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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

(Mark One)

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

or

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

For the transition period from February 27, 2011 to January 28, 2012.

Commission File No. 001-31390

CHRISTOPHER & BANKS CORPORATION

(Exact name of registrant as specified in its charter)

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

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

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.  o  YES  x  NO

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x  YES  o  NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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).  x  YES  o  NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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.

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

The aggregate market value of the Common Stock, par value $0.01 per share, held by non-affiliates of the registrant as of August 26, 2011, was approximately $162,187,000 based on the closing price of such stock as quoted on the New York Stock Exchange ($4.60) on such date.

The number of shares outstanding of the registrant’s Common Stock, par value $0.01 per share, was 36,004,981 as of March 24, 2012 (excluding treasury shares of 9,790,718).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held June 28, 2012 (the “Proxy Statement”) are incorporated by reference into Part III.

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CHRISTOPHER & BANKS CORPORATION

2012 TRANSITION REPORT ON FORM 10-K

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Introductory Note

On January 6, 2012, our Board of Directors amended and restated our By-Laws to provide that our fiscal year will end at the close of business on that Saturday in January or February which falls closest to the last day of January.  Prior to this change, our fiscal year ended at the close of business on that Saturday in February or March which fell closest to the last day of February.  As a result, this Transition Report on Form 10-K covers the transition period consisting of the eleven months (48 weeks) ended January 28, 2012 (“transition period” or “transition year”).  The fiscal years ended February 26, 2011 (“fiscal 2011”) and February 27, 2010 (“fiscal 2010”) each consisted of twelve months (52 weeks).  Therefore, when our results of operations for the transition period are being compared to the results for fiscal 2011, we are comparing results for an 11-month period to results for a 12-month period.  In addition, our fourth quarter for the transition period was shortened to the two-month period ended January 28, 2012.  In this Transition Report on Form 10-K our current fiscal year, the 53-week period ending February 2, 2013, is referred to as (“fiscal 2012”).  We believe the change in our fiscal year end will provide certain benefits, including aligning our reporting periods to be more consistent with those of other specialty retail apparel companies.

PART I

ITEM 1.
BUSINESS

General

Christopher & Banks Corporation is a Minneapolis, Minnesota-based retailer of women’s apparel and accessories, which operates retail stores through its wholly owned subsidiaries, Christopher & Banks, Inc. and Christopher & Banks Company (collectively referred to as “Christopher & Banks”, “the Company”, “we” or “us”).  As of January 28, 2012, we operated 686 stores in 44 states, including 402 Christopher & Banks stores, 199 C.J. Banks stores, 62 dual-concept stores and 23 outlet stores.  We also operate e-Commerce web sites for each of our brands at www.christopherandbanks.com and www.cjbanks.com.

History

Christopher & Banks Corporation, a Delaware corporation, was incorporated in 1986 to acquire Braun’s Fashions, Inc., which had operated as a family-owned business since 1956.  We became a publicly traded corporation in 1992 and, in July 2000, our stockholders approved a company name change from Braun’s Fashions Corporation to Christopher & Banks Corporation.  Our women’s plus size C.J. Banks brand was developed internally and we opened our first C.J. Banks stores in August 2000.  Our Christopher & Banks and C.J. Banks e-commerce websites began operating in February 2008 to further meet our customers’ needs for unique style, quality, value and convenience.

Christopher & Banks/C.J. Banks brands

Our Christopher & Banks brand offers distinctive fashions featuring exclusively designed, coordinated assortments of women’s apparel in missy sizes 4 to 16 and petite sizes 4P to 16P in our 402 Christopher & Banks stores and on our Christopher & Banks e-commerce web site.  Our C.J. Banks brand offers similar assortments of apparel in women’s plus sizes 14W to 26W in our 199 C.J. Banks stores and on our C.J. Banks e-commerce web site.  Our dual-concept stores (“dual stores”) offer merchandise from both of our Christopher & Banks and C.J. Banks brands, and all three size ranges (petite, missy and women’s plus) within each store, resulting in a greater opportunity to service our customers while increasing productivity and enhancing operating efficiencies.  Our outlet stores also offer an assortment of both Christopher & Banks and C.J. Banks apparel servicing the petite, missy and women’s plus size customer in one location.

The casual lifestyle brand fashions sold by Christopher & Banks and C.J. Banks are typically suitable for both work and leisure activities and are offered at moderate price points.  The target customer for Christopher & Banks and C.J. Banks generally ranges in age from 45 to 55 and is typically part of the female baby boomer demographic.

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Segments

For details regarding the operating performance of our reportable segments, see Note 20, Segment Reporting, to the consolidated financial statements.

Strategy

We strive to provide our customers with fashionable, versatile, quality apparel at a great value and with a consistent fit.  Our overall strategy for our two brands, Christopher & Banks and C.J. Banks, is to offer a compelling, evolving merchandise assortment through our stores and e-commerce web sites in order to satisfy our customers’ expectations for style, quality, value, versatility and fit, while providing knowledgeable and personalized customer service.

We have positioned ourselves to offer merchandise assortments balancing updated unique, novelty apparel with more classic styles, at affordable prices.  To differentiate ourselves from our competitors, our buyers, working in conjunction with our internal design group, strive to create a merchandise assortment of coordinated outfits, the majority of which are manufactured exclusively for us under our proprietary Christopher & Banks and C.J. Banks brand names.

Merchandise

In our transition period, our merchandise assortments included women’s apparel generally consisting of knit tops, woven tops, jackets, sweaters, skirts, denim bottoms, bottoms made of other fabrications and dresses in petite, missy and women’s plus sizes.  We also offered a selection of jewelry and accessories in all stores and online.  Our merchant team is currently focused on delivering increased sales and improved gross profit through executing the following initiatives:

·Provide a balanced merchandise assortment

In the third and fourth quarters of the transition period, the majority of our merchandise assortments consisted of higher-priced, fashion-forward styles.  We provided our customers with too many upscale choices at prices our customers were unwilling to pay.  The result was a significant increase in markdown levels in order to compel our customers to purchase and allow us to clear through slow-selling styles.

Our merchants began impacting a portion of our Summer fiscal 2012 product deliveries by editing the number of styles offered and reducing retail ticket prices to levels more in-line with our traditional offerings and more acceptable to our customers.  Going forward, our merchants are focusing on building assortments that are more balanced by increasing the amount of ‘good’ and ‘better’ product offerings and decreasing the number of ‘best’ styles.  This involves increasing the penetration of core product in our deliveries, including basic knit layering pieces and classic bottoms, increasing the representation of mid-priced ‘better’ selections, while reducing the number of higher priced ‘best’ styles.  Our goal is to reduce the overall number of unique styles we carry, which will allow us to present a more focused and compelling product assortment with fewer, more relevant selections. We expect these efforts will be fully reflected in our September in-store product offerings.

·Reduction and simplification of price points

We increased our retail ticket prices in our transition period and our customers failed to respond positively.  The price increases resulted from elevated commodities costs and providing more intricately constructed styles.  Our customers were highly resistant to the increased price points.  As we move forward, our goal is to mitigate markdown levels by offering more attractive opening price points and simplifying the number of price points offered to our customers.

The change in our approach to pricing in fiscal 2012 is intended to work hand-in-hand with our ‘good, better, best’ product initiative.  As we increase the penetration of core product offerings in our assortments, we expect to be able to drive sales volume by offering more styles at attractive opening price points that we believe our customers will accept without steep discounting.  In addition, we will reduce the number of price points across all categories to simplify the shopping experience.  Finally, we are committed to offering our customers value.  All styles, including those falling into our ‘better’ and ‘best’ classifications, will be priced at levels that are more attractive to our customers. We believe that this will result in improved sales, reduced markdowns and increased gross profit.

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·Implement a more targeted promotional cadence and markdown strategy

We are analyzing our promotional cadence and adjusting our markdown strategy in an effort to minimize and reverse the significant merchandise margin erosion we experienced in the transition period.  While we anticipate that in order to be competitive we will need to continue to be promotional this year, we are testing and implementing more targeted, unique promotions in an effort to improve merchandise margins and lessen our reliance on storewide promotional events.  In addition, we have adopted a more focused and timely approach to our markdown process that quickly addresses underperforming styles in an effort to utilize our markdowns as efficiently as possible.

·Improve product flow and speed to market and reduce lead times

Historically we have developed and delivered a full, unique merchandise assortment to our stores on a monthly basis.  In order to simplify and accelerate our product development process, we will reduce the number of major product deliveries by half to six times annually beginning in September 2012.  To maintain product freshness, we will supplement the major deliveries with a consistent flow of replenishment product and select new colors and styles to all stores on an ongoing basis.

Sourcing

We are analyzing all aspects of our product development and sourcing practices to identify opportunities to simplify and accelerate the process.  Improving speed to market is one of our critical initiatives in fiscal 2012 to help increase sales and gross profit by allowing us to react more quickly to current selling trends in-season.  We imported approximately 16% of our merchandise purchases directly from overseas manufacturers during the transition period, which resulted in longer product lead times.  Going forward we anticipate we will be working with a number of domestically-based apparel importers and manufacturers who can typically address and fill orders faster than overseas manufacturers.  In addition, we intend to concentrate more of our merchandise purchases with fewer key suppliers in our next fiscal year to become more significant to our vendor base.  We believe this will allow us to achieve better pricing by leveraging larger order quantities and receive faster delivery times from these key vendors.  We also plan to continue to streamline and reduce costs related to our inbound supply chain including renegotiating contracts and consolidating service providers for ocean freight, customs brokerage services and truck and rail transportation.

Our merchandise costs throughout the transition period were impacted by higher prices for cotton and synthetic fibers, along with increased production labor and transportation costs.  Although we passed some of these price increases on to our customers in the transition period, there was resistance to the higher prices.  As a result, we intend to increase our efforts to provide quality merchandise to our customers at an attractive price, which will likely result in continued pressure on merchandise margins in fiscal 2012.  While product costs remained elevated in the beginning of fiscal 2012, we currently expect product costs to begin to decline in the second quarter of fiscal 2012, as compared to the second quarter of the transition period, and to continue to trend below transition period levels during the remainder of fiscal 2012.

Restructuring/Store Closing Initiative

On November 11, 2011, we announced that, following an in-depth analysis of our store portfolio, the Board approved a plan to close approximately 100 stores, most of which were underperforming.  Ultimately, 103 stores were identified for closure, and these closings are expected to positively impact results of operations in our next fiscal year.  This group of stores generated approximately $35 million of sales and store-level operating losses of approximately $11 million, which included approximately $7 million of non-cash impairment charges, on a trailing 12-month basis through January 28, 2012.  Ninety of the 103 stores identified for closure were closed in the transition period, with two closing in November, seven closing in December and 81 closing in January.  We closed five stores in February 2012 and expect to close eight additional stores in March 2012 and beyond.

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In addition to the store closures, we are seeking to restructure the occupancy costs of a majority of our remaining stores and to convert or consolidate a number of existing Christopher & Banks and C.J. Banks stores into dual stores.  In 19 of the centers where we closed stores in the fourth quarter, we converted the remaining Christopher & Banks or C.J. Banks store (a “sister store”) into a dual-store location in order to continue to serve all of our missy, petite and women’s plus size customers in those locations.  The store closings resulted in the termination of approximately 27% of our store operations field management team and 14% of our overall full-time and part-time store sales associate positions.  The Company also reduced its corporate office headcount by approximately 15% during the third and fourth quarters of the transition period.

The Company recorded total restructuring and asset impairment charges of approximately $21.2 million in the transition period.  In the third quarter, we recorded $11.4 million of non-cash asset impairment charges, which consisted of approximately $7.4 million of asset impairment charges related to stores identified for closure and a non-cash charge of approximately $4.0 million related to store level asset impairments for stores which the company will continue to operate.  We also recorded a $0.8 million charge in the third quarter related to severance charges for field management and corporate office personnel who were terminated in October 2011 and for field associates who were terminated as a result of the store closures.

In the fourth quarter of the transition period, we recorded total restructuring charges of $9.0 million.  Approximately $8.3 million related to accrued lease termination fees associated with the 103 stores identified for closure.  The charge also included approximately $0.4 million of severance charges related to additional terminations at our corporate office and in our field organization and $0.3 million of other miscellaneous store closing costs.

The Company expects to incur additional lease termination fees of approximately $0.7 million in the first half of fiscal 2012 in conjunction with the 13 stores identified for closure which were still operating as of January 28, 2012.

Real Estate

In addition to the store closing/restructuring initiative, we have reevaluated our overall real estate strategy, including converting and combining existing Christopher & Banks and C.J. Banks locations into dual stores and reducing the number of new dual and outlet store openings.  We began the transition period with 517 Christopher & Banks stores, 252 C.J. Banks stores, three dual stores and three outlet stores.  During the year, we opened nine new dual stores, 20 new outlet stores and one new Christopher & Banks store.  In addition to the nine new dual stores requiring a capital investment, we opened 22 dual stores where we combined a Christopher & Banks store and a C.J. Banks store into one of the existing locations.  We also converted 29 existing, stand-alone Christopher & Banks stores into dual stores during the year by adding women’s plus size merchandise to the assortment.

We closed 119 stores in the transition period, including the 90 stores closed in connection with our store restructuring initiative.  As a result, we ended the year with 402 Christopher & Banks stores, 199 C.J. Banks stores, 62 dual stores and 23 outlet stores.  For fiscal 2012, we intend to conserve cash by minimizing capital expenditures related to new store openings.  New store projects will be limited to a few strategic repositionings and combinations of existing Christopher & Banks and C.J. Banks stores.  We also intend to open outlet locations in markets where we deem it strategically important to maintain a store location.

Customer Experience

In an effort to drive overall productivity, we continue to strive to enhance our customer experience. We have focused our associates on strengthening our selling culture while providing more knowledgeable selling and personalized service to our customers.  In the transition period, we reintroduced a selling program that includes a significant focus on grass roots connections with our customers and improving our store associates’ product knowledge.  We also continue to strive to deliver exceptional personalized customer service in a warm and inviting store environment.

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In addition, we continue to refine and add new visual merchandising elements to our stores to maximize merchandise displays to provide more compelling and clearer product messages.  This is intended to drive increased numbers of new and existing customers into our stores through a more organized presentation of merchandise and product outfitting options.

Marketing

In the transition period, we spent approximately 1.7% of sales on marketing-related efforts, up from approximately 1.5% of sales in fiscal 2011.  In fiscal 2012 we plan to spend slightly less on marketing as a percent of sales than in the transition period.  Our marketing efforts will continue to be focused on strengthening communications with our customers through e-mail and direct mail.

During the transition period, we delivered 10 direct mail pieces and we plan to execute approximately 10 direct mail campaigns again in fiscal 2012.  We utilize a customer relationship management system to track customer transactions and analyze strategic decisions for our e-mail and direct mail initiatives.  In the transition period, we also completed an initiative to develop a stronger brand presence to ensure consistency in the messages we are sending to our customers, including delivering a consistent look and feel across our stores and e-commerce web sites.

In fiscal 2011, we launched our Friendship® Rewards loyalty program.  Friendship Rewards is a point-based program where members earn points based on purchases.  After reaching a certain level of accumulated points, members are rewarded with a certificate which may be applied towards purchases at our stores or web sites.  The program has helped us to build our customer database and we will continue to refine the program to encourage increased purchases by our Friendship Rewards members.

In April 2012, we plan to launch our Christopher & Banks/C.J. Banks private label credit card.  This program will work in conjunction with Friendship Rewards to provide our customers who place purchases on their card with special benefits and incentives.  In addition, we plan to utilize a number of direct mail and e-mail campaigns, along with in-store contests, to promote the new Christopher & Banks/C.J. Banks card.

e-Commerce

In February 2008, we launched separate e-commerce web sites for our Christopher & Banks and C.J. Banks brands at www.christopherandbanks.com and www.cjbanks.com.  Today, these sites generally offer the entire assortment of merchandise carried at our Christopher & Banks, C.J. Banks, dual and outlet stores in addition to exclusive e-commerce products and extended sizes and lengths.  Inventory and order fulfillment for our e-commerce operations are handled by a third-party provider.

The web sites referenced above and elsewhere in this Transition Report on Form 10-K are for textual reference only and such references are not intended to incorporate our web sites into this Transition Report on Form 10-K.

Store Operations

We manage our store organization in a manner that encourages participation by our field associates in the execution of our business and operational strategies.  Our store operations are organized into districts and regions.  Each district is managed by a district manager, who typically supervises an average of 14 stores.  We have three regional managers who supervise our district managers.

Information Technology

We have built and maintain a scalable, cost-effective and integrated information technology infrastructure that makes the design, procurement and distribution of our products more efficient.  Our integrated systems provide, among other things, comprehensive product lifecycle management, sophisticated merchandise planning and allocation, order processing, efficient merchandise receiving and distribution, flexible point-of-sale transaction processing, robust customer relationship management capabilities and timely and reliable financial reporting.

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Competition

The women’s retail apparel business is highly competitive.  We believe that the principal basis upon which we compete is by providing fashionable, versatile, quality merchandise assortments at a great value and with a consistent fit.  We also believe our visual merchandise presentation, personalized customer service and store locations help to differentiate us from our competition.  Our competitors include a broad range of national and regional retail chains that sell similar merchandise, including department stores, specialty stores, discount stores, mass merchandisers and Internet-based retailers.  Many of these competitors are larger and have greater financial resources than us allowing them to engage in significant marketing campaigns and aggressive promotions.  We believe that our unique merchandise assortments, strong visual presentation, product quality, affordable merchandise price and customer service can enable us to compete effectively.

Employees

As of March 24, 2012, we had approximately 1,500 full-time and 4,900 part-time associates.  The number of part-time associates typically increases during November and December in connection with the holiday selling season and during our semi-annual Friends & Family events.  Approximately 225 of our associates are employed at our corporate office and distribution center facility, with the remaining associates employed in our store field organization.  None of our employees is represented by a labor union or is subject to a collective bargaining agreement.  We have never experienced a work stoppage and consider our relationship with our employees to be good.

Seasonality

Our quarterly results may fluctuate significantly depending on a number of factors, including general economic conditions, consumer confidence, customer response to our seasonal merchandise mix, timing of new store openings, adverse weather conditions, shifts in the timing of certain holidays and shifts in the timing of promotional events.  Traditionally, we have had higher sales, in the first and third quarters of our fiscal year, and have had lower sales in our second and fourth fiscal quarters.  In addition, the shift in our fiscal year to one ending at the close of business on that Saturday in January or February which falls closest to the last day of January from one that ended at the close of business on that Saturday in February or March which fell closest to the last day of February, and the related shift in the timing of our fiscal quarterly reporting periods may also have an impact on the seasonality of our business by reported quarter, especially when compared to prior periods.

Trademarks and Service Marks

The Company, through our wholly owned subsidiary, Christopher & Banks Company, is the owner of the federally registered trademarks and service marks “christopher & banks,” which is our predominant private brand, and “cj banks,” our women’s plus size private brand.  Management believes these primary marks are important to our business and are recognized in the women’s retail apparel industry.  Accordingly, we intend to maintain these marks and the related registrations.  U.S. trademark registrations are for a term of ten years and are renewable every ten years as long as the trademarks are used in the regular course of trade.  Management is not aware of any challenges to our right to use these marks in the United States.

Available Information

We make available free of charge, on or through our web site, located at www.christopherandbanks.com under the heading Investor Relations, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

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ITEM 1A.
RISK FACTORS

Our business is subject to a variety of risks and thus an investment in our stock is also subject to risk.  The following risk factors should be read carefully in connection with evaluating our business and in the forward-looking statements that are contained in this Transition Report on Form 10-K, as well as in some of our other filings with the Securities and Exchange Commission (“SEC”).  If any of the risks and uncertainties described below actually occurs, our business, financial condition and results of operations could be materially and adversely affected.  Additional risks that we do not yet know of or currently believe are immaterial may also impact our business operations.

All of our stores are located within the United States, making us highly susceptible to macroeconomic conditions in the United States and their impact on consumer demand for our apparel and accessories.

General economic conditions, particularly those in the United States, may adversely affect our business.  All of our stores are located within the United States, making our results highly dependent on U.S. macroeconomic conditions and their impact on consumer spending.  In addition, a significant portion of our total sales is derived from stores located in nine states:  Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, New York, Pennsylvania and Wisconsin, resulting in further dependence on local economic conditions in these states.

While the United States and many other international economies have improved since the global financial crisis in 2008, a prolonged economic downturn and slow recovery, including higher rates of unemployment, rising commodity prices and declining real estate market values, have had, and may continue to have, a material negative effect on our business, financial condition and results of operations.  In addition, economic conditions could negatively impact the Company’s retail landlords and their ability to maintain their shopping centers in a first-class condition and otherwise perform their obligations, which in turn could negatively impact our sales.

Our ability to attract customers to our stores that are located in regional malls and other shopping centers depends heavily on the success of the malls and the centers in which our stores are located and any decrease in customer traffic could cause our net sales to be less than expected.

The vast majority of our current stores are located in shopping malls and other retail centers.  Sales at these stores are derived in considerable part from the volume of traffic generated in those malls or retail centers and surrounding areas.  Our stores benefit from the ability of adjacent tenants to generate consumer traffic near our stores and the continuing popularity of the regional malls and outlet, lifestyle and power centers where our stores are located.  Customer traffic and, in turn, our sales volume may be adversely affected by, among other things, economic downturns nationally or regionally, high fuel prices, increased competition, changes in consumer demographics or a closing of an anchor store.  A reduction in customer traffic as a result of these and any other factors could result in lower sales and leave us with excess inventory.  In such circumstances, we may have to respond by increasing markdowns or initiating marketing promotions to reduce excess inventory, which could adversely impact our merchandise margins and operating income.

To take advantage of customer traffic and the shopping preferences of our customers, we need to maintain stores in desirable locations where competition for suitable store locations is strong.

Our failure to reverse declining gross margins would have a material adverse impact on our business, profitability and liquidity.

We experienced declines in our overall gross margin over the past several fiscal quarters.  If we are unable to reverse this trend during fiscal 2012, it is possible that our working capital and cash flows from operating activities would not be sufficient to meet our operating requirements and we would be required to access some, if not all, of our credit facility and potentially require other sources of financing to fund our operations.

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We operate in a highly competitive retail industry.  The size and resources of some of our competitors may allow them to compete more effectively than we can, which could reduce our revenues, profits and market share.

The women’s specialty retail apparel business is highly competitive.  We believe we compete primarily with department stores, specialty stores, discount stores, mass merchandisers and Internet-based retailers that sell women’s apparel.  Many of our competitors are companies with greater financial, marketing and other resources available to them and may offer a broader selection of merchandise than we do.  They may be able to adapt to changes in customer preferences more quickly, devote greater resources to the marketing and sale of their products, generate greater national brand recognition or adopt more aggressive pricing policies than we can.  In addition, the women’s specialty apparel industry has become more promotional over the past several years.  As a result, we are likely to continue to experience pricing pressure, which in turn could lead to increased marketing expenditures and loss of market share.  In addition to competing for sales, we compete for favorable store locations, lease terms and qualified associates.  Increased competition in these areas may result in higher costs, which could reduce our sales and margins and adversely affect our results of operations.

If we are unable to anticipate or react to changing consumer preferences in a timely manner and offer a compelling product at an attractive price, our sales, gross margins and results of operations would be adversely impacted.

Our success largely depends on our ability to consistently gauge and respond on a timely basis to fashion trends and provide a balanced assortment of merchandise that satisfies changing fashion tastes and customer demands.  Forecasting consumer demand for our merchandise is difficult.  In addition, our merchandise assortment differs from season to season and, at any given time, our assortment may not resonate with our customers.  On average, we begin the design process for apparel six to eight months before the merchandise is available to customers, and we typically begin to make purchase commitments four to six months in advance of delivery to stores.  These lead times make it difficult for us to respond quickly to changes in the demand for our products or to adjust the cost of the product in response to customers’ fashion or price preferences.  Any missteps may affect merchandise desirability, gross margins and inventory levels.  Our failure to anticipate, identify or react appropriately in a timely manner to changes in customers’ preferences could lead to more frequent and larger markdowns, which could result in lower sales and gross margins, reduce our profits and negatively impact our results of operations.  In addition, our margins may be impacted by changes in our merchandise mix and a shift toward merchandise with a lower gross margin at full retail.  These changes could have an adverse effect on our results of operations.  This could also negatively impact our image with our customers and result in diminished brand loyalty.  On the other hand, if we underestimate demand for our merchandise, we may experience inventory shortages, resulting in missed sales and lost revenues.

Our inability to maintain the value of our brands and our trademarks may adversely affect our business and financial performance.

The Christopher & Banks and C.J. Banks brand names are integral to our business.  Maintaining, promoting, positioning and growing our brands will depend largely on the success of our design, merchandising and marketing efforts and on our ability to provide a consistent, high quality customer experience.  Our business could be adversely affected if we fail to achieve these objectives for our brands.  In addition, our public image and reputation could be tarnished by negative publicity.  Any of these events could negatively impact sales.

We also believe that our “christopher & banks” and “cj banks” trademarks are important to our success and we register the majority of our trademarks in an effort to protect them.  If we cannot adequately protect our marks or prevent infringement of them, our business and financial performance could suffer.  In addition, others may assert rights in, or ownership of, trademarks and other intellectual property rights or in marks that are similar to ours, and we may not be able to successfully resolve these types of conflicts to our satisfaction.  In some cases, there may be holders who have prior rights to similar marks.  Failure to protect our trademarks could adversely affect our business.

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There are risks associated with our e-commerce business.

We sell merchandise over the internet through our web sites, www.christopherandbanks.com and www.cjbanks.com.  Our e-commerce operations are subject to numerous risks, including:

·                  the successful implementation of new systems and internet platforms;

·                  reliance on a single third party fulfillment center;

·                  rapid technological change;

·                  reliance on third party computer hardware and software;

·                  diversion of sales from our stores;

·                  liability for online content;

·                  lack of compliance with or violations of applicable state or federal laws and regulations, including those relating to online privacy and the resulting impact on consumer purchases;

·                  credit card fraud;

·                  system failures or security breaches and the costs to address and remedy such failures or breaches; and

·                  timely delivery of our merchandise to our customers by third parties.

There also can be no assurance that our e-commerce operations will meet our sales and profitability plans, and the failure to do so could negatively impact our revenues and earnings.

If third parties who manage some aspects of our business do not adequately perform their functions, we might experience disruptions in our business, resulting in decreased profits or losses and damage to our reputation.

We use third parties in various aspects of our business or to support our operations.  We have a long-term contract with a third party to manage much of our e-commerce operations, including order management, order fulfillment, customer care, and channel management services.  We rely on third parties to inspect the factories where our products are made for compliance with our vendor code of conduct.  We may rely on a third party for the implementation and/or management of certain aspects of our information technology infrastructure.  We also rely on third parties to transport merchandise and deliver it to our distribution center, as well as to ship merchandise to our stores and to our third party e-commerce fulfillment center.

Failure by any of these third parties to perform these functions effectively and properly could disrupt our operations and negatively impact our profitability and reputation.

Extreme and/or unseasonable weather conditions could have a disproportionately large effect on our business, financial condition and results of operations.

Extreme weather conditions in the areas in which our stores are located could have an adverse effect on our business, financial condition and results of operations.  For example, heavy snowfall or other extreme weather conditions over a prolonged period might make it difficult for our customers to travel to our stores.  Our business is also susceptible to unseasonable weather conditions.  For example, extended periods of unseasonably warm temperatures during the winter season or cool weather during the summer season could render a portion of our inventory incompatible with those unseasonable conditions in the affected areas of the United States.  Any such prolonged unseasonable weather conditions could adversely affect our business, financial condition and results of operations.

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Natural disasters, unusually adverse weather conditions (whether or not attributable to climate change), pandemic outbreaks, terrorist acts and global political events could cause permanent or temporary distribution center or store closures, impair our ability to purchase, receive or replenish inventory or cause customer traffic to decline, all of which could result in lost sales and otherwise adversely affect our financial performance.

The occurrence of one or more natural disasters, such as tornadoes, fires, flood and earthquakes, unusually adverse weather conditions (whether or not attributable to climate change), pandemic outbreaks, terrorist acts or disruptive global political events, such as civil unrest in countries in which our suppliers are located, or similar disruptions could adversely affect our operations and financial performance.  To the extent these events result in the closure of our distribution center and corporate headquarters, or a significant number of our stores, or impact one or more of our key suppliers, our operations and financial performance could be materially adversely affected.  These events also could have indirect consequences, such as increases in the cost of insurance, if they were to result in significant loss of property or other insurable damage.

We may not successfully implement our strategic and tactical initiatives.

In conjunction with recent changes in the chief executive officer position and in our merchant team, as discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Transition Report on Form 10-K, the Company has begun to undertake a series of initiatives to improve sales, gross margins and earnings in order to return the Company to profitability.  In particular, we are transforming our merchandise strategy and processes to better align with our customers’ fashion preferences, to improve our speed to market and to improve our ability to respond rapidly to customer preferences.  While some progress on these initiatives has begun, our ability to continue to make progress depends upon a number of factors which could result in unexpected costs, delays or failure to meet our internal expectations.  If we are unable to improve our financial performance, our results of operations and ability to generate cash flow could be adversely affected.

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

We currently lease all of our store locations.  Our leases range from month-to-month to approximately ten years.  A number of our leases have early termination provisions if we do not achieve specified sales levels after an initial term and, in some cases, allow us to pay rent based on a percent of sales if we fail to achieve certain specified sales levels.  Approximately 40% of our store base is currently paying reduced rent as a percent of sales and the leases for approximately 67% of our store base expire between now and January 2015.  We believe that over the last few years we have been able to negotiate favorable rental rates and extend leases due in part to the state of the economy and higher than usual vacancy rates.  It is possible this trend may not continue and that we will either need to pay higher operating costs or close stores in connection with such lease extension negotiations which could adversely impact our financial performance, results of operations and ability to generate cash flow.  Given the current state of our business, we have very few store openings planned for fiscal 2012.

Increasing our store productivity will be largely dependent upon our success in continuing to rationalize our existing store portfolio as well as in maintaining or increasing customer traffic in our stores.

Over the past six years, the average sales per square foot in our stores have steadily declined.  Improving the profitability of our existing stores and optimizing store productivity is critical to our future growth and profitability and will also depend on customer acceptance of our merchandise in all of our stores, including our dual and outlet stores.  Our ability to increase the productivity of our stores will be largely dependent upon our ability to continue to rationalize our existing store portfolio as well as our ability to generate customer traffic to our stores and to convert that traffic into sales.

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In November 2011, we announced our plan to close approximately 100 stores.  The majority of these stores have already been closed.  We also announced our intention to restructure the occupancy costs at the majority of our remaining stores as part of this process.  We expect that the reduction in store locations will help to increase our store productivity by eliminating overlap in certain markets and allowing management to focus its resources, such as store merchandise inventories and capital expenditures, on a more streamlined and productive store base.  If we are unable to execute successfully on this program to the extent or within the time that we expect or, if the restructured occupancy costs or improvements in store productivity are not at the level that we expect, our revenues, margins, liquidity and results of operations could be adversely affected.

Customer traffic depends upon our ability to promote our brand successfully with our existing customers and potential new customers by providing merchandise that satisfies customer demand in terms of price, quality, fit and in-stock position.  There can be no assurance that our efforts to generate customer traffic in our stores and the resulting sales from that traffic will be successful or at the levels we would expect, which could negatively impact our sales and store productivity and may leave us with excess inventory.  We may need to respond to any declines in customer traffic or sales generated from such traffic by increasing markdowns or initiating or continuing additional promotions to attract customers to our stores, which would adversely impact our margins and operating results.

The costs to close underperforming stores may be significant and may negatively impact our cash flows and our results of operations.

We regularly assess our portfolio of stores for profitability, and we close certain underperforming stores when appropriate under the circumstances.  We recently closed approximately 100 stores, most of which were underperforming, in order to reduce operating losses and to achieve improved long-term performance of our store base.  In closing underperforming stores, we negotiate with landlords to mitigate the amount of remaining lease obligations.  While most of those stores have closed we have not completed the negotiation of the lease termination for approximately 25 stores as of March 24, 2012.  There is no assurance we will reach acceptable negotiated lease settlements and, in some cases, the landlords may decide to pursue litigation.  As a result, costs to close underperforming stores may be significant and may negatively impact our cash flows and our results of operations.  The estimated costs and charges associated with store closings are also based on management’s assumptions and projections, and actual amounts may vary materially from our forecasts and expectations.  Additionally, while our goal in closing certain stores is to increase the productivity of our store portfolio, reductions in our overall number of stores will negatively impact our net sales.

The impact of potential consolidation of commercial and retail landlords could adversely impact our business, financial condition and results of operations.

Continued consolidation in the commercial retail real estate market could affect our ability to successfully negotiate favorable rental terms for our stores in the future.  Should significant consolidation continue, a large proportion of our store base could be concentrated with one or a few entities that could then be in a position to dictate unfavorable terms to us due to their significant negotiating leverage.  If we are unable to negotiate favorable lease terms with these entities, this could affect our ability to profitably operate our stores, which could adversely impact our business, financial condition and results of operations.

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

We monitor the performance and productivity of our store portfolio.  When we determine that a store is underperforming or is to be closed, we reassess the recoverability of the store’s long-lived assets, which in some cases can result in an impairment charge.  When a store is identified for impairment analysis, we estimate the fair value of the store assets using an income approach, which is based on estimates of future operating cash flows at the store level.  These estimates, which include estimates of future net store sales, direct store expenses, and non-cash store adjustments, are based on the experience and knowledge of management, including historical store operating results.  These estimates can be affected by factors that can be difficult to predict, such as future operating results, customer activity and future economic conditions, and require management to apply judgment.  In addition to any other potential or actual future store closings or any negative trends in our store performance, any decision to close, consolidate or downsize a store may result in additional future impairments of store assets.

We are highly dependent on a few suppliers and our business could suffer if we needed to replace them.

We do not own or operate any manufacturing facilities.  Instead we depend on independent third parties to manufacture our merchandise.  In the transition period, our ten largest suppliers accounted for approximately 55% of the merchandise we purchased and we purchased 18.6%, 9.5% and 7.9% of our goods respectively from our three largest suppliers.

We generally maintain non-exclusive relationships with the suppliers that manufacture our merchandise and we compete with other companies for production facilities.  As a result, we have no contractual assurances of continued supply or pricing, and any supplier could discontinue selling to us at any time.  Moreover, a key supplier may not be able to supply our inventory needs due to capacity constraints, financial instability or other factors beyond our control, or we could decide to stop using a supplier due to quality or other issues.  If we were required to change suppliers or if a key supplier were unable to supply desired merchandise in sufficient quantities on acceptable terms, we could experience delays in receipt of inventory until alternative supply arrangements were secured.  These delays could result in lost sales and a decline in customer satisfaction.  It is also possible that the inability of our suppliers to access credit, or concerns suppliers or their lenders may have with our creditworthiness, may cause them to extend less favorable terms to us, which could adversely affect our cash flows, margins and financial condition, as well as limit the availability under our revolving line of credit.  Additionally, delays by our suppliers in supplying our inventory needs could cause us to incur more expensive transportation charges, which may adversely affect our margins.

Our reliance on foreign sources of production poses various risks.

In the transition period, we directly imported approximately 16% of our merchandise and much of the merchandise we purchase domestically is made overseas.  Substantially all of our directly imported merchandise is manufactured in Asia.  The majority of these goods are produced in China and Indonesia. Any event causing a sudden disruption of manufacturing or imports from Asia or elsewhere, including the imposition of additional import restrictions, could harm our operations.

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

·                  significant delays in the delivery of cargo due to port security considerations;

·                  disruption in the operation of the ports where our products are imported;

·                  imposition of or increases in duties, taxes or other charges on imports;

·                  imposition of new legislation or regulations relating to import quotas or other restrictions that may limit or prohibit merchandise that may be imported into the United States from countries or regions where we do business;

·                  financial or political instability in any of the countries in which our merchandise is manufactured;

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·                  fluctuation in the value of the U.S. dollar against foreign currencies or restrictions on the transfer of funds;

·                  potential recalls or cancellations of orders for any merchandise that does not meet our quality standards;

·                  inability to meet our production needs due to raw material or labor shortages;

·                  disruption of imports by labor disputes and local business practices;

·                  political or military conflict involving the United States, which could cause a delay in the transportation of the Company’s products and an increase in transportation costs;

·                  heightened terrorism security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods; and

·                  natural disasters, disease epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas.

Any of the foregoing factors, or a combination of them, could have an adverse effect on our business.

Our raw material costs may increase, which could negatively impact our profitability.

The raw materials used to manufacture our products, in particular cotton, and our transportation and contract manufacturing labor costs are subject to availability constraints and price volatility.  Consequently, higher product costs could have a negative effect on our gross profit margin and increased selling prices could have a negative effect on our sales volume.  We may not be able to pass all or a portion of such higher sourcing costs on to our customers, which could negatively impact our profitability.

We rely on independent third party transportation providers for substantially all of our merchandise shipments.

We currently rely upon independent third party transportation providers for substantially all of our merchandise shipments, including shipments to our stores, our e-commerce fulfillment center and our e-commerce customers.  Our use of outside delivery services for shipments is subject to risks, including increases in fuel prices, which would increase our shipping costs, and employee strikes and inclement weather, which may impact a shipper’s ability to provide delivery services that adequately meet our shipping needs.  If we change shipping companies, we could face logistical difficulties that could adversely impact deliveries and we would incur costs and expend resources in connection with such a change.  Moreover, we may not be able to obtain terms as favorable as those received from independent third party transportation providers we currently use, which would increase our costs.

Our business could suffer if one or more of our suppliers fails to comply with applicable laws, including a failure to follow acceptable labor practices.

Our suppliers source the merchandise sold in our stores from manufacturers both inside and outside of the United States.  We expect manufacturers of the goods that we sell to operate in compliance with applicable laws and regulations and comply with our social compliance program and, although each of our purchase orders requires adherence to accepted labor practices, applicable laws and compliance with our vendor code of conduct, we do not supervise or control our suppliers or the manufacturers that produce the merchandise we sell.  Our social compliance program is intended to promote ethical business practices, and our staff and the staff of the third party auditing service company periodically visit or inspect the operations of our independent manufacturers to assess compliance with our vendor code of conduct.  Nonetheless, the violation of any labor, immigration, manufacturing safety or other laws by any of our suppliers or their U.S. and non-U.S. manufacturers, such as use of child labor, could damage our brand image or subject us to boycotts by our customers or activist groups.

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We have experienced significant management turnover and our future success will depend to a significant extent on our ability to retain the current management team and their ability and that of the current and future chief executive officer to execute a successful business strategy.

Over the past two years, we have experienced a number of changes in our executive ranks, including the positions of president and chief executive officer, chief financial officer and head merchant.  Also, our Board of Directors is currently conducting a search for a permanent chief executive officer (“CEO”).  The loss of any of our key personnel could have a material adverse effect on our business, as we may not be able to find suitable individuals to replace them on a timely basis.  In addition, any departures of key management could be viewed in a negative light by investors and analysts, which could cause our common stock price to decline.  Our future success will depend to a significant extent on the current and future CEO and management team’s ability to implement a successful business strategy, to lead and motivate our employees, and to work effectively together.  If this management team is not successful in that regard, our ability to execute our business strategy and tactical initiatives could be adversely affected.  Future turnover within senior management could adversely impact the execution of our business strategies and our results of operations, and it may make recruiting for future management positions more difficult.

Our results of operations could deteriorate if we fail to attract, develop and retain qualified employees.

Our success depends to a significant extent on our ability to attract, hire, motivate and retain qualified employees, including store personnel.  Competition for experienced managers in the retail industry is considerable, and our operations could be adversely affected if we cannot retain our experienced managers or if we fail to attract additional qualified individuals.  Our performance also depends in large part on the talents and contributions of engaged and skilled associates in all areas of our organization.  The turnover rate in the retail industry’s store operations is high, and qualified individuals of the requisite caliber and number needed to fill open positions may be in short supply in some geographic areas.  If we are unable to identify, hire, develop, motivate and retain talented individuals or if there is a significant increase in employee turnover rates, we may be unable to compete effectively and our business could be adversely impacted.

System security risk issues could disrupt our internal operations or information technology systems, and any such disruption could harm our net revenues, increase our expenses and harm our reputation, results of operations and stock price.  In addition, incidents in which we fail to protect our customers’ information against security breaches could result in monetary damages against us and could otherwise damage our reputation, harm our businesses and adversely impact our results of operations.

We rely on information systems to manage our operations, including a full range of retail, financial, sourcing and merchandising systems, and regularly make investments to upgrade, enhance or replace these systems.  The reliability and capacity of our information systems are critical.  Despite our preventative efforts, experienced computer programmers and hackers, or even internal users, may be able to penetrate, create systems disruptions or cause shutdowns of our information systems or that of third party companies with which we have contracted to provide payment processing services.  As a result, we could incur significant expenses addressing problems created by these breaches.  This risk is heightened because we collect and store customer information for marketing purposes.  Any limitations imposed on the use of such customer information, whether imposed by federal or state governments or business partners, could have an adverse effect on our future marketing activities.  In addition, any compromise of customer information could subject us to customer or government litigation and harm our reputation, which could adversely affect our business and growth.  Moreover, we could incur significant expenses or disruptions of our operations in connection with system failures or data breaches.  In addition, sophisticated hardware and operating system software and applications that we buy or license from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the systems.  The costs to us to eliminate or alleviate security problems, viruses and bugs, or any problems associated with the outsourced services provided to us, could be significant, and efforts to address these problems could result in interruptions, delays or cessation of service that may impede our sales, distribution or other critical functions.

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In addition, almost all states have adopted breach of data security statutes or regulations that require notification to consumers if the security of their personal information is breached.  Governmental focus on data security may lead to additional legislative action, and the increased emphasis on information security may lead customers to request that we take additional measures to enhance security.  As a result, we may have to modify our business with the goal of further improving data security, which would result in increased expenses and operating complexity.  Lastly, our reputation may be damaged by any compromise of security, loss or theft of customer data in our possession, which could negatively impact our business, financial condition or results of operations.

We depend on a single facility to conduct our operations and distribution of merchandise and our business would suffer a material adverse effect if this facility were shut down or its operations severely disrupted.

Our corporate headquarters and our only distribution facility are located in one facility in Plymouth, Minnesota.  Our distribution facility supports our retail stores and supplies merchandise to our third party e-commerce provider.  Virtually all of our merchandise is shipped from our suppliers to the distribution facility and then packaged and shipped to our stores or to our third party e-commerce provider.  Our stores and our third party e-commerce provider must receive merchandise in a timely manner in order to stay current with the fashion preferences of our customers.  If we encounter difficulties associated with the distribution facility or if it were to be shut down for any reason, we could face inventory shortages and delays in shipments.  In addition, much of our computer equipment and all of our senior management, including critical resources dedicated to merchandising, finance and administrative functions, are located at our corporate headquarters.  In the event of a disaster or fire, our management and operations distribution staff would have to find an alternative location, causing further disruption and expense to our business and operations.

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

Tightening of credit markets may adversely affect our business.

Tightening of the credit markets could make it more difficult for us to enter into agreements for new indebtedness (we had no debt outstanding as of January 28, 2012) or to obtain funding through the issuance of our securities.  Worsening economic conditions could also result in difficulties for financial institutions and other parties that we may do business with, which could potentially impair our ability to access financing under our existing Credit Facility.

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

The sufficiency and availability of our sources of liquidity may be affected by a variety of factors, including, without limitation: (i) the level of our operating cash flows, which are impacted by consumer acceptance of our merchandise, general economic conditions and the level of consumer discretionary spending; and (ii) our ability to maintain borrowing availability and to comply with applicable covenants contained in our Credit Facility.

As a specialty retailer dependent upon consumer discretionary spending, we have been adversely affected by the current economic environment, which has impacted our sales, margins, cash flows, liquidity, results of operations and financial condition.  Our ability to become profitable and to generate positive cash flows is dependent upon many factors, including improvement in economic conditions and consumer spending and our ability to execute successfully our financial plan and strategic initiatives.  There can be no assurance that our cash flows from operations will be sufficient at all times to support our Company without additional financing or credit availability.

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

Our Credit Facility contains borrowing base and other provisions that may restrict our ability to access it.

Lower than expected sales that negatively impact our cash flows could require us to borrow under our existing Credit Facility.  Although we currently do not have any borrowings under this facility, we use it periodically for letters of credit, which reduces the amount available for borrowings.  The actual amount of credit that is available from time to time under our Credit Facility is limited to a borrowing base amount that is determined according to the value of eligible inventory, as reduced by certain reserve amounts per the terms of the Credit Facility.  Consequently, it is possible that, should we need to access our Credit Facility, it may not be available in full.  Moreover, under our Credit Facility, we are subject to various covenants and requirements.  Should we be unable to comply with certain of the covenants and requirements in the Credit Facility, we may be unable to borrow under our Credit Facility.

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

Primarily as a result of our operating losses during fiscal 2012, our cash, cash equivalents and short and long-term investments have decreased from $105.6 million at February 26, 2011 to $61.7 million at January 28, 2012.  While we have availability under our Credit Facility to bolster our liquidity, we may need additional capital to fund our operations, particularly if our operating results and cash flows from operating activities do not improve substantially compared to recent periods or if the Credit Facility were unavailable.  The sale of additional equity securities or convertible debt securities would result in additional dilution to our stockholders.  If we borrow under our Credit Facility or incur other debt, our expenses will increase and we could be subject to additional covenants that may restrict our operating flexibility.  Newly issued securities may have rights, preferences and privileges that are senior or otherwise superior to those of our common stock.  There is no assurance that equity or debt financing will be available in amounts or on terms acceptable to us.  Without sufficient liquidity, we will be more vulnerable to further downturns in our business or the general economy, we may not be able to react to changes in our business or to take advantage of opportunities as they arise and we could be forced to curtail our operations, all of which could result in material adverse consequences to our business, results of operations and financial condition.

We do not expect to pay any cash dividends for the foreseeable future.

The Company recently suspended the payment of its quarterly dividend.  We do not anticipate that we will pay any cash dividends on shares of our common stock for the foreseeable future.  Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions relating to indebtedness we may incur, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.

Our stock price has fluctuated and may continue to fluctuate widely.

The market price for our common stock has experienced, and could continue to experience in the future, substantial volatility as a result of many factors.  Failure to meet market expectations, particularly with respect to sales, earnings and same-store sales, would likely result in a decline in the market value of our stock.

In addition, stock markets generally have experienced a high level of price and volume volatility and market prices for the stock of many companies, including ours, have experienced wide price fluctuations not necessarily related to their operating performance.

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The reported high and low sales prices of our common stock were $7.12 per share and $2.00 per share, respectively, during the transition period.  The current price of our common stock may not be indicative of future market prices.  The fluctuation of the market price of our common stock may have a negative impact on our liquidity and access to capital.  In addition, price volatility of our common stock may expose us to stockholder litigation, which may adversely affect our financial condition, results of operations and cash flows.

Failure to comply with legal and regulatory requirements could damage our reputation, financial condition and market price of our stock.

We are subject to numerous regulations and laws that govern our operations, marketing and sale of our merchandise, corporate structure, and financial controls and disclosures.  Our policies, procedures and internal controls are designed to comply with those applicable laws and regulations, including those imposed by the SEC and the New York Stock Exchange (“NYSE”), as well as applicable employment and consumer protection laws.  Any changes in regulations, the imposition of additional regulations or the enactment of any new legislation may increase the complexity of the regulatory environment in which we operate and the related cost of compliance.  Failure to comply with such laws and regulations may damage our reputation, impact our financial condition or reduce the market price of our stock.

We may be subject to adverse outcomes in current or future litigation matters.

We are involved from time-to-time in litigation and other claims against our business.  There are also other types of claims that could be asserted against us based on litigation that has been asserted against others, particularly in the retail industry, such as intellectual property infringement (as discussed below), customer and employment claims, including class action lawsuits claiming violation of federal or state laws.  These matters typically arise in the ordinary course of business but, in some cases, could also raise complex factual and legal issues requiring significant management time and, if determined adversely to the Company, could subject the Company to material liabilities.

In recent years, there has been increasing activity by companies which have acquired intellectual property rights but do not practice those rights (sometimes referred to as “patent trolls”) to engage in very broad licensing programs aimed at a large number of companies in a wide variety of businesses, or at retail companies specifically.  These efforts typically involve proposing licenses in exchange for a payment of money and may also include the threat or actual initiation of litigation for that purpose.  Any such litigation can be quite costly to defend, even if unsubstantiated or invalid.  There is one such matter pending against us as to which our third party e-commerce provider has agreed to defend and indemnify us, subject to the terms of our e-commerce agreement with them.  We also receive from time-to-time communications from patent trolls relating to proposed licenses.  It is not possible to predict the impact, if any, of such claims on our business and operations.

If, for any reason, we do not meet the NYSE continued listing requirements, our common stock could be delisted.

The continued listing requirements of the NYSE require, among other things, that the average closing price of our common stock be above $1.00 for over 30 consecutive trading days, and that our market capitalization meet certain minimum levels.  To date for this calendar year, through March 24, 2012, the lowest closing price for our stock during trading on the NYSE has been $2.02 per share; we have, therefore, been in compliance with the NYSE’s listing requirements.  Should we become non-compliant, we generally would have a specified period of time to cure any non-compliance, and we would intend to take steps to cure any such non-compliance.  If at the end of any cure period, however, we were unable to satisfy the NYSE criteria for continued listing, our common stock would be subject to delisting, which may reduce the liquidity and market price of our common stock and reduce the number of investors willing to hold or acquire our common stock.

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Provisions in our charter documents and Delaware law may inhibit a takeover and discourage, delay or prevent stockholders from replacing or removing current directors or management.

Provisions in our certificate of incorporation and by-laws may have the effect of delaying or preventing a merger with or acquisition of us, even where the stockholders may consider it to be favorable.  These provisions could also prevent or hinder an attempt by stockholders to replace current directors or management and include:

·                  prohibiting cumulative voting in the election of directors;

·                  authorizing the Board to designate and issue “blank check” preferred stock;

·                  limiting persons who can call special meetings of the Board of Directors or stockholders;

·                  prohibiting stockholder action by written consent; and

·                  establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted on by stockholders at a stockholders meeting.

Changes in accounting rules and regulations may adversely affect our results of operations.

Changes to existing accounting rules or regulations may impact our future results of operations or cause the perception that we are more highly leveraged.  Other new accounting rules or regulations and varying interpretations of existing accounting rules and regulations have occurred and may occur in the future.  For instance, accounting regulatory authorities have indicated that they may begin to require lessees to capitalize operating leases in their financial statements in the next few years.  If adopted, such a change would require us to record a significant amount of lease related assets and liabilities on our balance sheet and make other changes to the recording and classification of lease-related expenses on our statements of operations and cash flow.  This and other future changes to accounting rules or regulations or the questioning of current accounting practices may adversely affect our results of operations and financial position.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

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

ITEM 2.

PROPERTIES

Store Locations

Our stores are located primarily in shopping malls and retail centers in smaller to mid-sized cities and suburban areas.  Approximately 83% of our stores are located in enclosed malls that typically have numerous specialty stores and two or more general merchandise chains or department stores as anchor tenants.  The remainder of our Christopher & Banks, C.J. Banks and dual stores are located in power, strip and lifestyle shopping centers.  We opened our first outlet stores in fiscal 2011 and operated 25 locations in outlet centers as of March 24, 2012.

At March 24, 2012 Christopher & Banks, C.J. Banks, dual and outlet stores averaged approximately 3,300, 3,600, 3,800 and 3,900 square feet, respectively.  Approximately 85% of the total aggregate store square footage is allocated to selling space.

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At March 24, 2012, we operated 673 stores in 44 states as follows:

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Store Leases

All of our store locations are leased.  Lease terms typically include a rental period of ten years and may contain a renewal option.  Leases generally require payments of fixed minimum rent and contingent percentage rent, calculated based on a percent of sales in excess of a specified threshold.

The following table, which covers all of the stores operated by us at March 24, 2012, indicates the number of leases expiring during the periods indicated and the number of such leases with renewal options.  The number of stores with leases expiring in less than twelve months includes those stores which currently are operating on month-to-month terms.

For leases that expire in a given period, we plan to evaluate the projected future performance of each store location prior to lease expiration to determine if we will seek to negotiate a new lease for that particular location.

Corporate Office and Distribution Center Facility

In fiscal 2002, we purchased our 210,000 square foot corporate office and distribution center facility, located in Plymouth, Minnesota.  Prior to fiscal 2002, we leased this facility.  We utilize the entire facility for our corporate office and distribution center requirements and receive and distribute all of our merchandise for all of our stores through this one facility.  Management believes our corporate office and distribution center facility space is sufficient to meet our requirements for the next year.

e-Commerce Web Sites

In February 2008, we launched separate e-commerce web sites for our Christopher & Banks and C.J. Banks brands at www.christopherandbanks.com and www.cjbanks.com.  Web site hosting, order taking, customer service and order fulfillment related to our e-commerce operations are outsourced to a third-party provider.

ITEM 3.
LEGAL PROCEEDINGS

We are subject, from time to time, to various claims, lawsuits or actions that arise in the ordinary course of business.  Although the amount of any liability that could arise with respect to any current proceedings cannot, in management’s opinion, be accurately predicted, any such liability is not expected to have a material adverse impact on our financial position, results of operations or liquidity.

ITEM 4.
MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 4A.
EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information regarding our executive officers as of March 24, 2012.

Joel N. Waller was elected Chief Executive Officer effective February 17, 2012. Mr. Waller joined Christopher & Banks on December 14, 2011 as President for a one-year term.  Mr. Waller has more than 30 years of retail experience.  From 2008 to 2010, Mr. Waller served as President of the A.M. Retail Group, a specialty retailer of leather outerwear, accessories and apparel.  From 2005 to 2008, he was the Chief Executive Officer of The Wet Seal, Inc., a specialty retailer of juniors clothing, shoes and accessories.  Prior to that, he was the Chief Executive Officer of Wilsons Leather, a specialty retailer of leather outerwear, accessories and apparel, for approximately twenty years.  Mr. Waller has also served as an executive retail consultant.

Monica L. Dahl has served as Senior Vice President, Multi-Channel Marketing, Investor Relations and Business Strategy since November 2011.  From July 2010 through November 2011, Ms. Dahl served as Senior Vice President, e-Commerce, Planning & Allocation, and Strategy.  From August 2008 to July 2010, Ms. Dahl served as Senior Vice President, Planning & Allocation and e-Commerce.  From December 2005 to July 2008, she was Executive Vice President and Chief Operating Officer.  Ms. Dahl served as Vice President of Business Development from November 2004 to December 2005.  Upon joining the Company in May 2004, Ms. Dahl was Director of Business Development.  From January 1993 to April 2004, Ms. Dahl held various positions with Wilsons Leather, including Director of Sourcing; Divisional Merchandise Manager — Women’s Apparel; Director of Merchandise Planning; and several positions in the Finance department.  Ms. Dahl was with Arthur Andersen LLP from December 1987 to December 1992.

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

Michael J. Lyftogt was elected Senior Vice President, Chief Financial Officer in February 2011.  From July 2010 to February 2011 Mr. Lyftogt served as Chief Accounting Officer and Interim Chief Financial Officer.  Prior to his appointment as Chief Accounting Officer in July 2010, he served as Vice President, Finance from March 2006 to July 2010 and was the Company’s Controller from March 1998 through February 2006.  He also served as Interim Chief Financial Officer from December 2008 to June 2009.  Prior to joining the Company, Mr. Lyftogt was Controller for M.F. Bank & Company, Inc.  Mr. Lyftogt also has previous experience in public accounting.

Michelle L. Rice has served as Senior Vice President, Store Operations since January 2012.  From February 2011 through January 2012 she was Vice President, Store Operations.  From July 2010 until February 2011, Ms. Rice was Vice President, Stores and from August 2008, when she joined the Company, until July 2010 she was a Regional Vice President.  Ms. Rice has approximately 20 years of retail industry experience.  She was the Regional Sales Director at Fashion Bug, a division of Charming Shoppes, a fashion retailer of missy and plus size apparel, from November 2006 to August 2008 and was a District Operations Manager at TJX Corporation from 2003 to November 2006.

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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 “CBK”.  The quarterly high and low closing stock sales price information for our common stock for the transition period and fiscal 2011 is included in the table below.

As of March 24, 2012, we had 106 holders of record of our common stock and approximately 4,500 beneficial owners.  The last reported sales price on the NYSE of our common stock on March 24, 2012 was $2.25.

In fiscal 2004, our Board of Directors declared our first cash dividend.  The declaration provided for an on-going cash dividend of $0.04 per share to be paid quarterly, subject to Board approval.  In July 2006, our Board of Directors authorized an increase in the quarterly cash dividend to $0.06 per share.  A quarterly dividend was paid each quarter through October 2011 and in December 2011 we announced that our Board of Directors had suspended the payment of a quarterly dividend.

The following table sets forth information concerning purchases of our common stock for the periods indicated.

(1) The shares of common stock in this column represent shares that were surrendered to the Company by stock plan participants in order to satisfy minimum withholding tax obligations related to vesting of restricted stock awards.

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Comparative Stock Performance

The graph below compares the cumulative total stockholder return on the Company’s common stock (“CBK”) from March 3, 2007 to January 28, 2012 to the cumulative total stockholder return of the S&P 500 Index and the S&P Apparel Retail Index.  The comparisons assume $100 was invested on March 3, 2007 in our common stock, the S&P 500 Index and the S&P Apparel Retail Index and also assumes that any dividends are reinvested.

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ITEM 6.

SELECTED FINANCIAL DATA

The following selected financial data has been derived from our audited Consolidated Financial Statements and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Transition Report on Form 10-K and the Consolidated Financial Statements and related notes appearing in Item 8 of this Transition Report on Form 10-K.  The transition period ended January 28, 2012 consisted of 48 weeks.  All other years presented consisted of 52 weeks.

(1)  The year ended January 28, 2012 consisted of 48 weeks.  All other years presented consisted of 52 weeks.

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(1)  The transition period ended January 28, 2012 consisted of 48 weeks.  All other years presented consisted of 52 weeks.

(2)  Same store sales data is calculated based on the change in net sales for stores that have been open for more than 13 full months and includes stores, if any, that have been relocated within the same mall.  We typically do not expand or relocate stores within a mall.  Stores where square footage has been changed by more than 25 percent are excluded from the same store sales calculation for 13 full months.  Stores closed during the year are included in the same store sales calculation only for the full months of the year during which the stores were open.  In addition, sales which are initiated in stores but fulfilled through our e-commerce websites are included in the calculation of same store sales.

(3) The computation of net sales per gross square foot includes stores which were open for all months of the fiscal year.  Relocated and expanded stores, if any, are included in the calculation.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related Notes included in Item 8 of this Transition Report on Form 10-K.

Executive Overview

Christopher & Banks Corporation, a Delaware corporation, is a Minneapolis-based retailer of women’s apparel and accessories, which operates retail stores through its wholly owned subsidiaries.  On January 6, 2012, our Board of Directors amended and restated our By-Laws to provide that our fiscal year will end at the close of business on that Saturday in January or February which falls closest to the last day of January.  Prior to this change, our fiscal year ended at the close of business on that Saturday in February or March which fell closest to the last day of February.  As a result, this Transition Report on Form 10-K covers the transition period consisting of the eleven months (48 weeks) ended January 28, 2012 (“transition period” or “transition year”).  The fiscal years ended February 26, 2011 (“fiscal 2011”) and February 27, 2010 (“fiscal 2010”) each consisted of twelve months (52 weeks).  Therefore, when our results of operations for the transition period are being compared to the results for fiscal 2011, we are comparing results for an 11-month period to results for a 12-month period.  In addition, our fourth quarter for the transition period was shortened to the two-month period ended January 28, 2012.  In this Transition Report on Form 10-K our current fiscal year, the 53-week period ending February 2, 2013, is referred to as “fiscal 2012”.  We believe the change in our fiscal year end will provide certain benefits, including aligning our reporting periods to be more consistent with those of other specialty retail apparel companies.

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As of January 28, 2012, we operated 686 stores in 44 states, including 402 Christopher & Banks stores, 199 C.J. Banks stores, 62 dual concept stores and 23 outlet stores.  Our Christopher & Banks brand offers distinctive fashions featuring exclusively designed, coordinated assortments of women’s apparel in sizes 4 to 16 and in petite sizes 4P to 16P.  Our C.J. Banks brand offers similar assortments of women’s apparel in sizes 14W to 26W.  Our dual concept and outlet stores offer an assortment of both Christopher & Banks and C.J. Banks apparel servicing the petite, missy and women-size customer in one location. We also operate e-Commerce web sites for our two brands at www.christopherandbanks.com and www.cjbanks.com which, in addition to offering the apparel and accessories found in our stores, also offer exclusive sizes and styles available only online.

We strive to provide our customers quality apparel at a reasonable price with a consistent fit.  Our overall strategy for our two brands, Christopher & Banks and C.J. Banks, is to offer a compelling, evolving assortment of unique and classic apparel through our stores and e-Commerce web sites in order to satisfy our customers’ expectations for style, quality, value and fit, while providing exceptional, personalized customer service.

Transition Period Summary

The transition period was extremely challenging for Christopher & Banks as we reported a net loss of $71.1 million, or $2.00 per share.  Customers did not respond favorably to our merchandise assortment throughout the year, but particularly in the third and fourth quarters when we provided more fashion forward product at higher price points.  As a result, same store sales declined 5% for the year and merchandise margins declined by approximately 1,130 basis points when compared to fiscal 2011.  This dramatic reduction in merchandise margins was the result of a considerable increase in promotional activity as we took deeper markdowns to drive sales and clear through slower selling product.  Our merchandise margins were also impacted by year-over-year increases in product costs which we were not able to pass on to our customers, as there was poor acceptance of many of our product offerings at the full retail ticket price.

We ended the transition period with cash, cash equivalents, and short and long-term investments of $61.7 million, compared to $105.6 million as of February 26, 2011.  Total inventory was $39.5 million at January 28, 2012, compared to $39.2 million at February 26, 2011.  The increase in inventory was largely due to higher e-commerce inventory and to a shift in payment terms made by the Company in February 2011, which became effective in the second quarter of the transition period.

Other Developments

Effective February 17, 2012, we announced that our Board of Directors had elected Joel N. Waller as our President and Chief Executive Officer.  Mr. Waller joined Christopher & Banks on December 14, 2011 as President for a one-year term.  Mr. Waller replaced Larry C. Barenbaum, our former Chief Executive Officer, who resigned all positions with the Company, including the position of Director, effective February 17, 2012.  We incurred a pre-tax severance charge of approximately $0.3 million in the first quarter of fiscal 2012 in connection with Mr. Barenbaum’s resignation.  At the same time, we also announced that our Board of Directors had formed a committee to commence a search for a permanent Chief Executive Officer.

Our Board elected Lisa W. Pickrum to our Board effective June 1, 2011.  Effective July 27, 2011, Robert Ezrilov’s term as director ended and he retired from the Board.  As of March 24, 2012, the Board consisted of seven directors, all of whom are independent directors.

Outlook and Initiatives

Our results of operations for the eleven months ended January 28, 2012 reflect difficulties in improving net sales and in maintaining an acceptable gross margin, particularly given the level of our aggressive promotional activity.  We expect these trends will continue into the first and second quarters of fiscal 2012 as highly promotional activity will continue to be required to clear residual holiday/winter merchandise deliveries.  In addition, we anticipate margins will continue to be pressured in the first and second quarters of fiscal 2012 as we do not expect to be able to pass on the full impact of higher product costs to our customers, given the overall resistance of our customers to full retail ticket prices in the second half of the transition period.

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Based on our current plans for our next fiscal year, we believe cash flows from operating activities, working capital and borrowing availability under our Credit Facility will be sufficient to meet our operating and capital expenditure requirements for the next twelve months.  While we expect to see a continuation of challenging sales and gross profit margin trends in the first half of our next fiscal year, our operating plan contemplates improvements in net sales per store, operating results and cash flows from operations. The plan is dependent on our ability to consistently deliver merchandise that is appealing to our customer on a competitive and profitable basis and to effectively manage our costs in order to satisfy our working capital and other operating cash requirements.

The ability to achieve our operating plan is based on a number of assumptions which involve significant judgment and estimates of future performance.  If our sales, gross margins and operating results continue to fall short of our expectations, we may be required to access some, if not all, of our Credit Facility and potentially require other sources of financing to fund our operations.  We will continue to monitor our performance and liquidity and, if we believe it is appropriate or necessary to borrow under the Credit Facility or obtain additional liquidity, we would anticipate taking further steps intended to improve the Company’s financial position, such as modifying our operating plan, seeking to further reduce costs, decrease our cash spend and/or capital expenditures, as well as evaluating alternatives and opportunities to obtain additional sources of liquidity through the debt or equity markets.  It is possible these actions may not be sufficient or available or, if available, available on terms acceptable to us.

Chief Executive Officer

Joel N. Waller initially joined Christopher & Banks on December 14, 2011 as President for a one-year term.  On February 17, 2012, Mr. Waller was elected by our Board of Directors as Chief Executive Officer in connection with Larry C. Barenbaum’s resignation as Chief Executive Officer.  Mr. Waller brings extensive retail experience to Christopher & Banks, having served as Chief Executive Officer for Wilsons Leather and The Wet Seal, Inc.  While his initial focus has been on product development, sourcing and merchandising, Mr. Waller also brings significant management and operational experience to our organization that we believe will assist us in revitalizing our business in our efforts to return to profitability.

Merchandising

In the third quarter of the transition period, we also reestablished the position of Divisional General Merchandise Manager in our merchandise area.  We added two Divisional General Merchandise Managers, one for the Christopher & Banks division and one for the C.J. Banks division.  One of the Divisional General Merchandise Managers was promoted internally, while the other is a new hire.  Both individuals bring strong retail experience and merchandising disciplines to our merchant team.  With the recent addition of our new President and Chief Executive Officer, and the reestablishment of the Divisional General Merchandise Manager positions, we are in the process of reevaluating our merchandising and sourcing strategies.  Our merchant team is currently focused on delivering increased sales and improved gross profit through executing the following initiatives:

·Provide a balanced merchandise assortment

In the third and fourth quarters of the transition period, the majority of our merchandise assortments consisted of higher-priced, fashion-forward styles.  We provided our customer with too many upscale choices at prices our customers were unwilling to pay.  The result was a significant increase in markdown levels required to compel our customers to purchase and allow us to clear-through slow-selling styles.

Our merchants began impacting a portion of our Summer fiscal 2012 product deliveries by editing the number of styles offered and reducing retail ticket prices to levels more in-line with our traditional offerings and more acceptable to our customers.  Going forward, our merchants are focusing on building assortments that are more balanced by increasing the amount of ‘good’ and ‘better’ product offerings and decreasing the number of ‘best’ styles.  This involves increasing the penetration of core product in our deliveries, including basic knit layering pieces and classic bottoms, increasing the representation of mid-priced ‘better’ selections, while reducing the number of higher priced ‘best’ styles.  Our goal is to reduce the overall number of unique styles we carry, which will allow us to present a more focused and compelling product assortment with fewer, more relevant selections.  We expect these efforts will be fully reflected in our September in-store product offerings.

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·Reduction and simplification of price points

We increased our retail ticket prices in the transition period and our customers failed to respond positively.  The price increases resulted from elevated commodities costs and providing more intricately constructed styles.  Our customers were highly resistant to the increased price points.  As we move forward, our goal is to mitigate markdown levels by offering more attractive opening price points and simplifying the number of price points offered to our customers.

The change in our approach to pricing is intended to work hand-in-hand with our ‘good, better, best’ product initiative.  As we increase the penetration of core product offerings in our assortments, we expect to be able to drive sales volume by offering more styles at attractive opening price points that we believe our customers will accept without steep discounting.  In addition, we will reduce the number of price points across all categories to simplify the shopping experience.  Finally, we are committed to offering our customers value.  All styles, including those falling into our ‘better’ and ‘best’ classifications, will be priced at levels that are more attractive to our customers. We believe that this will result in improved sales, reduced markdowns and increased gross profit.

·Implement a more targeted promotional cadence and markdown strategy

We are analyzing our promotional cadence and adjusting our markdown strategy in an effort to minimize and reverse the significant merchandise margin erosion we experienced in the transition period.  While we anticipate that in order to be competitive we will need to continue to be promotional in fiscal 2012, we are testing and implementing more targeted, unique promotions in an effort to improve merchandise margins and lessen our reliance on storewide promotional events.  In addition, we have adopted a more focused and timely approach to our markdown process that quickly addresses underperforming styles on a unique basis in an effort to utilize our markdowns as efficiently as possible.

·Improve product flow, speed to market and reduce lead times

Historically we have developed and delivered a full, unique merchandise assortment to our stores on a monthly basis.  In order to simplify and accelerate our product development process, we will reduce the number of major product deliveries in half to six times annually beginning in September 2012.  To maintain product freshness, we will supplement the major deliveries with a consistent flow of replenishment product and select new colors and styles to all stores on an ongoing basis.

More robust product testing efforts will also be incorporated into our development process while we work with current and new suppliers to identify opportunities to shorten product lead times and enhance our ability to react quickly to current selling trends in-season.

Restructuring/Store Closing Initiative

On November 11, 2011, we announced that, following an in-depth analysis of our store portfolio, the Board approved a plan to close approximately 100 stores, most of which were underperforming.  Ultimately, 103 stores were identified for closure, and these closings are expected to positively impact results of operations in our next fiscal year.  This group of stores generated approximately $35 million of sales and store-level operating losses of approximately $11 million, which included approximately $7 million of non-cash impairment charges, on a trailing 12-month basis through January 28, 2012.  Ninety of the 103 stores identified for closure were closed in the transition period, with two closing in November, seven closing in December and 81 closing in January.  We closed five stores in February 2012, six stores in March 2012 and expect to close the remaining two stores by the end of fiscal 2012.

In addition to the store closures, we are seeking to restructure the occupancy costs of a majority of our remaining stores and to convert or consolidate a number of existing Christopher & Banks and C.J. Banks stores into dual stores.  In 19 of the centers where we closed stores in the fourth quarter, we converted the remaining sister store into a dual-store location in order to continue to serve all of our missy, petite and women’s plus size customers in those locations.  The store closings resulted in the termination of approximately 27% of our store operations field management team and 14% of our overall full-time and part-time store sales associate positions.  The Company also reduced its corporate office headcount by approximately 15% during the third and fourth quarters of the transition period.

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The Company recorded total restructuring and asset impairment charges of approximately $21.2 million in the transition period.  In the third quarter, we recorded $11.4 million of non-cash asset impairment charges, which consisted of approximately $7.4 million of asset impairment charges related to stores identified for closure and a non-cash charge of approximately $4.0 million related to store level asset impairments for stores which the company will continue to operate.  We also recorded a $0.8 million charge in the third quarter related to severance charges for field management and corporate office personnel who were terminated in October 2011 and for field associates who were terminated as a result of the store closures.

In the fourth quarter of the transition period, we recorded total restructuring charges of $9.0 million.  Approximately $8.3 million related to accrued lease termination costs associated with the 103 stores identified for closure.  The Company is in the process of negotiating termination agreements with these landlords and expects to settle these liabilities within the next twelve months.  The charge also included approximately $0.4 million of severance charges related to additional terminations at our corporate office and in our field organization and $0.3 million of other miscellaneous store closing costs.  The following table details information related to restructuring and impairment charges recorded during the transition period.