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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)    

ý

 

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

For the fiscal year ended January 31, 2015

or

o

 

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

For the transition period from            to          

Commission file number 1-16097

THE MEN'S WEARHOUSE, INC.
(Exact Name of Registrant as Specified in its Charter)

Texas
(State or Other Jurisdiction of
Incorporation or Organization)
  74-1790172
(IRS Employer
Identification Number)

6380 Rogerdale Road
Houston, Texas

(Address of Principal Executive Offices)

 

77072-1624
(Zip Code)

(281) 776-7000
(Registrant's telephone number, including area code)

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

Title of each class   Name of each exchange on which registered
Common Stock, par value $.01 per share   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý.    No o.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o.    No ý.

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 ý.    No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý.    No o.

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o.    No ý.

The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the closing price of shares of common stock on the New York Stock Exchange on August 2, 2014, was approximately $2,466.1 million.

The number of shares of common stock of the registrant outstanding on March 17, 2015 was 48,135,587 excluding 129,095 shares classified as Treasury Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Document   Incorporated as to
Notice and Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held July 1, 2015
  Part III: Items 10, 11, 12, 13 and 14

   


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FORM 10-K REPORT INDEX

10-K Part and Item No.
  Page No.  

PART I

 

 

       

Item 1.

 

Business

    3  

Item 1A.

 

Risk Factors

    14  

Item 1B.

 

Unresolved Staff Comments

    25  

Item 2.

 

Properties

    26  

Item 3.

 

Legal Proceedings

    27  

Item 4.

 

Mine Safety Disclosures

    27  

PART II

 

 

   
 
 

Item 5.

 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

    28  

Item 6.

 

Selected Financial Data

    30  

Item 7.

 

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

    32  

Item 7A.

 

Quantitative and Qualitative Disclosures About Market Risk

    50  

Item 8.

 

Financial Statements and Supplementary Data

    52  

Item 9.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    101  

Item 9A.

 

Controls and Procedures

    101  

Item 9B.

 

Other Information

    104  

PART III

 

 

   
 
 

Item 10.

 

Directors, Executive Officers and Corporate Governance

    104  

Item 11.

 

Executive Compensation

    104  

Item 12.

 

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

    104  

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

    105  

Item 14.

 

Principal Accounting Fees and Services

    105  

PART IV

 

 

   
 
 

Item 15.

 

Exhibits, Financial Statement Schedules

    105  

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Forward-Looking and Cautionary Statements

Certain statements made in this Annual Report on Form 10-K and in other public filings and press releases by the Company (as defined below) contain "forward-looking" information (as defined in the Private Securities Litigation Reform Act of 1995) that involves risk and uncertainty. These forward-looking statements may include, but are not limited to, references to, sales, earnings, margins, costs, number and costs of store openings, future capital expenditures, acquisitions, synergies, demand for clothing, market trends in the retail and corporate apparel clothing business, currency fluctuations, inflation and various economic and business trends. Forward-looking statements may be made by management orally or in writing, including, but not limited to, Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form 10-K and other sections of our filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended and the Securities Act of 1933, as amended.

Forward-looking statements are not guarantees of future performance and a variety of factors could cause actual results to differ materially from the anticipated or expected results expressed in or suggested by these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to: actions by governmental entities; domestic and international economic activity and inflation; success, or lack thereof, in executing our internal operating plans and new store and new market expansion plans, as well as integration of acquisitions including Jos. A. Bank Clothiers, Inc.; performance issues with key suppliers; disruption in buying trends due to homeland security concerns; severe weather; foreign currency fluctuations; government export and import policies; advertising or marketing activities of competitors; and legal proceedings. Future results will also be dependent upon our ability to continue to identify and complete successful expansions and penetrations into existing and new markets and our ability to integrate such expansions with our existing operations.

These forward-looking statements are based upon management's current beliefs or expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies and third party approvals, many of which are beyond our control. Refer to "Risk Factors" contained in Part I of this Annual Report on Form 10-K for a more complete discussion of these and other factors that might affect our performance and financial results. These forward-looking statements are intended to convey the Company's expectations about the future, and speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.

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PART I

ITEM 1.    BUSINESS

General

The Men's Wearhouse began operations in 1973 as a partnership and was incorporated as The Men's Wearhouse, Inc. (the "Company") under the laws of Texas in May 1974. Our principal corporate and executive offices are located at 6380 Rogerdale Road, Houston, Texas 77072-1624 (telephone number 281-776-7000) and at 6100 Stevenson Blvd., Fremont, California 94538-2490 (telephone number 510-657-9821), respectively.

On June 18, 2014, the Company acquired Jos. A. Bank Clothiers, Inc. ("Jos. A. Bank"), a men's specialty apparel retailer with 624 retail stores (excluding 15 franchise stores) across the United States ("U.S."), for total consideration of approximately $1.8 billion. For additional information, refer to Note 2, "Acquisitions", to our consolidated financial statements included in this Annual Report on Form 10-K.

Unless the context otherwise requires, "Company", "we", "us" and "our" refer to The Men's Wearhouse, Inc. and its subsidiaries. References herein to years are to the Company's 52-week or 53-week fiscal year, which ends on the Saturday nearest January 31 in the following calendar year. The periods presented in these financial statements are the fiscal years ended January 31, 2015 ("fiscal 2014"), February 1, 2014 ("fiscal 2013") and February 2, 2013 ("fiscal 2012"). Each of these periods had 52 weeks, except for fiscal 2012, which consisted of 53 weeks.

Our Brands and Products

We are the largest specialty retailer of men's suits and the largest provider of tuxedo rental product in the U.S. and Canada. At January 31, 2015, we operated a total of 1,758 retail stores, with 1,635 stores in the U.S. and Puerto Rico as well as 123 stores in Canada. Our U.S. retail stores are operated under the brand names of Men's Wearhouse (698 stores), Men's Wearhouse and Tux (210 stores), Jos. A. Bank (636 stores, excluding 15 franchise stores) and K&G (91 stores) in 50 states, the District of Columbia and Puerto Rico. Our Canadian stores are operated under the brand name of Moores (123 stores) in ten provinces. In addition, at January 31, 2015, we operated 34 retail dry cleaning, laundry and heirlooming facilities through MW Cleaners in Texas. On August 6, 2013, we acquired JA Holding, Inc. ("JA Holding"), the parent company of the American clothing brand Joseph Abboud® and a U.S. tailored clothing factory, for $94.9 million in cash consideration. These operations comprise our retail segment.

Additionally, we operate two corporate apparel providers—our UK-based holding company operations, the largest provider in the United Kingdom ("UK"), under the Dimensions, Alexandra and Yaffy brands, and our Twin Hill operations in the U.S. These operations provide corporate clothing uniforms and workwear to workforces through multiple channels including managed corporate accounts, catalogs and the internet. We initially acquired 86% of the UK-based holding company in 2010. Certain previous shareholders of Dimensions controlled 14% of the UK-based holding company and on September 26, 2014, we purchased the 14% non-controlling interest for total consideration of approximately $6.7 million. These operations comprise our corporate apparel segment.

For information on store closings and openings, see "Item 6. Selected Financial Data" in this Annual Report on Form 10-K. Financial information concerning business segments and geographic area is contained in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and under Note 16 to our consolidated financial statements both included in this Annual Report on Form 10-K.

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Retail Segment

In our retail segment, we offer our products and services through our four retail merchandising brands—Men's Wearhouse/Men's Wearhouse and Tux, Jos. A. Bank, Moores and K&G—and the internet at www.menswearhouse.com, www.josbank.com, and www.josephabboud.com. Our stores are located throughout the U.S. and Canada and carry a wide selection of exclusive and non-exclusive merchandise brands. MW Cleaners is also included in the retail segment as these operations have not had a significant effect on our revenues or expenses. Also, as a result of our acquisition of JA Holding, we operate a factory located in New Bedford, Massachusetts that manufactures quality U.S. made tailored clothing including designer suits, tuxedos, sport coats and slacks which we sell in our Men's Wearhouse stores and at www.josephabboud.com.

Men's attire is characterized by infrequent and more predictable fashion changes. Therefore, we believe we are not as exposed to trends typical of more fashion-forward apparel retailers where significant markdowns to move out-of-style merchandise are more common. However, our concentration in men's attire causes our sales to be impacted by macroeconomic trends, particularly unemployment levels and consumer confidence.

The Men's Wearhouse targets the male consumer (25 to 55 years old) by providing a superior level of customer service and offering a broad selection of exclusive and non-exclusive merchandise brands at regular and sale prices we believe are competitive with specialty and traditional department stores. Our merchandise includes suits, suit separates, sport coats, slacks, formalwear, business casual, sportswear, outerwear, dress shirts, shoes and accessories in classic, modern and slim fits and in a wide range of sizes including a significant selection of "Big and Tall" product. We also offer a full selection of tuxedo rental product. We believe our tuxedo rental program broadens our customer base by drawing first-time and younger customers into our stores; accordingly, our offering includes an expanded merchandise assortment including dress and casual apparel targeted toward the younger customer.

At January 31, 2015, we operated 698 Men's Wearhouse retail apparel stores (including nine outlet stores) in 50 states, the District of Columbia and Puerto Rico. These stores are referred to as "Men's Wearhouse stores" or "full line stores" that offer a full selection of retail merchandise and tuxedo rental product. Men's Wearhouse stores are primarily located in regional strip and specialty retail shopping centers or in freestanding buildings as we believe that men prefer direct and easy store access that enables our customers to park near the entrance of the store.

At January 31, 2015, we also operated another 210 stores in 33 states branded as Men's Wearhouse and Tux. These stores are referred to as "rental stores" and offer a full selection of tuxedo rental product and a limited selection of retail merchandise and are located primarily in regional malls and lifestyle centers. During fiscal 2014, we closed 38 Men's Wearhouse and Tux stores as we continued to experience a consumer driven shifting of rental revenues from the rental stores to our full line stores located one mile or less in proximity.

Jos. A. Bank targets the male career professional (35 to 59 years old) emphasizing high quality tailored and business casual clothing and accessories, substantially all of which is sold under the exclusive Jos. A. Bank label. Jos. A. Bank merchandise consists of suits, suit separates, sport coats, slacks, formalwear, business casual, sportswear, outerwear, dress shirts, shoes and accessories in primarily traditional styles and in a wide range of sizes including a selection of "Big and Tall" product. We also offer tuxedo rentals at all of our Jos. A. Bank stores. On September 3, 2014, we announced the early termination of an agreement

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between Jos. A. Bank and Jim's Formal Wear, effective December 31, 2014, which allowed us to leverage our existing tuxedo rental inventory to serve the Jos. A. Bank tuxedo operations.

At January 31, 2015, we operated 636 Jos. A. Bank retail apparel stores (including 53 outlet stores) in 44 states and the District of Columbia. Jos. A. Bank stores are primarily located in fashion-oriented, specialty retail centers. In addition, as of January 31, 2015, there are 15 franchise stores.

Moores is one of Canada's leading specialty retailers of men's apparel. Similar to the Men's Wearhouse stores, Moores stores offer a broad selection of exclusive and non-exclusive merchandise brands at regular and sale prices that we believe are competitive with traditional Canadian specialty and department stores. Moores' merchandise consists of suits, suit separates, sport coats, slacks, formalwear, business casual, sportswear, outerwear, dress shirts, shoes and accessories in classic, modern and slim fits and in a wide range of sizes including a selection of "Big and Tall" product. We also offer tuxedo rentals at all of our Moores stores which we believe broadens our customer base by drawing first-time and younger customers into our stores. To further accommodate these younger tuxedo rental customers, we also offer an expanded merchandise assortment including dress and casual apparel targeted toward a younger customer.

At January 31, 2015, we operated 123 retail apparel stores in ten Canadian provinces. Moores stores are primarily located in regional strip and specialty retail shopping centers.

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

At January 31, 2015, we operated 91 K&G stores in 27 states, 83 of which also offer ladies' career apparel, sportswear, accessories and shoes and children's apparel. K&G stores are "destination" stores located primarily in second generation strip shopping centers that are easily accessible from major highways and thoroughfares.

During 2014, we completed our review of strategic alternatives for our K&G operations. As part of the review, we considered offers to acquire the K&G business, none of which were acceptable. We concluded that continuing to operate K&G as a wholly-owned subsidiary of the Company and part of the Company's overall portfolio will provide the most value to our shareholders.

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

K&G stores are designed to allow customers to select and purchase apparel by themselves. For example, each merchandise category is clearly marked and organized by size, and suits are specifically tagged as a

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means of further assisting customers to easily select their styles and sizes. K&G employees are also available to assist customers with merchandise selection, including correct sizing.

Substantially all of our retail apparel stores provide on-site tailoring services to facilitate timely alterations at a reasonable cost to customers. Tailored clothing purchased at a Men's Wearhouse store will be pressed and re-altered (if the alterations were performed at a Men's Wearhouse store) free of charge for the life of the garment. In addition, Jos. A. Bank utilizes Company-owned regional tailor shops, which receive merchandise from stores to perform tailoring services and return the merchandise to the selling store for customer pickup.

Our advertising strategy primarily consists of television, email, online (including social networking), mobile, direct mail, telemarketing and bridal shows. We consider our integrated efforts across these channels to be the most effective means of both attracting and reaching potential new customers, as well as reinforcing the positive attributes of our various brands with our existing customer base. In addition, for Jos. A. Bank, we distribute a catalog to communicate the Jos. A. Bank image, to provide customers with fashion guidance in coordinating outfits and to generate traffic.

We have a preferred relationship with David's Bridal, Inc., the nation's largest bridal retailer, and TheKnot.com with respect to our tuxedo rental operations. Additionally, we have an agreement with Vera Wang that gives us the exclusive right to "Black by Vera Wang" tuxedo products for rental and retail sale.

We also offer our "Perfect Fit" loyalty program to our Men's Wearhouse, Men's Wearhouse and Tux and Moores customers. Under the loyalty program, customers receive points for purchases. Points are equivalent to dollars spent on a one-for-one basis, excluding any sales tax dollars. Upon reaching 500 points, customers are issued a $50 rewards certificate which they may use to make purchases at Men's Wearhouse, Men's Wearhouse and Tux or Moores stores or online at www.menswearhouse.com. We believe that the loyalty program facilitates our ability to cultivate long-term relationships with our customers. All customers who register for our "Perfect Fit" loyalty program are eligible to participate and earn points for purchases. Approximately 83% of sales transactions at our Men's Wearhouse, Men's Wearhouse and Tux and Moores stores were to customers who participated in the loyalty program for fiscal year 2014. We are also evaluating the addition of a loyalty program for Jos. A. Bank, which we believe will enhance our relationship with the Jos. A. Bank customer.

Our Men's Wearhouse and Moores retail apparel stores offer a broad selection of exclusive and non-exclusive men's business attire, including a consistent stock of core items (such as basic suits, navy blazers and tuxedos) and a significant selection of "Big and Tall" product. Although basic styles are emphasized, each season's merchandise reflects current fit, fabric and color trends. We do not purchase significant quantities of merchandise overruns or close-outs. At our Men's Wearhouse and Moores brands, we provide recognizable quality merchandise at prices that assist the customer in identifying the value available at our retail apparel stores. The broad merchandise selection creates increased sales opportunities by permitting a customer to purchase substantially all of his wardrobe and accessory requirements, including shoes, at our retail apparel stores.

The inventory mix at our Men's Wearhouse and Moores stores includes business, business casual, casual and formal merchandise designed to meet the demand of our customers. This assortment includes the classic fit, comprised of pleated pants and a more generous fit, and modern fit, consisting of flat front pants, narrower lapels, side vent jackets and a more tailored but still comfortable fit. In addition, we have expanded our merchandise assortment targeted toward a younger customer in our Men's Wearhouse and Moores retail stores with the addition of slim fit clothing, a fit that is much closer to the body producing a slimmer, more flattering look.

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Also, at Men's Wearhouse stores currently, and in 2015, at Moores stores, we offer our customers the ability to purchase a custom-made suit which can be produced in approximately three weeks and is unique to each customer's specifications. Based on our experience and expertise, we believe that the depth of selection offered provides us with an advantage over most of our competitors.

At Jos. A. Bank, we offer a distinctive collection of clothing and accessories focused on a classic look including formal, business, business casual, sportswear and golf apparel, substantially all of which is sold under the Jos. A. Bank label. Jos. A. Bank's product offerings include suits, tuxedos, dress shirts, sportcoats, dress pants, overcoats, ties, and sportswear, among other items. The Jos. A. Bank merchandising strategy is focused on a classic styling with attention to detail in quality materials and workmanship.

Our promotional pricing strategy for Men's Wearhouse and Moores utilizes a variety of pricing techniques such as "buy one get one free" designed to encourage multiple unit sales allowing us to offer our customers excellent value while still maintaining adequate margins and remaining competitive in the current economic environment. Jos. A. Bank's business is highly promotional driven by a product pricing strategy where targeted promotional events are run throughout the year based on market conditions and customer preferences and demands.

We purchase merchandise and tuxedo rental product from approximately 700 vendors and do not believe that the loss of any vendor would significantly impact us. While we have no material long-term contracts with our vendors, we believe that we have developed an excellent relationship with our vendors that is supported by consistent purchasing practices.

For the Men's Wearhouse and Moores brands, our vertical direct sourcing model with third-party vendors covers design, product development and all logistics to the sales floor. We have no long-term merchandise supply contracts and typically transact business on a purchase order-by-purchase order basis either directly with manufacturers and fabric mills or with trading companies. We have developed long-term and reliable relationships with most of our direct manufacturers and fabric mills, which we believe provides stability, quality and price leverage. We also work with trading companies that support our relationships with vendors for our direct sourced merchandise and contract agent offices that provide administrative functions on our behalf. In addition, the agent offices provide all quality control inspections and ensure that our operating procedures manuals are adhered to by our suppliers.

In addition, as a result of our acquisition of JA Holding, we also operate a factory located in New Bedford, Massachusetts that manufactures quality, made in America, tailored clothing including designer suits, tuxedos, sport coats and slacks which we sell in our Men's Wearhouse stores. We also sell similar merchandise in our Moores stores, which is produced by a third party in Canada, not JA Holding.

In fiscal year 2014, Men's Wearhouse/Men's Wearhouse and Tux, Moores and K&G sourced approximately 62% of direct sourced merchandise from Asia (34% from China and Indonesia) while 12% was sourced in Mexico, 7% in the U.S. and 19% was sourced in Europe and other regions. All of our foreign purchases are negotiated and paid for in U.S. dollars, except purchases from Italy which are negotiated and paid for in Euros. All direct sourcing vendors are expected to adhere to our compliance program. To oversee compliance, we have a direct sourcing compliance department and we also use the services of an outside audit company to conduct frequent vendor audits.

Currently, Jos. A. Bank merchandise is designed through the coordinated efforts of our merchandising and planning staff, working in conjunction with suppliers, manufacturers, trading companies and buying agents around the world. Similar to Men's Wearhouse and Moores, Jos. A. Bank transacts substantially all business on a purchase order-by-purchase order basis and does not maintain any long-term or exclusive contracts, commitments or arrangements with manufacturers or other suppliers. In addition, Jos. A. Bank

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uses buying agents to source a significant portion of our products from various companies located in or near Asia. As part of the integration process, we expect to leverage our direct sourcing model to source Jos. A. Bank merchandise.

Since the date of acquisition through the end of fiscal 2014, Jos. A. Bank sourced approximately 65% of total product purchases from Asia (41% from China and India) while 24% was sourced from Mexico and 11% from other regions. In addition, Jos. A. Bank uses buying agents to source products from various companies located in or near Asia. Since the date of acquisition through the end of fiscal 2014, two buying agents sourced, respectively, approximately 58% and 7% of Jos. A. Bank total product purchases. No other buying agent represented more than 5% of total product purchases for Jos. A. Bank.

All retail apparel merchandise for Men's Wearhouse/Men's Wearhouse and Tux stores is received into our distribution center located in Houston, Texas, where it is either placed in back-stock or allocated to and picked by store for shipping. In the majority of our larger markets, we also have separate hub facilities or space within certain Men's Wearhouse stores used as redistribution facilities for their respective areas. Merchandise for Jos. A. Bank is received and distributed to stores from our distribution centers in Hampstead and Eldersburg, Maryland, while most purchased merchandise for Moores is distributed to the stores from our distribution center in Montreal, Quebec. The majority of merchandise for our K&G stores is direct shipped by vendors to the stores with the remainder of K&G merchandise being transported to our K&G stores from our Houston distribution center. We are currently reviewing our distribution center approach for the Men's Wearhouse/Men's Wearhouse and Tux and Jos. A. Bank brands to optimize our shipping and freight costs by transitioning to a regional distribution strategy that leverages the geographic locations of our main distribution centers in Houston, Texas and Hampstead, Maryland.

Our tuxedo rental product is located in our Houston distribution center and in six additional distribution facilities located in the U.S. (five) and Canada (one). The six additional distribution facilities also receive limited quantities of retail product, primarily formalwear accessories, that is sold in our Men's Wearhouse/Men's Wearhouse and Tux, Moores and, as of January 1, 2015, Jos. A. Bank stores.

All retail merchandise and new tuxedo rental product transported from vendors to our distribution facilities is done so via common carrier or on a dedicated fleet of long-haul vehicles operated by a third party. This dedicated fleet is also used to transport product from our Houston distribution center to the hub facilities and a fleet of leased or owned smaller vehicles is used to transport product from the hub facilities to our stores within a given geographic region.

Our primary competitors include traditional department stores, specialty men's clothing stores, online retailers, off-price retailers, manufacturer-owned and independently-owned outlet stores and their e-commerce channels and independently owned tuxedo rental stores. We believe that the principal competitive factors in the menswear market are merchandise assortment, quality, price, garment fit, merchandise presentation, store location and customer service, including on-site tailoring.

We believe that strong vendor relationships, our direct sourcing program and our buying volumes and patterns are the principal factors enabling us to obtain quality merchandise at attractive prices. Certain of our competitors (principally department stores) may be larger and may have substantially greater financial, marketing and other resources than we have and therefore may have certain competitive advantages.

Corporate Apparel Segment

Our corporate apparel segment provides corporate clothing uniforms and workwear to workforces with operations conducted by Twin Hill in the U.S. and by our UK holding company operating under the Dimensions, Alexandra and Yaffy brands primarily in the UK. We offer our corporate apparel clothing

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products through multiple channels including managed corporate accounts, catalogs and the internet at www.dimensions.co.uk and www.alexandra.co.uk. We offer a wide variety of customer branded apparel such as shirts, blouses, trousers, skirts and suits as well as a wide range of other products from aprons to safety vests to high visibility police outerwear. With respect to our managed contracts, we generally provide complete management of our customers' corporate clothing programs from design, fabric buying and manufacture to measuring, product roll-outs and ongoing stock replacement and replenishment.

Our customer base includes companies and organizations in the retail grocery, retail, banking, distribution, travel and leisure, postal, security, healthcare and public sectors. Sectors which tend to be strong users of third party corporate wear providers are retail, finance, utilities, hospitality and leisure. Sector characteristics tend to impact the corporate wear requirements of our individual customers. For example, retail customers typically have high staff turnover levels resulting in large replenishment volumes and significant seasonal demand, while banking customers generally have lower turnover and replenishment requirements but refresh or rebrand uniforms more frequently. The public service sector has historically consisted of fragmented regional authorities although there seems to be a move in the UK toward more consolidated sourcing units.

Our managed contract customers are generally organizations with larger numbers of uniform wearing employees or those that use uniforms as a form of brand identity. We have long established relationships with many of the UK's top employers and we currently maintain over 30 managed accounts with an average account size greater than 15,000 wearers. Our typical catalog customers are small to medium sized organizations with a relatively smaller number of employees or organizations where brand differentiation is not imperative.

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

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

During fiscal 2014, no one customer accounted for 10% or more of our total corporate apparel net sales and we do not believe that the loss of any customer would significantly impact us.

Our catalogs are distributed electronically, via mail and by sales representatives. The catalogs offer a full range of our products and offer further branding or embellishment of most products ordered. Catalog orders can be placed via phone, mail, fax or direct contact with our sales representatives and, in the U.S., via client-specific websites. Our UK e-commerce platforms also allow online ordering via our websites and provide 24-hour functionality, with a full list of our products and their details. In addition, we regularly develop dedicated websites for our corporate clients for use by their employees in ordering their company specific corporate wear.

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

Under our managed contracts, our customers receive a full range of services including design, fabric buying and manufacturing, measuring and sizing, employee database management and replenishment forecasting, supply chain management and distribution and logistics of finished products. Customers work with our in-house design and technical teams to design and develop uniforms or other corporate wear that creates strong brand identity. We utilize our management information and garment tracking system which highlights trends, identifies issues and provides benchmark data for the customer at all levels from individual wearer to enterprise-wide. This system also allows us to identify potential cost savings and develop solutions on behalf of our customers and to respond quickly to trends or other changing needs.

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

Most corporate apparel garment production is outsourced to third-party manufacturers and fabric mills through our direct sourcing programs. We have developed long-term relationships with most of our direct manufacturers and fabric mills, which we believe provides stability, quality and reliability. We do not have any material long-term contracts with our vendors and we do not believe that the loss of any vendor would significantly impact us. We also work with trading companies that support our relationships with our direct source vendors and with contract agent offices that provide administrative functions on our behalf. In addition, the agent offices assist with quality control inspections and ensure that our operating procedures manuals are adhered to by our suppliers.

During 2014, approximately 55% of our corporate wear product purchases was sourced in Asia (primarily China, Pakistan, Bangladesh, Sri Lanka and Indonesia) while approximately 45% was sourced from Europe and other regions. Our foreign purchases from Asia are negotiated and paid for in U.S. dollars, while our purchases from Europe and other regions are negotiated and paid for in pounds Sterling or Euros.

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

Our UK corporate apparel group, through its Dimensions, Alexandra and Yaffy brands, provides workwear and uniforms to more UK employees than any of our corporate apparel competitors, which consist mostly of companies that focus more on catalog business. The U.S. corporate wear market is more fragmented with several U.S. competitors being larger and having more resources than Twin Hill. We believe that the competitive factors in the corporate wear market are merchandise assortment, quality, price, customer

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service and delivery capabilities. We believe that our proven capability in the provision of corporate apparel programs to businesses and organizations of all sizes alongside our catalog and internet operations position us well with our existing customers and should enable us to continue to gain new catalog accounts and managed contracts.

Business Strategy

Our business strategy includes:

We have developed a thoughtful integration plan over the next three years as it relates to the Jos. A. Bank acquisition. By the end of fiscal 2016, we expect to achieve approximately $100 million in run-rate annual cost synergies, including savings on cost of goods sold, elimination of duplicative corporate expenses and advertising purchase leverage. Additionally, we expect to achieve revenue synergies and therefore are expecting up to $150 million of total run-rate annual synergies by the end of fiscal 2016.

We believe that we can increase the number of full line Men's Wearhouse stores in the U.S. from the current 698 to approximately 750 over the next few years, with approximately 25 new stores planned for fiscal 2015. We also expect to increase the number of Moores stores in Canada from the current 123 to approximately 125 stores in fiscal 2015. Store expansion will be in new and existing markets including single store markets and smaller stores in central business districts. We believe these additional stores will put us in closer proximity to a larger portion of our target customer base and will generate opportunities for incremental sales of our quality merchandise selection and tuxedo rentals. With respect to Jos. A. Bank, we committed to opening stores that were already in process at the time of the acquisition and will assess our future strategy for additional Jos. A. Bank stores in 2015.

By expanding our exclusive brand portfolio, we believe we will be able to expand our product offerings and increase our margins and profitability. We continue to evaluate acquisition of brands and trademarks, as well as the development of brands in-house. In 2012, we entered into a consulting agreement with Joseph Abboud pursuant to which he was named our Chief Creative Director and engaged to create exclusive brands and products for our customers. In addition, during fiscal 2013, we acquired JA Holding, the parent company of the American clothing brand Joseph Abboud® and a U.S. tailored clothing factory. We believe this transaction will accelerate our strategy of offering exclusive brands with broad appeal at attractive prices. In late 2014, we launched a Joseph Abboud website and plan to open a Joseph Abboud flagship store in New York City in 2015.

We believe that additional growth opportunities also exist through continuing the diversification of our merchandise mix. As a result of recent trends in men's apparel that favor trimmer fitting product, a significant portion of our merchandise offering at Men's Wearhouse is slim fit. We will continue to feature these products in our stores and our marketing channels to target the younger customer as well as the other demographics that will be influenced by this trend.

We plan to continue to pursue growth in the tuxedo rental business through the leveraging of tuxedo rental product in Jos. A. Bank stores and the use of our tuxedo rental website and mobile phone applications for tuxedo rentals. We carry an exclusive "Black by Vera Wang" tuxedo that continues to have a positive influence on our rentals and have introduced a Joseph Abboud® tuxedo that we believe will lead to

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additional growth for the tuxedo rental business. We believe that our tuxedo marketing initiatives, including our David's Bridal and TheKnot.com relationships, rental offerings, online website enhancements and continued emphasis on customer service, will enable us to continue to grow our tuxedo rentals in future years. In addition, we announced in-home wedding consultations beginning in 2015 to offer a new level of convenience and personalized service for our customers.

Our future growth plans also include the integration of digital technologies to provide a sales experience that combines the advantages of our physical store with an information rich online shopping experience through our website and mobile applications. For example, at Men's Wearhouse and Jos. A. Bank stores, if the customer wants to purchase an item that is not available at the store our clothing consultants can order it through our websites to fulfill the customer's purchasing needs. We expect to leverage Jos. A. Bank's online success and expertise to accelerate this growth. Also, through our websites we are able to offer international shipping to over 100 countries. We plan to continue to make investments in technologies, business processes and personnel intended to deepen our customer relationships and increase our share of their closet.

Seasonality

Our sales and net earnings are subject to seasonal fluctuations. Our tuxedo rental revenues are heavily concentrated in the second and third quarters while the fourth quarter is considered the seasonal low point. In addition, Jos. A. Bank has historically experienced increased customer traffic during the holiday season and its increased marketing efforts during the holiday season have historically resulted in sales and net earnings generated in the fourth quarter, which are significantly larger as compared to the other three quarters. With respect to corporate apparel sales and operating results, seasonal fluctuations are not significant but customer decisions to rebrand or revise their corporate wear programs can cause significant variations in period results. Because of these fluctuations in our sales, results for any quarter are not necessarily indicative of the results that may be achieved for the full year.

Trademarks and Servicemarks

We are the owner in the U.S. and selected other countries of the trademarks and service marks MEN'S WEARHOUSE®, and MW MEN'S WEARHOUSE and design®, and of federal registrations thereof. Our rights in the MEN'S WEARHOUSE marks and its variations are a significant part of our business, as the marks have become well known through our use of the marks in connection with our retail and formalwear rental services and products (both in store and online) and our advertising campaigns. We are also the owner of various marks and trademark registrations in the U.S., Canada and abroad under which our stores and corporate apparel business operate or which are used to label the products we sell or rent, including various JOSEPH ABBOUD® and JOS. A. BANK® labels. We intend to maintain and protect our marks and the related registrations.

We are the licensee for certain designer labels on products of a specific nature (such as men's suits, men's formalwear or men's shirts). We generally pay a royalty for the use of the label, based on cost for the relevant product. The labels licensed under these agreements will continue to be used in connection with a portion of the purchases under the direct sourcing program described above, as well as purchases from other vendors. We monitor the performance of these licensed labels compared to their cost and may elect to selectively terminate any license, as provided in the particular agreement. We also are the licensor of the JOSEPH ABBOUD® label for limited products in the U.S. and Canada, and for a broader range of products abroad.

Employees

At January 31, 2015, we had approximately 26,100 employees, consisting of approximately 23,500 in the U.S. and 2,600 in foreign countries, of which approximately 18,600 were full-time employees. Seasonality

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affects the number of part-time employees as well as the number of hours worked by full-time and part-time personnel.

At January 31, 2015, approximately 650 of our employees at the factory located in New Bedford, Massachusetts that manufactures our Joseph Abboud clothing are members of Unite Here, a New England based labor union. The current union contract expires in April 2016. Also, approximately 350 employees working in the Jos. A. Bank Hampstead, Maryland tailoring overflow shop and distribution centers are represented by the Mid-Atlantic Regional Joint Board, Local 806. Our collective bargaining agreement with the Mid-Atlantic Regional Joint Board, Local 806 is scheduled to expire at the end of April 2015 and we are currently engaged in negotiations to enter into a new collective bargaining agreement. Lastly, approximately 130 Jos. A. Bank sales associates in New York City and four surrounding New York counties are represented by Local 340, New York New Jersey Regional Joint Board, Workers United. Our most recent collective bargaining agreement covering these employees is scheduled to expire in April 2016.

We believe our relationship with our union and nonunion employees is good and we have no reason to believe that we will experience any interruption in our business upon the expiration of these collective bargaining agreements.

Available Information

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

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ITEM 1A.    RISK FACTORS

We wish to caution you that there are risks and uncertainties that could affect our business. These risks and uncertainties include, but are not limited to, the risks described below and elsewhere in this report, particularly found in "Forward-Looking and Cautionary Statements." The following is not intended to be a complete discussion of all potential risks or uncertainties, as it is not possible to predict or identify all risk factors.

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

While economic conditions have improved recently, U.S., UK and global economic and political conditions could negatively impact consumer confidence and the level of consumer discretionary spending. The continuation and/or recurrence of these market, political and economic conditions could intensify the adverse effect of such conditions on our revenues and operating results. Consumer confidence may also be adversely affected by national and international security concerns such as war, terrorism, public health events or natural disasters (or the threat of any of these).

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

Our ability to continue to expand our core stores may be limited.

A large part of our growth has resulted from the addition of new Men's Wearhouse stores and the increased sales volume and profitability provided by these stores. In addition, the recent acquisition of Jos. A. Bank significantly increased the total number of retail stores we operate. As of January 31, 2015, we operate 698 Men's Wearhouse stores, 636 Jos. A. Bank stores, 123 Moores stores, and 91 K&G stores. We will continue to depend on adding new stores to increase our sales volume and profitability; however, we believe that our ability to increase the number of new stores in the U.S. and Canada may be limited. Therefore, we may not be able to achieve the same rate of growth as we have historically.

In addition, our ability to open new stores will depend on our ability to obtain suitable locations, negotiate acceptable lease terms, hire qualified personnel and open and operate new stores on a timely and profitable basis. Continued expansion will place increasing demands on our operational, managerial and administrative resources. These increased demands could cause us to operate our business less effectively and in turn, could adversely affect our financial performance and results of operations. Further, the results achieved by our existing stores may not be indicative of the performance or market acceptance of stores in other locations and the opening of new stores in existing markets may adversely affect sales and profits of established stores in those same markets.

Certain of our expansion strategies may present greater risks.

We are continuously assessing opportunities to expand store concepts and complementary products and services related to our core business, such as corporate apparel and uniform sales. We may expend both capital and personnel resources on such business opportunities which may or may not be successful. Additionally, any new concept is subject to certain risks, including customer acceptance, competition, product differentiation and the ability to obtain suitable sites. We cannot assure you that we will be able to

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develop and grow new concepts to a point where they will become profitable or generate positive cash flow.

We may not realize the anticipated benefits of the acquisition of Jos A. Bank, which could adversely impact our business and our operating results.

We intend to continue the operations of Jos. A. Bank as a separate, stand-alone brand; however, we have devoted and will continue to devote significant managerial attention and resources into the integration of Jos. A. Bank. While we believe that we have sufficient resources to accomplish the integration successfully, there are a number of significant risks involved. We cannot assure you that:

If we are unable to integrate Jos. A. Bank and manage the integration process successfully, or to achieve a substantial portion of the anticipated benefits of the acquisition within the time frame anticipated by management, it could have a material adverse effect on our business, financial condition or results of operations.

Any future acquisitions that we may undertake could be difficult to integrate, disrupt our business, dilute shareholder value and harm our operating results.

In the event we complete one or more new acquisitions, we may be subject to a variety of risks, including risks associated with an ability to integrate acquired assets, systems or operations into our existing operations, diversion of management's attention from core operational matters, higher costs, or unexpected difficulties or problems with acquired assets or entities, outdated or incompatible technologies, labor difficulties or an inability to realize anticipated synergies and efficiencies, whether within anticipated time frames or at all. If one or more of these risks are realized, it could have an adverse impact on our financial condition and operating results.

Our business is seasonal.

Our business is subject to seasonal fluctuations. For example, our tuxedo rental revenues are heavily concentrated in the second and third quarters while the fourth quarter is considered the seasonal low point. In addition, Jos. A. Bank has historically experienced increased customer traffic during the holiday season and its increased marketing efforts during the holiday season have historically resulted in sales and net earnings generated in the fourth quarter, which are significantly larger as compared to the other three quarters. Any factors negatively affecting us during these peak periods, including inclement weather or unfavorable economic conditions, could have a significant adverse effect on our revenues and operating results. With respect to our corporate apparel sales, seasonal fluctuations are not significant but customer decisions to rebrand, revise or delay their corporate wear programs can cause significant variations in quarterly results. Because of the seasonality of our sales, results for any quarter are not necessarily indicative of the results that may be achieved for the full year.

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Comparable sales may continue to fluctuate on a regular basis.

Our comparable sales have fluctuated significantly in the past on both an annual and quarterly basis and are expected to continue to fluctuate in the future. We believe that a variety of factors affect comparable sales results including, but not limited to, consumer confidence and the level of consumer discretionary spending, changes in economic conditions and consumer disposable income, spending patterns and debt levels, consumer credit availability, weather conditions, the timing of certain holiday seasons, the number and timing of new store openings, changes in the popularity of a retail center, the timing and level of promotional pricing or markdowns, store closings, relocations and remodels, changes in fashion trends and our merchandise mix or other competitive factors. Comparable sales fluctuations may impact our ability to leverage our fixed direct expenses, including store rent and store asset depreciation, which may adversely affect our financial condition or results of operations.

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

All retail apparel merchandise for Men's Wearhouse stores is received into our Houston distribution center, where the inventory is then processed, sorted and either placed in back-stock or shipped to our stores. In the majority of our larger markets, we also have separate hub facilities or space within certain Men's Wearhouse stores used as redistribution facilities for their respective geographical areas. Our tuxedo rental product is also stored in our Houston distribution center and, to a lesser extent, in five additional distribution facilities located in the U.S. and one in Canada. Merchandise for Jos. A. Bank is received and distributed from our distribution centers in Hampstead and Eldersburg, Maryland, while most merchandise for Moores is distributed from our distribution center in Montreal, Quebec. The majority of merchandise for our K&G stores is direct shipped by vendors to the stores while the remainder is transported from our Houston distribution center. All corporate apparel merchandise is received into our distribution facilities located in Houston or California for our U.S. operations and Long Eaton for our UK operations.

We depend in large part on the orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules, proper functioning of our IT and inventory control systems and overall effective management of the distribution centers. Events, such as disruptions in operations due to fire or other catastrophic events, software malfunctions, employee matters or shipping problems, may result in delays in the delivery of merchandise to our stores. For example, given our proximity to the Texas gulf coast, it is possible that a hurricane or tropical storm could damage the Houston distribution center, result in extended power outages or flood roadways into and around the distribution center, any of which would disrupt or delay deliveries to the distribution center and to our stores.

Although we maintain business interruption and property insurance, we cannot assure you that our insurance will be sufficient, or that insurance proceeds will be paid timely to us, in the event any of our distribution centers are damaged or shut down for any reason, or if we incur higher costs and longer lead times in connection with a disruption at one or more of our distribution centers.

We may be negatively impacted by competition.

Both the men's retail and the corporate apparel industries are highly competitive with numerous participants. We compete with traditional department stores, specialty men's clothing stores, online retailers, online tuxedo rental providers, off-price retailers, manufacturer-owned and independently-owned outlet stores and their e-commerce channels, independently owned tuxedo rental stores and other corporate apparel providers. In addition, some of our primary competitors sell their products in stores that are located in the same shopping malls or retail centers as our stores, which results in competition for favorable site locations and lease terms in these shopping malls and retail centers.

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

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

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

Our success depends upon the personal efforts and abilities of our senior management team and other key personnel. Although we believe we have a strong management team with significant industry expertise, we face intense competition in hiring and retaining these personnel and the extended loss of the services of key personnel could have a material adverse effect on our business, financial condition and results of operations.

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

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

Moores, our Canadian subsidiary, conducts most of its business in Canadian dollars ("CAD") but purchases a significant portion of its merchandise in U.S. dollars. The exchange rate between CAD and U.S. dollars has fluctuated historically. Recently, the value of the CAD against the U.S. dollar has weakened. If this valuation does not improve, then the revenues and earnings of our Canadian operations will be reduced when they are translated to U.S. dollars. Also, the value of our Canadian net assets as expressed in U.S. dollars may decline. Moores utilizes foreign currency hedging contracts to limit exposure to changes in U.S. dollar/CAD exchange rates; however, these hedging activities may not adequately protect our Canadian operations from exchange rate risk.

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

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We are subject to import risks, including potential disruptions in supply, changes in duties, tariffs, quotas and export restrictions on imported merchandise, strikes and other events affecting delivery; and economic, political or other problems in countries from or through which merchandise is sourced or imported.

Many of the products sold in our stores and our corporate apparel operations are sourced from various foreign countries. Political or financial instability, war, civil strife, terrorism, trade restrictions, tariffs, currency exchange rates, transport capacity limitations, labor disruptions, strikes and other work stoppages and other factors relating to international trade are beyond our control and could affect the availability and the price of our inventory.

We require our vendors to operate in compliance with applicable laws and regulations and our internal policy requirements. Our business could be adversely affected if our vendors do not comply with applicable legal requirements, our vendor policies and practices generally acceptable in the United States regarding social and ethical matters and acceptable labor and sourcing practices (collectively, "Vendor Requirements").

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

Labor union disputes could impact our business.

Approximately 650 of our employees at the factory located in New Bedford, Massachusetts that manufactures our Joseph Abboud clothing are members of Unite Here, a New England based labor union. Also, approximately 350 employees working in the Jos. A. Bank Hampstead, Maryland tailoring overflow shop and distribution centers are represented by the Mid-Atlantic Regional Joint Board, Local 806 and, approximately 130 Jos. A. Bank sales associates in New York City and four surrounding New York counties are represented by Local 340, New York New Jersey Regional Joint Board, Workers United. Should a labor dispute arise, we could experience shortages in product to sell in our stores or disruptions in services provided at our Jos. A. Bank stores.

Any significant interruption in fabric supply could cause interruptions at our U.S. tailored clothing factory.

The principal raw material used by our U.S. tailored clothing factory is fabric. Most of the factory's supply arrangements are seasonal. The factory does not have any long-term agreements in place with its fabric suppliers; therefore, we cannot assure you that any of such suppliers will continue to do business with us in the future. If a particular mill were to experience a delay due to fire or natural disaster and become unable to meet the factory's supply needs, it could take a period of up to several months for us to arrange for and receive an alternate supply of such fabric. In addition, import and export delays caused, for example, by an extended strike at the port of entry, could prevent the factory from receiving fabric shipped by its suppliers. Therefore, there could be a negative effect on the ability of the factory to meet its production goals if there is an unexpected loss of a supplier of fabric or a long interruption in shipments from any fabric supplier.

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

As a result of our international operations and our sourcing of merchandise and tuxedo rental product from vendors located outside of the United States, we face the possibility of greater losses from a number of risks inherent in doing business in international markets and from a number of factors which are beyond

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our control. Such factors that could harm our results of operations and financial condition include, among other things:

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

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

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

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

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

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

Our business is subject to numerous, varied and changing laws, rules and regulations, the interpretation of which can be uncertain and which may lead to litigation or administrative proceedings.

Our business is subject to rules issued by the payment card industry (PCI), and laws, rules and regulations promulgated by international, national, state and local authorities, including laws, rules and regulations relating to privacy, use of consumer information, credit cards and advertising. In addition, we have over 26,000 employees located in the U.S., Puerto Rico and in multiple foreign countries and, as a result, we are subject to numerous and varying laws, rules and regulations related to employment. All of these laws, rules and regulations and the interpretation thereof are subject to change and often application thereof may be unclear. As a result, from time to time, we are subject to inquiries, investigations, and/or litigation, including class action lawsuits, and administrative actions related to compliance with these laws, rules and regulations. Additionally, we are involved in various routine legal proceedings, including ongoing litigation, incidental to the conduct of our business. Litigation or regulatory developments could adversely affect our business, financial condition and results of operations.

Jos. A. Bank's advertising, marketing and promotional activities have been the subject of review by state regulators.

Jos. A. Bank is subject to a consent decree with the New York Office of the Attorney General regarding certain advertising practices relating to sales promotions in the state of New York. In addition, Jos. A. Bank has in the past been, and may from time to time in the future be, required to respond to inquiries from other State Attorney Generals related to its advertising practices. Although we endeavor to monitor and comply with all applicable laws and regulations to ensure that all advertising, marketing and promotional activities comply with all applicable legal requirements, many of the applicable legal requirements involve subjective judgments. It is possible that any resolution we may reach with any governmental authority may materially impact our current or future planned marketing program and could have an adverse impact on our business.

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

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

We could be subject to losses if we fail to address emerging security threats or detect and prevent privacy and security incidents.

As part of our normal operations, we maintain and transmit confidential information about our customers as well as proprietary information relating to our business operations. Our systems or our third-party service providers' systems may be vulnerable to privacy and security incidents including attacks by unauthorized users, corruption by computer viruses or other malicious software code, emerging cybersecurity risks, inadvertent or intentional release of confidential or proprietary information, or other similar events. The occurrence of any security breach involving the misappropriation, loss or other

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

In this respect, credit card companies are requiring businesses that accept their credit cards to implement pin and chip card recognition systems by October 2015. Failure to have this in place could result in our being responsible to the credit card companies for losses they incur from fraudulent use of credit card information improperly obtained from information captured by us. Because of anticipated shortages in the availability of the necessary pin and chip recognition equipment, we do not anticipate that we will have pin and chip recognition fully installed until the end of 2015. As a result, in the event of a data breach following the October 2015 deadline but before the certification and implementation of this system, we may face liabilities that could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to obtain insurance coverage in the future at current rates.

Our current insurance program is consistent with both our past level of coverage and our risk management policies. While we believe we will be able to obtain liability insurance in the future, because of increased selectivity by insurance providers, we may only be able to obtain such insurance at increased rates and/or with reduced coverage levels, if at all, which could adversely impact our financial condition and results of operations. In addition, we self-insure against a number of risks. Although we believe that our self-insurance program is adequately prepared for such risks, we may face losses that could have an adverse impact on our financial condition and results of operations.

Compliance with changing regulations and standards for accounting, corporate governance, tax and employment laws could result in increased administrative expenses and could adversely impact our business, results of operations and reported financial results.

Our policies, procedures and internal controls are designed to help us comply with all applicable laws, accounting and reporting requirements, regulations and tax requirements, including those imposed by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC and the New York Stock Exchange, as well as applicable employment laws and the health care reform legislation, such as the Affordable Care Act. Shareholder activism, the current political environment, financial reform legislation and the current high level of government intervention and regulatory reform has led, and may continue to lead, to substantial new regulations and compliance obligations. Any changes in regulations, the imposition of additional regulations or the enactment of any new legislation that affects employment and labor, trade, product safety, transportation and logistics, health care, tax, privacy, or environmental issues, among other things, may increase the complexity of the regulatory environment in which we operate and the related cost of compliance. Failure to comply with the various laws and regulations, as well as changes in laws and regulations, could have an adverse impact on our reputation, financial condition or results of operations.

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Changes in accounting standards and estimates could materially impact our results of operations.

Generally accepted accounting principles and the related authoritative guidance for many aspects of our business, including revenue recognition, inventories, goodwill and intangible assets, leases and income taxes, are complex, continually evolving and involve subjective judgments. Changes in these rules or changes in the underlying estimates, assumptions or judgments by our management could have a material adverse effect on our reported results of operations. For example, proposed authoritative guidance for lease accounting, once finalized and enacted, may have a material adverse effect on our results of operations and financial position.

We may recognize impairment on long-lived assets, goodwill and intangible assets.

Periodically, we review our long-lived assets for impairment whenever economic events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We also review our goodwill and intangible assets for indicators of impairment in accordance with applicable accounting rules. Goodwill and intangible assets have significantly increased in light of our Jos. A. Bank acquisition. Significant negative industry or general economic trends, disruptions to our business and unexpected significant changes or planned changes in our use of the assets may result in impairments to our goodwill, intangible assets and other long-lived assets. Any reduction in or impairment of the value of goodwill or intangible assets will result in a charge against earnings, which could have a material adverse impact on our reported results of operations and financial condition.

Our failure to protect our reputation could have a material adverse effect on our brands.

Our ability to maintain our reputation is critical to our brands. Our reputation could be jeopardized if we fail to maintain high standards for merchandise quality and integrity and customer service. Any negative publicity about these types of concerns may reduce demand for our merchandise. Failure to comply with ethical, social, product, labor, health and safety or environmental standards could also jeopardize our reputation and potentially lead to various adverse consumer actions, including boycotts. Public perception about our company as a whole, our products or our stores, whether justified or not, could impair our reputation, involve us in litigation, damage our brand and have a material adverse effect on our business. Failure to comply with local laws and regulations, to maintain an effective system of internal controls and provide accurate and timely financial statement information, or to prevent security breaches could also hurt our reputation. Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations and financial condition, as well as require additional time and resources to rebuild our reputation.

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

In connection with the acquisition of Jos. A. Bank, we entered into a $1.1 billion aggregate principal amount senior secured facility (the "Term Loan Facility") and a $500.0 million asset-based revolving facility (the "ABL Facility" together with the Term Loan Facility, the "Credit Facilities"). In addition, we issued $600.0 million in aggregate principal amount of our 7.0% Senior Notes due 2022 (the "Senior Notes"). After entering into the Credit Facilities and completing the offering of the Senior Notes, our leverage has increased substantially. As of January 31, 2015, our total indebtedness is approximately $1,687.2 million. In addition, we have up to $432.5 million of additional borrowing availability under the ABL Facility, excluding letters of credit totaling approximately $18.5 million issued and outstanding.

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Our leverage could have important consequences for you, including:

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

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the Credit Facilities and the indenture governing the Senior Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and, under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. If new debt is added to our and our subsidiaries' existing debt levels, the related risks that we now face would increase. In addition, the Credit Facilities and the indenture governing the Senior Notes will not prevent us from incurring obligations that do not constitute indebtedness under those agreements. As of January 31, 2015, we have up to $432.5 million of additional borrowing availability under the ABL Facility, excluding letters of credit totaling approximately $18.5 million issued and outstanding.

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

Our ability to make scheduled payments on our indebtedness will depend upon our future operating performance and on our ability to generate cash flow in the future, which is subject to general economic, financial, business, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings, including borrowings under the ABL Facility, will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investment and capital expenditures or to dispose of material assets or operations, seek additional equity capital or restructure or refinance our indebtedness. We may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our

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scheduled debt service obligations. The Credit Facilities and the indenture that governs the Senior Notes contain restrictions on our ability to dispose of assets and use the proceeds from any such disposition.

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

If our indebtedness is accelerated, we may need to refinance all or a portion of our indebtedness before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including the Credit Facilities, on commercially reasonable terms or at all. We cannot assure you that we will be able to obtain sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all.

We rely, to a certain extent, on our subsidiaries to generate cash and, as such, our ability to make payments on our indebtedness will be dependent on cash flow generated by these subsidiaries.

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

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

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

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

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instruments governing our indebtedness, a default under one agreement or instrument could result in a default under, and the acceleration of, our other indebtedness. In addition, the lenders under the Credit Facilities could proceed against the collateral securing that indebtedness.

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

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

We are exposed to interest rate risk through our variable rate borrowings under the Credit Facilities. Borrowings under such facilities bear interest at a variable rate, based on an adjusted LIBOR rate, plus an applicable margin. Interest rates are currently at relatively low levels. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. Assuming all capacity under the ABL Facility is fully drawn, each one percentage point change in interest rates would result in approximately a $5.0 million change in annual interest expense. Assuming the LIBOR rate surpassed the 1% LIBOR floor provision on our Term Loan, we would be exposed to interest rate risk on such Term Loan. To partially mitigate such interest rate risk, we entered into an interest rate swap to exchange variable interest rate payments for fixed interest rate payments for a portion of the outstanding Term Loan balance. After consideration of the swap, each one percentage point change in interest rates would result in an approximate $5.8 million change in annual interest expense on our Term Loan.

If we are not in compliance with our obligations under the registration agreement related to the Senior Notes, then additional interest will accrue on the principal amount of the original notes.

We have agreed to use commercially reasonable efforts to consummate the exchange offer of our Senior Notes by July 13, 2015 or cause the Senior Notes to be registered under the Securities Act to permit resales. If we are not in compliance with our obligations under the registration agreement related to the Senior Notes, then additional interest will accrue on the principal amount of the original notes, in addition to the stated interest on the original notes, from and including the date on which a registration default occurs to but excluding the date on which all registration defaults have been cured. Additional interest will accrue at a rate of 0.25% per annum on the principal amount of the notes during the 90 day period after the occurrence of the registration default and will increase by 0.25% per annum at the end of each subsequent 90 day period. In no event will the rate of additional interest exceed 1.00% per annum on the principal amount.

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

We have available for issuance 2,000,000 shares of preferred stock, par value $.01 per share. Our Board of Directors is authorized to issue any or all of this preferred stock, in one or more series, without any further action on the part of shareholders. The rights of our shareholders may be negatively affected if we issue a series of preferred stock in the future that has preference over our common stock with respect to the payment of dividends or distribution upon our liquidation, dissolution or winding up. See Note 11 of Notes to Consolidated Financial Statements for more information.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.    PROPERTIES

As of January 31, 2015, we operated 1,635 retail apparel and tuxedo rental stores in 50 states, the District of Columbia and Puerto Rico and 123 retail apparel stores in ten Canadian provinces. As of January 31, 2015, our stores aggregated approximately 10.1 million square feet. Almost all of these stores are leased, generally for five to ten year initial terms with one or more renewal options after our initial term. The following tables set forth the location, by state, territory or province, of these stores:

United States
  Men's
Wearhouse
  Men's
Wearhouse
and Tux
  Jos. A.
Bank
  K&G   Total  

California

    81     13     41     1     136  

Texas

    62     1     58     11     132  

Florida

    48     20     48     5     121  

Illinois

    32     16     30     6     84  

New York

    41     9     30     4     84  

Pennsylvania

    28     11     33     3     75  

New Jersey

    18     9     35     5     67  

Virginia

    20     13     28     3     64  

Maryland

    18     11     27     7     63  

Ohio

    24     9     23     5     61  

Michigan

    22     14     15     8     59  

Massachusetts

    20     12     24     3     59  

Georgia

    20     5     26     5     56  

North Carolina

    18     10     25     3     56  

Tennessee

    14     5     12     2     33  

Connecticut

    12     3     15     2     32  

Alabama

    10     4     15     1     30  

Indiana

    12     4     12     2     30  

Colorado

    14     1     11     3     29  

Minnesota

    13     4     9     2     28  

Missouri

    11     4     12     1     28  

South Carolina

    10     5     11     1     27  

Wisconsin

    12     5     8     1     26  

Washington

    15     1     7     2     25  

Arizona

    14     1     9           24  

Louisiana

    10     7     4     3     24  

Kentucky

    6     4     8           18  

Kansas

    6     2     5     1     14  

Utah

    9           4           13  

Iowa

    9           3           12  

Oklahoma

    5           6     1     12  

Oregon

    11           1           12  

Mississippi

    5     1     4           10  

Nevada

    6     1     3           10  

New Hampshire

    5     1     4           10  

Arkansas

    5           4           9  

District of Columbia

    2           6           8  

Nebraska

    4           4           8  

Rhode Island

    1     3     4           8  

Delaware

    3           3           6  

New Mexico

    4           2           6  

West Virginia

    2           3           5  

Idaho

    2           2           4  

South Dakota

    2     1     1           4  

Maine

    2           1           3  

Montana

    2                       2  

North Dakota

    2                       2  

Puerto Rico

    2                       2  

Alaska

    1                       1  

Hawaii

    1                       1  

Vermont

    1                       1  

Wyoming

    1                       1  

Total

    698     210     636     91     1,635  

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Canada
  Moores  

Ontario

    52  

Quebec

    24  

British Columbia

    16  

Alberta

    15  

Manitoba

    5  

Nova Scotia

    4  

New Brunswick

    3  

Saskatchewan

    2  

Newfoundland

    1  

Prince Edward Island

    1  

Total

    123  

We own or lease properties in various parts of the U.S. and Canada to facilitate the distribution of retail and rental product to our stores. We own or lease properties in Houston, Texas, Hampstead and Eldersburg, Maryland and, to facilitate the distribution of our corporate apparel product, various parts of the UK. Total leased and owned space for distribution is approximately 2.7 million square feet and 2.1 million square feet, respectively.

In addition, we have primary office locations in Houston, Texas, Fremont, California and Hampstead, Maryland with additional satellite offices in other parts of the U.S., Canada and Europe. We lease approximately 0.5 million square feet and lease approximately 0.2 million square feet of office space.

ITEM 3.    LEGAL PROCEEDINGS

We are involved in various routine legal proceedings, including ongoing litigation. Management believes that none of these matters will have a material adverse effect on our financial position, results of operations or cash flows. See Note 17 of Notes to Consolidated Financial Statements for a discussion of our legal proceedings.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

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PART II

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

Our common stock is traded on the New York Stock Exchange under the symbol "MW". The following table sets forth, on a per share basis for the periods indicated, the high and low sale prices per share for our common stock as reported by the New York Stock Exchange and the quarterly dividends declared on each share of common stock:

 
  High   Low   Dividend  

Fiscal Year 2014

                   

First quarter

  $ 58.80   $ 41.89   $ 0.18  

Second quarter

    59.07     47.08     0.18  

Third quarter

    55.45     43.13     0.18  

Fourth quarter

    48.86     39.77     0.18  

Fiscal Year 2013

   
 
   
 
   
 
 

First quarter

  $ 35.30   $ 27.48   $ 0.18  

Second quarter

    41.02     33.58     0.18  

Third quarter

    47.29     32.46     0.18  

Fourth quarter

    52.72     41.31     0.18  

On March 17, 2015, there were approximately 925 shareholders of record and approximately 10,000 beneficial shareholders of our common stock.

The cash dividend of $0.18 per share declared by our Board of Directors (the "Board") in January 2015 is payable on March 27, 2015 to shareholders of record on March 17, 2015. The dividend payout is approximately $9.0 million.

The Credit Facilities and the indenture governing the Senior Notes contain covenants that, among other things, limit the Company's ability to pay dividends on the Company's common stock in excess of $10.0 million per quarter. See Note 4 of Notes to Consolidated Financial Statements for additional information on financing arrangements.

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

Issuer Purchases of Equity Securities

We did not purchase any of our equity securities during the fourth quarter of fiscal 2014. In March 2013, the Board approved a $200.0 million share repurchase program for our common stock, which amended and replaced the Company's then existing share repurchase program authorized in January 2011. At January 31, 2015, the remaining balance available under the Board's March 2013 authorization was $48.0 million.

Performance Graph

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

The following graph compares, as of each of the dates indicated, the percentage change in the Company's cumulative total shareholder return on the Common Stock with the cumulative total return of the S&P 500 Index, a subset of companies in the S&P Retail Select Index ("Select Group") and the Dow Jones US

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Apparel Retailers Index. Next year we do not intend to include the Dow Jones US Apparel Retailers Index in our comparison of cumulative total return. We are changing to a subset of companies in the S&P Retail Select Index because the performance of this subset of companies may impact certain of our performance units granted in 2014 and, therefore, we believe it is a more useful comparison. See Note 11 of Notes to Consolidated Financial Statements for additional information on our performance unit grants.

The graph assumes that the value of the investment in our Common Stock and each index was $100 at January 30, 2010 and that all dividends paid by those companies included in the indices were reinvested.

GRAPHIC

 
  January 30,
2010
  January 29,
2011
  January 28,
2012
  February 2,
2013
  February 1,
2014
  January 31,
2015
 

Measurement Period (Fiscal Year Covered)

                                     

The Men's Wearhouse, Inc. 

  $ 100.00   $ 132.17   $ 176.78   $ 159.02   $ 256.51   $ 251.82  

S&P 500

    100.00     122.19     127.34     148.71     180.70     206.41  

Select Group(1)

    100.00     126.93     159.23     207.65     233.79     278.77  

Dow Jones US Apparel Retailers

    100.00     124.05     147.67     184.91     210.27     254.63  

(1)
For purposes of this graph, the select group currently consists of the following companies: Abercrombie & Fitch Co., Aeropostale, Inc., American Eagle Outfitters, Inc., ANN, Inc., Ascena Retail Group, Inc., Brown Shoe Co., Inc., Chico's FAS, Inc., DSW, Inc., Express, Inc., Finish Line, Inc., Foot Locker, Inc., Francesca's Holdings Corporation, Genesco, Inc., Guess?, Inc., L Brands, Inc., Ross Stores, Inc., Stage Stores, Inc., The Buckle, Inc., The Cato Corporation, The Children's Place, Inc., The Gap, Inc., The TJX Companies, Inc., Urban Outfitters, Inc. and Zumiez, Inc.

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

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ITEM 6.    SELECTED FINANCIAL DATA

The following selected statement of (loss) earnings, balance sheet and cash flow information for the fiscal years indicated has been derived from our audited consolidated financial statements. The Selected Financial Data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and notes thereto. References herein to years are to the Company's 52-week or 53-week fiscal year, which ends on the Saturday nearest January 31 in the following calendar year. For example, references to "2014" mean the fiscal year ended January 31, 2015. All fiscal years for which financial information is included herein had 52 weeks with the exception of the fiscal year ended February 2, 2013 which had 53 weeks.

As a result of the acquisitions of Jos. A. Bank on June 18, 2014, JA Holding on August 6, 2013 and Dimensions and Alexandra on August 6, 2010, the statements of (loss) earnings data and cash flow information below for the years ended January 31, 2015, February 1, 2014 and January 29, 2011, include the results of operations and cash flows, since each respective acquisition date. In addition, the balance sheet information below as of January 31, 2015, February 1, 2014 and January 29, 2011 includes the fair values of the assets acquired and liabilities assumed as of the acquisition date for Jos. A. Bank, JA Holding and Dimensions and Alexandra, respectively.

 
  2014   2013   2012   2011   2010  
 
  (Dollars and shares in thousands, except per share and per
square foot data)

 

Statement of (Loss) Earnings Data:

                               

Total net sales

  $ 3,252,548   $ 2,473,233   $ 2,488,278   $ 2,382,684   $ 2,102,664  

Total gross margin

    1,358,614     1,089,010     1,108,148     1,048,927     898,433  

Operating income

    73,210     129,628     198,568     185,432     101,671  

Net (loss) earnings attributable to common shareholders

    (387 )   83,791     131,716     120,601     67,697  

Per Common Share Data:

                               

Diluted net (loss) earnings per common share attributable to common shareholders

  $ (0.01 ) $ 1.70   $ 2.55   $ 2.30   $ 1.27  

Cash dividends declared

  $ 0.72   $ 0.72   $ 0.72   $ 0.54   $ 0.39  

Weighted-average common shares outstanding—diluted

    47,899     49,162     51,026     51,692     52,853  

Operating Information:

                               

Percentage increase/(decrease) in comparable sales(1):

                               

Men's Wearhouse

    3.9 %   0.7 %   4.8 %   9.1 %   4.7 %

Moores

    8.6 %   (4.1 )%   1.5 %   4.5 %   2.2 %

K&G

    3.7 %   (5.5 )%   (4.3 )%   3.6 %   (1.5 )%

Average net sales per square foot(2):

   
 
   
 
   
 
   
 
   
 
 

Men's Wearhouse

  $ 382   $ 386   $ 389   $ 376   $ 344  

Moores

  $ 377   $ 345   $ 361   $ 358   $ 343  

K&G

  $ 152   $ 145   $ 153   $ 157   $ 149  

Average square footage(3):

   
 
   
 
   
 
   
 
   
 
 

Men's Wearhouse

    5,667     5,710     5,721     5,705     5,673  

Men's Wearhouse and Tux

    1,387     1,387     1,372     1,384     1,381  

Jos. A. Bank

    4,595                  

Moores

    6,025     6,358     6,362     6,339     6,306  

K&G

    23,784     23,710     23,704     23,750     23,472  

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  2014   2013   2012   2011   2010  
 
  (Dollars in thousands)
 

Number of retail stores:

                               

Open at beginning of the period

    1,124     1,143     1,166     1,192     1,259  

Acquired from Jos. A. Bank(4)

    624                  

Opened

    60     25     37     25     10  

Closed

    (50 )   (44 )   (60 )   (51 )   (77 )

Open at end of the period

    1,758     1,124     1,143     1,166     1,192  

Men's Wearhouse

    698     661     638     607     585  

Men's Wearhouse and Tux

    210     248     288     343     388  

Jos. A. Bank(4)

    636                  

Moores

    123     121     120     117     117  

K&G

    91     94     97     99     102  

Total

    1,758     1,124     1,143     1,166     1,192  

Cash Flow Information:

                               

Capital expenditures

  $ 96,420   $ 108,200   $ 121,433   $ 91,820   $ 58,868  

Depreciation and amortization

    112,659     88,749     84,979     75,968     75,998  

Repurchases of common stock

    251     152,129     41,296     63,988     144  

 

 
  January 31,
2015
  February 1,
2014
  February 2,
2013
  January 28,
2012
  January 29,
2011
 

Balance Sheet Information:

                               

Cash and cash equivalents

  $ 62,261   $ 59,252   $ 156,063   $ 125,306   $ 136,371  

Inventories

    938,336     599,486     556,531     572,502     486,499  

Working capital

    758,026     479,808     560,970     544,108     497,352  

Total assets

    3,546,758     1,555,230     1,496,347     1,405,952     1,320,318  

Long-term debt, including current portion

    1,687,232     97,500              

Total equity

    969,789     1,023,149     1,109,235     1,031,819     983,853  

(1)
Comparable sales data is calculated by excluding the net sales of a store for any month of one period if the store was not owned or open throughout the same month of the prior period and, beginning in 2013, include e-commerce net sales. The inclusion of e-commerce net sales did not have a significant effect on comparable sales. Comparable sales percentages for Moores are calculated using Canadian dollars.

(2)
Average net sales per square foot is calculated by dividing total square footage for all stores owned or open the entire year into net sales for those stores. The calculation for Men's Wearhouse includes Men's Wearhouse and Tux stores. The calculation for Moores is based upon the Canadian dollar. For fiscal 2012, the calculation excludes total sales for the 53rd week.

(3)
Average square footage is calculated by dividing the total square footage for all stores open at the end of the period by the number of stores open at the end of such period.

(4)
Excludes 15 franchise stores.

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

General

The Men's Wearhouse, Inc. is a men's specialty apparel retailer offering suits, suit separates, sport coats, slacks, business casual, sportswear, outerwear, dress shirts, shoes and accessories and tuxedo rentals. We offer our products and services through multiple channels including The Men's Wearhouse/Men's Wearhouse and Tux, Jos. A. Bank, Moores Clothing for Men, K&G and the internet at www.menswearhouse.com, www.josbank.com, and www.josephabboud.com. Our stores are located throughout the U.S., Puerto Rico and Canada and carry a wide selection of exclusive and non-exclusive merchandise brands. In addition, we offer our customers alteration services and most of our K&G stores also offer ladies' career apparel, sportswear, accessories and shoes, and children's apparel. We also conduct retail dry cleaning, laundry and heirlooming operations through MW Cleaners in Texas.

Additionally, we operate two corporate apparel providers—our UK-based operations, the largest provider in the UK under the Dimensions, Alexandra and Yaffy brands, and our Twin Hill operations in the U.S. These operations provide corporate clothing uniforms and workwear to workforces through multiple channels including managed corporate accounts, catalogs and the internet at www.dimensions.co.uk and www.alexandra.co.uk.

On June 18, 2014, we acquired all of the outstanding common stock of Jos. A. Bank, a men's specialty apparel retailer, for $65.00 per share in cash, or total consideration of approximately $1.8 billion. The acquisition was funded primarily by a $1.1 billion term loan facility, the issuance of $600.0 million in unsecured senior notes and borrowings under an asset-based credit facility (the "ABL"). Borrowings under the ABL facility were subsequently repaid in full promptly following the close of the Jos. A. Bank acquisition using the cash acquired from Jos. A. Bank. Based on the manner in which we manage, evaluate and internally report our operations, we determined that Jos. A. Bank is an operating segment that meets the criteria for aggregation into our retail reportable segment.

On August 6, 2013, we acquired JA Holding, the parent company of the American clothing brand Joseph Abboud® and a U.S. tailored clothing factory, for $94.9 million in cash consideration. JA Holding is a component of our Men's Wearhouse brand and therefore has been included in our retail reportable segment.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information and disclosures regarding our reportable segments and the discussion included in "Results of Operations" below.

During 2014, we completed our review of strategic alternatives for our K&G operations. As part of the review, we considered offers to acquire the K&G business, none of which were acceptable. We concluded that continuing to operate K&G as a wholly-owned subsidiary of the Company and part of the Company's overall portfolio will provide the most value to our shareholders.

We follow the standard fiscal year of the retail industry, which is a 52-week or 53-week period ending on the Saturday closest to January 31. Fiscal year 2014 ended on January 31, 2015, fiscal year 2013 ended on February 1, 2014 and fiscal year 2012 ended on February 2, 2013. Fiscal year 2014 and 2013 included 52 weeks and fiscal year 2012 included 53 weeks.

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Overview

Highlights of our performance for the year ended January 31, 2015, which includes the results of Jos. A. Bank from June 18, 2014, as well as acquisition and integration costs, non-operating items and purchase accounting adjustments compared to the prior year ended February 1, 2014 are presented below, followed by a more comprehensive discussion under "Results of Operations":

During fiscal 2014, we opened 60 stores (41 Men's Wearhouse stores, 16 Jos. A. Bank stores (since the date we acquired Jos. A. Bank), and three Moores stores) and closed 50 stores (38 Men's Wearhouse and Tux stores, four Men's Wearhouse stores, four Jos. A. Bank stores, three K&G stores and one Moores store).

In fiscal 2015, we plan to open approximately 25 Men's Wearhouse stores, three to six Jos. A. Bank stores and three Moores stores and to expand and/or relocate approximately 13 existing Men's Wearhouse stores, four existing Jos. A. Bank stores and three existing Moores stores. We also plan to close one Men's Wearhouse store, 10 to 12 Jos. A. Bank stores, one Moores store, four to five K&G stores and approximately 14 to 16 Men's Wearhouse and Tux stores as their lease terms expire or acceptable lease termination arrangements can be established.

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Results of Operations

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

 
  Fiscal Year(1)  
 
  2014   2013   2012  

Net sales:

                   

Retail clothing product

    72.7 %   67.4 %   68.0 %

Tuxedo rental services

    13.6     16.7     16.3  

Alteration and other services

    5.7     5.9     6.1  

Total retail sales

    92.1     90.0     90.4  

Corporate apparel clothing product

    7.9     10.0     9.6  

Total net sales

    100.0 %   100.0 %   100.0 %

Cost of sales(2):

                   

Retail clothing product

    46.4     44.5     44.7  

Tuxedo rental services

    19.2     15.6     13.9  

Alteration and other services

    71.8     77.4     75.3  

Occupancy costs

    13.2     13.1     12.6  

Total retail cost of sales

    57.2     54.4     53.8  

Corporate apparel clothing product

    70.2     70.2     71.1  

Total cost of sales

    58.2     56.0     55.5  

Gross margin(2):

                   

Retail clothing product

    53.6     55.5     55.3  

Tuxedo rental services

    80.8     84.4     86.1  

Alteration and other services

    28.2     22.6     24.7  

Occupancy costs

    (13.2 )   (13.1 )   (12.6 )

Total retail gross margin

    42.8     45.6     46.2  

Corporate apparel clothing product

    29.8     29.8     28.9  

Total gross margin

    41.8     44.0     44.5  

Advertising expense

    5.2     4.1     3.8  

Selling, general and administrative expenses

    34.3     34.3     32.8  

Goodwill impairment charge

    0.0     0.4     0.0  

Operating income

    2.3     5.2     8.0  

Interest income

    0.0     0.0     0.0  

Interest expense

    (2.0 )   (0.1 )   (0.1 )

Loss on extinguishment of debt

    (0.1 )   0.0     0.0  

Earnings before income taxes

    0.2     5.1     7.9  

Provision for income taxes

    0.2     1.7     2.6  

Net (loss) earnings including non-controlling interest

    (0.0 )   3.4     5.3  

Net earnings attributable to non-controlling interest

    (0.0 )   (0.0 )   (0.0 )

Net (loss) earnings attributable to common shareholders

    (0.0 )%   3.4 %   5.3 %

(1)
Percentage line items may not sum to totals due to the effect of rounding.

(2)
Calculated as a percentage of related sales.

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2014 Compared with 2013

Total net sales increased $779.3 million, or 31.5%, to $3,252.5 million for fiscal 2014 as compared to fiscal 2013.

Total retail sales increased $768.8 million, or 34.5%, to $2,995.2 million for fiscal 2014 as compared to fiscal 2013 due mainly to $684.0 million of net sales from Jos. A. Bank since the date of acquisition as well as increases in retail clothing product revenues of $59.9 million and tuxedo rental services revenue of $21.8 million from our other brands. The net increase is attributable to the following:

(in millions)
  Amount attributed to
$ 684.0   Increase in net sales from Jos. A. Bank.
  58.2   3.9% increase in comparable sales at Men's Wearhouse/Men's Wearhouse and Tux.
  19.4   8.6% increase in comparable sales at Moores(1).
  11.4   3.7% increase in comparable sales at K&G.
  16.4   Increase from net sales of stores opened in 2013, relocated stores and expanded stores not yet included in comparable sales(2).
  26.1   Increase in net sales from new stores opened in 2014(2).
  (27.1 ) Decrease in net sales resulting from closed stores.
  (16.4 ) Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
  (3.2 ) Other(2).
$ 768.8   Increase in total retail sales.

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

(2)
Excludes Jos. A. Bank.

Comparable sales for Men's Wearhouse/Men's Wearhouse and Tux, Moores and K&G exclude the net sales of a store for any month of one period if the store was not open throughout the same month of the prior period and include e-commerce net sales. The inclusion of e-commerce net sales did not have a significant effect on comparable sales.

The increase at Men's Wearhouse/Men's Wearhouse and Tux resulted primarily from increased average unit retails (net selling prices) and average transactions per store that more than offset decreased units sold per transaction. The increase at Moores was driven by increased average unit retails, units sold per transaction and average transactions per store. The increase at K&G was due to increased units sold per transaction and average transactions per store which more than offset a decrease in average unit retails. At Men's Wearhouse/Men's Wearhouse and Tux, tuxedo rental service comparable sales increased 6.4% primarily due to an increase in rental rates and a slight increase in unit rentals.

Total corporate apparel clothing product sales increased $10.6 million to $257.4 million for fiscal 2014 as compared to fiscal 2013. UK corporate apparel sales increased $7.7 million due mainly to the impact of a stronger pound Sterling this year compared to last year. U.S. corporate apparel sales increased $2.9 million due primarily to increased sales from existing customer programs.

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

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distribution costs are not included in determining our tuxedo rental services gross margin as these costs are included in SG&A expenses.

Our total gross margin increased $269.6 million, or 24.8%, to $1,358.6 million for fiscal 2014 as compared to fiscal 2013. Total retail segment gross margin increased $266.4 million or 26.2% from fiscal 2013 to $1,281.9 million in fiscal 2014. The dollar increase in gross margin was primarily driven by $227.1 million of gross margin generated by Jos. A. Bank as well as by higher sales from our other brands. As a result of the purchase price allocation for the Jos. A. Bank acquisition, a preliminary purchase accounting adjustment of $34.4 million was recorded for the step up of inventory to its fair value. During fiscal 2014, $33.5 million of the inventory valuation step up was recognized and negatively impacted gross margin results. We expect the remaining $0.9 million of step up in inventory to be charged to cost of sales in the first half of fiscal 2015.

For the retail segment, total gross margin as a percentage of related sales decreased from 45.6% in fiscal 2013 to 42.8% in fiscal 2014 driven primarily by a lower gross margin as a percentage of sales for Jos. A. Bank, which includes the recognition of the inventory step up at Jos. A. Bank, partially offset by a higher retail clothing product gross margin rate at our other brands. In addition, retail segment gross margin was impacted by a decrease in the tuxedo rental services gross margin rate primarily due to a $10.6 million charge to rationalize our tuxedo inventory to allow for more productive rental styles, as well as increased royalty expenses.

Occupancy costs increased $104.6 million primarily due to Jos. A. Bank occupancy costs. Occupancy costs as a percentage of retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, increased slightly from 13.1% in fiscal 2013 to 13.2% in fiscal 2014, primarily due to the impact of Jos. A. Bank's occupancy costs, which are higher as a percentage of sales than our other brands.

Corporate apparel gross margin increased $3.2 million or 4.4% from fiscal 2013 to $76.7 million in fiscal 2014. For the corporate apparel segment, total gross margin as a percentage of related sales was flat at 29.8% for both fiscal 2013 and 2014.

Advertising expense increased to $168.3 million in fiscal 2014 from $101.1 million in fiscal 2013, an increase of $67.2 million or 66.5%. The increase was primarily driven by Jos. A. Bank advertising costs as well as advertising expense related to the rollout of Joseph Abboud® merchandise. As a percentage of total net sales, these expenses increased from 4.1% in fiscal 2013 to 5.2% in fiscal 2014.

SG&A expenses increased to $1,117.1 million in fiscal 2014 from $848.8 million in fiscal 2013, an increase of $268.3 million or 31.6%. The dollar increase in SG&A expenses was driven by an increase in expenses related to acquisition, integration and non-operating costs primarily related to Jos. A. Bank, a licensee arbitration award related to JA Holding, other cost reduction initiatives, as well as Jos. A. Bank operating expenses, which includes amortization of intangible assets recorded in connection with the Jos. A. Bank acquisition. As a percentage of total net sales, these expenses remained flat at 34.3% in both fiscal 2013

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and 2014. The components of the changes in SG&A expenses as a percentage of total net sales and the related dollar changes were as follows:

 
  %   in millions   Attributed to
      1.6   $ 63.0   Increase in acquisition, integration and non-operating costs as a percentage of sales from 1.2% in fiscal 2013 to 2.8% in fiscal 2014. For fiscal 2014, these costs totaled $92.4 million, related primarily to Jos. A. Bank acquisition and integration costs and other cost reduction initiatives, partially offset by a $3.4 million favorable litigation settlement. For fiscal 2013, such costs totaled $29.4 million due to acquisition and integration costs related to JA Holding, costs related to strategic projects, separation costs associated with former executives, asset impairment charges, K&G e-commerce closure costs and a New York store related closure costs, partially offset by a gain of $2.2 million on the sale of an office building.
      1.3     42.6   $42.6 million of costs for a JA Holding licensee arbitration award in fiscal 2014 with no corresponding amount in the prior year.
      0.2     6.1   Increase in amortization of intangible assets as a percentage of sales from 0.1% in fiscal 2013 to 0.3% in fiscal 2014. Amortization of intangible assets on an absolute dollar basis increased $6.1 million primarily due to intangible assets recorded in connection with the Jos. A. Bank acquisition.
      (0.7 )   78.4   Decrease in store salaries as a percentage of sales from 12.9% in fiscal 2013 to 12.2% in fiscal 2014. Store salaries on an absolute dollar basis increased $78.4 million primarily due to the impact of Jos. A. Bank store salaries and higher commissions at our other brands.
      (2.4 )   78.2   Decrease in other SG&A expenses as a percentage of sales from 20.1% in fiscal 2013 to 17.7% in fiscal 2014. On an absolute dollar basis, other SG&A expenses increased $78.2 million primarily due to the inclusion of Jos. A. Bank's other SG&A expenses.
        $ 268.3   Total

In the retail segment, SG&A expenses as a percentage of related net sales decreased from 35.3% in fiscal 2013 to 35.1% in fiscal 2014. On an absolute dollar basis, retail segment SG&A expenses increased $265.6 million primarily due to acquisition, integration and non-operating costs, costs related to the JA Holding licensee arbitration award and operating expenses for Jos. A. Bank, which includes amortization of intangible assets recorded in connection with the Jos. A. Bank acquisition and other cost reduction initiatives.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales remained flat at 25.2% in both fiscal 2013 and 2014. Corporate apparel segment SG&A expenses increased $2.7 million primarily due to higher UK operating expenses driven by the impact of a stronger pound Sterling this year compared to last year.

Interest expense increased to $66.0 million in fiscal 2014 from $3.2 million in fiscal 2013 primarily due to interest expense on borrowings entered into in connection with the Jos. A. Bank acquisition.

Our effective income tax rate increased from 33.6% for fiscal 2013 to 101.8% for fiscal 2014 primarily due to an increase in permanent items as a percent of pre-tax earnings, mainly consisting of non-deductible transaction costs related to the Jos. A. Bank acquisition. Furthermore, the foreign jurisdictions in which we operate had profitability which require us to provide for income tax. Thus, the combination of tax expense being recorded on U.S. activity (due mainly to the non-deductible transaction costs), and for tax expense

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from our foreign operations, coupled with low book income results in a high effective tax rate for fiscal 2014 compared to fiscal 2013.

These factors resulted in a net loss attributable to common shareholders of $0.4 million for fiscal 2014, a decrease of $84.2 million from net earnings of $83.8 million for fiscal 2013.

2013 Compared with 2012

Total net sales decreased $15.0 million, or 0.6%, to $2,473.2 million for fiscal 2013 as compared to fiscal 2012.

Total retail sales decreased $22.4 million, or 1.0%, to $2,226.4 million for fiscal 2013 as compared to fiscal 2012 due mainly to a $23.7 million decrease in retail clothing product revenues and a $4.1 million decrease in alteration and other services offset by a $5.4 million increase in tuxedo rental services revenues. The net decrease in total retail sales is attributable to the following:

(in millions)
  Amount attributed to
$ 10.2   0.7% increase in comparable sales at Men's Wearhouse / Men's Wearhouse and Tux.
  (10.1 ) 4.1% decrease in comparable sales at Moores(1).
  (18.7 ) 5.5% decrease in comparable sales at K&G.
  (25.8 ) Impact of 53rd week in 2012 (based on trailing 52 weeks in 2012).
  32.0   Increase from net sales of stores opened in 2012, relocated stores and expanded stores not yet included in comparable sales.
  18.4   Increase in net sales from new stores opened in 2013.
  (23.8 ) Decrease in net sales resulting from closed stores.
  (10.3 ) Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
  5.7   Other.
$ (22.4 ) Decrease in total retail sales.

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

Comparable sales for Men's Wearhouse/Men's Wearhouse and Tux, Moores and K&G exclude the net sales of a store for any month of one period if the store was not open throughout the same month of the prior period and, beginning in 2013, include e-commerce net sales. The inclusion of e-commerce net sales did not have a significant effect on comparable sales.

The increase at Men's Wearhouse/Men's Wearhouse and Tux resulted primarily from increased average unit retails that more than offset decreased units sold per transaction and average transactions per store. The decrease at Moores was driven by decreased units sold per transaction, average unit retails and average transactions per store. The decrease at K&G was due to decreased average transactions per store and average unit retails which more than offset an increase in units sold per transaction. Tuxedo rental service revenues increased primarily due to increased unit rental rates which more than offset decreased unit rentals and tuxedo fees.

Total corporate apparel clothing product sales increased $7.4 million to $246.8 million for fiscal 2013 as compared to fiscal 2012. UK corporate apparel sales decreased $0.8 million due mainly to the impact of a weaker pound Sterling for 2013 as compared to 2012, which more than offset an increase in sales from existing customer programs. U.S. corporate apparel sales increased $8.2 million due primarily to increased sales from new customer rollouts and existing customer programs as well as increased catalog sales.

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

Our total gross margin decreased $19.1 million, or 1.7%, to $1,089.0 million for fiscal 2013 as compared to fiscal 2012. Total retail segment gross margin decreased $23.5 million or 2.3% from fiscal 2012 to $1,015.5 million in fiscal 2013. For the retail segment, total gross margin as a percentage of related sales decreased from 46.2% in fiscal 2012 to 45.6% in fiscal 2013 driven primarily by a decrease in tuxedo rental services gross margin rate due to increased royalty expenses and higher per unit rental costs. This was partially offset by a slight increase in retail clothing product gross margin rate due to increased average unit retails.

Occupancy costs as a percentage of retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, increased from 12.6% in fiscal 2012 to 13.1% in fiscal 2013 due to deleveraging of occupancy expenses caused by our decreased retail sales. On an absolute dollar basis, occupancy costs increased $7.5 million primarily due to higher rent and depreciation expense.

Corporate apparel gross margin increased $4.3 million or 6.3% from fiscal 2012 to $73.5 million in fiscal 2013. For the corporate apparel segment, total gross margin as a percentage of related sales increased from 28.9% in fiscal 2012 to 29.8% in fiscal 2013 driven by higher sales and changes in the sales mix at our U.S. operations.

Advertising expenses increased to $101.1 million in fiscal 2013 from $94.4 million in fiscal 2012, an increase of $6.7 million or 7.1%. As a percentage of total net sales, these expenses increased from 3.8% in fiscal 2012 to 4.1% in fiscal 2013.

SG&A expenses increased to $848.8 million in fiscal 2013 from $815.2 million in fiscal 2012, an increase of $33.6 million or 4.1%. As a percentage of total net sales, these expenses increased from 32.8% in fiscal

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2012 to 34.3% in fiscal 2013. The components of this 1.5% net increase in SG&A expenses as a percentage of total net sales and the related absolute dollar changes were as follows:

 
  %   in millions   Attributed to
      1.7   $ 40.2   Increase in other SG&A expenses as a percentage of sales from 19.6% in fiscal 2012 to 21.3% in fiscal 2013. On an absolute dollar basis, other SG&A expenses increased $40.2 million with $10.8 million primarily due to increased employee related and non-store payroll costs and $29.4 million due to acquisition and integration costs related to JA Holding, costs related to strategic projects, separation costs associated with former executives, asset impairment charges, K&G e-commerce closure costs and a New York store related closure costs, partially offset by a gain of $2.2 million on the sale of an office building.
      (0.2 )   (6.6 ) Decrease in store salaries as a percentage of sales from 13.1% in fiscal 2012 to 12.9% in fiscal 2013. Store salaries on an absolute dollar basis decreased $6.6 million primarily due to decreased store sales support salaries and decreased store bonuses.
      1.5   $ 33.6   Total

In the retail segment, SG&A expenses as a percentage of related net sales increased from 33.4% in fiscal 2012 to 35.3% in fiscal 2013. On an absolute dollar basis, retail segment SG&A expenses increased $34.5 million primarily due to increased employee related and non-store payroll costs, acquisition and integration costs related to JA Holding, costs related to strategic projects, separation costs associated with former executives, K&G e-commerce closure costs and a New York store related closure costs, partially offset by a gain on the sale of an office building.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales decreased from 26.3% in fiscal 2012 to 25.2% in fiscal 2013. Corporate apparel segment SG&A expenses decreased $0.9 million primarily due to reduced UK operating expenses partially offset by higher U.S. operating expenses and separation costs associated with a former executive.

During fiscal 2013, based on estimates provided to us by market participants during our review of strategic alternatives for the K&G brand, we concluded that the carrying value of the K&G brand exceeded its fair value. Based on further analysis, it was determined that the entire carrying value of K&G's goodwill was impaired resulting in a non-cash pre-tax goodwill impairment charge of $9.5 million.

Interest expense increased to $3.2 million in fiscal 2013 from $1.5 million in fiscal 2012 primarily due to interest expense related to our previous term loan facility entered into in August 2013 to fund the JA Holding acquisition.

Our effective income tax rate increased from 33.2% for fiscal 2012 to 33.6% for fiscal 2013 mainly due to the reduced tax benefit related to audit settlements, closed statutes of limitation and a one-time adjustment in the prior year.

These factors resulted in net earnings attributable to common shareholders of $83.8 million or 3.4% of total net sales for fiscal 2013, a decrease of $47.9 million or 36.4% from net earnings of $131.7 million or 5.3% of total net sales for fiscal 2012.

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Liquidity and Capital Resources

At January 31, 2015 and February 1, 2014, cash and cash equivalents totaled $62.3 million and $59.3 million, respectively. At January 31, 2015, cash and cash equivalents held by foreign subsidiaries totaled $39.1 million. Under current tax laws and regulations, if cash and cash equivalents held outside the U.S. are repatriated to the U.S., in certain circumstances we may be subject to additional U.S. income taxes and foreign withholding taxes. We currently do not intend to repatriate amounts held by foreign subsidiaries.

We had working capital of $758.0 million and $479.8 million at January 31, 2015 and February 1, 2014, respectively. The increase in working capital of $278.2 million at January 31, 2015 compared to February 1, 2014 is due mainly to the acquisition of Jos. A. Bank. Our primary sources of working capital are cash flows from operations and available borrowings under our financing arrangements, as described below.

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

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

We used the net proceeds from the Term Loan, the offering of the Senior Notes and the net proceeds from $340.0 million drawn on the ABL Facility to pay the approximately $1.8 billion purchase price for the acquisition of Jos. A. Bank and to repay all of our obligations under our Third Amended and Restated Credit Agreement, dated as of April 12, 2013 (as amended the "Previous Credit Agreement"), including $95.0 million outstanding under the Previous Credit Agreement as well as settlement of the then existing interest rate swap. The loans under the ABL Facility were subsequently repaid in full promptly following the closing of the Jos. A. Bank acquisition using the cash acquired from Jos. A. Bank.

The Term Loan is guaranteed, jointly and severally, by certain of our U.S. subsidiaries and will mature on June 18, 2021. The interest rate on the Term Loan is based on the 3-month LIBOR rate, which was approximately 0.25% at January 31, 2015. However, the Term Loan interest rate is subject to a LIBOR floor of 1% per annum, plus the applicable margin which is currently 3.50%, resulting in a total interest rate of 4.50% at January 31, 2015. To minimize the impact of changes in interest rates on our interest payments under the Term Loan, in January 2015, we entered into an interest rate swap agreement to swap variable-rate interest payments for fixed-rate interest payments on a notional amount of $520.0 million, effective in February 2015. The interest rate swap agreement matures in August 2018 and has periodic interest settlements. Under this interest rate swap agreement, we receive a floating rate based on the 3-month LIBOR rate and pay a fixed rate of 5.03% (including the applicable margin of 3.50%) on the outstanding notional amount. As of January 31, 2015, there was approximately $1,087.2 million issued and outstanding under the Term Loan.

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The ABL Facility provides for a senior secured revolving credit facility of $500.0 million, with possible future increases to $650.0 million under an expansion feature that matures on June 18, 2019 and is guaranteed, jointly and severally, by certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices: (i) adjusted LIBO rate, (ii) Canadian Dollar Offered Rate ("CDOR") rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the federal funds effective rate plus 0.5% or the adjusted LIBO rate for a one-month period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 2.00%. The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.50% to 2.00%, and a fee on unused commitments which ranges from 0.25% to 0.375%. As of January 31, 2015, there were no borrowings outstanding under the ABL Facility.

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

We utilize letters of credit primarily to secure inventory purchases and as collateral for workers compensation claims. At January 31, 2015, letters of credit totaling approximately $18.5 million were issued and outstanding. Borrowings available under the ABL Facility as of January 31, 2015 were $432.5 million.

The Senior Notes are guaranteed, jointly and severally, on an unsecured basis by certain of our U.S. subsidiaries. The Senior Notes and the related guarantees are senior unsecured obligations of the Company and the guarantors, respectively, and will rank equally with all of the Company's and each guarantor's present and future senior indebtedness. The Senior Notes will mature on July 1, 2022. Interest on the Senior Notes are payable on January 1 and July 1 of each year. Payments began January 1, 2015. At January 31, 2015, there was $600.0 million of Senior Notes outstanding.

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

We have also entered into a registration rights agreement regarding the Senior Notes pursuant to which we agreed, among other things, to use our commercially reasonable efforts to consummate an exchange offer of the Senior Notes for substantially identical notes registered under the Securities Act of 1933, as amended, on or before July 13, 2015. Additional interest will accrue at a rate of 0.25% per annum on the principal amount of the Senior Notes during the 90 day period after the occurrence of the registration default and will increase by 0.25% per annum at the end of each subsequent 90 day period. In no event will the rate of additional interest exceed 1.00% per annum on the principal amount.

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Net cash provided by operating activities was $94.8 million and $188.9 million for 2014 and 2013, respectively. The $94.1 million decrease is primarily the result of a decrease in net earnings driven by acquisition and integration costs related to Jos. A. Bank, interest expense on our indebtedness, and an arbitration award related to JA Holding, as well as changes in working capital primarily related to fluctuations in accounts payable, accrued expenses and other current liabilities.

Net cash provided by operating activities was $188.9 million and $225.7 million for 2013 and 2012, respectively. The $36.8 million decrease is primarily the result of a decrease in net earnings driven by acquisition costs related to JA Holding and various strategic projects and an increase in inventories primarily related to an inventory build for the rollout of Joseph Abboud® merchandise as well the impact of new Men's Wearhouse stores and higher inventory levels resulting from lower sales. The decrease was partially offset by an increase in accounts payable, accrued expenses and other current liabilities and other current liabilities primarily related to the aforementioned inventory build-up of Joseph Abboud® merchandise, the timing of vendor payments and the impact of accrued professional fees related to various strategic projects.

Net cash used in investing activities was $1,587.7 million and $199.0 million for 2014 and 2013, respectively. The $1,388.7 million increase in cash used in investing activities was primarily driven by the acquisition of Jos. A. Bank. Our capital expenditures in 2014 and 2013 relate to costs incurred for stores opened, remodeled or relocated during the year or under construction at the end of the year and infrastructure technology, office and distribution facility investments.

Net cash used in investing activities was $199.0 million and $123.5 million for 2013 and 2012, respectively. The $75.5 million increase in cash used in investing activities is primarily due to the acquisition of JA Holding for $94.9 million. Our capital expenditures in 2013 and 2012 relate mainly to costs incurred for stores opened, remodeled or relocated during the year or under construction at the end of the year, distribution facility additions and infrastructure technology investments. In 2013, we received $4.1 million in proceeds from the sales of property and equipment, primarily an office building. In addition, in 2012, we incurred approximately $13.4 million of costs related to purchase of land and buildings to consolidate our California office locations.

Net cash provided by financing activities was $1,500.9 million for 2014 compared to net cash used in financing activities of $82.9 million for 2013. The net change of $1,583.8 million was primarily driven by borrowings on our Term Loan and issuance of the Senior Notes for the acquisition of Jos. A. Bank. Cash outflows from financing activities consist primarily of repayment of borrowings under our ABL Facility and previous term loan, payment of deferred financing costs related to our Credit Facilities and cash dividend payments.

Net cash used in financing activities was $82.9 million and $71.3 million for 2013 and 2012, respectively. The $11.6 million increase in cash used in financing activities was primarily due to cash outflows for the repurchase of common stock and cash dividend payments offset by proceeds from our previous term loan.

Share repurchase program—In March 2013, the Board of Directors (the "Board") approved a $200.0 million share repurchase program for our common stock, which amended and replaced our then existing share repurchase program authorized by the Board in January 2011. At January 31, 2015, the remaining balance available under the Board's March 2013 authorization was $48.0 million.

During fiscal 2014, no shares were repurchased in open market transactions under the Board's March 2013 authorization.

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In July 2013, we entered into an accelerated share repurchase agreement ("ASR Agreement") with J.P. Morgan Securities LLC ("JPMorgan"), as agent for JPMorgan Chase Bank, National Association, London Branch, to purchase $100.0 million of our common stock. In July 2013, we paid $100.0 million to JPMorgan and received an initial delivery of 2,197,518 shares. The value of the initial shares received was approximately $85.0 million, reflecting a $38.68 price per share. In September 2013, JPMorgan delivered an additional 455,769 shares valued at approximately $15.0 million, reflecting a $32.91 price per share. All repurchased shares under the ASR Agreement were immediately retired. In addition to the ASR Agreement, during fiscal 2013, 1,489,318 shares at a cost of $52.0 million were repurchased in open market transactions under the Board's March 2013 authorization.

The following table summarizes our common stock repurchases during fiscal 2014, 2013 and 2012 (in thousands, except share data and average price per share):

 
  Fiscal Year  
 
  2014   2013   2012  

Shares repurchased(1)

    5,349     4,147,983     1,128,525  

Total costs

  $ 251   $ 152,129   $ 41,296  

Average price per share

  $ 46.93   $ 36.68   $ 36.59  

(1)
Includes 5,349, 5,378 and 7,041 shares, respectively, repurchased in private transactions to satisfy minimum tax withholding obligations arising upon the vesting of certain restricted stock.

Dividends—Cash dividends paid were approximately $34.8 million, $35.5 million and $37.1 million during fiscal 2014, 2013 and 2012, respectively. In fiscal 2014, 2013 and 2012, a dividend of $0.18 per share was declared in each quarter, for an annual dividend of $0.72 per share, respectively. The cash dividend of $0.18 per share declared by the Board in January 2015 is payable on March 27, 2015 to shareholders of record on March 17, 2015.

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

Capital expenditures are anticipated to be in the range of $120.0 to $130.0 million for 2015. This amount includes the anticipated costs to open approximately 25 Men's Wearhouse stores, three to six Jos. A. Bank stores and three Moores stores and to expand and/or relocate approximately 13 existing Men's Wearhouse stores, four existing Jos. A. Bank stores and three existing Moores stores. The average cost (excluding telecommunications and point-of-sale equipment and inventory) of opening a new store is expected to be approximately $0.5 million in 2015. The balance of the capital expenditures for 2015 will be used for integration projects related to Jos. A. Bank, point-of-sale and other computer equipment and systems, store remodeling, distribution facilities and investment in other corporate assets. The actual amount of future capital expenditures will depend in part on the number of new stores opened and the terms on which new stores are leased and the timing of our Jos. A. Bank integration projects, as well as on industry trends consistent with our anticipated operating plans.

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

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

Contractual Obligations

As of January 31, 2015, we are obligated to make cash payments in connection with our long-term debt, non-cancelable operating leases and other contractual obligations in the amounts listed below. In addition, we utilize letters of credit primarily for inventory purchases and as collateral for workers compensation claims. At January 31, 2015, letters of credit totaling approximately $18.5 million were issued and outstanding.

 
  Payments Due by Period  
(In millions)
Contractual obligations
  Total   <1 Year   1 - 3 Years   4 - 5 Years   > 5 Years  

Long-term debt(1)

  $ 2,339.5   $ 104.8   $ 223.1   $ 187.4   $ 1,824.2  

Operating lease base rentals(2)

    1,354.7     262.7     434.3     296.3     361.4  

Other contractual obligations(3)

    33.6     19.8     13.0     0.8      

Total contractual obligations(4)

  $ 3,727.8   $ 387.3   $ 670.4   $ 484.5   $ 2,185.6  

(1)
Includes interest payments of $93.8 million within one year, $198.4 million between one and three years, $168.1 million between four and five years and $182.0 million beyond five years, at current interest rates including the impact of active interest rate swaps. See Notes 4 and 15 of Notes to Consolidated Financial Statements for additional information.

(2)
We lease retail business locations, office and warehouse facilities and equipment under various non-cancelable operating leases. See Note 17 of Notes to Consolidated Financial Statements for additional information.

(3)
Other contractual obligations consist primarily of minimum payments under our agreement with Vera Wang that gives us the exclusive right to "Black by Vera Wang" tuxedo products and our marketing agreement with David's Bridal, Inc. Pursuant to our marketing agreement with David's Bridal, Inc., there are performance conditions that may impact future payments. These potential future payments are not included in the table above as such amounts are not readily determinable.

(4)
Excluded from the table above is $20.6 million, which includes $0.8 million in interest, related to uncertain tax positions. These amounts are not included due to our inability to predict the timing of the settlement of these amounts. Refer to Note 5 of Notes to Consolidated Financial Statements for additional information.

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

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Off-Balance Sheet Arrangements

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

Inflation

We believe the impact of inflation on the results of operations during the periods presented has been minimal. However, we cannot assure you that our business will not be affected by inflation in the future.

Critical Accounting Policies and Estimates

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

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

Revenue Recognition—Clothing product revenue is recognized at the time of sale and delivery of merchandise, net of actual sales returns and a provision for estimated sales returns. Revenues from tuxedo rental, alteration and other services are recognized upon completion of the services.

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

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

Impairment of Long-Lived Assets—Long-lived assets, such as property and equipment and identifiable intangibles with finite useful lives, are periodically evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level of which there are identifiable cash flows, which is generally at a store level. Assets are reviewed using factors including, but not limited to, our future operating plans and projected cash flows. The determination of whether impairment has occurred is based

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on an estimate of undiscounted future cash flows directly related to the assets, compared to the carrying value of the assets. If the sum of the undiscounted future cash flows of the assets does not exceed the carrying value of the assets, full or partial impairment may exist. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined using an income approach, which requires discounting the estimated future cash flows associated with the asset. Estimating future cash flows requires management to make assumptions and to apply judgment, including forecasting future sales, costs and useful lives of assets. Significant judgment is also involved in selecting the appropriate discount rate to be applied in determining the estimated fair value of an asset. Changes to our key assumptions related to future performance, market conditions and other economic factors can significantly affect our impairment evaluation and result in future impairment charges. For example, unanticipated long-term adverse market conditions can cause individual stores to become unprofitable and can result in an impairment charge for the property and equipment assets in those stores.

Business Combinations-Purchase Price Allocation—For the Jos. A. Bank acquisition, we allocated the purchase price to the various tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values, which are preliminary as of January 31, 2015. Determining the fair value of certain assets and liabilities acquired is subjective in nature and often involves the use of significant estimates and assumptions, which are inherently uncertain. Many of the estimates and assumptions used to determine fair values, such as those used for intangible assets are made based on forecasted information and discount rates. In addition, the judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations.

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

For purposes of our goodwill impairment evaluation, the reporting units are our operating brands identified in Note 16 of Notes to Consolidated Financial Statements. Goodwill has been assigned to the reporting units based on prior business combinations related to the brands. The goodwill impairment evaluation is performed in two steps.

In our step one process, we estimate the fair value of our reporting units using a combined income and market comparable approach. Our income approach uses projected future cash flows that are discounted using a weighted-average cost of capital analysis that reflects current market conditions. The market comparable approach primarily considers market price multiples of comparable companies and applies those price multiples to certain key drivers of the reporting unit.

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

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As discussed above, the fair values of reporting units in 2014 were determined using a combined income and market comparable approach. We believe these two approaches are appropriate valuation techniques and we generally weight the two values equally as an estimate of reporting unit fair value for the purposes of our impairment testing. However, we may weigh one value more heavily than the other when conditions merit doing so. The fair value derived from the weighting of these two methods provided appropriate valuations that, in aggregate, reasonably reconciled to our market capitalization, taking into account observable control premiums. As of January 31, 2015, we concluded that none of our goodwill was impaired.

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

With the exception of the Jos. A. Bank reporting unit, all of our other reporting units have fair values that significantly exceed their carrying values. The recorded value of goodwill and intangible assets from the recently acquired Jos. A. Bank brand were derived from more recent business operating plans and macroeconomic conditions and therefore are more susceptible to an adverse change that could require an impairment charge.

Indefinite-lived intangible assets are not subject to amortization but are reviewed at least annually for impairment. The indefinite-lived intangible asset impairment evaluation is performed by comparing the fair value of the indefinite-lived intangible assets to their carrying values. We estimate the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This approach is dependent upon a number of factors, including estimates of future growth and trends, royalty rates, discount rates and other variables. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. As of January 31, 2015, our impairment evaluation of indefinite-lived intangible assets did not result in an impairment charge.

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

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

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

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

Recent Accounting Pronouncements

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

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

We are subject to exposure from fluctuations in U.S. dollar/Euro exchange rates, U.S. dollar/pound Sterling ("GBP") exchange rates and U.S. dollar/Canadian dollar ("CAD") exchange rates as a result of our direct sourcing programs and our operations in foreign countries. Our UK-based operations in particular are subject to exposure from fluctuations in U.S. dollar/GBP exchange rates as Dimensions and Alexandra sell their products and conduct their business primarily in GBP but purchase most of their merchandise in transactions paid in U.S. dollars.

As further described in Note 15 of Notes to Consolidated Financial Statements, our risk management policy is to hedge a portion of forecasted merchandise purchases for our direct sourcing programs that bear foreign exchange risk using foreign exchange forward contracts. We have not elected to apply hedge accounting to these transactions denominated in a foreign currency. A hypothetical 10% increase or decrease in applicable January 31, 2015 forward rates could impact the fair value of the derivative financial instruments by $1.0 million. However, it should be noted that any change in the value of these contracts, whether real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged item.

Dimensions and Alexandra, our UK-based operations, sell their products and conduct their business primarily in GBP but purchase most of their merchandise in transactions paid in USD. The exchange rate between the GBP and USD has fluctuated over the last ten years. A decline in the value of the GBP as compared to the USD will adversely impact our UK operating results as the cost of merchandise purchases will increase and the revenues and earnings of our UK operations will be reduced when they are translated to USD. Also, the value of our UK net assets in USD may decline. Dimensions and Alexandra utilize foreign currency hedging contracts as discussed above to limit exposure to changes in USD/GBP exchange rates.

Moores conducts its business in CAD. The exchange rate between CAD and USD has fluctuated over the last ten years. If the value of the CAD against the USD weakens, then the revenues and earnings of our Canadian operations will be reduced when they are translated to USD. Also, the value of our Canadian net assets in USD may decline. Moores utilizes foreign currency hedging contracts, from time to time, to limit exposure to changes in USD/CAD exchange rates.

Interest Rate Risk

In conjunction with the Jos. A. Bank acquisition, we entered into new financing arrangements and repaid amounts existing under our Previous Credit Agreement. For further information, refer to Note 4 of Notes to Consolidated Financial Statements. Borrowings under our Credit Facilities generally bear interest at a rate based on LIBOR plus an applicable margin. As such, our Credit Facilities expose us to market risk for changes in interest rates.

Certain terms of our Term Loan limit our exposure to short-term interest rate fluctuations, specifically the existence of a LIBOR floor of 1% per annum. Assuming LIBOR rates surpassed the 1% LIBOR floor provision on our Term Loan, we would be exposed to interest rate risk on such Term Loan. At January 31, 2015, the 3-month LIBOR rate was approximately 0.25%, which is significantly below the LIBOR floor. However, to partially mitigate future interest rate risk, in January 2015, we entered into an interest rate swap agreement to exchange variable interest rate payments for fixed interest rate payments for a portion of the outstanding Term Loan balance, effective in February 2015. After consideration of the swap, each one percentage point change in interest rates would result in an approximate $5.8 million change in annual interest expense on our Term Loan.

We also have exposure to market rate risk for changes in interest rates as those rates relate to our investment portfolio. The primary objective of our investment activities is to preserve principal while at the

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same time maximizing yields without significantly increasing risk. As of January 31, 2015, we have highly liquid investments classified as cash equivalents in our consolidated balance sheet. Future investment income earned on our cash equivalents will fluctuate in line with short-term interest rates.

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

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
The Men's Wearhouse, Inc.
Houston, Texas

We have audited the accompanying consolidated balance sheets of The Men's Wearhouse, Inc. and subsidiaries (the "Company") as of January 31, 2015 and February 1, 2014, and the related consolidated statements of (loss) earnings, comprehensive (loss) income, shareholders' equity, and cash flows for each of the three years in the period ended January 31, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of The Men's Wearhouse, Inc. and subsidiaries as of January 31, 2015 and February 1, 2014, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of January 31, 2015, based on the criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 27, 2015 expressed an unqualified opinion on the Company's internal control over financial reporting.

    /s/ DELOITTE & TOUCHE LLP

Houston, Texas
March 27, 2015

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THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

 
  January 31,
2015
  February 1,
2014
 

ASSETS

             

CURRENT ASSETS:

             

Cash and cash equivalents

  $ 62,261   $ 59,252  

Accounts receivable, net

    73,266     63,153  

Inventories

    938,336     599,486  

Other current assets

    175,574     93,206  

Total current assets

    1,249,437     815,097  

PROPERTY AND EQUIPMENT, AT COST:

             

Land

    20,921     19,229  

Buildings

    123,762     112,837  

Leasehold improvements

    589,105     467,307  

Furniture, fixtures and equipment

    575,983     491,948  

    1,309,771     1,091,321  

Less accumulated depreciation and amortization

    (743,697 )   (683,159 )

Net property and equipment

    566,074     408,162  

TUXEDO RENTAL PRODUCT, net

    132,672     142,816  

GOODWILL

    887,936     126,003  

INTANGIBLE ASSETS, net

    668,259     58,027  

OTHER ASSETS

    42,380     5,125  

TOTAL ASSETS

  $ 3,546,758   $ 1,555,230  

LIABILITIES AND SHAREHOLDERS' EQUITY

             

CURRENT LIABILITIES:

             

Accounts payable

  $ 209,867   $ 148,762  

Accrued expenses and other current liabilities

    268,935     175,797  

Income taxes payable

    1,609     730  

Current maturities of long-term debt

    11,000     10,000  

Total current liabilities

    491,411     335,289  

LONG-TERM DEBT

   
1,676,232
   
87,500
 

DEFERRED TAXES AND OTHER LIABILITIES

    409,326     109,292  

Total liabilities

    2,576,969     532,081  

COMMITMENTS AND CONTINGENCIES

             

SHAREHOLDERS' EQUITY:

   
 
   
 
 

Preferred stock, $.01 par value, 2,000,000 shares authorized, no shares issued

         

Common stock, $.01 par value, 100,000,000 shares authorized, 48,265,902 and 47,701,829 shares issued

    482     476  

Capital in excess of par

    440,907     412,043  

Retained earnings

    537,263     572,712  

Accumulated other comprehensive (loss) income

    (5,671 )   27,311  

Treasury stock, 129,095 and 137,900 shares at cost

    (3,192 )   (3,407 )

Total equity attributable to common shareholders

    969,789     1,009,135  

Non-controlling interest

        14,014  

Total shareholders' equity

    969,789     1,023,149  

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

  $ 3,546,758   $ 1,555,230  

   

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

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THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

For the Years Ended
January 31, 2015, February 1, 2014 and February 2, 2013

(In thousands, except per share amounts)

 
  Fiscal Year  
 
  2014   2013   2012  

Net sales:

                   

Retail clothing product

  $ 2,365,463   $ 1,667,535   $ 1,691,248  

Tuxedo rental services

    442,866     411,864     406,454  

Alteration and other services

    186,843     147,023     151,147  

Total retail sales

    2,995,172     2,226,422     2,248,849  

Corporate apparel clothing product

    257,376     246,811     239,429  

Total net sales

    3,252,548     2,473,233     2,488,278  

Cost of sales:

   
 
   
 
   
 
 

Retail clothing product

    1,098,550     741,957     756,048  

Tuxedo rental services

    84,978     64,308     56,567  

Alteration and other services

    134,227     113,729     113,846  

Occupancy costs

    395,521     290,896     283,382  

Total retail cost of sales

    1,713,276     1,210,890     1,209,843  

Corporate apparel clothing product

    180,658     173,333     170,287  

Total cost of sales

    1,893,934     1,384,223     1,380,130  

Gross margin:

   
 
   
 
   
 
 

Retail clothing product

    1,266,913     925,578     935,200  

Tuxedo rental services

    357,888     347,556     349,887  

Alteration and other services

    52,616     33,294     37,301  

Occupancy costs

    (395,521 )   (290,896 )   (283,382 )

Total retail gross margin

    1,281,896     1,015,532     1,039,006  

Corporate apparel clothing product

    76,718     73,478     69,142  

Total gross margin

    1,358,614     1,089,010     1,108,148  

Advertising expense

   
168,266
   
101,083
   
94,422
 

Selling, general and administrative expenses

    1,117,138     848,798     815,158  

Goodwill impairment charge

        9,501      

Operating income

    73,210     129,628     198,568  

Interest income

   
356
   
385
   
648
 

Interest expense

    (66,032 )   (3,205 )   (1,544 )

Loss on extinguishment of debt

    (2,158 )        

Earnings before income taxes

    5,376     126,808     197,672  

Provision for income taxes

    5,471     42,591     65,609  

Net (loss) earnings including non-controlling interest

    (95 )   84,217     132,063  

Net earnings attributable to non-controlling interest

    (292 )   (426 )   (347 )

Net (loss) earnings attributable to common shareholders

  $ (387 ) $ 83,791   $ 131,716  

Net (loss) earnings per common share attributable to common shareholders:

                   

Basic

  $ (0.01 ) $ 1.71   $ 2.56  

Diluted

  $ (0.01 ) $ 1.70   $ 2.55  

Weighted-average common shares outstanding:

                   

Basic

    47,899     48,849     50,793  

Diluted

    47,899     49,162     51,026  

   

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

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THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

For the Years Ended
January 31, 2015, February 1, 2014 and February 2, 2013

(In thousands)

 
  For the Fiscal Year Ended  
 
  2014   2013   2012  

Net (loss) earnings including non-controlling interest

  $ (95 ) $ 84,217   $ 132,063  

Currency translation adjustments

    (31,942 )   (8,606 )   (23 )

Unrealized loss on cash flow hedge, net of tax

    (1,266 )   (399 )    

Adjustment to minimum pension liability, net of tax

    226          

Comprehensive (loss) income including non-controlling interest

    (33,077 )   75,212     132,040  

Comprehensive income attributable to non-controlling interest:

                   

Net earnings

    (292 )   (426 )   (347 )

Currency translation adjustments

        (608 )   26  

Amounts attributable to non-controlling interest

    (292 )   (1,034 )   (321 )

Comprehensive (loss) income attributable to common shareholders          

  $ (33,369 ) $ 74,178   $ 131,719  

   

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

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THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, except shares)

 
  Common
Stock
  Capital
in Excess
of Par
  Retained
Earnings
  Accumulated
Other
Comprehensive
Income
(Loss)
  Treasury
Stock, at
Cost
  Total Equity
Attributable to
Common
Shareholders
  Non-
controlling
Interest
  Total
Shareholders'
Equity
 

BALANCES—January 28, 2012

  $ 718   $ 362,735   $ 1,095,535   $ 36,921   $ (476,749 ) $ 1,019,160   $ 12,659   $ 1,031,819  

Net earnings

            131,716             131,716     347     132,063  

Other comprehensive income (loss)

                3         3     (26 )   (23 )

Cash dividends—$0.72 per share

            (37,005 )           (37,005 )       (37,005 )

Share-based compensation

        16,515                 16,515         16,515  

Common stock issued under share-based award plans and to stock discount plan—722,659 shares

    7     8,450                 8,457         8,457  

Tax payments related to vested deferred stock units

        (4,421 )               (4,421 )       (4,421 )

Tax benefit related to share-based plans

        2,949                 2,949         2,949  

Treasury stock reissued—6,295 shares

        26             151     177         177  

Repurchases of common stock—1,128,525 shares

                    (41,296 )   (41,296 )       (41,296 )

BALANCES—February 2, 2013

    725     386,254     1,190,246     36,924     (517,894 )   1,096,255     12,980     1,109,235  

Net earnings

            83,791             83,791     426     84,217  

Other comprehensive (loss) income

                (9,613 )       (9,613 )   608     (9,005 )

Cash dividends—$0.72 per share

            (35,252 )           (35,252 )       (35,252 )

Share-based compensation

        17,120                 17,120         17,120  

Common stock issued under share-based award plans and to stock discount plan—719,551 shares

    7     10,732                 10,739         10,739  

Tax payments related to vested deferred stock units

        (3,865 )               (3,865 )       (3,865 )

Tax benefit related to share-based plans

        1,664                 1,664         1,664  

Treasury stock reissued—11,761 shares

        138             287     425         425  

Repurchases of common stock—4,147,983 shares

    (27 )       (99,973 )       (52,129 )   (152,129 )       (152,129 )

Retirement of treasury stock—22,915,087 shares

    (229 )       (566,100 )       566,329              

BALANCES—February 1, 2014

    476     412,043     572,712     27,311     (3,407 )   1,009,135     14,014     1,023,149  

Net (loss) earnings

            (387 )           (387 )   292     (95 )

Other comprehensive loss

                (32,982 )       (32,982 )       (32,982 )

Purchase of non-controlling interest

        7,249                 7,249     (14,306 )   (7,057 )

Cash dividends—$0.72 per share

            (34,809 )           (34,809 )       (34,809 )

Share-based compensation

        16,513                 16,513         16,513  

Common stock issued under share-based award plans and to stock discount plan—569,522 shares

    6     8,076                 8,082         8,082  

Tax payments related to vested deferred stock units

        (6,940 )               (6,940 )       (6,940 )

Tax benefit related to share-based plans

        3,736                 3,736         3,736  

Treasury stock reissued—8,805 shares

        230             213     443         443  

Repurchases of common stock—5,349 shares

            (251 )           (251 )       (251 )

Retirement of treasury stock—100 shares

            (2 )       2              

BALANCES—January 31, 2015

  $ 482   $ 440,907   $ 537,263   $ (5,671 ) $ (3,192 ) $ 969,789   $   $ 969,789  

   

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

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THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended
January 31, 2015, February 1, 2014 and February 2, 2013

(In thousands)

 
  Fiscal Year  
 
  2014   2013   2012  

CASH FLOWS FROM OPERATING ACTIVITIES:

                   

Net (loss) earnings including non-controlling interest

  $ (95 ) $ 84,217   $ 132,063  

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

                   

Depreciation and amortization

    112,659     88,749     84,979  

Tuxedo rental product amortization

    34,424     32,266     28,315  

Amortization of deferred financing costs

    4,903     523     372  

Amortization of discount on long-term debt

    982          

Loss on extinguishment of debt

    2,158          

Loss on disposition of assets

    12,328     158     1,958  

Goodwill impairment charge

        9,501      

Asset impairment charges

    302     2,216     482  

Share-based compensation

    16,513     17,120     16,515  

Excess tax benefits from share-based plans

    (3,766 )   (2,145 )   (2,997 )

Deferred tax (benefit) provision

    (13,107 )   2,272     5,180  

Deferred rent expense and other

    4,233     2,884     1,030  

Changes in operating assets and liabilities:

                   

Accounts receivable

    (6,151 )   14,517     (6,447 )

Inventories

    (26,586 )   (39,342 )   16,026  

Tuxedo rental product

    (37,185 )   (50,577 )   (55,281 )

Other assets

    (19,250 )   (6,339 )   (11,461 )

Accounts payable, accrued expenses and other current liabilities

    3,831     34,514     9,103  

Income taxes payable

    6,135     (2,713 )   5,172  

Other liabilities

    2,436     1,109     721  

Net cash provided by operating activities

    94,764     188,930     225,730  

CASH FLOWS FROM INVESTING ACTIVITIES:

                   

Capital expenditures

    (96,420 )   (108,200 )   (121,433 )

Acquisition of businesses, net of cash

    (1,491,393 )   (94,906 )    

Proceeds from sales of property and equipment

    160     4,127     33  

Investment in trademarks, tradenames and other assets

            (2,075 )

Net cash used in investing activities

    (1,587,653 )   (198,979 )   (123,475 )

CASH FLOWS FROM FINANCING ACTIVITIES:

                   

Proceeds from new term loan

    1,089,000          

Payments on new term loan

    (2,750 )        

Proceeds from asset-based revolving credit facility

    348,000          

Payments on asset-based revolving credit facility

    (348,000 )        

Proceeds from issuance of senior notes

    600,000          

Deferred financing costs

    (51,080 )   (1,776 )    

Proceeds from previous term loan

        100,000      

Payments on previous term loan

    (97,500 )   (2,500 )    

Cash dividends paid

    (34,785 )   (35,549 )   (37,084 )

Purchase of non-controlling interest

    (6,651 )        

Proceeds from issuance of common stock

    8,082     10,739     8,457  

Tax payments related to vested deferred stock units

    (6,940 )   (3,865 )   (4,421 )

Excess tax benefits from share-based plans

    3,766     2,145     2,997  

Repurchases of common stock

    (251 )   (152,129 )   (41,296 )

Net cash provided by (used in) financing activities

    1,500,891     (82,935 )   (71,347 )

Effect of exchange rate changes

    (4,993 )   (3,827 )   (151 )

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

    3,009     (96,811 )   30,757  

Balance at beginning of period

    59,252     156,063     125,306  

Balance at end of period

  $ 62,261   $ 59,252   $ 156,063  

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THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

For the Years Ended
January 31, 2015, February 1, 2014 and February 2, 2013

(In thousands)

 
  Fiscal Year  
 
  2014   2013   2012  

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

                   

Cash paid for:

                   

Interest

  $ 44,765   $ 2,338   $ 1,154  

Income taxes, net

  $ 33,815   $ 52,591   $ 60,437  

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

                   

Increase in capital in excess of par due to purchase of non-controlling interest (Note 10)

  $ 7,249   $   $  

Cash dividends declared

  $ 8,987   $ 8,963   $ 9,260  

We had unpaid capital expenditure purchases included in accounts payable and accrued expenses and other current liabilities of approximately $15.0 million, $10.0 million and $14.0 million in fiscal 2014, 2013 and 2012, respectively. Capital expenditure purchases are recorded as cash outflows from investing activities in the consolidated statement of cash flows in the period in which they are paid.

   

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

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THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business—The Men's Wearhouse, Inc. and its subsidiaries (the "Company") is a specialty apparel retailer offering suits, suit separates, sport coats, slacks, business casual, sportswear, outerwear, dress shirts, shoes and accessories for men and tuxedo rentals. We offer our products and services through multiple channels including The Men's Wearhouse, Men's Wearhouse and Tux, Jos. A. Bank Clothiers ("Jos. A. Bank"), Moores Clothing for Men ("Moores"), K&G and the internet at www.menswearhouse.com, www.josbank.com and www.josephabboud.com. Our stores are located throughout the United States ("U.S."), Puerto Rico and Canada and carry a wide selection of exclusive and non-exclusive merchandise brands. In addition, we offer our customers alteration services and most of our K&G stores also offer ladies' career apparel, sportswear and accessories, including shoes, and children's apparel.

We also conduct corporate apparel and uniform operations through Twin Hill in the U.S. and through our Dimensions, Alexandra and Yaffy brands in the United Kingdom ("UK"). We offer our corporate apparel clothing products through multiple channels including managed corporate accounts, catalogs and the internet at www.dimensions.co.uk and www.alexandra.co.uk. In addition, we conduct retail dry cleaning, laundry and heirlooming operations through MW Cleaners in Texas. We operate two reportable segments as determined by the way we manage, evaluate and internally report our business activities: Retail and Corporate Apparel. Refer to Note 16 for further segment information.

On June 18, 2014, we acquired Jos. A. Bank, a men's specialty apparel retailer, for total cash consideration of approximately $1.8 billion. Based on the manner in which we manage, evaluate and internally report our operations, we determined that Jos. A. Bank is an operating segment that meets the criteria for aggregation into our retail reportable segment. On August 6, 2013, we acquired JA Holding, Inc. ("JA Holding"), the parent company of the American clothing brand Joseph Abboud® and a U.S. tailored clothing factory. Based on the manner in which we manage, evaluate and internally report our operations, we determined that JA Holding is a component of our Men's Wearhouse brand and therefore has been included in our retail reportable segment. See Notes 2 and 16 for additional details on these acquisitions and our segments.

We follow the standard fiscal year of the retail industry, which is a 52-week or 53-week period ending on the Saturday closest to January 31. The periods presented in these financial statements are the fiscal years ended January 31, 2015 ("fiscal 2014"), February 1, 2014 ("fiscal 2013") and February 2, 2013 ("fiscal 2012"). Each of these periods had 52 weeks, except for 2012, which consisted of 53 weeks.

Principles of Consolidation—The consolidated financial statements include the accounts of The Men's Wearhouse, Inc. and its subsidiaries. Intercompany accounts and transactions have been eliminated in the consolidated financial statements.

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

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

Accounts Receivable—Accounts receivable consists of our receivables from third-party credit card providers and other trade receivables, which consist primarily of receivables from our corporate apparel segment

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THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

customers. Collectability is reviewed regularly recorded net of an allowance for uncollectible accounts, which is adjusted as necessary.

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

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

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

Depreciation expense was $102.8 million, $84.9 million and $81.7 million for fiscal 2014, 2013 and 2012, respectively.

Tuxedo Rental Product—Tuxedo rental product is amortized to cost of sales based on the cost of each unit rented. The cost of each unit rented is estimated based on the number of times the unit is expected to be rented and the average cost of the rental product. Lost, damaged and retired rental product is also charged to cos