on behalf of a putative class of persons who purchased or otherwise acquired the
Company's securities between June 18, 2014 and December 9, 2015 (the "Class Period"). On May 26, 2017,
Lead Plaintiff Strathclyde Pension Fund filed an Amended Complaint alleging that during the Class Period
Defendants omitted facts about the Company's Jos. A. Bank's business, financial status, and operations, the
omission of which rendered Defendants' statements about the Jos. A. Bank business false or misleading. The
amended complaint also named Jon W. Kimmins, the Company's former Chief Financial Officer, and Mary
Beth Blake, the Company's current Brand President, Jos. A. Bank, as additional named defendants. On July 28,
2017, the Company filed a motion to dismiss the amended complaint, which is fully briefed. We believe that
the claims are without merit and are defending the lawsuit vigorously. The range of loss, if any, is not
reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse
effect on our financial position, results of operations or cash flows.

On February 17, 2016, Anthony Oliver filed a putative class action lawsuit against our Men's Wearhouse
subsidiary in the United States District Court for the Central District of California (Case No. 2:16-cv-
01100). The complaint attempts to allege claims under the Telephone Consumer Protection Act. In particular
the complaint alleges that the Company sent unsolicited text messages to cellular telephones beginning
October 1, 2013 to the present day. After we demonstrated that the Company had the plaintiff's permission to
send him texts, the plaintiff filed an amended complaint alleging the Company sent text messages exceeding
the number plaintiff had agreed to receive each week. The parties filed cross-motions for summary judgment
on what constitutes a “week” and the Court recently issued an order granting the plaintiff’s motion and denying
our motion on what period constitutes a “week.” We continue to believe that the claims are without merit and
intend to defend the lawsuit vigorously. The range of loss, if any, is not reasonably estimable at this time. We
do not currently believe, however, that it will have a material adverse effect on our financial position, results of
operations or cash flows.

On August 2, 2017, two American Airlines employees filed a putative class action lawsuit against our Twin
Hill subsidiary in the United States District Court for the Northern District of Illinois (Case No. 1:17-cv-
05648). The complaint attempts to allege claims for strict liability and negligence based on allegedly defective
uniforms Twin Hill supplied to American Airlines for its employees. On September 28, 2017, the plaintiffs
filed an amended complaint adding nine additional named plaintiffs and adding claims for civil battery and
intentional infliction of emotional distress. On November 17, 2017, the Company filed a motion to dismiss the
plaintiffs’ claims. We believe that any lawsuit filed on the basis of the safety of the Twin Hill uniforms
supplied to American Airlines is without merit, and we intend to contest this action vigorously. Twin Hill has
substantial and convincing evidence of the uniforms' safety and fitness for their intended purpose and we
believe that there is no evidence linking any of the plaintiffs' alleged injuries to our uniforms. The range of
loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a
material adverse effect on our financial position, results of operations or cash flows.

On September 27, 2017, Heather Poole and numerous other American Airlines employees filed a lawsuit
against our Twin Hill subsidiary in the Superior Court for the State of California for the County of Alameda
(Case No. RG17876798). The complaint attempts to allege claims for strict liability and negligence based on
allegedly defective uniforms Twin Hill supplied to American Airlines for its employees. On December 11,
2017, the Company filed a demurrer to Plaintiff’s complaint. On or about February 20, 2018, the Court
granted our demurrer and dismissed the plaintiffs’ Complaint ruling that the plaintiffs did not allege enough
facts to state a claim against Twin Hill. The plaintiffs have until April 6, 2018 to file an amended Complaint.
To date, we have not received an amended Complaint. We believe that any lawsuit filed on the basis of the
safety of the Twin Hill uniforms supplied to American Airlines is without merit, and we intend to contest this
action vigorously. Twin Hill has substantial and convincing evidence of the uniforms' safety and fitness for
their intended purpose and we believe that there is no evidence linking any of the plaintiffs' alleged injuries to
our uniforms. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe,
however, that it will have a material adverse effect on our financial position, results of operations or cash
flows.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On October 30, 2017, Melodie Agnello, Denise Mumma, and numerous other American Airlines employees
filed a lawsuit against our Twin Hill subsidiary in the Superior Court for the State of California for the County
of Alameda (Case No. RG17880635). The complaint attempts to allege claims for strict liability and
negligence based on allegedly defective uniforms Twin Hill supplied to American Airlines for its employees.
On December 11, 2017, the Company filed a demurrer to plaintiff’s complaint. On or about February 20,
2018, the Court granted our demurrer and dismissed the plaintiffs’ Complaint ruling that the plaintiffs did not
allege enough facts to state a claim against Twin Hill. The plaintiffs have until April 6, 2018 to file an amended
Complaint. To date, we have not received an amended Complaint. We believe that any lawsuit filed on the
basis of the safety of the Twin Hill uniforms supplied to American Airlines is without merit, and we intend to
contest this action vigorously. Twin Hill has substantial and convincing evidence of the uniforms' safety and
fitness for their intended purpose and we believe that there is no evidence linking any of the plaintiffs' alleged
injuries to our uniforms. The range of loss, if any, is not reasonably estimable at this time. We do not currently
believe, however, that it will have a material adverse effect on our financial position, results of operations or
cash flows.

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

19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As discussed in Note 6, The Men’s Wearhouse (the “Issuer”) issued $600.0 million in aggregate principal
amount of 7.00% Senior Notes. The Senior Notes are guaranteed jointly and severally, on an unsecured basis
by Tailored Brands, Inc. (the “Parent”) and certain of our U.S. subsidiaries (the “Guarantors”). Our foreign
subsidiaries (collectively, the “Non-Guarantors”) are not guarantors of the Senior Notes. Each of the
Guarantors is 100% owned and all guarantees are joint and several. In addition, the guarantees are full and
unconditional except for certain automatic release provisions related to the Guarantors.

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

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

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Tailored Brands, Inc.
Condensed Consolidating Balance Sheet
February 3, 2018
(in thousands)

Tailored

The Men’s

Guarantor

Non-
Guarantor

Brands,
Inc.

Wearhouse, Inc.

Subsidiaries

Eliminations

Consolidated

ASSETS

CURRENT
LIABILITIES:
Accounts payable
Accrued expenses and
other current liabilities
Current portion of long-
term debt

Total current liabilities

Long-term debt, net
Deferred taxes, net and
other liabilities
Shareholders' equity
Total liabilities and
shareholders' equity

— $
—
—
3,666
3,666

—
—
—
—

128,458
—
$132,124 $

51,818
23,712
207,504
26,951
309,985

203,204
103,664
6,160
—

2,180
368,328
445,126
38,217
853,851

220,979

3,658
67,010
155,438

$ 49,609

—

58,573
199,301
9,418
316,901

(370,830)
—
—
(370,830)

$ 103,607
79,783
851,931
78,252
1,113,573

36,491
16,408
47,122
13,549

—
—
—
—

460,674
123,730
120,292
168,987

1,424,647

—
—
12,699
81,846
2,058,843 $1,301,741 $ 512,317 $(2,005,070) $1,999,955

(1,553,105)
(81,135)

—
805

11,183

$110,326 $

281,838 $

57,756 $ 66,016 $ (370,830) $ 145,106

14,061

87,597

155,813

34,187

—

291,658

—
124,387
—

7,000
376,435
1,389,808

—
213,569
—

—
100,203
—

—
(370,830)
—

7,000
443,764
1,389,808

5,545
2,192
$132,124 $

46,641

164,142
28,998
164,191
128,458
383,116
2,192
2,058,843 $1,301,741 $ 512,317 $(2,005,070) $1,999,955

(81,135)
(1,553,105)

1,041,531

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Tailored Brands, Inc.
Condensed Consolidating Balance Sheet
January 28, 2017
(in thousands)

Tailored

The Men’s

Guarantor

Non-
Guarantor

Brands,
Inc.

ASSETS

Wearhouse, Inc.

Subsidiaries

Eliminations

Consolidated

CURRENT ASSETS:
Cash and cash
equivalents
Accounts receivable, net
Inventories
Other current assets
Total current assets
Property and equipment,
net
Rental product, net
Goodwill
Intangible assets, net
Investments in
subsidiaries
Other assets
Total assets
LIABILITIES AND
SHAREHOLDERS'
(DEFICIT) EQUITY
CURRENT
LIABILITIES:
Accounts payable
Accrued expenses and
other current liabilities
Current portion of long-
term debt

Total current liabilities

Long-term debt, net
Deferred taxes, net and
other liabilities
Shareholders' (deficit)
equity

Total liabilities and
shareholders' (deficit)
equity

— $
7,376
—
12,773
20,149

—
—
—
—

1,002
15,499
230,264
134,225
380,990

232,090
131,287
6,160
78

1,881
476,742
438,167
28,436
945,226

216,248

3,369
68,510
157,270

$ 68,006

—

56,777
287,081
8,448
420,312

(490,680)
—
(110,280)
(600,960)

70,889
65,714
955,512
73,602
1,165,717

35,827
17,954
42,356
14,311

—
—
—
—

484,165
152,610
117,026
171,659

(109,788)
—
$ (89,639) $

$ 15,352 $

1,425,622

—
—
6,695
7,321
2,181,842 $1,391,582 $ 538,081 $(1,923,994) $2,097,872

(1,315,834)
(7,200)

—
959

5,615

509,572 $

82,337 $ 60,799 $ (490,680) $ 177,380

2,627

111,617

129,420

135,777

(110,280)

269,161

—
17,979
—

13,379
634,568
1,582,150

—
211,757
—

—
196,576
—

—
(600,960)
—

13,379
459,920
1,582,150

—

74,912

85,477

10,231

(7,200)

163,420

(107,618)

(109,788)

1,094,348

331,274

(1,315,834)

(107,618)

$ (89,639) $

2,181,842

$1,391,582

$ 538,081

$(1,923,994)

$2,097,872

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Tailored Brands, Inc.
Condensed Consolidating Statement of Earnings (Loss)
(in thousands)

Tailored

The Men’s

Guarantor

Non-
Guarantor

Brands,
Inc.

Wearhouse, Inc.

Subsidiaries

Eliminations

Consolidated

Year Ended

February 3, 2018

Net sales
Cost of sales
Gross margin
Operating expenses
Operating (loss) income
Other income and expenses,

— $
—
—
3,453
(3,453)

1,737,651 $1,653,188 $ 737,848 $(824,341) $3,304,346
1,895,580
567,446
170,402
1,408,766
1,179,350
116,587
53,815
229,416

1,255,046
398,142
557,404
(159,262)

(824,341)
—
(146,663)
146,663

897,429
840,222
648,569
191,653

net

Interest expense, net
Gain on extinguishment of

debt, net

(Loss) earnings before

income taxes

Provision (benefit) for

income taxes

(Loss) earnings before

equity in net income of
subsidiaries

Equity in earnings (loss) of

subsidiaries

Net earnings (loss)
Comprehensive income

(loss)

Year Ended

January 28, 2017

—
(442)

—

(105,009)

145,002

6,606

1,661
(1,062)

(146,663)
—

—
(99,907)

—

5,445

—

(3,895)

92,089

(7,654)

54,414

(3,444)

54,744

(41,719)

28,670

—

5,445

134,954

38,251

(451)

37,345

34,065

25,744

—

96,703

97,154
$ 96,703 $

59,809
97,154 $

$126,004 $

100,186 $

—

(156,963)

—
34,065 $ 25,744 $(156,963) $

—
96,703
34,050 $ 52,028 $(186,264) $ 126,004

Net sales
Cost of sales
Gross margin
Operating expenses
Operating (loss) income
Other income and expenses,

— $
—
—
3,374
(3,374)

1,765,793 $1,730,505 $ 405,526 $(523,121) $3,378,703
1,937,235
254,216
151,310
1,441,468
1,308,642
115,017
36,293
132,826

1,308,576
421,929
649,177
(227,248)

(523,121)
—
(95,433)
95,433

897,564
868,229
636,507
231,722

net

Interest expense, net
Gain on extinguishment of

debt, net

(Loss) earnings before

income taxes

(Benefit) provision for

income taxes

(Loss) earnings before

equity in net income of
subsidiaries

Equity in earnings (loss) of

subsidiaries

Net earnings (loss)
Comprehensive income

(loss)

—
(23)

—

(104,636)

89,433
2,404

6,000
(727)

(95,433)
—

—
(102,982)

—

1,737

—

(3,397)

128,823

(135,411)

41,566

(1,249)

25,063

(27,492)

10,303

—

1,737

31,581

6,625

(2,148)

103,760

(107,919)

31,263

—

24,956

27,104

(76,656)

—

49,552

—

24,956

27,104

(107,919)

31,263

49,552

$ 13,359 $

28,427 $ (107,895) $ 18,319 $

61,149 $

24,956

13,359

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Tailored Brands, Inc.
Condensed Consolidating Statement of Earnings (Loss)
(in thousands)

Tailored

The Men’s

Guarantor

Non-
Guarantor

Brands, Inc.

Wearhouse, Inc. Subsidiaries Subsidiaries Eliminations Consolidated

Year Ended

January 30, 2016

Net sales
Cost of sales
Gross margin
Operating expenses
Operating (loss)

income

Other income and
expenses, net

Interest expense, net
Loss on

extinguishment of
debt, net

(Loss) earnings before

income taxes

(Benefit) provision for

income taxes

(Loss) earnings before
equity in net income
of subsidiaries
Equity in (loss)
earnings of
subsidiaries

Net (loss) earnings
Comprehensive (loss)

— $
—
—
2,801

1,787,295 $1,852,876 $ 427,770 $ (571,670) $ 3,496,271
2,011,848
265,349
162,421
1,484,423
2,561,719
120,667

1,374,272
478,604
1,238,599

(571,670)
—
(18,409)

943,897
843,398
1,218,061

(2,801)

(374,663)

(759,995)

41,754

18,409

(1,077,296)

—
—

16,450
(106,613)

1,959
1,776

—
(953)

(18,409)
—

—
(105,790)

—

(12,675)

—

(12,675)

(2,801)

(477,501)

(756,260)

40,801

—

(1,195,761)

(403)

(65,534)

(112,010)

8,905

—

(169,042)

(2,398)

(411,967)

(644,250)

31,896

—

(1,026,719)

(1,024,321)

—
—
$(1,026,719) $ (1,024,321) $ (644,250) $ 31,896 $1,636,675 $(1,026,719)

1,636,675

(612,354)

—

income

$(1,049,534)

$ (1,024,663)

$ (644,296)

9,469

$1,659,490

$(1,049,534)

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Tailored Brands, Inc.
Condensed Consolidating Statement of Cash Flows
Year Ended February 3, 2018
(in thousands)

Tailored

The Men’s

Guarantor

Non-
Guarantor

Net cash provided by (used
in) operating activities

CASH FLOWS FROM

INVESTING
ACTIVITIES:

Capital expenditures
Acquisition of business,

net of cash

Intercompany activities
Proceeds from sale of

property and equipment
Net cash used in

investing activities

CASH FLOWS FROM

FINANCING
ACTIVITIES:

Payments on term loan
Proceeds from asset-

based revolving credit
facility

Payments on asset-based
revolving credit facility

Repurchase and

retirement of senior
notes

Deferred financing costs
Intercompany activities
Cash dividends paid
Proceeds from issuance

of common stock

Tax payments related to
vested deferred stock
units
Net cash (used in)

provided by financing
activities
Effect of exchange rate

changes

Increase (decrease) in

cash and cash equivalents
Cash and cash equivalents at

beginning of period

Cash and cash equivalents at

Brands,
Inc.

Wearhouse, Inc.

Subsidiaries

Eliminations

Consolidated

$ 35,545

520,678 $

61,823

(231,517)

(35,761)

350,768

—

—
—

—

(25,729)

(63,681)

(5,548)

—

(94,958)

—
(285,500)

—
—

(457)
(75,135)

—

360,635

(457)
—

3,323

2,157

—

5,480

(307,906)

(61,524)

(81,140)

360,635

(89,935)

—

(53,379)

—

(53,379)

—

276,300

(276,300)

—
—
—
(35,761)

(145,371)
(2,580)
39,374
—

—

—
—
—
—

1,903

—

(1,687)

—

276,300

(276,300)

—
—
285,500
—

—
—
(324,874)
—

—

(145,371)
(2,580)
—
(35,761)

1,903

(1,687)

(35,545)

(161,956)

—

285,500

(324,874)

(236,875)

8,760

—

8,760

50,816

299

(18,397)

1,002

1,881

68,006

—

32,718

70,889

—

end of period

—

51,818 $

2,180

49,609

—

103,607

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Tailored Brands, Inc.
Condensed Consolidating Statement of Cash Flows
Year Ended January 28, 2017
(in thousands)

Tailored

The Men’s

Guarantor

Non-
Guarantor

Brands,
Inc.

Wearhouse, Inc.

Subsidiaries

Eliminations

Consolidated

Net cash provided by (used in)

operating activities

$ 34,402

257,133

47,038

$ (60,705)

$ (35,240)

242,628

CASH FLOWS FROM

INVESTING ACTIVITIES:

Capital expenditures
Intercompany activities
Proceeds from sale of

property and equipment
Net cash used in investing

activities

CASH FLOWS FROM

FINANCING ACTIVITIES:

Payments on term loan
Proceeds from asset-based
revolving credit facility
Payments on asset-based
revolving credit facility
Repurchase and retirement

of senior notes

Intercompany activities
Cash dividends paid
Proceeds from issuance of

common stock

Tax payments related to

Excess tax benefits from

share-based plans
Net cash (used in)

provided by financing
activities

Effect of exchange rate changes
Increase (decrease) in cash and

cash equivalents

Cash and cash equivalents at

beginning of period

Cash and cash equivalents at

end of period

—
—

—

(46,960)
(110,280)

(47,998)
—

(4,736)
—

—
110,280

(99,694)
—

—

598

—

617

(157,240)

(47,400)

(4,717)

110,280

(99,077)

—

(42,451)

—

(42,451)

—

606,500

(606,500)

—
—
(35,240)

2,189

(21,924)
(35,240)

—

—
—
—

—

3,037

(3,037)

—

110,280
—

—

(75,040)
—

—

609,537

(609,537)

(21,924)
—
(35,240)

2,189

(1,362)

(34,402)
—

(99,615)

—

—
—

110,280

(3,865)

(75,040)
—

(98,777)
(3,865)

—

278

(362)

40,993

724

2,243

27,013

—

40,909

29,980

—

1,002 $

1,881

68,006

—

70,889

vested deferred stock units

(1,362)

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Tailored Brands, Inc.
Condensed Consolidating Statement of Cash Flows
Year Ended January 30, 2016
(in thousands)

Tailored

The Men’s

Guarantor

Non-
Guarantor

Brands,
Inc.

Wearhouse, Inc. Subsidiaries

Subsidiaries

Eliminations

Consolidated

Net cash provided by (used in)

operating activities

$ 35,404

47,515 $

47,880

35,878

$ (34,980)

131,697

CASH FLOWS FROM

INVESTING ACTIVITIES:

Capital expenditures
Intercompany activities
Proceeds from sale of

property and equipment
Net cash used in investing

activities

CASH FLOWS FROM

FINANCING ACTIVITIES:

Payments on term loan
Proceeds from asset-based
revolving credit facility
Payments on asset-based
revolving credit facility

Intercompany activities
Cash dividends paid
Proceeds from issuance of

common stock

Deferred financing costs
Tax payments related to

Excess tax benefits from

share-based plans

Repurchases of common

stock
Net cash (used in)

provided by financing
activities

Effect of exchange rate changes
Increase (decrease) in cash and

cash equivalents

Cash and cash equivalents at

beginning of period

Cash and cash equivalents at

end of period

—
—

—

(54,525)

33,432

(50,692)
—

(10,281)
—

—
(33,432)

(115,498)
—

2,586

—

2,617

(18,507)

(50,661)

(10,281)

(33,432)

(112,881)

(8,000)

—

(8,000)

180,500

—

—
—
(34,980)

(180,500)
(34,980)

—

2,974

—

—
(3,566)

1,417

(277)

—

(33,432)
—

—

180,500

—
68,412
—

(180,500)
—
(34,980)

—
—

—

—
—

—

2,974
(3,566)

(4,538)

1,584

(277)

—
—
—

—
—

—

167

—

(35,404)
—

(46,546)

—

167
—

(33,432)
(4,294)

68,412
—

(46,803)
(4,294)

—

(17,538)

(2,614)

(12,129)

18,262

4,857

39,142

—

(32,281)

62,261

—

724 $

2,243

27,013

—

29,980

vested deferred stock units

(4,538)

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. QUARTERLY RESULTS OF OPERATIONS (Unaudited)

Our quarterly results of operations reflect all adjustments, which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented. The consolidated results of operations by
quarter for fiscal 2017 and 2016 are presented below (in thousands, except per share amounts):

Fiscal 2017 Quarters Ended

Net sales
Gross margin
Net earnings (loss)
Net earnings (loss) per common share allocated to

common shareholders:

(3)

Basic
Diluted

(3)

Net sales
Gross margin
Net earnings (loss)
Net earnings (loss) per common share allocated to

common shareholders:

(3)

Basic
Diluted

(3)

July 29,
April 29,
2017
(1)
2017
$782,906 $850,758 $810,818 $
396,696

358,757

332,440

February 3,
2018
859,864
320,873

(2)

October
28,
2017

1,839 $ 58,471 $ 36,892 $

(499)

$
$

0.04 $
0.04 $

1.19 $
1.19 $

0.75 $
0.75 $

(0.01)
(0.01)

Fiscal 2016 Quarters Ended

April 30,
(4)

2016

July 30,
(5)

2016

October
29,
2016

(6)

$828,822 $909,684 $846,934 $
410,304

351,841

377,206

1,637 $ 24,975 $ 28,433 $

(7)

January 28,
2017
793,263
302,117
(30,089)

$
$

0.03 $
0.03 $

0.51 $
0.51 $

0.58 $
0.58 $

(0.62)
(0.62)

(1)

Includes pre-tax expenses of $17.2 million relating to the termination of the tuxedo rental license
agreement with Macy’s.

(2) Within provision for income taxes, includes $18.3 million related to a favorable tax resolution offset by a

change in our position on permanently reinvested foreign earnings totaling $17.3 million.

(3) Due to the method of calculating weighted-average shares outstanding, the sum of the quarterly per share
amounts may not equal net earnings (loss) per common share allocated to common shareholders for the
respective years.

(4)

Includes pre-tax expenses of $16.5 million consisting primarily of restructuring and other charges of
$13.2 million.

(5)

Includes pre-tax expenses of $39.4 million consisting primarily of restructuring and other charges of
$35.0 million.

(6)

Includes pre-tax expenses of $12.3 million consisting primarily of restructuring and other charges of
$10.9 million.

(7)

Includes pre-tax expenses of $28.2 million consisting primarily of asset impairment charges of $15.1
million and restructuring and other charges of $9.0 million.

Table of Contents

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

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

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the
fiscal quarter ended February 3, 2018 that has materially affected, or is reasonably likely to materially affect,
the Company’s internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rule 13a‑15(f) under the Exchange Act. Our internal control over financial reporting is
a process designed under the supervision of our principal executive and principal financial officers, and
overseen by our Board of Directors, and implemented by management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with
policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of the end of our
most recent fiscal year. In making this assessment, our management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated
Framework (2013). Based on such assessment, management concluded that, as of February 3, 2018, our
internal control over financial reporting is effective based on those criteria.

Deloitte & Touche LLP has audited our internal control over financial reporting as of February 3, 2018; their
report is included in Item 9A, which follows.

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Tailored Brands, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Tailored Brands, Inc. and subsidiaries (the
“Company”) as of February 3, 2018, based on criteria established in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of February 3, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued
by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements as of and for the year ended February 3, 2018,
of the Company and our report dated March 30, 2018, expressed an unqualified opinion on those financial
statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are
a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas
March 30, 2018

Table of Contents

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Except as set forth below, the information required by this Item is incorporated herein by reference from our
Proxy Statement for the Annual Meeting of Shareholders to be held June 21, 2018.

The Company has adopted a Code of Ethics and Business Conduct that applies to all employees including the
Company’s Chief Executive Officer and all Presidents, Chief Financial Officers, Principal Accounting
Officers, Executive Vice Presidents and other designated financial and operations officers. A copy of such
policy is posted on the Company’s website, www.tailoredbrands.com, under the heading “Investors - Corporate
Governance.”

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference from our Proxy Statement for the
Annual Meeting of Shareholders to be held June 21, 2018.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by reference from our Proxy Statement for the
Annual Meeting of Shareholders to be held June 21, 2018.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

The information required by this Item is incorporated herein by reference from our Proxy Statement for the
Annual Meeting of Shareholders to be held June 21, 2018.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item is incorporated herein by reference from our Proxy Statement for the
Annual Meeting of Shareholders to be held June 21, 2018.

Table of Contents

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Schedules

The following consolidated financial statements of the Company are included in Part II, Item 8:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of February 3, 2018 and January 28, 2017
Consolidated Statements of Earnings (Loss) for the years ended February 3, 2018, January 28, 2017

and January 30, 2016

Consolidated Statements of Comprehensive Income (Loss) for the years ended February 3, 2018,

January 28, 2017 and January 30, 2016

Consolidated Statements of Shareholders’ Equity (Deficit) for the years ended February 3, 2018,

January 28, 2017 and January 30, 2016

Consolidated Statements of Cash Flows for the years ended February 3, 2018, January 28, 2017 and

January 30, 2016

Notes to Consolidated Financial Statements

(b) Exhibits

Exhibits filed with this annual report on Form 10‑K are incorporated herein by reference as set forth in the
Index to Exhibits on page 92.

ITEM 16. FORM 10-K SUMMARY

None.

Table of Contents

Exhibit Index

3.1 —Certificate of Formation for Tailored Brands, Inc. (incorporated by reference
from Exhibit 3.1 to the Company’s Current Report on Form 8‑K filed with the
Commission on February 1, 2016).

3.2 —Amended and Restated Bylaws of Tailored Brands, Inc., as amended
(incorporated by reference from Exhibit 3.1 to the Company’s Current Report on
Form 8‑K filed with the Commission on January 29, 2018).

4.1 —Certificate of Formation for Tailored Brands, Inc. (included as Exhibit 3.1).
4.2 —Amended and Restated Bylaws of Tailored Brands, Inc. (included as

Exhibit 3.2).

4.3 —Indenture, dated as of June 18, 2014, by an among the Company, the MW
Guarantors and the Trustee, relating to the Senior Notes (incorporated by
reference from Exhibit 4.1 to the Company’s Current Report on Form 8‑K filed
with the Commission on June 20, 2014).

4.4 —Supplemental Indenture, dated as of June 18, 2014, by and among the Company,
the JOSB Guarantors and the Trustee, relating to the Senior Notes (incorporated
by reference from Exhibit 4.2 to the Company’s Current Report on Form 8‑K
filed with the Commission on June 20, 2014).

4.5 —Second Supplemental Indenture relating to the Notes, dated as of January 29,
2016, among The Men’s Wearhouse, Inc., Tailored Brands, Inc., Tailored
Shared Services, LLC and The Bank of New York Mellon Trust Company,
N.A., as trustee (incorporated by reference from Exhibit 4.3 to the Company’s
Current Report on Form 8‑K filed with the Commission on February 1, 2016).

4.6 —Third Supplemental Indenture relating to the Notes, dated as of June 30, 2016,
among The Men’s Wearhouse, Inc., Tailored Brands Purchasing LLC, and
Tailored Brands Gift Card Co LLC and the Bank of New York Mellon Trust
Company, N.A., as trustee (incorporated by reference from Exhibit 4.1 to the
Company’s Current Report on Form 8‑K filed with the Commission on July 1,
2016).

4.7 —Registration Agreement, dated as of June 18, 2014, by and among the Company,
the MW Guarantors and Merrill Lynch, Pierce, Fenner & Smith Incorporated
and J.P. Morgan Securities LLC, relating to the Senior Notes (incorporated by
reference from Exhibit 4.3 to the Company’s Current Report on Form 8‑K filed
with the Commission on June 20, 2014).

10.1 —Credit Agreement, dated as June 18, 2014, by and among the Company and the
other Co‑Borrowers, the U.S. ABL Administrative Agent, the Canadian ABL
Administrative Agent and the ABL Lenders (incorporated by reference from
Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed with the
Commission on June 18, 2014).

10.2 —Term Loan Credit Agreement, dated as of June 18, 2014, by and among the
Company, the Term Administrative Agent and the Term Lenders (incorporated
by reference from Exhibit 10.2 to the Company’s Current Report on Form 8‑K
filed with the Commission on June 20, 2014).

10.3 —Amendment No. 1 to Term Loan, dated as of June 26, 2014, by and among the
Company, the Administrative Agent and the Term Lenders (incorporated by
reference from Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed
with the Commission on July 1, 2014).

Table of Contents

10.4 —Amendment No. 1 to ABL Facility, dated as of July 28, 2014, by and among the
Company, and the other Co‑Borrowers, the U.S. ABL Administrative Agent, the
Canadian ABL Administrative Agent and the ABL Lenders (incorporated by
reference from Exhibit 10.4 to the Company’s Quarterly Report on Form 10‑Q
for the fiscal quarter ended August 2, 2014).

10.5 —Incremental Facility Agreement No. 1, dated as of April 7, 2015, among The
Men’s Wearhouse, Inc., the guarantors party thereto, the lenders party thereto
and JPMorgan Chase Bank, N.A. (incorporated by reference from Exhibit 10.1 to
the Company’s Current Report on Form 8‑K filed with the Commission on
April 8, 2015).

10.6 —Amendment No. 2 to ABL Facility (including Annex A), dated as of October 25,
2017, by and among the Company, and the other Co-Borrowers, the U.S. ABL
Administrative Agent, the Canadian ABL Administrative Agent and the ABL
Lenders (incorporated by reference from Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q filed with the Commission on December 7,
2017).

*10.7 —1996 Long‑Term Incentive Plan (As Amended and Restated Effective April 1,
2008) (incorporated by reference from Exhibit 10.1 to the Company’s Quarterly
Report on Form 10‑Q for the fiscal quarter ended May 3, 2008), and the forms
of stock option agreement, restricted stock award agreement and deferred stock
unit award agreement (incorporated by reference from Exhibit 10.20 to the
Company’s Current Report on Form 8‑K filed with the Commission on
March 18, 2005).

*10.8 —Forms of Deferred Stock Unit Award Agreement, Restricted Stock Award
Agreement and Nonqualified Stock Option Award Agreement under The Men’s
Wearhouse, Inc. 1996 Long‑Term Incentive Plan (as amended and restated
effective as of April 1, 2008) (incorporated by reference from Exhibit 10.1 to the
Company’s Quarterly Report on Form 10‑Q for the fiscal quarter ended May 1,
2010).

*10.9 —2004 Long‑Term Incentive Plan (As Amended and Restated Effective April 1,
2008) (incorporated by reference from Exhibit 10.1 to the Company’s Current
Report on Form 8‑K filed with the Commission on June 27, 2008).

*10.10 —First Amendment to The Men’s Wearhouse, Inc. 2004 Long‑Term Incentive
Plan (incorporated by reference from Exhibit 10.1 to the Company’s Current
Report on Form 8‑K filed with the Commission on June 17, 2011).

*10.11 —Second Amendment to The Men’s Wearhouse, Inc. 2004 Long‑Term Incentive
Plan (incorporated by reference from Exhibit 10.1 to the Company’s Current
Report on Form 8‑K filed with the Commission on April 20, 2012).

*10.12 —Third Amendment to The Men’s Wearhouse, Inc. 2004 Long‑Term Incentive
Plan (incorporated by reference from Exhibit 10.1 to the Company’s Current
Report on Form 8‑K filed with the Commission on September 10, 2013).

*10.13 —Fourth Amendment to The Men’s Wearhouse, Inc. 2004 Long‑Term Incentive
Plan (incorporated by reference from Exhibit 10.1 to the Company’s Current
Report on Form 8‑K filed with the Commission on July 2, 2015).

*10.14 —Agreement for Adoption and Assumption of The Men’s Wearhouse, Inc. Equity
Incentive Plans, between The Men’s Wearhouse, Inc. and Tailored Brands, Inc.,
effective as of January 31, 2016 (incorporated by reference from Exhibit 10.1 to
the Company’s Current Report on Form 8‑K filed with the Commission on
February 1, 2016).

Table of Contents

*10.15 —Forms of Deferred Stock Unit Award Agreement, Performance‑Based Deferred
Stock Unit Award Agreement, Restricted Stock Award Agreement and
Nonqualified Stock Option Award Agreement (each for named executive
officers) under The Men’s Wearhouse, Inc. 2004 Long‑Term Incentive Plan
(incorporated by reference from Exhibit 10.2 to the Company’s Current Report
on Form 8‑K filed with the Commission on April 9, 2013).

*10.16 —Forms of Deferred Stock Unit Award Agreement, Performance‑Based Deferred
Stock Unit Award Agreement, Restricted Stock Award Agreement and
Nonqualified Stock Option Award Agreement (each for executive officers)
under The Men’s Wearhouse, Inc. 2004 Long‑Term Incentive Plan (incorporated
by reference from Exhibit 10.3 to the Company’s Current Report on Form 8‑K
filed with the Commission on April 9, 2013).

*10.17 —Form of Deferred Stock Unit Award Agreement (for senior executive officers,
including named executive officers) under The Men’s Wearhouse, Inc. 2004
Long‑Term Incentive Plan (incorporated by reference from Exhibit 10.1 to the
Company’s Current Report on Form 8‑K filed with the Commission on
September 16, 2014).

*10.18 —Form of Performance Unit Award Agreement, for executive officers, under the
Tailored Brands, Inc. 2004 Long-Term Incentive Plan (incorporated by
reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed
with the Commission on April 8, 2016)

*10.19 —Form of Nonqualified Stock Option Award Agreement (for senior executive
officers, including named executive officers) under The Men’s Wearhouse, Inc.
2004 Long‑Term Incentive Plan (incorporated by reference from Exhibit 10.3 to
the Company’s Current Report on Form 8‑K filed with the Commission on
September 16, 2014).

*10.20 —The Men’s Wearhouse, Inc. 2004 Long‑Term Incentive Plan Subplan for UK
Employees (incorporated by reference from Exhibit 10.1 to the Company’s
Current Report on Form 8‑K filed with the Commission on March 29, 2012).

*10.21 —Tailored Brands, Inc. 2016 Long-Term Incentive Plan, as amended (incorporated
by reference from Appendix A to the Company’s proxy statement on
Schedule 14A relating to the 2017 Annual Meeting of Shareholders of the
Company filed with the Commission on May 4, 2017 (File No. 1‑16097)).

*10.22 —Form of Deferred Stock Unit Award Agreement (for employees, including
named executive officers) under the Tailored Brands, Inc. 2016 Long-Term
Incentive Plan (incorporated by reference from Exhibit 10.26 to the Company’s
Annual Report on Form 10-K filed with the Commission on March 24, 2017).

*10.23 — Form of Restricted Stock Award Agreement (for employees, including named
executive officers) under the Tailored Brands, Inc. 2016 Long-Term Incentive
Plan (incorporated by reference from Exhibit 10.28 to the Company’s Annual
Report on Form 10-K filed with the Commission on March 24, 2017).

*10.24 —Form of Restricted Stock Award Agreement (for directors) under the Tailored
Brands, Inc. 2016 Long-Term Incentive Plan (incorporated by reference from
Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the
Commission on September 8, 2016).

*10.25 —Form of Deferred Stock Unit Award Agreement (for non‑employee directors)
under the Tailored Brands, Inc. 2016 Long-Term Incentive Plan (incorporated
by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-
Q filed with the Commission on June 8, 2017).

*10.26 —Form of Nonqualified Stock Option Agreement (for executives, including named
executive officers) under the Tailored Brands, Inc. 2016 Long-Term Incentive
Plan (incorporated by reference from Exhibit 10.30 to the Company’s Annual
Report on Form 10-K filed with the Commission on March 24, 2017).

Table of Contents

*10.27

—

*10.28

—

Form of December 2016 Performance Unit Award Agreement, for executive
officers, under the Tailored Brands, Inc. 2016 Long-Term Incentive Plan
(incorporated by reference from Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed with the Commission on December 13, 2016)
Form of May 2017 Performance Unit Award Agreement, for executive officers,
under the Tailored Brands, Inc. 2016 Long-Term Incentive Plan (incorporated
by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed with the Commission on May 17, 2017).

*10.29 —Tailored Brands, Inc. 2016 Cash Incentive Plan (incorporated by reference from
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the
Commission on June 20, 2016).

*10.30 —Tailored Brands, Inc. Vice President Change in Control Severance Plan (as
Amended and Restated Effective September 8, 2016) (incorporated by reference
from Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed with
the Commission on September 8, 2016).

*10.31 —Tailored Brands, Inc. Amended and Restated Senior Executive Change in
Control Severance Plan (incorporated by reference from Exhibit 10.2 to the
Company’s Quarterly Report on Form 10-Q filed with the Commission on
September 7, 2017).

*10.32 —Sixth Amended and Restated Employment Agreement dated effective as of
February 25, 2014, by and between The Men’s Wearhouse, Inc. and David H.
Edwab (incorporated by reference from Exhibit 10.16 to the Company’s Annual
Report on Form 10‑K filed with the Commission on April 1, 2014).

*10.33 —Amended and Restated Employment Agreement dated April 22, 2015, by and
between The Men’s Wearhouse, Inc. and Douglas S. Ewert (incorporated by
reference from Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed
with the Commission on April 28, 2015).

*10.34 —Assignment and Amendment of Employment Agreement for Douglas S. Ewert,
between The Men’s Wearhouse, Inc. and Tailored Brands, Inc., effective as of
January 31, 2016 (incorporated by reference from Exhibit 10.3 to the Company’s
Current Report on Form 8‑K filed with the Commission on February 1, 2016).

*10.35 —Employment Agreement dated effective June 29, 2015, by and between The
Men’s Wearhouse, Inc. and Bruce K. Thorn (incorporated by reference from
Exhibit 10.2 to the Company’s Current Report on Form 8‑K filed with the
Commission on July 2, 2015).

*10.36 —Assignment and Amendment of Employment Agreement for Bruce K. Thorn,
between The Men’s Wearhouse, Inc. and Tailored Brands, Inc., effective as of
January 31, 2016 (incorporated by reference from Exhibit 10.5 to the Company’s
Current Report on Form 8‑K filed with the Commission on February 1, 2016).

12 —Computation of Ratio of Earnings to Fixed Charges (filed herewith).

21.1 —Subsidiaries of the Company (filed herewith).
23.1 —Consent of Deloitte & Touche LLP, independent auditors (filed herewith).
31.1 —Certification of Annual Report Pursuant to Section 302 of the Sarbanes‑Oxley

Act of 2002 by the Chief Executive Officer (filed herewith).

31.2 —Certification of Annual Report Pursuant to Section 302 of the Sarbanes‑Oxley

Act of 2002 by the Chief Financial Officer (filed herewith).

32.1 —Certification of Annual Report Pursuant to Section 906 of the Sarbanes‑Oxley

Act of 2002 by the Chief Executive Officer (furnished herewith)†.

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32.2 —Certification of Annual Report Pursuant to Section 906 of the Sarbanes‑Oxley

Act of 2002 by the Chief Financial Officer (furnished herewith)†.

101.1 —The following financial information from Tailored Brands, Inc.’s Annual Report
on Form 10‑K for the year ended February 3, 2018, formatted in XBRL
(Extensible Business Reporting Language) and filed electronically herewith:
(i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of
Earnings (Loss); (iii) the Consolidated Statements of Comprehensive Income
(Loss); (iv) the Consolidated Statements of Shareholders’ Equity (Deficit);
(v) the Consolidated Statements of Cash Flows; and (vi) the Notes to
Consolidated Financial Statements.

* Management Compensation or Incentive Plan.

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

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SIGNATURES

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.

TAILORED BRANDS, INC.
By

/s/ Douglas S. Ewert
Douglas S. Ewert
Chief Executive Officer

Dated: March 30, 2018

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/ Douglas S. Ewert
Douglas S. Ewert

Chief Executive Officer and Director

March 30, 2018

/s/ Jack P. Calandra
Jack P. Calandra

Executive Vice President, Chief Financial Officer March 30, 2018
and Treasurer

/s/ Brian T. Vaclavik
Brian T. Vaclavik

Senior Vice President, Chief Accounting Officer March 30, 2018
and Principal Accounting Officer

/s/ Dinesh S. Lathi
Dinesh S. Lathi

/s/ David H. Edwab
David H. Edwab

/s/ Irene Chang Britt
Irene Chang Britt

/s/ Rinaldo S. Brutoco
Rinaldo S. Brutoco

/s/ Sue E. Gove
Sue E. Gove

/s/ Theo Killion

Theo Killion

/s/ Grace Nichols
Grace Nichols

/s/ William B. Sechrest
William B. Sechrest

/s/ Sheldon I. Stein
Sheldon I. Stein

Chairman of the Board and Director

March 30, 2018

Vice Chairman of the Board and Director

March 30, 2018

Director

March 30, 2018

Tailored Brands, Inc.
Computation of Ratio of Earnings to Fixed Charges
(In thousands, except ratio data)

February 3, January 28,

2018

2017

Fiscal Year Ended
January 30,
2016

Exhibit 12

(1)

January 31, February 1,

2015

2014

Earnings (Loss)
Earnings (loss) before income taxes
Add:
Fixed charges
Adjusted Earnings (Loss)
Fixed Charges:
Interest expense
Portion of rent expense under operating
leases deemed to be the equivalent of
interest

Total Fixed Charges
Ratio of Earnings to Fixed Charges

(2) (3)

$ 134,954 $

31,581 $(1,195,761) $

5,376 $ 126,808

184,472
319,426

189,436
221,017

194,702
(1,001,059)

143,613
148,989

61,244
188,052

100,471

103,149

105,977

66,032

3,205

84,001
184,472
1.73

86,287
189,436
1.17

88,725
194,702
—

77,581
143,613
1.04

58,039
61,244
3.07

(1) All fiscal years for which financial information is included herein had 52 weeks with the exception of

the fiscal year ended February 3, 2018 which had 53 weeks.

(2) For purposes of computing the ratio of earnings to fixed charges, earnings consist of earnings before
income taxes plus fixed charges. Fixed charges consists of interest incurred on indebtedness,
including amortization of debt expenses including any discount on indebtedness, and the portion of
rental expense under operating leases deemed to be the equivalent of interest.

(3)

In fiscal 2015, our earnings were insufficient to cover fixed charges by $806.4 million.

Subsidiaries of the Company

(1)

Exhibit 21.1

Domestic Subsidiaries:

(5)

(4)(6)

(2)(3)

(4)(7)

The Men’s Wearhouse, Inc., a Texas corporation
Jos. A. Bank Clothiers, Inc., a Delaware corporation
(4)
The Joseph A. Bank Mfg. Co., Inc., a Delaware corporation
K&G Men’s Company Inc., a Delaware corporation
JA Apparel Corp., a Delaware corporation
Nashawena Mills Corp., a Massachusetts corporation
(8)
Joseph Abboud Manufacturing Corp., a Delaware corporation
MWDC Holding Inc., a Delaware corporation
MWDC Texas Inc., a Delaware corporation
(9)
Twin Hill Acquisition Company, Inc., a California corporation
Renwick Technologies, Inc., a Texas corporation
TMW Merchants LLC, a Delaware limited liability company
Tailored Shared Services, LLC, a Delaware limited liability company
Tailored Brands Purchasing LLC, a Texas limited liability company
(11)
Tailored Brands Gift Card Co LLC, a Texas limited liability company

(4)(10)

(4)

(8)

(4)

(11)

Foreign Subsidiaries:

(4)

(14)

(12)

(12)(13)

Moores Retail Group Inc., a New Brunswick corporation
Moores The Suit People Inc., a New Brunswick corporation
Golden Brand Clothing (Canada) Ltd., a New Brunswick corporation
Tailored Brands Noborue Limited, a limited company incorporated in Hong Kong
MWUK Holding Company Limited, a limited company incorporated in England and Wales
Ensco 648 Limited, a limited company incorporated in England and Wales
Ensco 645 Limited, a limited company incorporated in England and Wales
MWUK Limited, a limited company incorporated in England and Wales
AlexandraVêtements Professionnels SARL, a French société à responsabilité limitée
Alexandra Corporate Fashion BV, a limited company incorporated under the laws of the Netherlands
Work Uniforms Direct Limited, a limited company incorporated under the laws of Northern Ireland.
Tailored Brands Sourcing Holding Company Limited, an exempted company incorporated in the Cayman
Islands with limited liability
Tailored Brands Atlantic Company Limited, an exempted company incorporated in the Cayman Islands with
limited liability
Tailored Brands Pacific Company Limited, an exempted company incorporated in the Cayman Islands with
limited liability
Tailored Brands Central BV, a limited company incorporated under the laws of the Netherlands
Tailored Brands Eastern Sourcing Limited, a limited company incorporated in Hong Kong
__________

(16)

(14)

(15)

(20)

(17)

(18)

(19)

(2)

As of February 3, 2018. The names of certain subsidiaries are omitted because such unnamed subsidiaries,
considered in the aggregate as a single subsidiary, do not constitute a significant subsidiary as of February
3, 2018.
100% owned by Tailored Brands, Inc.

The Men’s Wearhouse, Inc. does business under the names Men’s Wearhouse and Men’s Wearhouse &

Tux.
100% owned by The Men’s Wearhouse, Inc.
100% owned by Jos. A. Bank Clothiers, Inc.

K&G Men’s Company Inc. does business under the names K&G Fashion Superstore, K&G Fashion, and

K&G Suit Warehouse.
JA Apparel Corp. does business under the name Joseph Abboud.
100% owned by JA Apparel Corp.

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

MWDC Texas Inc. is 100% owned by MWDC Holding Inc. and does business under the name
MWCleaners. On March 3, 2018, we sold MWDC Texas Inc. to a third party buyer; therefore, MWDC
Texas Inc. is no longer a subsidiary of the Company as of the date hereof.

(10)

Twin Hill Acquisition Company, Inc. does business under the name Twin Hill and Twin Hill Corporate

(11)

(12)

(13)

Apparel.

100% owned by Tailored Shared Services, LLC.

100% owned by Moores Retail Group Inc.
Moores The Suit People Inc. does business under the names Moores Clothing for Men and Moores
Vêtements Pour Hommes.

(14)

(15)

(16)

(17)

100% owned by owned by Moores The Suit People Inc.
100% owned by MWUK Holding Company Limited.
100% owned by owned by Ensco 648 Limited.
100% of the outstanding ordinary shares are owned by Ensco 645 Limited. MWUK Limited does business

(18)

(19)

(20)

under the names Dimensions, Alexandra and Yaffy.

100% owned by MWUK Limited.

100% owned by Tailored Brands Sourcing Holding Company Limited.
100% owned by Tailored Brands Central BV, as trustee of Tailored Brands Sourcing Group (a China
business trust)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 33-48108, 33-74692, 333-21109,
333-53623, 333-90306, 333-90308, 333-125182, 333-152298, 333-175122, 333-209305, 333-212574 and 333-
219335 on Form S-8 of our reports dated March 30, 2018, relating to the consolidated financial statements of
Tailored Brands, Inc. and subsidiaries (the “Company”), and the effectiveness of the Company’s internal
control over financial reporting, appearing in this Annual Report on Form 10-K of Tailored Brands, Inc. for the
year ended February 3, 2018.

Exhibit 23.1

/s/ DELOITTE & TOUCHE LLP

Houston, Texas
March 30, 2018

Exhibit 31.1

I, Douglas S. Ewert, certify that:

Certifications

I have reviewed this annual report on Form 10‑K of Tailored Brands, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f))
for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and

Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.

Dated: March 30, 2018

/s/ Douglas S. Ewert
Douglas S. Ewert
Chief Executive Officer

Exhibit 31.2

I, Jack P. Calandra, certify that:

Certifications

I have reviewed this annual report on Form 10‑K of Tailored Brands, Inc.;

Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.

Dated: March 30, 2018

/s/ JACK P. CALANDRA
Jack P. Calandra
Executive Vice President, Chief Financial
Officer and Treasurer

Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of The Sarbanes‑Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

Exhibit 32.1

In connection with the Annual Report of Tailored Brands, Inc. (the “Company”) on Form 10‑K for the year
ended February 3, 2018, as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, Douglas S. Ewert, Chief Executive Officer of the Company, certify, pursuant to 18 U. S. C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that to the best of my
knowledge:

(1)

(2)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.

Dated: March 30, 2018

/s/ Douglas S. Ewert
Douglas S. Ewert
Chief Executive Officer

Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of The Sarbanes‑Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

Exhibit 32.2

In connection with the Annual Report of Tailored Brands, Inc. (the “Company”) on Form 10‑K for the year
ended February 3, 2018, as filed with the Securities and Exchange Commission on the date hereof
(the “Report”), I, Jack P. Calandra, Chief Financial Officer of the Company, certify, pursuant to
18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that to the
best of my knowledge:

(1)

(2)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.

Dated: March 30, 2018

/s/ JACK P. CALANDRA
Jack P. Calandra
Executive Vice President, Chief Financial Officer
and
Treasurer