**United States Securities and Exchange Commission**

**Washington, DC 20549**

 

**FORM 10-Q**

 
| **ý** |   | **Quarterly  report pursuant to Section 13 or 15(d) of the Securities Exchange Act of  1934**  |
|------------|--------|-----------------------------------------------------------------------------------------------------|
|       |   |                                                                                                |
|       |   | **For the quarterly period ended  July 31, 2004.**                                             |
|       |   |                                                                                                |
|       |   | **or**                                                                                              |
|       |   |                                                                                                |
|       |   | **Transition  report pursuant to Section 13 or 15(d) of the Securities Exchange Act of  1934** |
|       |   |                                                                                                |
|       |   | **Commission File  Number       0-23874**                        |

 

**Jos. A. Bank Clothiers, Inc.**

(Exact name of registrant as specified in itscharter)

 

| **Delaware**                              |   | **36-3189198**                            |
|-------------------------------------------|--------|-------------------------------------------|
| (State incorporation)                     |   | (I.R.S. Employer  Identification  Number) |
|                                      |
|                                      |
|                                      |   |                                      |
| **500 Hanover Pike, Hampstead, MD**       |   | **21074-2095**                            |
| (Address  of Principal Executive Offices) |   | (Zip  Code)                               |

#####  

##### **410-239-2700**

##### (Registrant’s telephonenumber including area code)

#####  

**None**

(Former name or former address, if changedsince last report)

 

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

 

Yes ý   No o

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Exchange Act Rule12b-2)

 

Yes ý   No o

 

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

 
| **Class**                    |   | **Outstanding as of September 3, 2004** |
|------------------------------|--------|----------------------------------------------|
|                         |   |                                         |
| Common Stock, $.01 par value |   | 13,394,608                                   |

 

 

----

 

Jos. A. Bank Clothiers, Inc.

 

Index

 
| Part I.   | Financial Information                                 |                                                                                                                        |
|-----------|-------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|
|      |
|      | Item  1.                                              | Condensed  Consolidated Financial Statements (unaudited)                                                                    | 3 |
|      |                                                  |                                                                                                                        |   |
|      |                                                  | Condensed  Consolidated Statements  of Income – Three and Six Months ended  August 2, 2003 and July 31, 2004 | 3 |
|      |                                                  |                                                                                                                        |   |   |
|      |                                                  | Condensed Consolidated Balance  Sheets – as of January 31, 2004 and  July 31, 2004                           | 4 |
|      |                                                  |                                                                                                                        |   |   |
|      |                                                  | Condensed Consolidated Statements  of Cash Flows – Six Months ended  August 2, 2003 and July 31, 2004        | 5 |
|      |                                                  |                                                                                                                        |   |   |
|      | Notes to Condensed Consolidated Financial  Statements | 6                                                                                                                           |
|      |                                                  |                                                                                                                        |   |   |
|      | Item 2.                                               | Management’s Discussion and Analysis of  Results of Operations and Financial Condition                                 | 11 |
|      |                                                  |                                                                                                                        |   |
|      | Item 3.                                               | Quantitative and Qualitative Disclosures  about Market Risk                                                                 | 16 |
|      |                                                  |                                                                                                                        |   |
|      | Item 4.                                               | Internal Controls  and Procedures                                                                                           | 17 |
|      |                                                  |                                                                                                                        |
| Part II.  | Other Information                                     | 17                                                                                                                          |
|      |                                                  |                                                                                                                        |
|      | Item  1.                                              | Legal  Proceedings                                                                                                          | 17 |
|      |                                                  |                                                                                                                        |   |
|      | Item  4.                                              | Submission  of Matters to a Vote of Securities Holders                                                                      | 17 |
|      |                                                  |                                                                                                                        |   |
|      | Item 6.                                               | Exhibits and Reports on Form 8-K                                                                                            | 18 |
|      |                                                  |                                                                                                                        |
| Signature |                                                  | 18                                                                                                                          |
|           |                                                       |                                                                                                                             |  |  |  |  |

 

2

----

 

**PART I.****                                                    FINANCIALINFORMATION**

 

**Item 1.****           CondensedConsolidated Financial Statements**

 

#### **JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES**

#### **Condensed ConsolidatedStatements of Income**

(In thousands except per share data)

(Unaudited)

 
|                                     |   | **Three  Months Ended**  |       | **Six Months  Ended**   |       |
|------------------------------------------|--------|--------------------------|------------|-------------------------|------------|
|                                     |   | **August 2,  2003** |       | **July 31,  2004** |       | **August 2,  2003** |   | **July 31,  2004** |   |
|                                     |   |                     |       |                    |       |   |   |   |   |
| Net sales                                |   | **$**                    | 64,442     | ** **              | **$**      | **81,994** | ** ** | **$** | 126,714 | ** ** | **$** | **161,923** | ** ** |
| Cost of goods sold                       |   | 28,840                   | ** ** | **32,883**              |       | 55,512 | ** ** | **63,777** | ** ** |
| Gross Profit                             |   | 35,602                   | ** ** | **49,111**              |       | 71,202 | ** ** | **98,146** | ** ** |
|                                     |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Operating expenses:                      |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Sales and marketing                      |   | 24,247                   | ** ** | **32,011**              |       | 48,361 | ** ** | **62,662** | ** ** |
| General and administrative               |   | 7,343                    | ** ** | **10,253**              |       | 14,386 | ** ** | **18,837** | ** ** |
| Store opening costs                      |   | 226                      | ** ** | **269**                 |       | 592 | ** ** | **500** | ** ** |
| Total operating expenses                 |   | 31,816                   | ** ** | **42,533**              |       | 63,339 | ** ** | **81,999** | ** ** |
|                                     |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Operating income                         |   | 3,786                    | ** ** | **6,578**               |       | 7,863 | ** ** | **16,147** | ** ** |
|                                     |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Interest expense, net                    |   | 382                      | ** ** | **433**                 |       | 685 | ** ** | **914** | ** ** |
|                                     |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Income before provision for income taxes |   | 3,404                    | ** ** | **6,145**               |       | 7,178 | ** ** | **15,233** | ** ** |
| Provision for income taxes               |   | 1,418                    | ** ** | **2,616**               |       | 3,018 | ** ** | **6,369** | ** ** |
|                                     |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Net income                               |   | **$**                    | 1,986      | ** **              | **$**      | **3,529** | ** ** | **$** | 4,160 | ** ** | **$** | **8,864** | ** ** |
|                                     |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Earnings per share:                      |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Net income:                              |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Basic                                    |   | **$**                    | 0.17       | ** **              | **$**      | **0.26** | ** ** | **$** | 0.36 | ** ** | **$** | **0.67** | ** ** |
| Diluted                                  |   | **$**                    | 0.14       | ** **              | **$**      | **0.25** | ** ** | **$** | 0.30 | ** ** | **$** | **0.62** | ** ** |
| Weighted average shares outstanding:     |   |                     | ** ** |                    | ** ** |   | ** ** |   | ** ** |
| Basic                                    |   | 11,678                   | ** ** | **13,330**              |       | 11,651 | ** ** | **13,288** | ** ** |
| Diluted                                  |   | 13,794                   | ** ** | **14,196**              |       | 13,689 | ** ** | **14,204** | ** ** |

 

See accompanying notes

 

3

----

 

**JOS. A.BANK CLOTHIERS, INC. AND SUBSIDIARIES**

**CondensedConsolidated Balance Sheets**

(In Thousands)

(Unaudited)

 
|                                             |   | **January 31, 2004** |    | **July 31, 2004** |       |
|--------------------------------------------------|--------|---------------------------|---------|------------------------|------------|
| **ASSETS**                                       |   |                      |    |                   | ** ** |
| CURRENT  ASSETS:                                 |   |                      |    |                   | ** ** |
| Cash and cash  equivalents                       |   | $                         | 875     |                   | **$**      | **784** | ** ** |
| Accounts  receivable, net                        |   | 4,201                     |    | **3,942**              | ** ** |
| Inventories:                                     |   |                      |    |                   | ** ** |
| Raw materials                                    |   | 11,652                    |    | **10,203**             | ** ** |
| Finished goods                                   |   | 109,136                   |    | **111,374**            | ** ** |
| Total  inventories, net                          |   | 120,788                   |    | **121,577**            | ** ** |
|                                             |   |                      |    |                   | ** ** |
| Prepaid  expenses and other current assets       |   | 10,323                    |    | **11,133**             | ** ** |
| Total current  assets                            |   | 136,187                   |    | **137,436**            | ** ** |
|                                             |   |                      |    |                   | ** ** |
| NONCURRENT  ASSETS:                              |   |                      |    |                   | ** ** |
| Property,  plant and equipment, net              |   | 47,401                    |    | **49,614**             | ** ** |
| Other  noncurrent assets, net                    |   | 2,923                     |    | **2,761**              | ** ** |
| Total assets                                     |   | $                         | 186,511 |                   | **$**      | **189,811** | ** ** |
|                                             |   |                      |    |                   | ** ** |
| **LIABILITIES AND  STOCKHOLDERS’ EQUITY**   |   |                      |    |                   | ** ** |
|                                             |   |                      |    |                   | ** ** |
| CURRENT  LIABILITIES:                            |   |                      |    |                   | ** ** |
| Accounts  payable                                |   | $                         | 28,748  |                   | **$**      | **25,259** | ** ** |
| Accrued  expenses and other                      |   | 33,985                    |    | **31,093**             | ** ** |
| Current  portion of long-term debt               |   | 1,245                     |    | **971**                | ** ** |
| Total current  liabilities                       |   | 63,978                    |    | **57,323**             | ** ** |
|                                             |   |                      |    |                   | ** ** |
| NONCURRENT  LIABILITIES:                         |   |                      |    |                   | ** ** |
| Long-term  debt, net of current portion          |   | 28,618                    |    | **29,399**             | ** ** |
| Deferred rent  and other noncurrent liabilities  |   | 6,413                     |    | **6,016**              | ** ** |
| Total  liabilities                               |   | 99,009                    |    | **92,738**             | ** ** |
|                                             |   |                      |    |                   | ** ** |
| STOCKHOLDERS’  EQUITY:                      |   |                      |    |                   | ** ** |
| Common stock                                     |   | 122                       |    | **124**                | ** ** |
| Additional  paid-in capital                      |   | 64,207                    |    | **64,912**             | ** ** |
| Retained earnings                                |   | 28,231                    |    | **37,095**             | ** ** |
|                                             |   | 92,560                    |    | **102,131**            | ** ** |
| Treasury stock                                   |   | (5,058                    | )       | **(5,058**             | **)**      |
| Total  stockholders’ equity                 |   | 87,502                    |    | **97,073**             | ** ** |
| Total  liabilities and stockholders’ equity |   | $                         | 186,511 |                   | **$**      | **189,811** | ** ** |

 

See accompanying notes

 

4

----

 

**JOS.A. BANK CLOTHIERS, INC. AND SUBSIDIARIES**

**CondensedConsolidated Statements of Cash Flows**

(In Thousands)

(Unaudited)

 
|                                                                                         |   | **Six Months  Ended**    |   |
|----------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                         |   | **August 2,  2003** |   | **July 31,  2004** |   |
|                                                                                         |   |                     |   |   |   |
| Cash flows from operating activities:                                                        |   |                     |   |   | ** ** |
| Net income                                                                                   |   | $                        | 4,160  |   | **$** | **8,864** | ** ** |
| Adjustments to reconcile net income to net  cash provided by (used in) operating activities: |   |                     |   |   | ** ** |
| Depreciation and amortization                                                                |   | 3,121                    |   | **3,828** | ** ** |
| Net (increase) in operating working capital  and other                                       |   | (29,954                  | )      | **(9,171** | **)** |
|                                                                                         |   |                     |   |   | ** ** |
| **Net cash provided  by (used in) operating activities**                                     |   | (22,673                  | )      | **3,521** | ** ** |
|                                                                                         |   |                     |   |   | ** ** |
| Cash flows from investing activities:                                                        |   |                     |   |   | ** ** |
| Additions to property, plant and equipment                                                   |   | (8,944                   | )      | **(5,677** | **)** |
| Proceeds from disposal of assets                                                             |   | —                   |   | **851** | ** ** |
|                                                                                         |   |                     |   |   | ** ** |
| **Net cash (used in) investing activities**                                                  |   | (8,944                   | )      | **(4,826** | **)** |
|                                                                                         |   |                     |   |   | ** ** |
| Cash flows from financing activities:                                                        |   |                     |   |   | ** ** |
| Borrowings under long-term Credit Agreement                                                  |   | 39,079                   |   | **44,173** | ** ** |
| Repayments under long-term Credit Agreement                                                  |   | (15,164                  | )      | **(41,760** | **)** |
| Repayment of other long-term debt                                                            |   | (581                     | )      | **(1,906** | **)** |
| Net proceeds from issuance of common stock                                                   |   | 619                      |   | **707** | ** ** |
|                                                                                         |   |                     |   |   | ** ** |
| **Net cash provided by financing activities**                                                |   | 23,953                   |   | **1,214** | ** ** |
|                                                                                         |   |                     |   |   | ** ** |
| Net (decrease) in cash and cash equivalents                                                  |   | (7,664                   | )      | **(91** | **)** |
|                                                                                         |   |                     |   |   | ** ** |
| Cash and cash equivalents – beginning of  period                                        |   | 8,389                    |   | **875** | ** ** |
|                                                                                         |   |                     |   |   | ** ** |
| Cash and cash equivalents – end of period                                               |   | $                        | 725    |   | **$** | **784** | ** ** |

 

See accompanying notes

 

5

----

 

**NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Unaudited)

(Amounts in Thousands Except Per Share Amounts and the Number ofStores)

 

**1.****                          BASISOF PRESENTATION**

 

Jos. A. BankClothiers, Inc. (the “Company”) is a nationwide retailer of classic men’sclothing through conventional retail stores and catalog and internet directmarketing.  The consolidated financialstatements include the accounts of the Company and its wholly-ownedsubsidiaries.  All significantintercompany balances and transactions have been eliminated in consolidation.

 

The results ofoperations for the interim periods shown in this report are not necessarilyindicative of results to be expected for the fiscal year.  In the opinion of management, theinformation contained herein reflects all adjustments necessary to make theresults of operations for the interim periods a fair statement of the operatingresults for these periods.  Theseadjustments are of a normal recurring nature.

 

Certain notes andother information have been condensed or omitted from the interim financialstatements presented in this Quarterly Report on Form 10-Q.  Therefore, these financial statements shouldbe read in conjunction with the Company’s January 31, 2004 Annual Reporton Form 10-K.

 

**2.****                          SIGNIFICANTACCOUNTING POLICIES**

 

**Inventories** -Inventories are stated at the lower of first-in, first-out cost or market.  The Company capitalizes into inventorycertain warehousing and freight delivery costs associated with shipping itsmerchandise to the point of sale.

 

**Catalog** - Costsrelated to mail order catalogs and promotional materials are included inprepaid expenses and other current assets. These costs are amortized over the expected periods of benefit, which istypically four months.

 

***StockOption Plan*** - The Company applies theintrinsic-value-based method of accounting prescribed by Accounting PrinciplesBoard (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”,and related interpretations including Financial Accounting Standards Board  Interpretation No. 44, “Accounting forCertain Transactions Involving Stock Compensation”, issued in March 2000,to account for its fixed-plan stock options. Under this method, compensation expense is recorded on the date of grantonly if the current market price of the underlying stock exceeds the exerciseprice. There was no stock-based compensation expense recognized in thestatement of income for the periods ended August 2, 2003 and July 31,2004. Statement of Financial Accounting Standards (“SFAS”) No. 123,“Accounting for Stock-Based Compensation” as amended by SFAS No. 148, “Accountingfor Stock Based Compensation-Transition and Disclosure”, established accountingand disclosure requirements using a fair-value-based method of accounting forstock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue toapply the intrinsic-value-based method

*** ***

6

----

 

***of accountingdescribed above, and has adopted the disclosure requirements of SFASNo. 123 as amended by SFAS No. 148. The following table illustrates the effect on net income if thefair-value-based method had been applied to all outstanding and unvested awardsin each quarter:***

*** ***
|                                                                                                                         |   | **Three Months Ended**  |       | **Six Months Ended**   |       |
|------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|------------|------------------------|------------|
|                                                                                                                         |   | **August 2, 2003** |       | **July 31, 2004** |       | **August 2, 2003** |   | **July 31, 2004** |   |
|                                                                                                                         |   |                    | ** ** |                   | ** ** |   | ** ** |   | ** ** |
| Net income as  reported                                                                                                      |   | $                       | 1,986      | ** **             | **$**      | **3,529** |   | $ | 4,160 | ** ** | **$** | **8,864** | ** ** |
|                                                                                                                         |   |                    | ** ** |                   | ** ** |   | ** ** |   | ** ** |
| Deduct total  stock-based employee compensation expense determined under fair-value-based  method for all awards, net of tax |   | 349                     | ** ** | **75**                 |       | 986 | ** ** | **225** | ** ** |
|                                                                                                                         |   |                    | ** ** |                   | ** ** |   | ** ** |   | ** ** |
| Pro forma net  income                                                                                                        |   | $                       | 1,637      | ** **             | **$**      | **3,454** |   | $ | 3,174 | ** ** | **$** | **8,639** | ** ** |
|                                                                                                                         |   |                    | ** ** |                   | ** ** |   | ** ** |   | ** ** |
| Pro forma  basic net income  per common share                                                                           |   | $                       | 0.14       | ** **             | **$**      | **0.26** |   | $ | 0.27 | ** ** | **$** | **0.65** | ** ** |
|                                                                                                                         |   |                    | ** ** |                   | ** ** |   | ** ** |   | ** ** |
| Pro forma  diluted net income per common share                                                                               |   | $                       | 0.12       | ** **             | **$**      | **0.24** |   | $ | 0.23 | ** ** | **$** | **0.61** | ** ** |

 

The fair value of each stock option granted is estimated on the date ofgrant using the Black-Scholes option pricing model with the following weightedaverage assumptions used for grants in the three and six months endedAugust 2, 2003.  For the threemonths and six months ended July 31, 2004, there were no stock optionsgranted.

 
|                           |   | **Three Months Ended**  |       | **Six Months Ended**   |   |
|--------------------------------|--------|-------------------------|------------|------------------------|--------|
|                           |   | **August 2, 2003** |       | **July 31, 2004** |   | **August 2, 2003** |   | **July 31, 2004** |   |
|                           |   |                    |       |                   |   |   |   |   |   |
| Risk free  interest rate       |   | 3.9%                    |       | —                 |   | 3.3% - 3.9% |   | — |   |
| Expected  volatility           |   | 44%                     |       | —                 |   | 44% - 52.9% |   | **—** | ** ** |
| Expected life                  |   | 7 Years                 | ** ** | **—**             |   | 7 Years | ** ** | **—** | ** ** |
| Contractual  life              |   | 10 Years                | ** ** | **—**             |   | 10 Years | ** ** | **—** | ** ** |
| Expected  dividend yield       |   | —%                 |       | **—**             |   | —% |   | **—** | ** ** |
| Fair value of  options granted |   | $20.03                  | ** ** | **—**             |   | $13.20 - $20.03 | ** ** | **—** | ** ** |
| # of options granted           |   | 3                       | ** ** | **—**             |   | 206 | ** ** | **—** | ** ** |

 

**Reclassifications**– Certain reclassifications have been made to the August 2, 2003 financialstatements in order to conform to the July 31, 2004 presentation.

 

7

----

 

**3.****                          SUPPLEMENTALCASH FLOW DISCLOSURE:**

a. Working Capitaland other Components:

The net change inworking capital and other components consists of the following:

 
|                                                   |   | **Six Months  Ended**    |       |
|--------------------------------------------------------|--------|--------------------------|------------|
|                                                   |   | **August 2,  2003** |       | **July 31,  2004** |   |
|                                                   |   |                     | ** ** |   | ** ** |
| (Increase) decrease in accounts receivable,  net       |   | $                        | (1,060     | ) | **$** | **259** | ** ** |
| Decrease (increase) in inventories                     |   | (32,929                  | )          | **(789** | **)** |
| Decrease (increase) in prepaids and other  assets      |   | 3                        |       | **(648** | **)** |
| Increase (decrease) in accounts payable                |   | 7,391                    |       | **(3,489** | **)** |
| (Decrease) in accrued expenses and other  liabilities  |   | (3,359                   | )          | **(4,504** | **)** |
|                                                   |   |                     |       |   | ** ** |
| Net (increase) in operating working capital  and other |   | **$**                    | (29,954    | ) | **$** | **(9,171** | **)** |

 

b. Interest andIncome Taxes Paid:

Interest andincome taxes paid were as follows:

 
|              |   | **Six Months  Ended**    |       | **Six Months  Ended**   |       |
|-------------------|--------|--------------------------|------------|-------------------------|------------|
|              |   | **August 2,  2003** |       | **July 31,  2004** |       |
|              |   |                     | ** ** |                    | ** ** |
| Interest paid     |   | $                        | 628        | ** **              | **$**      | **989** | ** ** |
| Income taxes paid |   | $                        | 4,972      | ** **              | **$**      | **12,245** | ** ** |

 

**4.****                          EARNINGSPER SHARE**

 

Basic net income per share is calculated by dividing net income by theweighted average number of common shares outstanding for the year.  Diluted net income per share is calculatedby dividing net income by the diluted weighted average common shares, whichreflect the potential dilution of stock options. The weighted average sharesused to calculate basic and diluted earnings per share are as follows:

 
|                                             |   | **Three  Months Ended**  |       | **Six Months  Ended**   |   |
|--------------------------------------------------|--------|--------------------------|------------|-------------------------|--------|
|                                             |   | **August 2,  2003** |       | **July 31,  2004** |   | **August 2,  2003** |   | **July 31,  2004** |   |
|                                             |   |                     |       |                    |   |   |   |   |   |
| Weighted average shares outstanding for  basic   |   | 11,678                   | ** ** | **13,330**              |   | 11,651 | ** ** | **13,288** | ** ** |
|                                             |   |                     |       |                    |   |   |   |   |   |
| Dilutive effect of stock options                 |   | 2,116                    | ** ** | **866**                 |   | 2,038 | ** ** | **916** | ** ** |
|                                             |   |                     |       |                    |   |   |   |   |   |
| Weighted average shares outstanding for  diluted |   | 13,794                   | ** ** | **14,196**              |   | 13,689 | ** ** | **14,204** | ** ** |

 

The Company uses the treasury method for calculating the dilutiveeffect of stock options.  There were noanti-dilutive options as of July 31, 2004.

 

8

----

 

**5.****                          SEGMENTREPORTING**

 

The Company hastwo reportable segments: stores and direct marketing.  While each segment offers a similar mix of men’s clothing to theretail customer, the full line stores also provide alterations.

 

The accountingpolicies of the segments are the same as those described in the Company’sJanuary 31, 2004 Annual Report on Form 10-K.  The Company evaluates performance of the segments based on “fourwall” contribution which excludes any allocation of “management company” costs,distribution center costs (except order fulfillment costs which are allocatedto direct marketing), interest and income taxes.

 

The Company’ssegments are strategic business units that offer similar products to the retailcustomer by two distinctively different methods.  In stores the typical customers travel to the store and purchasemen’s clothing and/or alterations and take their purchases with them.  The direct marketing customers receivecatalogs in their homes and/or offices and/or visit our web page via theinternet and place orders by phone, mail, fax or on line.  The merchandise is then shipped to thecustomers. Segment data is presented in the following table:

 

**Three months ended July 31, 2004**

 
|                          |   | **Stores** |   | **Direct  Marketing** |   | **Other** |   | **Total** |   |
|-------------------------------|--------|------------|--------|-----------------------|--------|-----------|--------|-----------|--------|
|                          |   |       |   |                  |   |      |   |      |   |
| Net sales (a)                 |   | $          | 71,022 |                  | $      | 8,573     |   | $         | 2,399  |   | $ | 81,994 |   |
| Depreciation and amortization |   | 1,447      |   | 18                    |   | 424       |   | 1,889     |   |
| Operating income (b)          |   | 13,747     |   | 2,910                 |   | (10,079   | )      | 6,578     |   |
| Capital expenditures (d)      |   | 2,376      |   | 8                     |   | 156       |   | 2,540     |   |
|                               |        |            |        |                       |        |           |        |           |        |  |  |  |  |

 

Three months ended August 2, 2003

 
|                          |   | **Stores** |   | **Direct  Marketing** | ** ** | **Other** | ** ** | **Total** | ** ** |
|-------------------------------|--------|------------|--------|-----------------------|------------|-----------|------------|-----------|------------|
|                          |   |       |   |                  |       |      |       |      |       |
| Net sales (a)                 |   | $          | 54,871 |                  | $          | 7,274     |       | $         | 2,297      |   | $ | 64,442 |   |
| Depreciation and amortization |   | 1,151      |   | 16                    |       | 454       |       | 1,621     |       |
| Operating income (b)          |   | 9,544      |   | 2,302                 |       | (8,060    | )          | 3,786     |       |
| Capital expenditures (d)      |   | 4,030      |   | 6                     |       | 1,085     |       | 5,121     |       |
|                               |        |            |        |                       |            |           |            |           |            |  |  |  |  |

 

**Six  Months ended July 31, 2004**

 
|                          |   | **Stores** |    | **Direct  Marketing** | ** ** | **Other** | ** ** | **Total** | ** ** |
|-------------------------------|--------|------------|---------|-----------------------|------------|-----------|------------|-----------|------------|
|                          |   |       |    |                  |       |      |       |      |       |
| Net sales (a)                 |   | $          | 140,780 |                  | $          | 16,576    |       | $         | 4,567      |   | $ | 161,923 |   |
| Depreciation and amortization |   | 2,804      |    | 34                    |       | 990       |       | 3,828     |       |
| Operating income (b)          |   | 29,381     |    | 5,694                 |       | (18,928   | )          | 16,147    |       |
| Identifiable assets (c)       |   | 146,258    |    | 29,652                |       | 13,901    |       | 189,811   |       |
| Capital expenditures (d)      |   | 5,333      |    | 13                    |       | 331       |       | 5,677     |       |
|                               |        |            |         |                       |            |           |            |           |            |  |  |  |  |

 

Six Months ended August 2, 2003

 
|                          |   | **Stores** |    | **Direct  Marketing** | ** ** | **Other** | ** ** | **Total** | ** ** |
|-------------------------------|--------|------------|---------|-----------------------|------------|-----------|------------|-----------|------------|
|                          |   |       |    |                  |       |      |       |      |       |
| Net sales (a)                 |   | $          | 108,273 |                  | $          | 14,014    |       | $         | 4,427      |   | $ | 126,714 |   |
| Depreciation and amortization |   | 2,248      |    | 32                    |       | 841       |       | 3,121     |       |
| Operating income (b)          |   | 19,145     |    | 4,524                 |       | (15,806   | )          | 7,863     |       |
| Identifiable assets (c)       |   | 126,536    |    | 23,643                |       | 15,959    |       | 166,138   |       |
| Capital expenditures (d)      |   | 7,075      |    | 6                     |       | 1,863     |       | 8,944     |       |
|                               |        |            |         |                       |            |           |            |           |            |  |  |  |  |

 

9

----

 

----

(a)          Direct marketing net sales represent catalog andinternet sales including catalog orders placed in new stores.  Net sales from segments below the quantitative thresholds are attributableprimarily to factory stores, franchise stores and regional tailor shops.  None of these operations have ever met anyof the quantitative thresholds for determining reportable segments and areincluded in “other”.

(b)         Operatingincome for Stores and Direct Marketing segments represents profit beforeallocations of overhead from the corporate office and the distribution center(which are included in the “other” segment), interest and income taxes.  Total Operating Income represents profitbefore interest and income taxes.

(c)          Identifiableassets include cash and cash equivalents, accounts receivable, inventories,prepaid expenses and other current assets and property, plant and equipmentresiding in or related to the reportable segment. Assets included in Other areprimarily cash and cash equivalents, property, plant and equipment associatedwith the corporate office and distribution center, deferred tax assets, andinventories, which have not been assigned to one of the reportable segments.

(d)         Capitalexpenditures include purchases of property, plant and equipment made for thereportable segment.

 

**6.****                          COMMONSTOCK DIVIDENDS**

 

On January 13,2004, the Company’s Board of Directors declared a 50% Common stock dividendpayable on February 18, 2004 to stockholders of record as ofJanuary 30, 2004.

 

On June 8,2004, the Company’s Board of Directors declared a 25% stock dividend payable onAugust 18, 2004 to stockholders of record as of July 30, 2004.

 

Unless otherwiseindicated, all historical weighted average share and per share amounts and allreferences to the number of common shares elsewhere in the consolidatedfinancial statements, and notes thereto, have been restated to reflect the twostock dividends.

 

**7.         OTHER MATTERS**

 

As previously disclosed in the Company’s Form 10-Q for the quarterended May 1, 2004, on or about April 22, 2004, the Company received asubpoena from the New York Attorney General requiring the production of certaindocuments relating to the Company’s advertising and in store promotions.  The Company has produced documents inresponse to the subpoena and is currently seeking a resolution of thematter.  While the exact amount of anyloss which may arise from this matter is not known, the Company has determinedthat a reasonable estimate of the loss is $475.  A loss contingency in this amount has been recorded as a generaland administrative expense in the accompanying Statement of Income for thethree months ended July 31, 2004.

 

10

----

 

**Item2.****                                   Management’sDiscussion and Analysis of Results of Operations and Financial****Condition**

 

The followingdiscussion should be read in conjunction with the attached condensedconsolidated financial statements and notes thereto and with the Company’saudited financial statements and notes thereto included in its Annual Report onForm 10-K for the fiscal year ended January 31, 2004.

 

**Overview** - Forthe second quarter of the Company’s fiscal year ending January 29, 2005(“fiscal 2004”), the Company’s net income increased 75% to $3.5 millioncompared with net income of $2.0 million for the second quarter of theCompany’s fiscal year ended January 31, 2004 (“fiscal 2003”). The Companyearned $.25 per diluted share in the second quarter of fiscal 2004 comparedwith $0.14 per diluted share in the second quarter of fiscal 2003.  The increased earnings were primarilyattributable to a 27% increase in net sales with increases in both the storeand direct marketing (catalog and internet) segments and a 470 basis pointincrease in gross profit margins.

 

Managementbelieves that the chain can grow to approximately 500 stores from the fiscal2003 year-end base of 210 stores.  TheCompany plans to open approximately 60 stores in 2004, including 20 that wereopened in the first half of the year, and****upto 75 stores each year thereafter to grow the chain to the 500 store level. Thestore growth is part of a strategic plan the Company initiated in fiscal2000.  In the past four years, theCompany has continued to increase the amount of store openings as itsinfrastructure and operating performance improved.  As such, there were ten new stores opened in fiscal 2000 (includingtwo factory stores), 21 new stores in fiscal 2001, 25 new stores in fiscal 2002and 50 new stores in fiscal 2003.

 

Capitalexpenditures should range between $17 and $20 million in fiscal 2004, primarilyto fund the opening of approximately 60 new stores, the renovation and/orrelocation of two stores, an expansion in distribution center capacity, and theimplementation of various systems initiatives. The Company expects to fund substantially all of its growth program in2004 with cash from operations, while using borrowings under its revolverduring the year to fund any required increases in cash needs.

 

##### *Common Stock Dividends.* On January 13, 2004, the Company’sBoard of Directors declared a 50% Common stock dividend payable onFebruary 18, 2004 to stockholders of record as of January 30, 2004.

#####  

On June 8,2004, the Company’s Board of Directors declared a 25% stock dividend payable onAugust 18, 2004 to stockholders of record as of July 30, 2004.

 

Unless otherwiseindicated, all historical weighted average share and per share amounts and allreferences to the number of common shares elsewhere in the consolidatedfinancial statements, and notes hereto, have been restated to reflect the twostock dividends.

 

##### **Critical accounting policies andestimates******– In preparing the consolidated financialstatements, a number of assumptions and estimates are made that, in thejudgment of management, are proper in light of existing general economic andcompany-specific circumstances. For a detailed discussion on the application ofthis and other accounting policies, see Note 1 in the Consolidated FinancialStatements in the Company’s January 31, 2004 Annual Report on Form 10-K.

#####  

##### *Inventory.* The Company records inventory at thelower of cost or market. Cost is determined using the first-in, first-outmethod.   The estimated market value isbased on assumptions for future demand and related pricing. The Company reducesthe carrying value of inventory to net realizable value where cost exceedsestimated selling price less costs of disposal.  Management’s sales assumptions are based on the Company’sexperience that historically most of the Company’s inventory is sold throughthe Company’s primary sales channels with virtually no inventory beingliquidated through bulk sales to third parties. If actual market conditions areless favorable than those projected by management, reductions in the value ofinventory may be required.

#####  

###### ***Asset Valuation.*** Long-lived assets, such asproperty, plant, and equipment, subject to depreciation, are reviewed forimpairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. Recoverability of assets tobe held and used is measured by a comparison of the carrying amount of an assetto estimated undiscounted future cash flows expected to be generated by theasset. If the carrying amount of an asset exceeds its estimated future cashflows, an impairment charge is recognized by the amount by which the carryingamount of the asset exceeds the fair value of the asset. The valuation of theseassets is dependent on the Company’s ability to continue to 

###### ** **

11

----

 

###### **generate profits at both the Company and store levels.**

###### ** **

While the Company has taken reasonable care in preparing theseestimates and making these judgments, actual results could and probably willdiffer from the estimates.  Managementbelieves any difference in the actual results from the estimates will not havea material effect upon the Company’s financial position or results ofoperations.

 

**Results of Operations**

 

The following table isderived from the Company’s Consolidated Statements of Income and sets forth,for the periods indicated, the items included in the Consolidated Statements ofIncome expressed as a percentage of net sales.

 
|                                     |   | **Percentage  of Net Sales  Three Months Ended** |   | **Percentage  of Net Sales  Six Months Ended** |       |
|------------------------------------------|--------|--------------------------------------------------|--------|------------------------------------------------|------------|
|                                     |   | **August 2,  2003**                         |   | **July 31,  2004**                        |       | **August 2,  2003** |   | **July 31,  2004** |   |
|                                     |   |                                             |   |                                           |       |   |   |   |   |
| Net sales                                |   | 100.0                                            | %      | **100.0**                                      | **%**      | 100.0 | % | **100.0** | **%** |
| Cost of goods sold                       |   | 44.8                                             |   | **40.1**                                       | ** ** | 43.8 |   | **39.4** | ** ** |
|                                     |   |                                             |   |                                           | ** ** |   |   |   | ** ** |
| Gross profit                             |   | 55.2                                             |   | **59.9**                                       | ** ** | 56.2 |   | **60.6** | ** ** |
| General and administrative expenses      |   | 11.4                                             |   | **12.5**                                       | ** ** | 11.4 |   | **11.6** | ** ** |
| Sales and marketing expenses             |   | 37.6                                             |   | **39.0**                                       | ** ** | 38.2 |   | **38.7** | ** ** |
| Store opening costs                      |   | 0.3                                              |   | **0.3**                                        | ** ** | 0.4 |   | **0.3** | ** ** |
|                                     |   |                                             |   |                                           | ** ** |   |   |   | ** ** |
| Operating income                         |   | 5.9                                              |   | **8.0**                                        | ** ** | 6.2 |   | **10.0** | ** ** |
| Interest expense, net                    |   | 0.6                                              |   | **0.5**                                        | ** ** | 0.5 |   | **0.6** | ** ** |
| Income before provision for income taxes |   | 5.3                                              |   | **7.5**                                        | ** ** | 5.7 |   | **9.4** | ** ** |
| Provision for income taxes               |   | 2.2                                              |   | **3.2**                                        | ** ** | 2.4 |   | **3.9** | ** ** |
| Net income                               |   | 3.1                                              | %      | **4.3**                                        | **%**      | 3.3 | % | **5.5** | **%** |

 

**Net sales** - Netsales increased 27% to $82.0 million in the second quarter of fiscal 2004compared with $64.4 million in the second quarter of fiscal 2003.  Net sales for the first half of fiscal 2004increased 28% to $161.9 million, compared with $126.7 million in the first halfof fiscal 2003.  The sales increase wasprimarily related to increases in store sales (including new stores as shownbelow) and in direct marketing sales. Comparable store sales increased 10.2% and 11.9% in the second quarterand first half of fiscal 2004, respectively. All major product categories generated sales increases in each quarterof 2004, lead by sales of sportswear which increased over 40% in the first halfof 2004.

 

12

----

 

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

 
|                                       |   | **Three  Months Ended**  |   | **Six Months  Ended**   |   |
|--------------------------------------------|--------|--------------------------|--------|-------------------------|--------|
|                                       |   | **August 2,  2003** |   | **July 31,  2004** |   | **August 2,  2003** |   | **July 31,  2004** |   |
|                                       |   | **Stores**               |   | **SquareFeet***         |   | **Stores** |   | **SquareFeet*** |   | **Stores** |   | **SquareFeet*** |   | **Stores** |   | **SquareFeet*** |   |
|                                       |   |                     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stores open at the beginning of the period |   | 175                      |   | 915                     |   | **218** | ** ** | **1,095** | ** ** | 160 |   | 846 |   | **210** | ** ** | **1,062** | ** ** |
| Stores opened                              |   | 6                        |   | 25                      |   | **11** | ** ** | **44** | ** ** | 21 |   | 94 |   | **20** | ** ** | **82** | ** ** |
| Stores closed                              |   | —                   |   | —                  |   | **—** | ** ** | **—** | ** ** | — |   | — |   | **(1** | **)** | **(5** | **)** |
| Stores open at the end of the period       |   | 181                      |   | 940                     |   | **229** | ** ** | **1,139** | ** ** | 181 |   | 940 |   | **229** | ** ** | **1,139** | ** ** |

 

----

*square feet is presented in thousands and excludes franchise stores

 

**Gross profit**-Gross profit (net sales less cost of goods sold) represented 59.9% of net salesin the second quarter of fiscal 2004 compared with 55.2% of net sales in thesecond quarter of fiscal 2003.  For thefirst six months of fiscal 2004, gross profit represented 60.6% of net salescompared with 56.2% for the same period of fiscal 2003. The increased grossprofit percentages are primarily due to the continued improvement in sourcingof merchandise, thus reducing the cost of items purchased, and increases inretail prices primarily through the introduction of new products and managementof retail prices.  Gross profit marginsincreased in substantially all major product categories.

 

**Sales and Marketing Expenses**– Sales and marketing expenses consist primarily of a) full-line store, factorystore and direct marketing occupancy, payroll, selling and other variable costsand b) advertising and marketing expenses. These expenses increased by $7.8 million and $14.3 million in the threeand six months ended July 31, 2004, respectively.

 

The increase in sales andmarketing expenses in the 49 stores which opened since the end of the secondquarter of fiscal 2003 plus the incremental increase in expense in the 21stores opened throughout the first half of 2003 was $5.1 million and $9.9million in the second quarter and six months ended July 31, 2004,respectively.  Sales and marketingexpenses in the stores which were open prior to fiscal 2003 were $2.2 millionand $3.2 million higher in the second quarter and six months endedJuly 31, 2004, respectively, than in the same periods in fiscal 2003primarily as a result of higher sales commissions on higher sales and increasedoccupancy costs and advertising costs. In addition, direct marketing sales and marketing expenses increased$0.5 million and $1.1 million respectively in the three months and six monthended July 31, 2004.  The directmarketing increases resulted primarily from increased sales and higher catalogcirculation.

 

The Company expects salesand marketing expenses to increase in fiscal 2004 primarily as a result of a)opening approximately 60 new stores, b) the full year operation of stores thatwere opened during fiscal 2003, and c) an increase in advertising expenditures,including the expenditure of at least $2.5 million related to image advertisingin magazines and on television.  Themajority of the image advertising expenses will be incurred in the fourthquarter of 2004.

 

**General and Administrative Expenses**– General and administrative expenses, which consist primarily of corporatepayroll costs and overhead and distribution center costs, increased $2.9million and $4.5 million in the second quarter and first six months of fiscal2004, respectively. The increases were primarily due to higher payroll andpayroll-related costs, travel costs, distribution center costs and otherexpenses related to business expansion, and professional fees principallyrelated to internal control documentation efforts in compliance withSection 404 of the Sarbanes-Oxley Act of 2002.  Continued growth in stores and the direct marketing segment mayresult in additional increases in these expenses.  In addition, the Company recorded a loss contingency in theamount of $475 thousand in the second quarter of 2004 representing the Company'sreasonable estimate of the loss which may arise in connection with the New YorkAttorney General's inquiry into the Company's advertising practices in NewYork.

 

13

----

 

**Store Opening Costs**– Store opening costs, which include the initial promotional advertising costsas well as other start-up costs such as travel for recruitment, training, andsetup of new stores, declined slightly per store in 2004 based on the timingand location of new store openings (which impact the advertising and travel incurredfor the stores).

 

**Interest Expense, net**– Interest expense increased in the second quarter of fiscal 2004 compared withthe same period of 2003.  The increasewas due primarily to higher borrowing levels under the revolver, primarilyrelated to the opening of new stores.

 

Interest expenseincreased $0.2 million to $0.9 million in the first six months of fiscal 2004from $0.7 million for the same period of 2003. The increase was due primarily to higher borrowing levels under the revolver,primarily related to the opening of new stores, and was partially offset by alower average interest rate.

 

**Income Taxes** –The first half of fiscal 2004 effective income tax rate decreased to 41.8%compared with 42.0% in the first half of fiscal 2003.  The decrease was primarily due to higher projected full yearprofitability, which will provide greater leverage against the non-deductibleexpenses.

 

**Liquidityand Capital Resources** - The Company maintains a bank credit agreement (the “CreditAgreement”), which provides for a revolving loan having a limit determined by aformula based on the Company’s inventories and accounts receivable. InJanuary 2004, the Company extended the maturity date under the CreditAgreement to April 2008. The amended Credit Agreement increased theavailable maximum revolving amount under the facility up to $100 million.In addition, at any time prior to April 30, 2006, the Company has theoption to increase the amount which may be borrowed to $125 million. TheCredit Agreement also includes a) financial covenants concerning minimumEBITDA, b) limitations on capital expenditures and additional indebtednessand c) a restriction on the payment of dividends. The financial covenantsare in effect only if the Company’s availability in excess of outstandingborrowings is less than $7.5 million. The Company does not believe itsavailability in excess of borrowings will be less than $7.5 million duringfiscal 2004.

 

The Company’savailability in excess of outstanding borrowings, as supported by the existingborrowing base under its Credit Agreement, was $52.2 million atJuly 31, 2004 compared with $52.4 million at January 31,2004.  The July 31, 2004 revolverbalance was $23.0 million compared with $21.9 million at August 2, 2003,as the Company has funded substantially all of its growth in 2004 from cashfrom operations.

 

As of July 31, 2004,the Company was in compliance with all loan covenants. Both currently and forthe same three and six-month periods of fiscal 2003, interest rates under theamended agreement are either at the prime rate or at LIBOR plus 1.5%. Theagreement also includes provisions for a seasonal over-advance.

 

14

----

 

The following tablesummarizes the Company’s sources and uses of funds as reflected in theCondensed Consolidated Statements of Cash Flows (in thousands):

 
|                                        |   | **Six Months  Ended**    |       |
|---------------------------------------------|--------|--------------------------|------------|
|                                        |   | **August 2,  2003** |       | **July 31,  2004** |   |
|                                        |   |                     |       |   |   |
| Cash provided by (used in):                 |   |                     | ** ** |   | ** ** |
| Operating activities                        |   | $                        | (22,673    | ) | **$** | **3,521** | ** ** |
| Investing activities                        |   | (8,944                   | )          | **(4,826** | **)** |
| Financing activities                        |   | 23,953                   |       | **1,214** | ** ** |
| Net (decrease) in cash and cash equivalents |   | $                        | (7,664     | ) | **$** | **(91** | **)** |

 

Cash provided by theCompany’s operating activities in the first half of fiscal 2004 increasedcompared with the first half of 2003 primarily due to lower expenditures forinventory compared with the same period of 2003.  Cash used for purchase of inventory was $0.8 million for thefirst half of fiscal 2004 compared with $32.9 million for the same period offiscal 2003, as the Company increased its inventories in 2003 to replenishinventory shortfalls, open new stores, build safety stock and increase its rawmaterials purchases.  Cash used ininvesting activities in the first half of fiscal 2004 relates primarily tocapital expenditures for new stores and was partially offset by the proceedsfrom the disposal of certain equipment. Cash provided by financing activities relates primarily to borrowingunder the Company’s revolving loan under the Credit Agreement and $0.7 millionfrom the proceeds of the exercise of stock options.  Also, the Company used $1.9 million for the repayment oflong-term debt.

 

For fiscal 2004, theCompany expects to spend between $17 to $20 million on capital expenditures,primarily to fund the opening of approximately 60 new stores, the renovationand/or relocation of two major stores, an expansion of distribution centercapacity and the implementation of various systems initiatives. Managementbelieves that the Company’s cash from operations and availability under its CreditAgreement will be sufficient to fund its planned capital expenditures andoperating expenses for fiscal 2004.  Thecost to open new stores is net of negotiated landlord contributions to helpfund the construction of leasehold improvements for new stores.  These amounts are typically paid by thelandlords after the completion of construction by the Company and the receiptof appropriate lien waivers from contractors. For the stores opened in fiscal 2003, the Company negotiatedapproximately $9 million of landlord contributions of which approximately $8million have been collected, including approximately $2 million which wascollected in the first half of fiscal 2004. The remaining amount is expected tobe received in fiscal 2004.  For thestores opened in the first half of fiscal 2004, the Company negotiatedapproximately $4 million of landlord contributions.

 

**Disclosures about Contractual Obligations and CommercialCommitments**

 

The Company’s principal commitments are non-cancelableoperating leases in connection with its retail stores, certain tailoring spacesand equipment.  Under the terms ofcertain of these leases, the Company is required to pay a base annual rent plusa contingent amount based on sales.  Inaddition, many of these leases include scheduled rent increases.

 

15

----

 

The following table reflects a summary of the Company’scontractual cash obligations and other commercial commitments as ofJuly 31, 2004; including amounts paid in the first half of 2004 except forlong-term debt:

 
|                          |   | **Payments  Due by Fiscal Year  (in thousands)** |   |
|-------------------------------|--------|--------------------------------------------------|--------|
|                          |   | **2004**                                         |   | **2005-2007** |   | **2008-2009** |   | **Beyond  2009** |   | **Total** |   |
|                          |   |                                             |   |   |   |   |   |   |   |   |   |
| Long-term debt                |   | 457                                              |   | 3,083 |   | 24,795 |   | 2,035 |   | 30,370 |   |
| Operating leases (a)          |   | 26,173                                           |   | 80,323 |   | 44,043 |   | 68,630 |   | 219,169 |   |
| Stand-by Letter-of-credit (b) |   | 400                                              |   |   |   |   |   |   |   | 400 |   |
| Purchase Commitment (c)       |   | 8,956                                            |   | — |   | — |   | — |   | 8,956 |   |

 

----

(a)          Includes various lease agreements for stores tobe opened and equipment placed in service subsequent to July 31, 2004.

(b)         To securethe payment of rent at one leased location included in “Operating Leases” aboveand is renewable each year through the end of the lease term.

(c)          TheCompany generally does not make unconditional, noncancelable purchasecommitments.  In fiscal 2003, theCompany entered into an agreement with one raw material supplier to purchase aspecified quantity of fabric through fiscal 2004 at a specified price.  This commitment could extend into 2005;however, the amount of the commitment would not change.

 

**AdditionalInformation**

 

As previously disclosed in theCompany’s Form 10-Q for the quarter ended May 1, 2004, on or aboutApril 22, 2004, the Company received a subpoena from the New York AttorneyGeneral requiring the production of certain documents relating to the Company’sadvertising and in store promotions. The Company has produced documents in response to the subpoena and iscurrently seeking a resolution of the matter. While the exact amount of any loss which may arise from this matter isnot known, the Company has determined that a reasonable estimate of the loss is$475 thousand.  A loss contingency inthis amount has been recorded as a general and administrative expense in theaccompanying Statement of Income for the three months ended July 31, 2004.

 

The Company’s statements concerning futureoperations contained herein are forward-looking statements within the meaningof the Private Securities Litigation Reform Act of 1995.  Actual results may differ materially fromthose forecasted due to a variety of factors outside of the Company’s controlthat can affect the Company’s operating results, liquidity and financialcondition such as risks associated with economic, weather, public health andother factors affecting consumer spending, the ability of the Company tofinance its expansion plans, the mix and pricing of goods sold, the marketprice of key raw materials such as wool and cotton, availability of lease sitesfor new stores, the ability to source product from its global supplier base andother competitive factors. These cautionary statements qualify all of theforward-looking statements the Company makes herein. The Company cannot assureyou that the results or developments anticipated by the Company will berealized or, even if substantially realized, that those results or developmentswill result in the expected consequences for the Company or affect the Company,its business or its operations in the way the Company expects. The Companycautions you not to place undue reliance on these forward-looking statements,which speak only as of their respective dates, and assumes no obligation toupdate any of the forward-looking statements. These risks should be carefullyreviewed before making any investment decision.

 

**Item 3.**                                                           **Quantitativeand Qualitative Disclosures about Market Risk**

 

At July 31, 2004, there were no derivativefinancial instruments.  In addition, theCompany does not believe it is materially at risk for changes in marketinterest rates or foreign currency fluctuations. The Company’s interest onborrowings under its Credit Agreement is at a variable rate based on the primerate or a spread over the LIBOR.

 

16

----

 

**Item 4.**                                                           **Internal****Controlsand Procedures**

 

Within90 days prior to the date of this report, the Company carried out, underthe supervision and with the participation of the Company’s management,including the Company’s Chief Executive Officer and the Company’s ChiefFinancial Officer, an evaluation of the effectiveness of the design andoperation of the Company’s disclosure controls and procedures pursuant toRule 13a-14(a) of the Securities Exchange Act of 1934. Based on thatevaluation, the Company’s Chief Executive Officer and Chief Financial Officerconcluded that as of July 31, 2004 the Company’s disclosure controls andprocedures are effective to ensure that information required to be disclosed bythe Company in the reports it files or submits under the Securities ExchangeAct of 1934, as amended, is recorded, processed, summarized and reported withinthe time periods specified in the SEC’s rules and forms.

 

Therehave been no significant changes in the Company’s internal controls or in otherfactors that could significantly affect the internal controls subsequent to thedate the Company completed its evaluation.

 

# **PART II.**                                                OTHER INFORMATION

 

## **Item1.****                                   LegalProceedings**

 

The Company has been named as a defendant in legal actions arising fromits normal business activities. Although the outcome of these lawsuits or other proceedings against theCompany cannot be accurately predicted, the Company does not expect that anysuch liability will have a material adverse effect on the business, net assetsor financial position of the Company.

 

## **Item4.****                                   Submissionof Matters to a Vote of Security Holders**

 

The following information is furnished with respect to matterssubmitted to a vote of security holders during the period covered by thisreport:

 

a)              The 2004 annual meeting of shareholder ofthe Company was held on June 25, 2004.

 

b)             Gary S. Gladstein was elected as directorat the meeting. Andrew A. Giordano, David A. Preiser and Robert N. Wildrickcontinued in their respective terms of office as directors.

 

c)              The matters voted upon at the meeting andthe votes were as follows:

 

1.               Election of Director

 
|              |   | **For**   |   | **Against** |
|-------------------|--------|-----------|--------|-------------|
| Gary S. Gladstein |   | 9,116,552 |   | 253,427     |

 

2.                    Ratification of selection ofDeloitte and Touche, LLP as the Company’s independent public accountants forthe fiscal year ending January 29, 2005.

 
| **For**   |   | **Against** |   | **Withheld** |   |
|-----------|--------|-------------|--------|--------------|--------|
| 9,326,068 |   | 38,072      |   | 5,830        |   |

 

As the annual meeting was held prior to the distribution of the stockdividend declared on June 8, 2004, the foregoing votes do not reflect anyadjustment which otherwise may have occurred as a result of said stockdividend.

 

17

----

 

## **Item6.            Exhibits and Reports on Form8-K**

 

(a)          Exhibits

 
| 31.1 |   | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)  or 15d-14(a).                                                                             |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 |   | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)  or 15d-14(a).                                                                             |
| 32.1 |   | Certification by Chief Executive Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |
| 32.2 |   | Certification by Chief Financial Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |

 

(b)         Reports on Form 8-K

 

On June 9, 2004, the Company filed a Form 8-K, Item 5, disclosingthat on June 9, 2004 the Company issued a press release in which theCompany announced that the Company’s Board of Director’s declared a 25% stockdividend to shareholders of record on July 30, 2004.

 

OnMay 25, 2004, the Company filed a report on Form 8-K, Item 12, announcing thaton May 25, 2004 the Company issued a press release  in which the Company announced, among other things, certainresults of operations for its first quarter ended May 1, 2004.

 

OnMay 14, 2004, the Company filed a report on Form 8-K, Item 4, announcing thaton May 12, 2004, Deloitte & Touche LLP was engaged as our principalaccountant to audit our financial statements for the 2004 Fiscal Year.

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 
| Date:  September 9, 2004 | Jos. A. Bank Clothiers,  Inc.     |
|------------------------------------|-----------------------------------|
|                               | (Registrant)                      |
|                               |                              |
|                               |   /s/   David E. Ullman |
|                               | David E. Ullman                   |
|                               | Chief Financial Officer           |

 

18

----