Company Quick10K Filing
Christopher & Banks
Price0.35 EPS-1
Shares38 P/E-1
MCap13 P/FCF-1
Net Debt-2 EBIT-23
TEV11 TEV/EBIT-0
TTM 2019-11-02, in MM, except price, ratios
10-Q 2020-10-31 Filed 2020-12-14
10-Q 2020-08-01 Filed 2020-09-14
10-Q 2020-05-02 Filed 2020-06-15
10-K 2020-02-01 Filed 2020-03-16
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10-Q 2019-08-03 Filed 2019-09-11
10-Q 2019-05-04 Filed 2019-06-12
10-K 2019-02-02 Filed 2019-03-18
10-Q 2018-11-03 Filed 2018-12-06
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10-Q 2017-10-28 Filed 2017-11-30
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10-K 2015-01-31 Filed 2015-04-09
10-Q 2014-11-01 Filed 2014-12-05
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10-K 2014-02-01 Filed 2014-03-21
10-Q 2013-08-03 Filed 2013-09-12
10-Q 2013-05-04 Filed 2013-06-13
10-K 2013-02-02 Filed 2013-03-25
10-Q 2012-10-27 Filed 2012-12-06
10-Q 2012-07-28 Filed 2012-09-06
10-Q 2012-04-28 Filed 2012-06-07
10-Q 2011-11-26 Filed 2012-01-05
10-Q 2011-08-27 Filed 2011-10-06
10-Q 2011-05-28 Filed 2011-07-07
10-K 2011-02-26 Filed 2011-05-12
10-Q 2010-11-27 Filed 2011-01-06
10-Q 2010-08-28 Filed 2010-10-07
10-Q 2010-05-29 Filed 2010-07-08
10-K 2010-02-27 Filed 2010-05-13
10-Q 2009-11-28 Filed 2010-01-07
8-K 2020-09-11
8-K 2020-08-05
8-K 2020-06-18
8-K 2020-06-12
8-K 2020-06-02
8-K 2020-05-01
8-K 2020-04-01
8-K 2020-03-19
8-K 2020-03-12
8-K 2020-03-10
8-K 2020-02-27
8-K 2019-12-11
8-K 2019-12-10
8-K 2019-12-04
8-K 2019-10-17
8-K 2019-09-10
8-K 2019-07-17
8-K 2019-06-26
8-K 2019-06-11
8-K 2019-04-18
8-K 2019-04-10
8-K 2019-04-05
8-K 2019-03-15
8-K 2019-03-12
8-K 2019-01-14
8-K 2018-12-20
8-K 2018-12-04
8-K 2018-10-22
8-K 2018-10-16
8-K 2018-09-05
8-K 2018-08-03
8-K 2018-08-02
8-K 2018-06-27
8-K 2018-06-26
8-K 2018-06-14
8-K 2018-06-13
8-K 2018-06-13
8-K 2018-05-31
8-K 2018-04-27
8-K 2018-03-08
8-K 2018-03-07
8-K 2018-02-01
8-K 2018-02-01
8-K 2018-01-15

CBK 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation
Note 2 - Liquidity and Management Plans
Note 3 - Revenue
Note 4 - Property, Equipment and Improvements, Net
Note 5 - Accrued Liabilities and Other Current Liabilities
Note 6 - Credit and Term Loan Facilities, Secured Vendor Financing Program and Ppp Loan
Note 7 - Income Taxes
Note 8 - Earnings per Share ("Eps")
Note 9 - Fair Value Measurements
Note 10 - Lease Commitments
Note 11 - Legal Proceedings
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 cbk-20201031ex311.htm
EX-31.2 cbk-20201031ex312.htm
EX-32.1 cbk-20201031ex321.htm
EX-32.2 cbk-20201031ex322.htm

Christopher & Banks Earnings 2020-10-31

Balance SheetIncome StatementCash Flow
220176132884402012201420172020
Assets, Equity
120865218-16-502012201420172020
Rev, G Profit, Net Income
20124-4-12-202012201420172020
Ops, Inv, Fin

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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q

(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2020
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
001-3139006-1195422
(Commission File Number)(I.R.S. Employer Identification No.)

CHRISTOPHER & BANKS CORPORATION
(a Delaware corporation)
2400 Xenium Lane North
Plymouth, Minnesota 55441
763-551-5000
(Registrant, State of Incorporation or Organization, Address of Principal Executive Officers and Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, par value $0.01 per shareCBKCOTCQX
 
 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes    No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an 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 filerAccelerated filer
Non Accelerated FilerSmaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

The registrant had 38,546,330 shares of common stock outstanding as of December 11, 2020, excluding shares of treasury stock.


Table of Contents
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
 
  Page
 
 
 
 
 
 
   
 
   

1

Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(amounts in thousands)
 October 31, 2020February 1, 2020
ASSETS  
Current assets:  
Cash and cash equivalents$1,202 $3,198 
Accounts receivable3,209 2,975 
Merchandise inventories47,262 41,698 
Prepaid expenses and other current assets4,123 4,072 
Income taxes receivable362 291 
Total current assets56,158 52,234 
Non-current assets:
Property, equipment and improvements, net20,010 24,952 
Operating lease assets94,974 110,509 
Deferred income taxes613 613 
Other assets1,081 1,098 
Total non-current assets116,678 137,172 
Total assets$172,836 $189,406 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$35,151 $23,715 
Short-term borrowings13,978  
Current portion of long-term debt667  
Current portion of long-term lease liabilities23,824 26,185 
Accrued salaries, wages and related expenses3,494 4,723 
Accrued liabilities and other current liabilities22,883 24,053 
Total current liabilities99,997 78,676 
Non-current liabilities:  
Long-term lease liabilities88,964 99,793 
Long-term debt14,333  
Other non-current liabilities3,120 1,829 
Total non-current liabilities106,417 101,622 
Commitments and contingencies  
Stockholders’ equity:  
Preferred stock — $0.01 par value, 1,000 shares authorized, none outstanding
  
Common stock —$0.01 par value, 74,000 shares authorized, 48,889 and 48,680 shares issued, and 35,587 and 38,377 shares outstanding at October 31, 2020 and February 1, 2020, respectively
454 452 
Additional paid-in capital129,865 129,413 
Accumulated deficit(51,022)(7,882)
Common stock held in treasury, 10,303 shares at cost at October 31, 2020 and February 1, 2020
(112,875)(112,875)
Total stockholders’ equity(33,578)9,108 
Total liabilities and stockholders’ equity$172,836 $189,406 
See Notes to Condensed Consolidated Financial Statements
2

Table of Contents
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
(amounts in thousands, except per share data)
 Thirteen Weeks EndedThirty-nine Weeks Ended
 October 31,November 2,October 31,November 2,
 2020201920202019
Net sales$72,797 $94,061 $171,403 $260,724 
Merchandise, buying and occupancy costs54,862 62,135 143,364 178,710 
Gross profit17,935 31,926 28,039 82,014 
Other operating expenses:  
Selling, general and administrative26,308 29,271 64,192 86,213 
Depreciation and amortization1,993 1,997 5,769 6,578 
Impairment of store assets181  445 311 
Total other operating expenses28,482 31,268 70,406 93,102 
Operating (loss) income(10,547)658 (42,367)(11,088)
Interest expense, net(270)(138)(823)(405)
(Loss) income before income taxes(10,817)520 (43,190)(11,493)
Income tax (benefit) provision(9)33 (50)113 
Net (loss) income and comprehensive (loss) income$(10,808)$487 $(43,140)$(11,606)
Basic (loss) income per share:  
Net (loss) income$(0.29)$0.01 $(1.14)$(0.31)
Basic shares outstanding37,855 37,495 37,728 37,755 
Diluted (loss) income per share:  
Net (loss) income$(0.29)$0.01 $(1.14)$(0.31)
Diluted shares outstanding37,855 37,552 37,728 37,755 
 

See Notes to Condensed Consolidated Financial Statements

3

Table of Contents
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(amounts in thousands)
Thirteen Weeks Ended
TreasuryCommon Stock
 Shares
Held
Amount
Held
Shares
Outstanding
Amount
Outstanding
Additional
Paid-in
Capital
Accumulated DeficitTotal
August 1, 202010,303 $(112,875)38,597 $454 $129,713 $(40,214)$(22,922)
Net loss— — — — — (10,808)(10,808)
Issuance of restricted stock, net of forfeitures— — (10) (2)— (2)
Stock-based compensation expense— — — — 154 — 154 
October 31, 202010,303 $(112,875)38,587 $454 $129,865 $(51,022)$(33,578)
Thirty-nine Weeks Ended
TreasuryCommon Stock
Shares
Held
Amount
Held
Shares
Outstanding
Amount
Outstanding
Additional
Paid-in
Capital
Accumulated DeficitTotal
February 1, 202010,303 $(112,875)38,377 $452 $129,413 $(7,882)$9,108 
Net loss— — — — — (43,140)(43,140)
Issuance of restricted stock, net of forfeitures— — 210 2 (11)— (9)
Stock-based compensation expense— — — — 463 — 463 
October 31, 202010,303 $(112,875)38,587 $454 $129,865 $(51,022)$(33,578)
Thirteen Weeks Ended
TreasuryCommon Stock
 Shares
Held
Amount
Held
Shares
Outstanding
Amount
Outstanding
Additional
Paid-in
Capital
Accumulated DeficitTotal
August 3, 201910,303 $(112,875)38,336 $451 $129,118 $(4,634)$12,060 
Net income— — — — — 487 487 
Issuance of restricted stock, net of forfeitures— — 83 1 (2)— (1)
Stock-based compensation expense— — — — 157 — 157 
November 2, 201910,303 $(112,875)38,419 $452 $129,273 $(4,147)$12,703 
Thirty-nine Weeks Ended
TreasuryCommon Stock
Shares
Held
Amount
Held
Shares
Outstanding
Amount
Outstanding
Additional
Paid-in
Capital
Retained
Earnings (Accumulated Deficit)
Total
February 2, 20199,979 $(112,809)38,386 $481 $128,714 $4,137 $20,523 
Net loss— — — — — (11,606)(11,606)
Issuance of restricted stock, net of forfeitures— — 357 3 (11)— (8)
Stock-based compensation expense— — — — 570 — 570 
Acquisition of common stock held in treasury, at cost324 (66)(324)(32)— — (98)
Cumulative effect of accounting change— — — — — 3,322 3,322 
November 2, 201910,303 $(112,875)38,419 $452 $129,273 $(4,147)$12,703 

See Notes to Condensed Consolidated Financial Statements
4

Table of Contents
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in thousands)
 
 Thirty-nine Weeks Ended
 October 31, 2020November 2, 2019
Cash flows from operating activities:  
Net loss$(43,140)$(11,606)
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization5,769 6,578 
Impairment of store assets445 311 
Amortization of financing costs140 46 
Lease expense15,176 19,320 
Stock-based compensation expense463 570 
Changes in operating assets and liabilities:  
Accounts receivable(234)(1,875)
Merchandise inventories(5,564)(5,355)
Prepaid expenses and other assets233 (712)
Income taxes receivable(71)(66)
Accounts payable11,500 5,787 
Accrued liabilities(2,458)(2,717)
Lease liabilities(13,190)(20,954)
Other liabilities1,307 (230)
Net cash used in operating activities(29,624)(10,903)
Cash flows from investing activities:  
Purchases of property, equipment and improvements(933)(1,632)
Net cash used in investing activities(933)(1,632)
Cash flows from financing activities:  
Shares redeemed for payroll taxes(9)(6)
Proceeds from bank credit facility18,155 15,400 
Payments of bank credit facility(8,048)(10,850)
Payments for debt issuance costs(408) 
Proceeds from long-term borrowings15,000  
Proceeds from secured vendor financing program3,871  
Acquisition of common stock held in treasury, at cost (98)
Net cash provided by financing activities28,561 4,446 
Net decrease in cash and cash equivalents(1,996)(8,089)
Cash and cash equivalents at beginning of period3,198 10,239 
Cash and cash equivalents at end of period$1,202 $2,150 
Supplemental cash flow information:  
Interest paid$883 $405 
Income taxes paid$64 $263 
Accrued purchases of property, equipment and improvements$136 $93 
 
See Notes to Condensed Consolidated Financial Statements

5

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CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 — Basis of Presentation
 
The unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q have been prepared by Christopher & Banks Corporation and its subsidiaries (collectively referred to as “Christopher & Banks”, “the Company”, “we” or “us”) pursuant to the current rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC"). Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been omitted, pursuant to such rules and regulations. These unaudited Condensed Consolidated Financial Statements, except the Condensed Consolidated Balance Sheet as of February 1, 2020 derived from the Company's audited financial statements, should be read in conjunction with the audited financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2020.
 
The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the full fiscal year. In the opinion of management, the information contained herein reflects all adjustments, consisting only of normal adjustments, except as otherwise stated in these notes, considered necessary to present fairly our financial position, results of operations, and cash flows as of October 31, 2020, November 2, 2019 and for all periods presented.

COVID-19

On March 11, 2020, the World Health Organization declared the novel coronavirus (known as COVID-19) outbreak to be a global pandemic. As a result, the Company began the temporary closing of its stores, and effective March 19, 2020, it made the decision to temporarily close all of its stores and corporate office to combat the rapid spread of COVID-19. All stores remained closed until April 27, 2020, when a small number of stores in select markets were reopened to serve solely as fulfillment centers for the Company’s eCommerce sales. Since April 27, 2020, 447 of the Company’s 452 stores, as well as its distribution center, have been reopened to customers, with the remaining stores closed to the public due to local government or landlord restrictions while remaining operational for purposes of fulfilling eCommerce orders. As of December 11, 2020, most corporate office associates continued to work remotely.

These developments have caused significant disruptions to the Company’s business and have had a significant adverse impact on its financial condition, results of operations and cash flows, both for the periods of time when stores were temporarily closed as well as continued suppressed traffic and customer spending at the Company's stores. The Company is unable to determine whether, when or how the conditions surrounding the COVID-19 pandemic will change, including the impact that social distancing protocols will continue to have on the Company’s operations, the degree to which the Company’s customers will patronize its stores, the impact from potential subsequent additional outbreaks or government mandated closures and the potential efficacy and availability of a COVID-19 vaccine.

In response to the COVID-19 pandemic and the temporary closing of stores, the Company temporarily furloughed all store and most distribution center and corporate associates, but continued to provide benefits to furloughed associates. As previously announced, corporate employees and management received temporary base salary reductions beginning with 20% and up to 50% for the CEO. The Board of Directors also agreed to a substantial reduction in retainer fees aligned with management. As of July 12, 2020, the Company restored base salaries and director retainer fees to levels effective immediately prior to March 22, 2020. As the Company reopened stores, it recalled most furloughed associates, with approximately 96% returning to the workforce as of December 1, 2020.

The Company suspended rent payments to landlords while stores were closed. It also suspended rent payments to landlords beginning in November 2020 and is currently negotiating with landlords in an effort to secure more favorable lease terms, where possible.

Additionally, in early June 2020, the Company applied for and received $10.0 million in loan proceeds under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Company applied the loan proceeds toward the payment of qualified payroll expenses in accordance with the conditions of the PPP. On October 27, 2020, Cache Valley Bank submitted the Company's PPP Loan forgiveness application to the Small Business Administration (the “SBA”). The SBA has 90 days to review and issue a decision regarding forgiveness. The Company believes that the SBA will approve the PPP Loan forgiveness application and that the loan principal will be entirely forgiven under the CARES Act.

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Also, the Company has worked closely with its merchandise vendor partners to reduce orders and extend payment terms, having cancelled as many of its spring/summer inventory orders as possible while holding over some core product. During the third quarter of 2020 the Company did not see the level of sales recovery from reopened stores that it had anticipated. The Company believes that COVID-19 has had an outsized impact on its customer demographic as the Company's customers are, in general, quite pragmatic, with limited demand for new outfits in the absence of social engagements during the initial pandemic and subsequent resurgences. In addition, the Company's store traffic data suggests that its customers remain hesitant to shop in stores. Also during the third quarter, the Company put in place a Secured Vendor Financing Program to improve liquidity and extend payment terms (See Note 6 - Credit and Term Loan Facilities, Secured Vendor Financing Program and PPP Loan) and the lender for the Company's Credit Facility, an asset-based facility, reduced its appraisal valuations on the Company's inventory, which has had the effect of reducing the amount of funding available under the facility.

The Company has experienced, and will continue to experience, adverse impacts on its financial condition and results of operations as a result of the COVID-19 pandemic, including, but not limited to, significant declines in net sales as a result of its store closings and delays in the receipt of new merchandise, as partially offset by reduced merchandise, buying and occupancy costs and other operating expenses; increases in operating losses and net losses; and adjustments to asset carrying values or impairment charges for store assets. Actual results may differ materially from the Company’s current estimates as the scope of the COVID-19 pandemic evolves, depending largely, though not exclusively, on the duration and extent of the disruption to its business.
 
Recently issued accounting pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for public entities for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years. The Company has not yet adopted this ASU as of the balance sheet date. The Company is currently evaluating the ASU and will document its impact in a subsequent period.

In March 2020, the FASB issued ASU No. 2020-04, Fair Value Measurement - Reference Rate Reform (Topic 848). The guidance addresses accounting consequences that could result from the global markets’ anticipated transition away from the use of the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The optional amendments are effective for all entities as of March 12, 2020, through December 31, 2022. The Company intends to elect to apply certain of the optional expedients when evaluating the impact of reference rate reform on its debt instruments that reference LIBOR.

Recently adopted accounting pronouncements

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements for fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Implementation did not have a significant impact on the condensed consolidated financial statements.

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

NOTE 2 — Liquidity and Management Plans

As previously disclosed, the COVID-19 pandemic has and continues to result in an overall disruption in the Company's operations and supply chain. While virtually all of the Company's retail stores reopened in June and July 2020 after being temporarily closed in March, the majority of reopened stores are operating at reduced capacity and hours in accordance with local regulations. All stores strictly adhere to current Centers for Disease Control and Prevention (the “CDC”) recommendations and local regulations to protect the health and safety of customers and associates. During the third quarter of 2020 the Company did not see the level of sales recovery from reopened stores that it had anticipated. The Company believes that COVID-19 has had an outsized impact on its customer demographic as the Company's customers are, in general, quite
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pragmatic with limited demand for new outfits in the absence of social engagements during the initial pandemic and subsequent resurgences. In addition, the Company's store traffic data suggests that its customers remain hesitant to shop in stores. Also during the third quarter, the lender for the Company's Credit Facility, an asset-based facility, reduced its appraisal valuations of the Company's inventory, which has the effect of reducing the amount of funding available under the facility. As a result, the Company's revenues, results of operations and cash flows continue to be materially adversely impacted, which raises substantial doubt about the Company's ability to continue as a going concern within one year after the date of the accompanying unaudited Condensed Consolidated Financial Statements are available to be issued.

Prior to 2020, the Company financed its operations principally through cash generated from operations as well as from its asset-based Credit Facility. In 2018, the Company generated additional cash through the sale of its headquarters and distribution facility. Due to continued operating losses, in February 2020 the Company amended its asset-based Credit Facility and put in place a Term Loan Facility (see Note 6). With the COVID-19 pandemic and the resulting CARES Act passed by Congress, the Company applied for and received a $10.0 million PPP loan in June 2020. During August 2020, the Company put in place a Secured Vendor Financing Program. On October 27, 2020, Cache Valley Bank submitted the Company's PPP Loan forgiveness application to the SBA. The SBA has 90 days to review and issue a decision regarding forgiveness. The Company believes that the SBA will approve the PPP Loan forgiveness application and that the loan principal will be entirely forgiven.

The Company continues to take short-term measures to increase its liquidity and sources of financing. However, conditions remain challenging and the Company has engaged strategic advisors, including B. Riley Securities Inc., to assist with management's evaluation and pursuit of available strategic alternatives. Various alternatives are being evaluated to improve the Company's liquidity and financial position, including, but not limited to, further lease concessions and deferrals, further reductions of operating and capital expenditures, raising additional capital including seeking a refinancing of the Company's debt, sale of the Company or its assets and restructuring its debt and liabilities through a private restructuring or a restructuring under the protection of applicable bankruptcy laws. However, there can be no assurance that the Company will be able to improve its financial position and liquidity, complete a refinancing, raise additional capital or successfully restructure its indebtedness and liabilities. The Company's strategic plans are not yet finalized and are subject to numerous uncertainties including negotiations with creditors and investors and conditions in the credit and capital markets.

There is significant uncertainty around the disruptions related to the COVID-19 pandemic and its impact on the global economy. The Company has experienced, and could continue to experience, other impacts as a result of the COVID-19 pandemic, including, but not limited to, significant impacts on its results of operations and charges from potential adjustments to the carrying amount of its inventory and long-lived asset impairment charges. While the Company anticipates future results of operations will continue to be adversely impacted, the full extent to which the COVID-19 pandemic impacts the Company's future results will depend on future developments, which are highly uncertain and cannot be predicted at this time, including new trends and information which may emerge concerning the severity of the COVID-19 pandemic in the United States, actions taken to contain it or treat its impact, resurgence(s) of COVID-19 that occur, and how quickly and to what extent normal economic and operating conditions can resume.

The accompanying unaudited Condensed Consolidated Financial Statements were prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business and do not include any adjustments to reflect the possible future effects of the uncertainty on the recoverability or classification of recorded asset amounts or classifications of the liabilities.

NOTE 3 — Revenue
 
Merchandise sales
We sell merchandise through our brick and mortar and eCommerce sales channels. Revenues are recognized when control of the promised merchandise is transferred to our customers. Within our brick and mortar sales channel, control is transferred at the point of sale. Within our eCommerce sales channel, control is transferred upon delivery of the merchandise to our customers. Shipping revenues associated with the eCommerce channel are recognized upon the completion of the delivery. The revenue recorded reflects the consideration that we expect to receive in exchange for our merchandise. The Company has elected, as an accounting policy, to exclude from the transaction price all taxes assessed by governmental authorities imposed on merchandise sales.
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Right of return
As part of our merchandise sales, we offer customers a right of return on merchandise that lapses, after a specified period of time, based on the original purchase date. The Company estimates the amount of sales that may be returned by our customers and records this estimate as a reduction of revenue in the period in which the related revenues are recognized. We utilize historical and industry data to estimate the total return liability. Conversely, the reduction in revenue results in a corresponding reduction in merchandise, buying and occupancy costs which results in a contract asset for the anticipated merchandise returned. The total reduction in revenue from estimated returns was $1.3 million for the period ended October 31, 2020, and $1.0 million for the period ended February 1, 2020. These amounts are included within accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.
Friendship Rewards Program
The Company established the Friendship Rewards Program (“Friendship Rewards”) as a loyalty program where customers earn points towards future discount certificates based on their purchase activity. We have identified the additional benefits received from Friendship Rewards as a separate performance obligation within a sales contract in the form of the discount certificates earned by customers. Accordingly, we assess any incremental discounts issued to our customers through Friendship Rewards and allocate a portion of the transaction price associated with merchandise sales from Friendship Rewards members to the future discounts earned. The transaction price allocated to future discounts is recorded as deferred revenue until the discounts are used or forfeited. In addition, the Company estimates breakage on the points earned within Friendship Rewards that will not be used by customers for future discounts. The Company estimates breakage based on the historical redemption rate and considers industry trends. Breakage is recorded as a reduction to the deferred revenue associated with Friendship Rewards. As of October 31, 2020, and February 1, 2020, the Company recorded $4.4 million and $4.3 million, respectively, in deferred revenue associated with Friendship Rewards, which is included in accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.
Gift card revenue
The Company sells gift cards to customers which can be redeemed for merchandise within our brick and mortar and eCommerce sales channels. Gift cards are recorded as deferred revenue when issued and are subsequently recorded as revenue upon redemption. The Company estimates breakage related to gift cards when the likelihood of redemption is remote. This estimate utilizes historical trends based on the vintage of the gift card. Breakage on gift cards is recorded as revenue in proportion to the rate of gift card redemptions by vintage. As of October 31, 2020, and February 1, 2020, the Company had $2.6 million and $4.3 million, respectively, of deferred revenue associated with the issuance of gift cards. The deferred gift card revenue is included in accrued liabilities and other current liabilities in the Condensed Consolidated Balance Sheets.
Private label credit card
The Company offers a private label credit card ("PLCC") which bears the Christopher and Banks brand name offered under an agreement with Comenity Bank. Pursuant to this agreement, there are several obligations on behalf of Comenity Bank that impact the recording of revenue.
In connection with extending the term of the agreement, the Company received a signing bonus. We have determined that the benefits associated with signing the agreement are recognized over time throughout its term. This is the most accurate depiction of the transfer of services as the customer receives and consumes the benefits by obtaining and having the ability to use financing through Comenity Bank for purchases within our brick and mortar and eCommerce sales channels throughout the agreement's term. The deferred signing bonus is included in other liabilities and is being recognized in net sales ratably over the term of the contract.
The other revenue based on customer usage of the card is recognized in net sales in the periods in which the related customer transaction occurs. As of October 31, 2020, the Company had $1.1 million recorded as deferred revenue associated with the signing bonus, of which $0.3 million was included in accrued liabilities and other current liabilities and the remaining $0.9 million was included in other non-current liabilities in the Condensed Consolidated Balance Sheets. As of February 1, 2020, the Company had $1.3 million recorded as deferred revenue associated with the signing bonus, of which $0.3 million was included in accrued liabilities and other current liabilities and the remaining $1.1 million was included in other non-current liabilities of the Condensed Consolidated Balance Sheets. The Company recorded $0.1 million into revenue for the thirteen and thirty-nine-week periods ended October 31, 2020 and November 2, 2019, respectively, associated with the signing bonus.
The Company records revenue associated with royalties received for purchases made using the PLCC. Royalty revenue is recognized based on the total amount to which we have a right to invoice in accordance with the practical expedient included in ASC 606. Accordingly, royalty revenue is recognized in the period in which the related purchases are recognized.
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The Company receives a performance bonus based on the total amount of new PLCC accounts that are opened during the year. We have determined that this is a form of variable consideration. Variable consideration is recorded if, in the Company’s judgment, it is probable that a significant future reversal of revenue under the contract will not occur.
Disaggregation of revenue
The following table provides information about disaggregated revenue by sales channel. All revenue illustrated below is included within our one reportable segment.
Thirteen Weeks EndedThirty-nine Weeks Ended
(in thousands)October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Brick and mortar stores$46,396 $74,483 $99,691 $205,130 
eCommerce sales26,762 20,098 71,214 55,696 
Other(361)(520)498 (102)
Net sales$72,797 $94,061 $171,403 $260,724 

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

Contract balances

The following table provides information about contract liabilities from contracts with customers (in thousands):
Contract Liabilities
October 31, 2020February 1, 2020
CurrentNon-CurrentCurrentNon-Current
Right of return$1,282 $ $979 $ 
Friendship Rewards4,416  4,280  
Gift card revenue2,587  4,282  
Private label credit card274 868 274 1,073 
Total$8,559 $868 $9,815 $1,073 

The Company recognized revenue of $1.5 million and $1.2 million in the thirteen-week periods ended October 31, 2020 and November 2, 2019, respectively, related to contract liabilities recorded at the beginning of the period. The Company recognized revenue of $2.8 million and $3.6 million in the thirty-nine week periods ended October 31, 2020 and November 2, 2019, respectively, related to contract liabilities recorded at the beginning of the period. Such revenues were comprised of the redemption and forfeiture of Friendship Rewards discount certificates, redemption of gift cards, and amortization of the PLCC signing bonus. As of October 31, 2020, and February 1, 2020, the Company did not have any material contract assets.
For the thirteen and thirty-nine-week periods ended October 31, 2020 and November 2, 2019, the Company did not recognize any revenue resulting from changes in the estimated variable consideration to be received associated with performance obligations satisfied or partially satisfied in prior periods.
Transaction price allocated to remaining performance obligations
The following table includes the estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied as of October 31, 2020:
Remainder of
(in thousands)Fiscal 2020Fiscal 2021Thereafter
Private label credit card$69 $274 $799 
Total
$69 $274 $799 

Contract Costs
The Company has not incurred any costs to obtain or fulfill a contract.
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NOTE 4 — Property, Equipment and Improvements, Net
 
Property, equipment and improvements, net consisted of the following (in thousands):
DescriptionOctober 31, 2020February 1, 2020
Store leasehold improvements$50,317 $49,894 
Store furniture and fixtures69,724 69,735 
Corporate office and distribution center furniture, fixtures and equipment6,467 6,463 
Computer and point of sale hardware and software33,292 32,952 
Construction in progress119 275 
Total property, equipment and improvements, gross159,919 159,319 
Less accumulated depreciation and amortization(139,909)(134,367)
Total property, equipment and improvements, net$20,010 $24,952 
 
Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

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

When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For long-lived assets deployed at store locations, we review for impairment at the individual store level.

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

Due to continued operating losses and sales declines resulting from the temporary closure of all stores as of March 19, 2020 due to the COVID-19 pandemic, the Company performed an impairment analysis for the quarter ended October 31, 2020. In performing the analysis, the Company estimated future sales, gross margins and store operating expenses, taking into account projected sales and other activity ramping up to more normal levels. Leasehold improvements, store furniture and fixtures, and right-of-use operating lease assets at certain under-performing stores, and stores identified for closure were analyzed for impairment. The Company recorded $0.2 million and $0.4 million in store asset impairment, respectively, for the thirteen and thirty-nine week periods ended October 31, 2020. The Company recorded zero and $0.3 million in store asset impairment during the thirteen and thirty-nine week periods ended November 2, 2019.

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NOTE 5 — Accrued Liabilities and Other Current Liabilities
 
Accrued liabilities and other current liabilities consisted of the following (in thousands):
 October 31, 2020February 1, 2020
Gift card revenue$2,587 $4,282 
Accrued Friendship Rewards liability4,416 4,280 
Accrued income, sales and other taxes payable842 1,056 
Accrued occupancy-related expenses364 468 
Right of return1,282 979 
eCommerce obligations6,105 5,932 
Other accrued liabilities7,287 7,056 
Total accrued liabilities and other current liabilities$22,883 $24,053 

NOTE 6 — Credit and Term Loan Facilities, Secured Vendor Financing Program and PPP Loan
 
Credit and Term Loan Facilities

The Company is party to an amended and restated credit agreement (“the Credit Facility”) with Wells Fargo Bank, National Association ("Wells Fargo"), as lender. On February 27, 2020, the Company entered into (i) a third amendment (the “Third Amendment”) to the Credit Facility with Wells Fargo and (ii) a credit agreement (the “Term Loan Facility”) with ALCC, LLC as lender.

The Third Amendment, among other changes, (i) removed the $5.0 million revolving “first-in, last-out” tranche credit facility, which was paid in full using proceeds from the Term Loan Facility and (ii) permitted the Company to incur indebtedness under the Term Loan Facility. The Term Loan Facility provides for a delayed draw term loan facility in the aggregate principal amount of up to $10.0 million with a maturity date of August 3, 2023, and supplements the existing $50.0 million revolving Credit Facility. On February 27, 2020, the Company drew $5.0 million on the Term Loan Facility.

The Credit Agreement and the Term Loan Facility were subsequently amended on August 5, 2020, to create specific covenant basket for the PPP Loan, thus freeing up the Company's $10.0 million unsecured debt basket.

Loans under the Term Loan Facility bear interest at a rate of 10% per annum and will amortize on a straight-line basis based on a 5-year amortization period in monthly installments beginning on the first business day of the thirteenth month after the date of the initial borrowing. Borrowings under the Credit Facility will generally accrue interest at a rate ranging from 1.50% to 1.75% over the LIBOR or 0.50% to 0.75% over the Wells Fargo Prime Rate based on the amount of Average Daily Availability for the Fiscal Quarter immediately preceding each Adjustment Date, as such terms are defined in the Credit Facility. The Company has the ability to select between the LIBOR or prime based rate at the time of the cash advance. The Credit Facility has an unused commitment fee of 0.25%.

The Company expensed approximately $0.1 million of deferred financing costs during the thirteen and thirty-nine week periods ended October 31, 2020 in connection with the Credit Facility. The deferred financing costs have been combined with the balance of the deferred financing costs remaining from the prior amendment on August 3, 2018. Deferred financing costs are included in other assets on the Condensed Consolidated Balance Sheet and are being amortized as interest expense over the related term of the Second Amendment.

The Credit Facility contains customary events of default and various affirmative and negative covenants. The financial covenant contained in both the Credit Facility and the Term Loan Facility requires the Company to maintain Availability, as such term is defined in the respective Facilities, at least equal to the greater of (a) ten percent (10%) of the borrowing base or (b) $3.0 million. In addition, the Credit Facility permits the payment of dividends to the Company's stockholders if certain financial conditions are met. In addition, the Term Loan Facility requires the Company to maintain specified levels of consolidated EBITDA when the outstanding principal balance exceeds $5.0 million. The Company was in compliance with all financial covenants and other financial provisions of the Credit Facility and Term Loan Facility as of October 31, 2020.

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The Company's obligations under the Credit Facility and Term Loan Facility are secured by the assets of the Company and its subsidiaries. The Company has pledged substantially all of its assets as collateral security for the loans, including accounts owed to the Company, bank accounts, inventory, other tangible and intangible personal property, intellectual property (including patents and trademarks), and stock or other evidences of ownership of 100% of all of the Company's subsidiaries.
 
There were $10.1 million and zero in outstanding borrowings under the Credit Facility as of October 31, 2020 and February 1, 2020, respectively. The capped borrowing base at October 31, 2020 was approximately $32.2 million. As of October 31, 2020, the Company had open on-demand letters of credit of approximately $12.0 million. Accordingly, after reducing the capped borrowing base, current borrowings of $10.1 million, open letters of credit and the required minimum availability of the greater of $3.3 million, or $3.0 million (10.0% of the revolving loan cap), the net availability of revolving credit loans under the Credit Facility was approximately $6.8 million at October 31, 2020.

Secured Vendor Financing Program

On August 5, 2020, Christopher & Banks Company, a subsidiary of the Company, entered into a secured vendor program agreement with ALCC, LLC (the “Program Agreement”), in order to improve cash flow and to better align the Company's payment for inventory when it is sold. Under the Program Agreement, ALCC may purchase up to $10 million of inventory from Christopher & Banks Company’s vendors on behalf of Christopher & Banks Company (the “Inventory”). Christopher & Banks Company must pay ALCC for the Inventory either when Christopher & Banks Company sells the Inventory or 180 days after ALCC purchases the Inventory. Christopher & Banks Company must pay ALCC a 1.0% origination fee on amounts funded under the Program Agreement. Christopher & Banks Company is required to pay weekly interest ranging from 5.0% to 6.0% on any unsold Inventory at rates determined in the Program Agreement. The Program Agreement will remain in effect until August 3, 2023 unless terminated earlier in accordance with its terms.
Because the payment terms for the suppliers that have chosen to participate in the Secured Vendor Financing Program are longer than standard industry practice, these amounts, which totaled $3.9 million as of October 31, 2020, have been excluded from accounts payable in the Condensed Consolidated Balance Sheet as the amounts are included in short-term borrowings.

Paycheck Protection Program Loan (PPP Loan)

On June 2, 2020, the Company was granted the PPP Loan from Cache Valley Bank in the aggregate amount of $10.0 million, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The PPP Loan, which required a note dated June 1, 2020 issued by the Company, matures on June 1, 2022 and bears interest at a rate of 1.00% per annum, payable monthly commencing on December 1, 2020. The Company may prepay the note at any time prior to maturity with no prepayment penalties. The Company may only use funds from the PPP Loan for purposes specified in the CARES Act and related PPP rules, which include payroll costs, costs used to continue group health care benefits, rent, and utilities; other uses will constitute a default under the PPP Loan.

The Company used the entire PPP Loan amount for qualifying expenses during fiscal June, July and August of 2020. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act during the 24-week period commencing on the date of disbursement of the Loan. On October 27, 2020, Cache Valley Bank submitted the Company's PPP Loan forgiveness application to the SBA. The SBA has 90 days to review and issue a decision regarding forgiveness. The Company believes that the SBA will approve the PPP Loan forgiveness application and that the loan principal will be entirely forgiven under the CARES Act.

NOTE 7 — Income Taxes

On March 27, 2020, the CARES Act was signed into law making several changes to the Internal Revenue Code. The changes include, but are not limited to: increasing the limitation on the amount of deductible interest expense, allowing companies to carryback certain net operating losses, increasing the amount of net operating loss carryforwards that corporations can use to offset taxable income and accelerating alternative minimum tax credit refunds. The tax law changes in the CARES Act did not have a material impact on the Company’s income tax provision.

For the thirteen weeks ended October 31, 2020, the Company recorded income tax benefit of $(9) thousand, or an effective tax rate of 0.1%, versus income tax expense of $33 thousand, or an effective tax rate of 6.3% for the same period of Fiscal 2019. For the thirty-nine weeks ended October 31, 2020, the Company recorded income tax benefit of $(50) thousand, or an effective tax rate of 0.1%, versus income tax expense of $113 thousand, or an effective tax rate of (1.0)% for the same period of Fiscal 2019. The income tax provisions for the Fiscal 2020 and 2019 periods are primarily driven by state taxes.

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As of October 31, 2020, the possibility of future cumulative losses still exists. Accordingly, the Company has continued to maintain a valuation allowance against its net deferred tax assets. A small deferred tax asset was allowed to remain related to certain state tax benefits. As of February 1, 2020, the Company has gross federal and state net operating loss (“NOL”) carryforwards of approximately $162.2 million and $83.2 million, respectively. A portion of the federal net operating loss carryforwards will begin to expire in 2032 while the other portion can be carried forward indefinitely. The state net operating loss carryforwards have carryforward periods of 5 to 20 years and begin to expire in the current year. The Company also has federal tax credits of $1.1 million which will begin to expire in 2030 and gross charitable contribution carryforwards of $0.7 million that will begin to expire in 2020.

Sections 382 and 383 of the Internal Revenue Code limit the annual utilization of certain tax attributes, including net operating loss carryforwards, incurred prior to a change in ownership. If the Company were to experience an ownership change, as defined by Sections 382 and 383, its ability to utilize its tax attributes could be substantially limited. Depending on the severity of the annual NOL limitation, the Company could permanently lose its ability to use a significant number of its accumulated NOLs.

The Company's liability for unrecognized tax benefits associated with uncertain tax provisions is recorded within the Condensed Consolidated Balance Sheets in Other non-current liabilities. There has been no material change in the reserve for unrecognized tax benefits since the end of the previous year. The Company recognizes interest and penalties related to unrecognized tax benefits as components of income tax expense. We do not expect any significant changes to the amount of unrecognized tax benefits in the next twelve months.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With few exceptions, the Company or its subsidiaries are no longer subject to examination prior to tax years before Fiscal 2011. The Company does not have any ongoing income tax audits that are anticipated to have a material impact on the financial statements.

NOTE 8 — Earnings Per Share (“EPS)
 
The following table sets forth the calculation of basic and diluted EPS shown in the accompanying Condensed Consolidated Statement of Operations and Comprehensive Loss:
 Thirteen Weeks EndedThirty-nine Weeks Ended
 October 31,November 2,October 31,November 2,
 2020201920202019
Numerator (in thousands):
  
Net (loss) income attributable to Christopher & Banks Corporation$(10,808)$487 $(43,140)$(11,606)
Denominator (in thousands):
  
Weighted average common shares outstanding - basic37,855 37,495 37,728 37,755 
Dilutive shares 57   
Weighted average common and common equivalent shares outstanding - diluted37,855 37,552 37,728 37,755 
Net (loss) income per common share:  
Basic$(0.29)$0.01 $(1.14)$(0.31)
Diluted$(0.29)$0.01 $(1.14)$(0.31)
 
Total stock options exercisable for approximately 4.2 million and 4.4 million shares were excluded from the shares used in the computation of diluted earnings per share for the thirteen week periods ended October 31, 2020 and November 2, 2019, respectively, as they were anti-dilutive.

Total stock options exercisable for approximately 4.2 million and 4.6 million shares were excluded from the shares used in the computation of diluted earnings per share for the thirty-nine week periods ended October 31, 2020 and November 2, 2019, respectively, as they were anti-dilutive.

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NOTE 9 — Fair Value Measurements
 
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair value measurements, as follows:
 
Level 1 – Quoted prices in active markets for identical assets or liabilities
Level 2 – Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable
Level 3 – Unobservable inputs that are significant to the fair value of the asset or liability.

Assets that are Measured at Fair Value on a Non-recurring Basis:
 
The following table summarizes certain information for non-financial assets for the thirty-nine weeks ended October 31, 2020 and the fiscal year ended February 1, 2020, that are measured at fair value on a non-recurring basis in periods subsequent to an initial recognition period. The Company places amounts into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. 
 Thirty-nine Weeks EndedFiscal Year Ended
Long-Lived Assets Held and Used (in thousands):
October 31, 2020February 1, 2020
Carrying value$682 $510 
Fair value measured using Level 3 inputs237 199 
Impairment charge$445 $311 
 
Approximately $0.3 million of the Fiscal 2020 impairment charge reduced the carrying value of operating lease assets. The remainder of the Fiscal 2020 impairment charge reduced the carrying value of fixed assets.

All of the fair value measurements included in the table above were based on significant unobservable inputs (Level 3). The Company determines fair value for measuring assets on a non-recurring basis using either a discounted cash flow or market value approach as discussed in Note 4, Property, Plant and Equipment. In determining future cash flows, the Company uses its best estimate of future operating results, which requires the use of significant estimates and assumptions, including estimated sales, merchandise margin and expense levels, and the selection of an appropriate discount rate; therefore, differences in the estimates or assumptions could produce significantly different results. General economic uncertainty impacting the retail industry and continuation of recent trends in company performance makes it reasonably possible that additional long-lived asset impairments could be identified and recorded in future periods.

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

n
NOTE 10 — Lease Commitments

The Company leases its store locations and vehicles under operating leases. The store lease terms, including rental period, renewal options, escalation clauses and rent as a percentage of sales, vary among the leases. Most store leases require the Company to pay real estate taxes and common area maintenance charges. In addition, we have lease agreements that contain both lease and non-lease components. We have elected to combine lease and non-lease components for all classes of assets.

For the Company's current lease obligations, no explicit interest rates were stated in the lease agreements and no implicit rates could be determined based on the terms of the agreements. Therefore, in all cases, the Company has applied a formula-based incremental borrowing rate appropriate to the type of lease and lease term.
 
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Maturities of our lease liabilities as of October 31, 2020 were as follows:
(in thousands)
Lease Liabilities(1)
Remainder of 2020$7,868 
202128,552 
202224,909 
202323,240 
202419,205 
Thereafter28,484 
Total lease payments132,258 
Less: Imputed interest(19,470)
Present value of lease liabilities112,788 
Less: Current lease liabilities(23,824)
Long-term lease liabilities$88,964 

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

Maturities of our lease liabilities as of February 1, 2020 were as follows:
(in thousands)
Lease Liabilities(1)
2020$32,904 
202127,326 
202223,028 
202321,929 
202418,558 
Thereafter26,760 
Total lease payments150,505 
Less: Imputed interest(24,527)
Present value of lease liabilities125,978 
Less: Current lease liabilities(26,185)
Long-term lease liabilities$99,793 

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

The weighted average remaining lease terms and discount rates for all leases as of October 31, 2020 were as follows:
Remaining lease term and discount rate:October 31, 2020
Weighted average remaining lease term (years)5.3
Weighted average discount rate5.6 %

Operating lease expense for the thirteen weeks ended October 31, 2020 totaled approximately $7.6 million, with $0.7 million of that amount representing operating lease variable rent that was recorded in cost of sales. In addition, all but $8 thousand of the $6.9 million of non-variable operating lease rent is included in cost of sales. $8 thousand dollars of operating lease expense is included in selling, general and administrative expenses. For the thirteen weeks ended October 31, 2020, cash lease payments were $6.4 million, and right-of-use assets obtained in exchange for lease liabilities were $2.9 million.

Operating lease expense for the thirty-nine weeks ended October 31, 2020 totaled approximately $25.3 million, with $1.4 million of that amount representing operating lease variable rent that was recorded in cost of sales. In addition, all but $27 thousand of the $23.9 million of non-variable operating lease rent is included in cost of sales. $27 thousand dollars of operating lease expense is included in selling, general and administrative expenses. For the thirty-nine weeks ended October 31, 2020, cash lease payments were $22.4 million, and right-of-use assets obtained in exchange for lease liabilities were $4.0 million.

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The Company suspended rent payments to landlords while stores were closed. It also suspended rent payments to landlords beginning in November 2020 and is currently negotiating with landlords in an effort to secure more favorable lease terms, where possible. As of October 31, 2020, $11.3 million is included in accounts payable in the Condensed Consolidated Balance Sheets that represents rent payments in arrears.

NOTE 11 — Legal Proceedings
 
We are subject, from time to time, to various claims, lawsuits or actions that arise in the ordinary course of business. We accrue for loss contingencies associated with outstanding litigation or legal claims for which management has determined it is probable that a loss contingency exists and the amount of the loss can be reasonably estimated. If we determine an unfavorable outcome is not probable or reasonably estimable, we do not accrue a potential loss contingency.

On August 14, 2019, Mark Gottlieb, a Company stockholder, filed a purported class action lawsuit against Jonathan Duskin; Seth Johnson; Keri Jones; Kent Kleeberger; William Sharpe, III; Joel Waller and Laura Weil (the "Named Directors"), B. Riley FBR, Inc. and B. Riley Financial Inc., in the Court of Chancery in the State of Delaware (the "Court of Chancery"), on behalf of himself and all stockholders who held shares as of December 20, 2018. The lawsuit alleges that the Named Directors breached their duty of loyalty in connection with the Company's rejection in December of 2018, of an unsolicited bid to acquire the Company and seeks unspecified damages for shareholders' lost opportunity. The lawsuit further alleges that B. Riley, the independent investment banking firm retained by the Company to assist it with an analysis of the unsolicited bid, aided and abetted the asserted breach of the duty of loyalty by the Named Directors. The Company believes the Complaint is without merit and pursued a motion to dismiss for failure to state a claim. This motion was granted by the Court of Chancery on November 20, 2020. Mr. Gottlieb has until December 20, 2020 to appeal that ruling to the Delaware Supreme Court.

The ultimate resolution of legal matters can be inherently uncertain and, for some matters, we may be unable to predict the ultimate outcome, determine whether a liability has been incurred or make an estimate of the reasonably possible liability that could result from an unfavorable outcome because of these uncertainties. We do not, however, currently believe that the resolution of any pending matter will have a material adverse effect on our financial position, results of operations or liquidity.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 1, 2020 and our unaudited Condensed Consolidated Financial Statements and related Notes included in Item 1 of this Quarterly Report on Form 10-Q. Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude.

The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed in "Risk Factors" and in "Forward-Looking Statements" in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020.

Executive Overview
 
We are a specialty retailer of privately branded women's apparel and accessories. We offer our customer an assortment of unique, classic and versatile clothing that fits her everyday needs at a good value.
 
We operate an integrated, omni-channel platform that provides our customer the ability to shop when and where she wants, including online or at our retail and outlet stores. This approach allows our customers to browse, purchase, return, or exchange our merchandise through the channel that is optimal for her.
 
As of October 31, 2020, we operated 452 stores in 44 states, including 316 Missy, Petite, Women ("MPW") stores, 77 outlet stores, 31 Christopher & Banks ("CB") stores, and 28 C.J. Banks ("CJ") stores. These store numbers include temporarily closed stores. Our CB brand offers unique fashions and accessories featuring exclusively designed assortments of women’s apparel in sizes 4 to 16 and in petite sizes 4P to 16P. Our C.J. Banks brand offers similar assortments of women’s apparel in sizes 14W to 26W. Our MPW concept and outlet stores offer an assortment of both CB and CJ apparel servicing the Missy, Petite and Women-sized customer in one location.
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COVID-19

On March 11, 2020, the World Health Organization declared the novel coronavirus (known as COVID-19) outbreak to be a global pandemic. As a result, and effective March 19, 2020, the Company made the decision to temporarily close all of its stores and corporate office to combat the rapid spread of COVID-19. All stores remained closed until April 27, 2020, when a small number of stores in select markets were reopened to serve solely as fulfillment centers for the Company’s eCommerce sales. Since April 27, 2020, 447 of the Company’s 452 stores, as well as its distribution center, have been reopened to customers, with the remaining stores closed to the public due to local government or landlord restrictions while remaining operational for purposes of fulfilling eCommerce orders. As of December 11, 2020, most corporate office associates continue to work remotely.

These developments have caused, and will continue to cause, significant disruptions to the Company’s business and have had a significant adverse impact on its financial condition, results of operations and cash flows, both for the periods of time when stores were temporarily closed as well as continued suppressed traffic and consumer spending at the Company's stores. The Company is unable to determine whether, when or how the conditions surrounding the COVID-19 pandemic will change, including the impact that social distancing protocols will have on the Company’s operations, the degree to which the Company’s customers will patronize its stores, the impact from potential subsequent additional outbreaks or government mandated closures and the potential efficacy and availability of a COVID-19 vaccine.

In response to the COVID-19 pandemic and the temporary closing of stores, the Company temporarily furloughed all store and most distribution center and corporate associates, but continued to provide benefits to furloughed associates. As previously announced, corporate employees and management received temporary base salary reductions beginning with 20% and up to 50% for the CEO. The Board of Directors also agreed to a substantial reduction in retainer fees aligned with management. As of July 12, 2020, the Company restored base salaries and director retainer fees to levels effective immediately prior to March 22, 2020. As the Company reopened stores, it recalled most furloughed associates, with approximately 96% returning to the workforce as of December 1, 2020.

The Company suspended rent payments to landlords while stores were closed. It also suspended payments to landlords beginning in November 2020 and is currently negotiating with landlords in an effort to secure more favorable lease terms, where possible.

Additionally, in early June 2020, the Company applied for and received $10.0 million in loan proceeds under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Company applied the loan proceeds toward the payment of qualified payroll expenses in accordance with the conditions of the PPP. On October 27, 2020, Cache Valley Bank submitted the Company's PPP Loan forgiveness application to the SBA. The SBA has 90 days to review and issue a decision regarding forgiveness. The Company believes that the SBA will approve the PPP Loan forgiveness and that the loan principal will be entirely forgiven under the CARES Act.

Also, the Company has worked closely with its merchandise vendor partners to reduce orders and extend payment terms, having cancelled as many of its spring/summer inventory orders as possible while holding over some core product. During the third quarter of 2020 the Company did not see the level of sales recovery from reopened stores that it had anticipated. The Company believes that COVID-19 has had an outsized impact on its customer demographic as the Company's customers are, in general, quite pragmatic, with limited demand for new outfits in the absence of social engagements during the initial pandemic and subsequent resurgences. In addition, the Company's store traffic data suggests that its customers remain hesitant to shop in stores. Also during the third quarter, the Company put in place a Secured Vendor Financing Program to improve liquidity and extend payment terms (See Note 6 to the Consolidated Condensed Financial Statements) and the lender for the Company's Credit Facility, an asset-based facility, reduced its appraisal valuations of the Company's inventory, which has the effect of reducing the amount of funding available under the facility.

The Company has experienced, and will continue to experience, adverse impacts on its financial condition and results of operations as a result of the COVID-19 pandemic, including, but not limited to, significant declines in net sales as a result of our store closings, reduced customer traffic and sales at re-opened stores, and delays in the receipt of new merchandise, as partially offset by reduced merchandise, buying and occupancy costs and other operating expenses; increases in operating losses and net losses; and adjustments to asset carrying values or long-lived asset impairment charges. Actual results may differ materially from the Company’s current estimates as the scope of the COVID-19 pandemic evolves, depending largely, though not exclusively, on the duration and extent of the disruption to its business.

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We continue to keep health and safety as a top priority at our stores. We have implemented social distancing and safety practices that include:
Hand sanitizer being available for all customers and associates;
Social distancing of at least 6 feet;
Extended cleaning efforts to wipe down surfaces after each use;
Wearing of masks by all associates and customers;
Limiting the number of customers in store based on store size;
Requiring associates that do not feel well to stay home; and
Requesting customers that do not feel way to stay home, but to shop online.

Ability to Continue as a Going Concern

As discussed in Note 1 and Note 2 to the unaudited Condensed Consolidated Financial Statements and in “Liquidity and Capital Resources” herein, the financial impact of the COVID-19 pandemic on our cash flows and liquidity has raised substantial doubt about our ability to continue as a going concern within one year of the issuance of our unaudited Condensed Consolidated Financial Statements.

The Company continues to take short-term measures to increase its liquidity and sources of financing. However, conditions remain challenging and the Company has engaged strategic advisors, including B. Riley Securities Inc., to assist with management's evaluation and pursuit of available strategic alternatives. Various alternatives are being evaluated to improve the Company's liquidity and financial position, including but not limited to, further lease concessions and deferrals, further reductions of operating and capital expenditures, raising additional capital including seeking a refinancing of the Company's debt, sale of the Company or its assets and restructuring its debt and liabilities through a private restructuring or a restructuring under the protection of applicable bankruptcy laws. However, there can be no assurance that the Company will be able to improve its financial position and liquidity, complete a refinancing, raise additional capital or successfully restructure its indebtedness and liabilities. The Company's strategic plans are not yet finalized and are subject to numerous uncertainties including negotiations with creditors and investors and conditions in the capital markets.

Ongoing Initiatives for Fiscal 2020 & Beyond

Since the beginning of the COVID-19 pandemic, protecting the health and safety of our customers, associates, and the communities that we serve has been our top priority. Accordingly, we moved quickly to close our stores, distribution center, and corporate offices in March. We continue to keep health and safety as a top priority at our re-opened our stores.

While our stores were closed, our primary short-term financial objective was to effectively manage and enhance our liquidity. As our stores return to normal operations, and we receive more clarity on the extent of the impact of the COVID-19 pandemic, we will continue to focus on a number of ongoing initiatives aimed at improving our business.

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

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

Enhance the Customer Shopping Experience

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

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Improve Marketing and Promotional Effectiveness

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

Leverage Omni-Channel Capabilities

Our integrated, omni-channel strategy is designed to provide customers with a seamless retail experience, allowing her to shop whenever, however and wherever she chooses. In January of 2018, we launched “Buy online, ship to store,” and in November of 2018, we launched “Buy online, ship from store.” We launched “Buy online, pick up in store” during the first quarter of Fiscal 2019 and in August of 2020 we launched an item level “Buy online, pick up in store” initiative. All of our stores are now fulfilling eCommerce orders. These flexible fulfillment options not only meet a customer need, they allow us to better leverage our inventory across our entire chain and to better manage our fulfillment costs.

Build Loyalty and Grow our Customer File

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

We continue to focus on maximizing the benefits of our customer relationship management (“CRM”) database, Friendship