<SUBMISSION>
<ACCESSION-NUMBER>0000950152-05-009821
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>7
<PERIOD>20051029
<FILING-DATE>20051208
<DATE-OF-FILING-DATE-CHANGE>20051208
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>DSW Inc.
<CIK>0001319947
<ASSIGNED-SIC>5661
<IRS-NUMBER>310746639
<STATE-OF-INCORPORATION>OH
<FISCAL-YEAR-END>0129
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-32545
<FILM-NUMBER>051252405
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>4150 EAST 5TH AVENUE
<CITY>COLUMBUS
<STATE>OH
<ZIP>43219
<PHONE>(614) 237-7100
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>4150 EAST 5TH AVENUE
<CITY>COLUMBUS
<STATE>OH
<ZIP>43219
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>l17332ae10vq.htm
<DESCRIPTION>DSW INC.           10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>DSW Inc.           10-Q</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 10-Q</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the quarterly period ended October&nbsp;29, 2005
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the transition period from </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> <B>to </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission File Number </B><U><B>1-32545</B></U></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B><FONT style="border-bottom: 1px solid #000000">DSW INC.</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Ohio
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">31-0746639</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of<BR>
incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer Identification No.)</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">4150 East 5th Avenue Columbus, Ohio
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">43219</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">(614)&nbsp;237-7100</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="margin-top: 1px"><FONT style="border-top: 1px solid #000000">Registrant&#146;s telephone number, including area code</FONT></DIV></DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Not applicable</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="margin-top: 1px"><FONT style="border-top: 1px solid #000000">(Former name, former address and former fiscal year, if changed since last report)</FONT></DIV></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months and (2)
has been subject to such filing requirements for the past 90&nbsp;days. YES <FONT face="Wingdings">&#254;</FONT> NO <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule&nbsp;12b-2 of
the Exchange Act).<BR> YES <FONT face="Wingdings">&#111;</FONT> NO <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of the
Exchange Act). YES <FONT face="Wingdings">&#111;</FONT> NO <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The number of outstanding Class&nbsp;A common shares, without par value, as of November&nbsp;30, 2005 was
16,189,578 and Class&nbsp;B common shares, without par value, as of November&nbsp;30, 2005 was 27,702,667.
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">









<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW INC.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left"><A href="#118"><B>Part I. Financial Information</B></A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><A href="#119">Item&nbsp;1.&nbsp;Financial Statements</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#101">Condensed Consolidated Balance Sheets at October&nbsp;29, 2005 and January&nbsp;29, 2005
</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><A href="#102"><DIV style="margin-left:15px; text-indent:-15px">Condensed Consolidated Statements of Income for the three and nine months ended October&nbsp;29, 2005 and October&nbsp;30, 2004
</DIV></A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#103"><DIV style="margin-left:15px; text-indent:-15px">Condensed Consolidated Statements of Shareholders&#146; Equity for the nine months ended October&nbsp;29, 2005 and October&nbsp;30, 2004
</DIV></A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="bottom">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><A href="#104"><DIV style="margin-left:15px; text-indent:-15px">Condensed Consolidated Statements of Cash Flows for the nine months ended October&nbsp;29, 2005 and October&nbsp;30, 2004
</DIV></A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="bottom">6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#105">Notes to the Condensed Consolidated Financial Statements
</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><A href="#106">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><A href="#107">Item&nbsp;3. Quantitative and Qualitative Disclosures About Market Risk</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">25</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><A href="#108">Item&nbsp;4. Controls and Procedures</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">25</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left"><A href="#109"><B>Part
II. Other Information</B></A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><A href="#110">Item&nbsp;1. Legal Proceedings</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">26</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><A href="#111">Item&nbsp;2. Unregistered Sales of Equity Securities and Use of Proceeds</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><A href="#112">Item&nbsp;3. Defaults Upon Senior Securities</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><A href="#113">Item&nbsp;4. Submission of Matters to a Vote of Security Holders</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><A href="#114">Item&nbsp;5. Other Information</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><A href="#115">Item&nbsp;6. Exhibits</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left"><A href="#116">Signature</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">28</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="5" valign="top" align="left"><A href="#117">Index to Exhibits</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">29</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l17332aexv4w1.htm">Exhibit 4.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l17332aexv31w1.htm">Exhibit 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l17332aexv31w2.htm">Exhibit 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l17332aexv32w1.htm">Exhibit 32.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l17332aexv32w2.htm">Exhibit 32.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l17332aexv99.htm">Exhibit 99</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt">- 2 -
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>PART
I. FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;1.
Financial Statements</B>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW INC.</B>
</DIV>

<DIV align="left">
<A name="101"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONDENSED CONSOLIDATED BALANCE SHEET</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(in thousands, except share amounts)</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">January 29,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,339</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,291</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receivables from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,940</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,261</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">247,846</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advances to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,676</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,056</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,899</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tradenames and other intangibles, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,079</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">881</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">483,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">395,437</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">69,393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,804</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,127</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,560</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,443</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108,927</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term obligations, net of current maturities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other noncurrent liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,684</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Shareholders&#146; equity:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Class&nbsp;A Common Shares, no par value;
170,000,000 authorized; 16,189,001
and none issued and outstanding, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Class&nbsp;B Common Shares, no par value;
100,000,000 authorized; 27,702,667
and 27,702,667 issued and outstanding, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101,442</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred Shares, no par value; 100,000,000
authorized; no shares issued or outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,384</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,729</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">294,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,826</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">483,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">395,437</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements.
</DIV>


<P align="center" style="font-size: 10pt">-3-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW INC.</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONDENSED CONSOLIDATED STATEMENTS OF INCOME</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(in thousands, except per share amounts)</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Three months ended</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine months ended</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">302,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">262,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">860,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">729,406</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(219,221</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(184,991</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(618,077</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(517,427</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">242,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">211,979</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(65,292</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(60,664</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(188,712</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(165,751</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,228</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(989</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,792</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,460</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
<TD align="right">(6,592</TD>
    <TD nowrap >)</TD>
<TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,876</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,768</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,965</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,358</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,942</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,613</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted earnings per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in per share calculations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements.
</DIV>


<P align="center" style="font-size: 10pt">-4-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW INC.</B>
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(in thousands)</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Number of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Class A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Class B</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Class A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Class B</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="LEFT" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">Expense</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, January&nbsp;31, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">101,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">143,871</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, October&nbsp;30, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">101,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">170,026</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, January&nbsp;29, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">101,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">77,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">178,826</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sale of stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">277,937</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,937</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,142</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend to parent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(101,442</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,558</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(190,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted stock units granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,887</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of deferred
compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock units granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, October&nbsp;29, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">280,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,729</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">294,508</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements.
</DIV>


<P align="center" style="font-size: 10pt">-5-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW INC.</B>
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(in thousands)</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine months ended</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income
to net cash provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,770</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of debt issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">382</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of deferred compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,959</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss on disposal of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in working capital, assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,985</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,440</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,779</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,372</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(48,440</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,962</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,022</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advances to/from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,676</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,621</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,789</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,091</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from lease incentives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,396</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other noncurrent liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,008</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,741</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,097</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from investing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,850</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,860</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sale of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,824</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,818</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from financing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments on capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(138</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sale of stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,937</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payment of note to parent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(190,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net (decrease)&nbsp;increase in revolving credit facility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(570</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Grant of stock units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,862</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase in cash and equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,141</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and equivalents, beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,076</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and equivalents, end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,217</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements.
</DIV>


<P align="center" style="font-size: 10pt">-6-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW Inc.</B>
</DIV>

<DIV align="left">
<A name="105"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><U><B>NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></U></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>BUSINESS OPERATIONS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>DSW Inc. (&#147;DSW&#148;) and its wholly-owned subsidiary, DSW Shoe Warehouse, Inc. (&#147;DSWSW&#148;), are
herein referred to collectively as DSW or the Company. Prior to December&nbsp;2004, DSW was a
wholly-owned subsidiary of Value City Department Stores, Inc., a wholly-owned subsidiary of
Retail Ventures, Inc. (&#147;RVI&#148;). In December&nbsp;2004, RVI completed a corporate reorganization
whereby Value City Department Stores, Inc. merged with and into Value City Department Stores
LLC (&#147;Value City&#148;), another wholly-owned subsidiary of RVI. In turn, Value City transferred
all of the issued and outstanding shares of DSW to RVI in exchange for a promissory note. On
June&nbsp;29, 2005, DSW commenced an initial public offering (&#147;IPO&#148;) that closed on July&nbsp;5, 2005.
DSW is listed on the New York Stock Exchange trading under the symbol &#147;DSW&#148;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>DSW operates in a single segment and sells better-branded footwear and accessories. As of
October&nbsp;29, 2005, DSW operated a total of 197 stores located throughout the United States. The
DSW stores offer a wide selection of brand name and designer dress, casual and athletic
footwear for men and women. DSW also supplies leased shoe departments for three
non-affiliated retailers under supply agreements. Under these supply agreements, DSW supplies
merchandise for shoe departments in Stein Mart, Inc. (&#147;Stein Mart&#148;), Gordmans, Inc.
(&#147;Gordmans&#148;) and Frugal Fannie&#146;s Fashion Warehouse (&#147;Frugal Fannie&#146;s&#148;). These agreements were
entered into in July&nbsp;2002, June&nbsp;2004 and September&nbsp;2003, respectively. Additionally, pursuant
to a license agreement with Filene&#146;s Basement, Inc. (&#147;Filene&#146;s Basement&#148;), a wholly-owned
subsidiary of RVI, DSW supplies leased shoe departments in most Filene&#146;s Basement stores. As
of October&nbsp;29, 2005, DSW supplied 157 leased departments for Stein Mart, 53 for Gordmans, 25
for Filene&#146;s Basement and one for Frugal Fannie&#146;s.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the three months and nine months ended October&nbsp;29, 2005, DSW opened 13 and 27 new DSW
stores, respectively, and, during the nine months ended October&nbsp;29, 2005, we re-categorized
two DSW/Filene&#146;s Basement combination locations as leased shoe departments which are included
in DSW.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INITIAL PUBLIC OFFERING</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On July&nbsp;5, 2005, DSW closed on its IPO of 14,062,500 Class&nbsp;A common shares. In connection with
this offering, DSW granted an option to the underwriters to purchase up to an additional
2,109,375 Class&nbsp;A common shares to cover over-allotments, which option was exercised in full
by the underwriters and also closed on July&nbsp;5, 2005. DSW sold 16,171,875 Class&nbsp;A common shares
raising net proceeds of $285.8&nbsp;million, net of the underwriters&#146; commission and before
estimated expenses of approximately $7.9&nbsp;million. DSW used the net proceeds of the offering to
repay $196.6&nbsp;million of intercompany indebtedness, including interest, owed to RVI and for
working capital and general corporate purposes, including the paying down of $20&nbsp;million
outstanding on DSW&#146;s old secured revolving credit facility and $10&nbsp;million intercompany
advance. The 410.09 common shares of DSW held by RVI outstanding</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-7-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><U><B>NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></U></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at January&nbsp;29, 2005 were converted to 27,702,667 Class&nbsp;B common shares. It is the 27,702,667
Class&nbsp;B common shares which are being used in the prior period&#146;s calculation of earnings per
share. Subsequent to the IPO, the transactions between DSW and RVI and its other subsidiaries
are settled in accordance with a shared services agreement and resulted in the advances from
affiliates being classified as a current receivable.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>BASIS OF PRESENTATION</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The accompanying unaudited interim financial statements should be read in conjunction with the
final prospectus dated June&nbsp;28, 2005 included in DSW&#146;s Registration Statement on Form&nbsp;S-1 (No.
333-123289).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the opinion of management, the unaudited interim financial statements reflect all
adjustments, consisting of normal recurring adjustments, which are necessary to present fairly
the consolidated financial position and results of operations for the periods presented.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>STOCK BASED COMPENSATION</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>DSW has various stock-based employee compensation plans. DSW accounts for those plans in
accordance with Accounting Principles Board Opinion (&#147;APB&#148;) No.&nbsp;25, &#147;Accounting for Stock
Issued to Employees,&#148; and related interpretations. Accordingly, no stock-based employee
compensation cost has been recognized for the fixed stock option plans. The following table
illustrates the effect on net income and income per share if DSW had applied the fair value
recognition of Statement of Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;123, &#147;Accounting for
Stock-Based Compensation.&#148;</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Three months ended</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine months ended</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14">(in thousands, except per share amounts)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: Stock-based employee
compensation expense included
in reported net income, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: Total stock-based employee
compensation expense determined
under the fair value based method
for all awards, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(628</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(839</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.94</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-8-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><U><B>NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></U></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>EARNINGS PER SHARE</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Basic earnings per share are based on net income and a simple weighted average of Class&nbsp;A and
Class&nbsp;B common shares and directors stock units outstanding. Diluted earnings per share
reflect the potential dilution of Class&nbsp;A common shares related to outstanding stock options
and restricted stock units. The numerator for the diluted earnings per share calculation is
net income. The denominator is the weighted average diluted shares outstanding.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Three months ended</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine months ended</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14">(in thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average shares outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assumed exercise of dilutive stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted stock units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of shares for computation of
dilutive earnings per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,703</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the three months and nine months ended October&nbsp;29, 2005, all potentially dilutive stock
options were dilutive. For the three months and nine months ended October&nbsp;30, 2004, there
were no potentially dilutive instruments outstanding.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ADOPTION OF ACCOUNTING STANDARDS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Financial Accounting Standards Board (&#147;FASB&#148;) periodically issues Statements of Financial
Accounting Standards (&#147;SFAS&#148;), some of which require implementation by a date falling within
or after the close of the fiscal year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004) Share-Based Payment (&#147;SFAS No.
123R&#148;). This statement revised SFAS No.&nbsp;123, Accounting for Stock-Based Compensation, (&#147;SFAS
No.&nbsp;123&#148;) and requires a fair value measurement of all stock-based payments to employees,
including grants of employee stock options and recognition of those expenses in the statements
of operations. SFAS No.&nbsp;123R establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods and services and focuses on
accounting for transactions in which an entity obtains employee services in share-based
payment transactions. In addition, SFAS No.&nbsp;123R will require the recognition of compensation
expense over the period during which an employee is required to provide service in exchange
for an award. The effective date of this standard was originally established to be interim
and annual periods beginning after June&nbsp;15, 2005.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-9-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><U><B>NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></U></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In April&nbsp;2005, the SEC delayed the compliance date for SFAS No.&nbsp;123R until the beginning of
DSW&#146;s 2006 fiscal year. DSW is currently evaluating the impact of this statement and has not
yet determined the method of adoption under SFAS No.&nbsp;123R and whether the adoption will result
in amounts that are similar to the pro forma disclosures currently required under SFAS No.&nbsp;123
(see note 4, &#147;Stock Based Compensation&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>LONG-TERM OBLIGATIONS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005, DSW and RVI and certain of their affiliates increased the ceiling under their
then-existing revolving credit facility from $350&nbsp;million to $425&nbsp;million. The increase of $75
million to the revolving credit facility was accomplished by amendment under substantially the
same terms as the then-existing revolving credit agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005, DSW declared a dividend and issued an intercompany note to RVI in the amount of
$165&nbsp;million. The indebtedness evidenced by this note was scheduled to mature in March&nbsp;2020
and bore interest at a rate equal to London Interbank Offered Rate, or LIBOR, plus 850 basis
points per year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In May&nbsp;2005, DSW declared an additional dividend and issued an intercompany note to RVI in the
amount of $25&nbsp;million. The indebtedness evidenced by this note was scheduled to mature in May
2020 and bore interest at a rate equal to LIBOR, plus 950 basis points per year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In July&nbsp;2005, subsequent to the IPO, DSW prepaid in full, without penalty, the principal
balance of both the $165&nbsp;million and $25&nbsp;million dividend notes, plus accrued interest of
approximately $6.6&nbsp;million.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In July&nbsp;2005, upon the consummation of DSW&#146;s IPO, RVI and the lenders thereunder amended or
terminated the existing credit facilities and other debt obligations of Value City and its
other affiliates, including certain facilities under which DSW had rights and obligations as a
co-borrower and co-guarantor and released DSW and DSWSW from their obligations as co-borrowers
and co-guarantors. At the same time, DSW entered into a new $150&nbsp;million secured revolving
credit facility with a term of five years. Under this new facility, DSW and its subsidiary,
DSWSW, are named as co-borrowers. The new secured revolving credit facility has borrowing base
restrictions and provides for borrowings at variable interest rates based on LIBOR, the prime
rate and the Federal Funds effective rate, plus a margin. DSW&#146;s obligations under its new
secured revolving credit facility are collateralized by a lien on substantially all of DSW&#146;s
and its subsidiary&#146;s personal property and a pledge of all of its shares of DSWSW. In
addition, this facility contains usual and customary restrictive covenants relating to its
management and the operation of its business. These covenants, among other things, restrict
DSW&#146;s ability to grant liens on its assets, incur additional indebtedness, open or close
stores, pay cash dividends and redeem its stock, enter into transactions with affiliates and
merge or consolidate with another entity. In addition, if at any time DSW utilizes over 90%
of its borrowing capacity under this facility, it must comply with a fixed charge coverage
ratio test set forth in the facility documents. At October&nbsp;29, 2005, DSW</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-10-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><U><B>NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></U></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>had no balance outstanding and was in compliance with the terms of the secured revolving
credit facility.</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine months ended</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">(in thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash paid during the period for:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,166</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,279</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noncash investing and operating activities &#150;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in accounts payable due to
asset purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(58</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>COMMITMENTS AND CONTINGENCIES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On March&nbsp;8, 2005, RVI announced that it had learned of the theft of credit card and other
purchase information from a portion of DSW customers. On April&nbsp;18, 2005, RVI issued the
findings from its investigation into the theft. The theft took place primarily over two weeks
and covered all customers who made purchases at 108 DSW stores, primarily during a three-month
period from mid-November&nbsp;2004 to mid-February&nbsp;2005. Transaction information involving
approximately 1.4&nbsp;million credit cards was obtained. For each card, the stolen information
included credit card or debit card numbers, name and transaction amount. In addition, data
from transactions involving approximately 96,000 checks were stolen. In these cases, checking
account numbers and driver&#146;s license numbers were obtained.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has contacted and is cooperating with law enforcement and other authorities with
regard to this matter. To mitigate potential negative effects on its business and financial
performance, the Company is working with credit card companies and issuers and has contacted
as many of its affected customers as possible. In addition, the Company worked with a leading
computer security firm to minimize the risk of any further data theft. The Company is involved
in several legal proceedings arising out of this incident that, after consultation with
counsel, it believes will not exceed the reserves the Company has currently recorded.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of October&nbsp;29, 2005, the Company estimates that the potential exposure for losses related
to this theft, including exposure under currently pending proceedings, range from
approximately $6.5&nbsp;million to approximately $9.5&nbsp;million. Because of many factors, including
the early development of information regarding the theft and recoverability under insurance</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-11-
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><U><B>NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></U></DIV>


<DIV align="center" style="font-size: 10pt"><B>(unaudited)</B></DIV>

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>policies, there is no amount in the estimated range that represents a better estimate than any
other amount in the range. Therefore, in accordance with Financial Accounting Standard No.&nbsp;5,
<I>Accounting for Contingencies</I>, the Company has accrued a charge to operations in the first
quarter of fiscal 2005 equal to the low end of the range set forth above, or $6.5&nbsp;million. As
the situation develops and more information becomes available, the amount of the reserve may
increase or decrease accordingly. The amount of any such change may be material.</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>There can be no assurance that there will not be additional proceedings or claims brought
against the Company in the future. We have contested and will continue to vigorously contest
the claims made against us and continue to explore our defenses and possible claims against
others.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is involved in various other legal proceedings that are incidental to the conduct
of its business. The Company estimates the range of liability related to pending litigation
where the amount and range of loss can be estimated. The Company records its best estimate of
a loss when the loss is considered probable. Where a liability is probable and there is a
range of estimated loss, the Company records the minimum estimated liability related to the
claim. In the opinion of management, the amount of any liability with respect to these legal
proceedings will not be material. As additional information becomes available, the Company
assesses the potential liability related to its pending litigation and revises the estimates.
Revisions in the Company&#146;s estimates and potential liability could materially impact its
results of operations.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-12-
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>As used in this Quarterly Report on Form 10-Q (this &#147;Report&#148;) and except as the context otherwise
may require, &#147;Company&#148;, &#147;we&#148;, &#147;us&#148;, and &#147;our&#148; refers to DSW Inc. (&#147;DSW&#148;) and its wholly owned
subsidiary, DSW Shoe Warehouse, Inc. (&#147;DSWSW&#148;).</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risk Factors and Safe Harbor Statement</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We caution that certain information in this Form 10-Q, particularly information regarding future
economic performance and finances, plans and objectives of management, is forward-looking (as such
term is defined in the Private Securities Litigation Reform Act of 1995) and is subject to change
based on various important factors. The following factors, among others, could cause our future
financial performance in fiscal 2005 and beyond to differ materially from those expressed or
implied in any such forward-looking statements. These risks and uncertainties include, without
limitation:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our continued ability to open and operate new stores on a profitable basis;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to maintain good vendor relationships;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to anticipate and respond to fashion trends and consumers preferences;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the loss or disruption of our centralized distribution center or our failure to add
additional distribution methods or facilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our continued dependence on RVI to provide us with many key services for our business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our failure to retain our existing management team and to continue to attract qualified
new personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>competition in the retail footwear industry;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in economic conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>risks inherent to international trade;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>security risks related to our electronic processing and transmission of confidential
customer information;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our relationship with RVI and Schottenstein Stores Corporation (&#147;SSC&#148;); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other factors set forth in Exhibit&nbsp;99 attached hereto.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The preparation of our consolidated financial statements in conformity with generally accepted
accounting principles, or GAAP, requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of commitments and contingencies at
the date of the financial statements and reported amounts of revenues and
</DIV>


<P align="center" style="font-size: 10pt">-13-
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">expenses during the reporting period. On an ongoing basis, we evaluate our estimates and
judgments, including, but not limited to, those related to inventory valuation, depreciation,
amortization, recoverability of long-lived assets (including intangible assets), estimates for self
insurance reserves for health and welfare, workers&#146; compensation and casualty insurance, income
taxes, contingencies, litigation and revenue recognition. We base these estimates and judgments on
our historical experience and other factors we believe to be relevant, the results of which form
the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. The process of determining significant estimates is
fact-specific and takes into account factors such as historical experience, current and expected
economic conditions, product mix, and in some cases, actuarial and appraisal techniques. We
constantly re-evaluate these significant factors and make adjustments where facts and circumstances
dictate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we believe that our historical experience and other factors considered provide a meaningful
basis for the accounting policies applied in the preparation of the consolidated statements, we
cannot guarantee that our estimates and assumptions will be accurate. As the determination of
these estimates requires the exercise of judgment, actual results inevitably will differ from those
estimates, and such differences may be material to our financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe the following represent the most significant accounting policies, critical estimates and
assumptions, among others, used in the preparation of our consolidated financial statements:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Revenue Recognition. </I>Revenues from merchandise sales are recognized at the point of
sale and are net of returns and exclude sales tax. Revenue from gift cards is deferred and
the revenue is recognized upon redemption of the gift cards.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Cost of Sales and Merchandise Inventories. </I>Merchandise inventories are stated at the
lower of cost, determined using the first-in, first-out basis, or market, using the retail
inventory method. The retail inventory method is widely used in the retail industry due to
its practicality. Under the retail inventory method, the valuation of inventories at cost
and the resulting gross profit are calculated by applying a calculated cost to retail ratio
to the retail value of inventories. The cost of the inventory reflected on our
consolidated balance sheet is decreased by charges to cost of sales at the time the retail
value of the inventory is lowered through the use of markdowns. Accordingly, earnings are
negatively impacted as merchandise is marked down prior to sale. Reserves to value
inventory at the lower of cost or market were $18.6&nbsp;million on October&nbsp;29, 2005 and $14.2
million at January&nbsp;29, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inherent in the calculation of inventories are certain significant management judgments and
estimates, including setting the original merchandise retail value or mark-on, markups of
initial prices established, reductions in prices due to customers&#146; perception of value (known
as markdowns), and estimates of losses between physical inventory counts, or shrinkage,
which, combined with the averaging process within the retail inventory method, can
significantly impact the ending inventory valuation at cost and the resulting gross profit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We include in the cost of sales expenses associated with warehousing, distribution and store
occupancy. Warehousing costs are comprised of labor, benefits and other labor-related costs
associated with the operations of the warehouse, which are primarily payroll-related taxes
and benefits. The non-labor costs associated with warehousing include rent, depreciation,
insurance, utilities and maintenance and other operating costs that are passed</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-14-
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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to us from the landlord. Distribution costs include the transportation of merchandise to the
warehouse and from the warehouse to our stores. Store occupancy costs include rent,
utilities, repairs, maintenance and janitorial costs and other costs associated with licenses
and occupancy-related taxes, which are primarily real estate taxes passed to us by our
landlords.</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Asset Impairment and Long-lived Assets. </I>We must periodically evaluate the carrying
amount of our long-lived assets, primarily property and equipment, and finite life
intangible assets when events and circumstances warrant such a review to ascertain if any
assets have been impaired. The carrying amount of a long-lived asset is considered
impaired when the carrying value of the asset exceeds the expected future cash flows
(undiscounted and without interest) from the asset. Our reviews are conducted down at the
lowest identifiable level, which include a store. The impairment loss recognized is the
excess of the carrying value, based on discounted future cash flows, of the asset over its
fair value. Should an impairment loss be realized, it will be included in gross profit.
Assets acquired for stores that have been previously impaired are not capitalized when
acquired if the store&#146;s expected future cash flow (undiscounted and without interest)
remains negative. The amount of impairment losses recorded in fiscal 2004 was $0.9&nbsp;million,
all of which was recorded in the fourth quarter. No impairment losses have been recorded
during the nine months ended October&nbsp;29, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We believe at this time that the long-lived assets&#146; carrying values and useful lives continue
to be appropriate. To the extent these future projections or our strategies change, our
conclusion regarding asset impairment may differ from our current estimates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Self-insurance Reserves. </I>We record estimates for certain health and welfare, workers
compensation and casualty insurance costs that are self-insured programs. These estimates
are based on actuarial assumptions and are subject to change based on actual results.
Should the total cost of claims for health and welfare, workers compensation and casualty
insurance exceed or fall short of those anticipated, reserves recorded may not be
appropriate, and, to the extent actual results vary from assumptions, earnings would be
impacted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Customer Loyalty Program. </I>We maintain a customer loyalty program for our DSW stores in
which customers receive a future discount on qualifying purchases. The &#147;Reward Your Style&#148;
program is designed to promote customer awareness and loyalty and provide us with the
ability to communicate with our customers and enhance our understanding of their spending
trends. Upon reaching the target spending level, customers may redeem these discounts on a
future purchase. Generally, these future discounts must be redeemed within six months. We
accrue the estimated costs of the anticipated redemptions of the discount earned at the
time of the initial purchase and charge such costs to operating expense based on historical
experience. The estimates of the costs associated with the loyalty program require us to
make assumptions related to customer purchase levels and redemption rates. The accrued
liability as of October&nbsp;29, 2005 and January&nbsp;29, 2005 was $7.4&nbsp;million and $4.5&nbsp;million,
respectively. To the extent assumptions of purchases and redemption rates vary from actual
results, earnings would be impacted.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-15-
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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Income Taxes. </I>We are required to determine the aggregate amount of income tax expense
to accrue and the amount which will be currently payable based upon tax statutes of each
jurisdiction we do business in. In making these estimates, we adjust income based on a
determination of generally accepted accounting principles for items that are treated
differently by the applicable taxing authorities. Deferred tax assets and liabilities, as
a result of these differences, are reflected on our balance sheet for temporary differences
that will reverse in subsequent years. A valuation allowance is established against
deferred tax assets when it is more likely than not that some or all of the deferred tax
assets will not be realized. If management had made these determinations on a different
basis, our tax expense, assets and liabilities could be different.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of October&nbsp;29, 2005, we operated 197 DSW stores in 32 states, and leased shoe departments in 157
Stein Mart stores, 53 Gordmans stores, 25 Filene&#146;s Basement stores and one Frugal Fannie&#146;s store.
We manage our operations as one segment. The following table represents selected components of our
historical consolidated results of operations, expressed as percentages of net sales:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Three months ended</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Nine months ended</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 29,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">October 30,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(72.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(70.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(71.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(70.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>THREE MONTHS ENDED OCTOBER 29, 2005 COMPARED TO THREE MONTHS ENDED OCTOBER 30, 2004</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Net Sales. </I>Net sales for the thirteen week period ended October&nbsp;29, 2005 increased by 15.2%, or
$39.8&nbsp;million, to $302.2&nbsp;million from $262.4&nbsp;million in the thirteen week period ended October&nbsp;30,
2004. Our comparable store sales in the third quarter of fiscal 2005 improved 3.5% compared to the
third quarter of fiscal 2004. The increase in DSW sales includes a net increase of 30 DSW stores,
7 non-affiliated leased shoe departments and the re-categorization of two DSW/Filene&#146;s Basement
combination stores as leased shoe departments. The DSW store locations opened subsequent to October
30, 2004 added $23.3&nbsp;million in sales, while the leased shoe departments opened subsequent to
October&nbsp;30, 2004 added $1.5&nbsp;million. Leased shoe department sales comprised 10.5% of total net
sales in the third quarter of fiscal 2005, compared to 9.6% in the third quarter of fiscal 2004.
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the third quarter of fiscal 2005, DSW comparable store sales increased in women&#146;s by 5.7%,
athletic by 1.1% and men&#146;s by 0.4%, and decreased in the accessories category by 9.4%. Sales
increases in the women&#146;s category were driven by increases in the seasonal classes, while the
increase in the athletic category was the result of an increase in the women&#146;s fashion class. The
decrease in the accessories category was the result of declines in all classes of accessories. The
accessories category represents 4.6% of total comparable DSW store sales for the third quarter of
fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Gross Profit. </I>Gross profit increased $5.5&nbsp;million to $83.0&nbsp;million in the third quarter of fiscal
2005 from $77.5&nbsp;million in the third quarter of fiscal 2004, and decreased as a percentage of net
sales from 29.5% in the third quarter of fiscal 2004 to 27.5% in the third quarter of fiscal 2005.
In the third quarter of fiscal 2004, our inventory was positioned to allow us to reduce our
markdown rate by not increasing the percent discount offered on our clearance goods. During the
third quarter of fiscal 2005, we did follow our plan and increased the percent discount offered on
our clearance goods. Other factors related to the decreased margin were; increased markdowns
caused by higher average unit retails, additional markdowns in our accessories category and an
increase in our occupancy expense. The store occupancy expense increased from 11.9% of net sales
in the third quarter of fiscal 2004 to 13.2% of net sales in the third quarter of fiscal 2005. The
increase in store occupancy is the result of increases in lease expense for new stores. In
addition, the leased shoe departments represent an increased percent of total sales and have a
higher occupancy percent to sales than in the prior year. These negative factors were partially
offset by an increase in our initial markups and a decrease in warehouse expense. Warehouse expense
as a percentage of net sales decreased from 2.1% in the third quarter of fiscal 2004 to 1.2% in the
third quarter of fiscal 2005. The decrease in warehouse expense is the result of improved
operational efficiencies achieved through the use of electronic shipping information, increased
unit volumes and an increased allocation of warehouse expense to Value City&#146;s shoe operations
pursuant to the shared services agreement between the Company and RVI that became effective as of
January&nbsp;30, 2005 (the &#147;Shared Services Agreement&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Operating Expenses. </I>For the third quarter of fiscal 2005, operating expenses increased $4.6
million to $65.3&nbsp;million from $60.7&nbsp;million in the third quarter of fiscal 2004, which represented
21.6% and 23.1% of net sales, respectively. The favorable operating percent was the result of
leveraging store expenses and marketing, and a reduction in pre-opening costs. Operating expenses
for the third quarter of fiscal 2005 include $3.6&nbsp;million in pre-opening costs compared to $4.2
million in pre-opening costs in the third quarter of fiscal 2004. Pre-opening costs are expensed
as incurred and therefore do not necessarily reflect expenses for the stores opened in a given
fiscal period. Included in operating expenses is the related operating cost, excluding occupancy,
associated with operating the leased shoe departments. The DSW stores and leased shoe departments
that opened subsequent to October&nbsp;30, 2004 added $4.1&nbsp;million in expenses compared to the third
quarter of fiscal 2004, excluding pre-opening and occupancy (excluding depreciation and
amortization) expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Operating Profit. </I>Operating profit was $17.7&nbsp;million in the third quarter of fiscal 2005 compared
to $16.8&nbsp;million in the third quarter of fiscal 2004, and decreased as a percentage of net sales
from 6.4% in the third quarter of fiscal 2004 to 5.9% in the third quarter of fiscal 2005.
Operating profit as a percentage of net sales was negatively impacted by the decrease in gross
profit as a percentage of sales, which was partially offset by the leveraging of operating
expenses.
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Interest Income (Expense). </I>Interest income for the third quarter of fiscal 2005 was $0.1&nbsp;million
as compared to $1.0&nbsp;million of interest expense for the third quarter of fiscal 2004. Interest
income for the quarter was the result of investment activity from funds generated by the IPO and
from operations. Net Interest includes the amortization of debt issuance costs of $0.1&nbsp;million in
the third quarter of fiscal 2004. The amortization of debt issuance costs during the third quarter
of fiscal 2005 was insignificant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Income Taxes. </I>Our effective tax rate for the third quarter of fiscal 2005 was 39.0%, compared to
40.2% for the third quarter of fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Net Income. </I>For the third quarter of fiscal 2005, net income increased $1.5&nbsp;million, or 15.6%,
over the third quarter of fiscal 2004 and represented 3.6% of net sales in both periods. This
increase was the result of the increase in gross profit partially offset by the increase in
operating expenses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NINE MONTHS ENDED OCTOBER 29, 2005 COMPARED TO NINE MONTHS ENDED OCTOBER 30, 2004</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Net Sales. </I>Net sales for the nine-month period ended October&nbsp;29, 2005 increased by 17.9%, or
$130.9&nbsp;million, to $860.3&nbsp;million from $729.4&nbsp;million in the nine-month period ended October&nbsp;30,
2004. Our comparable store sales in the nine-month period of fiscal 2005 improved 3.7% compared to
the nine-month period of fiscal 2004. The increase in DSW sales includes a net increase of 30 DSW
stores, 7 non-affiliated leased shoe departments and two Filene&#146;s Basement leased shoe departments
excluding the re-categorization of two DSW/Filene&#146;s Basement combination stores as leased shoe
departments. The DSW store locations opened subsequent to October&nbsp;30, 2004 added $53.3&nbsp;million in
sales compared to the fiscal 2004 nine-month period, while the new leased shoe departments added
$3.4&nbsp;million. Leased shoe department sales comprised 10.6% of total net sales in the first
nine-month period of fiscal 2005, compared to 9.2% in the same nine-month period of fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the nine-month period ended October&nbsp;29, 2005, as compared with same nine-month period in fiscal
2004, DSW comparable store sales increased in women&#146;s by 4.2%, athletic by 6.8% and men&#146;s by 1.8%,
and decreased in the accessories category by 6.9%. Sales increases in the women&#146;s categories were
driven by increases in the dress and seasonal classes while the increase in the men&#146;s categories
were driven by increases in the fashion and casual classes. The increase in the athletic category
was the result of the improvement in the women&#146;s and men&#146;s fashion class. The decrease in accessories
category was the result of declines in all classes of accessories. The accessories category
represents 4.7% of total comparable DSW store sales in the nine-month period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Gross Profit. </I>Gross profit increased $30.2&nbsp;million to $242.2&nbsp;million in the nine-month period
ended October&nbsp;29, 2005 from $212.0&nbsp;million in the same nine-month period of fiscal 2004, and
decreased as a percentage of net sales from 29.1% in the fiscal 2004 nine-month period to 28.1% in
the fiscal 2005 nine-month period. The decrease is attributable to increased markdowns in all
categories and an increase in our occupancy expense. The store occupancy expense increased from
12.1% of net sales in the fiscal 2004 nine-month period to 13.1% of net sales in the fiscal 2005
nine-month period. The increase in store occupancy expense is the result of increases in lease
expense for new stores. In addition, the leased shoe departments represent an increased percent of
total sales and have a higher occupancy percent to sales than in the prior year. These negative
factors were partially offset by an increase in our initial markups and a decrease in our warehouse
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">expense. Warehouse expense as a percentage of net sales decreased from 2.2% in the fiscal 2004
nine-month period to 1.4% in the fiscal 2005 nine-month period. The decrease in warehouse expense
is the result of improved operational efficiencies achieved through the use of electronic shipping
information, increased unit volumes and an increased allocation of warehouse expense to Value
City&#146;s shoe operations pursuant to the Shared Services Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Operating Expenses. </I>For the nine-month period ended October&nbsp;29, 2005, operating expenses increased
$22.9&nbsp;million to $188.7&nbsp;million from $165.8&nbsp;million in the fiscal 2004 nine-month period, which
represented 21.9% and 22.8% of net sales, respectively. The favorable operating percent was the
result of leveraging store expenses and marketing, and a reduction in pre-opening costs. Operating
expenses for the fiscal 2005 nine-month period includes $7.2&nbsp;million in pre-opening costs compared
to $8.8&nbsp;million in the same nine-month period in fiscal 2004. Pre-opening costs are expensed as
incurred and, therefore, do not necessarily reflect expenses for the stores opened in a given
fiscal period. Included in operating expenses is the related operating cost associated with
operating the leased shoe departments, excluding occupancy. The DSW stores and leased shoe
departments that opened subsequent to October&nbsp;30, 2004 added $9.4&nbsp;million in expenses compared to
the same nine-month period of fiscal 2004, excluding pre-opening and occupancy (excluding
depreciation and amortization) expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the nine-month period ended October&nbsp;29, 2005, we accrued an estimated liability related to
the theft of credit card and other purchase information. Potential exposures for losses related to
stolen information were estimated to fall within a range of approximately $6.5&nbsp;million to
approximately $9.5&nbsp;million. Because of many factors, including the early development of
information regarding the theft and recoverability under insurance policies, there is no amount in
the estimated range that represents a better estimate than any other amount in the range.
Therefore, in accordance with Financial Accounting Standard No.&nbsp;5, <I>Accounting for Contingencies</I>,
the Company has accrued a charge to operations equal to the low end of the range set forth above,
or $6.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Operating Profit. </I>Operating profit was $53.5&nbsp;million in the nine-month period of fiscal 2005
compared to $46.2&nbsp;million in the nine-month period of fiscal 2004, and decreased as a percentage of
net sales from 6.3% in the nine-month period of fiscal 2004 to 6.2% in the nine-month period of
fiscal 2005. Operating profit as a percentage of net sales was positively affected by the
leveraging of our operating expenses, but these positive effects were more than offset by the
reduction in gross profit and the estimate for our potential losses related to the theft of credit
card and other purchase information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Interest Income (Expense). </I>Interest expense, net of interest income, increased $5.9&nbsp;million to
$8.4&nbsp;million for the nine-month period of fiscal 2005 from $2.5&nbsp;million for the same nine-month
period of fiscal 2004. Included in interest expense is $6.6&nbsp;million of interest due to RVI related
to $190&nbsp;million of indebtedness incurred to fund two separate dividends. The indebtedness, which
was fully paid in July&nbsp;2005, was evidenced by a $165&nbsp;million note that bore interest at a rate
equal to LIBOR plus 850 basis points and a $25&nbsp;million note that bore interest at a rate equal to
LIBOR plus 950 basis points. The interest expense also reflects higher weighted average borrowing
rates related to the dividend notes and the write-off of unamortized debt issuance costs of $0.4
million for our old revolving credit facility. Interest expense includes the amortization of debt
issuance costs of $0.2&nbsp;million and $0.4&nbsp;million in the nine-month periods of fiscal 2005 and 2004,
respectively.
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Income Taxes. </I>Our effective tax rate for the nine-month period of fiscal 2005 was 39.8%, compared
to 40.2% for the nine-month period of fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Net Income. </I>For the nine-month period ended October&nbsp;29, 2005, net income increased $1.0&nbsp;million
or 3.8% over the nine-month period ended October&nbsp;30, 2004 and represents 3.2% versus 3.6% of net
sales, respectively. This increase was the result of the increase in gross profit partially offset
by the increases in operating expenses and interest expense.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Seasonality</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our business, measured in terms of net sales, is subject to seasonal trends. Our net sales,
measured on a comparable stores basis, have typically been higher in spring and early fall, when
our customers&#146; interest in new seasonal styles increases. In addition, when measured in terms of
operating profit, our business has historically experienced lower levels of profitability in the
fourth quarter of our fiscal year, due primarily to moderately lower sales in the fourth quarter.
Unlike many other retailers, we have not historically experienced a large increase in net sales
during our fourth quarter associated with the winter holiday season.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our primary ongoing cash requirements are for seasonal and new store inventory purchases, capital
expenditures in connection with our expansion, the remodeling of existing stores and infrastructure
growth. We have historically funded our expenditures with cash flows from operations and
borrowings under the Value City credit facilities to which we have been a party, as described
below. Our working capital and inventory levels typically build seasonally. We believe that we
will be able to continue to fund our operating requirements and the expansion of our business
pursuant to our growth strategy in the future with cash flows from operations and borrowings under
the new DSW secured revolving credit facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the thirty-nine week period ended October&nbsp;29, 2005, our net cash provided by operations was
$35.7&nbsp;million, compared to $4.1&nbsp;million provided by operations for the thirty-nine week period
ended October&nbsp;30, 2004. The $31.6&nbsp;million increase in cash provided by operations is primarily due
to lower growth in inventory over the comparable period and the cash provided from advances from
affiliates during fiscal 2005 whereas in the first nine months of fiscal 2004 advances from
affiliates was a net cash outflow. The increases in cash provided were partially offset by a
higher growth in prepaid expenses over the comparable period and the cash outflow from accounts
receivable from related parties which was primarily due to the change in classification from
advances from affiliates to a current receivable during fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net working capital increased $86.9&nbsp;million to $225.8&nbsp;million at October&nbsp;29, 2005 from $138.9
million at January&nbsp;29, 2005, primarily due to increased cash, inventory related to new stores
opened in fiscal 2005 and the classification of advances to affiliates to a current receivable.
Current assets divided by current liabilities at January&nbsp;29, 2005 and October&nbsp;29, 2005 was 2.3 and
2.8 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided by operating activities during the thirty-nine week period ended October&nbsp;29, 2005
is primarily due to the increase of accrued expenses of $18.3&nbsp;million and the proceeds from lease
incentives of $9.0&nbsp;million, partially offset by the increase in inventory of $21.4&nbsp;million.
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For each of the thirty-nine week periods ended October&nbsp;29, 2005 and October&nbsp;30, 2004, net cash used
in investing activities amounted to $19.8&nbsp;million. For the thirty-nine week period ended October
29, 2005, net cash used in investing activities consisted of capital expenditures, related
primarily to new stores.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our future capital expenditures will depend primarily on the number of new stores we open, the
number of existing stores we remodel and the timing of these expenditures. In fiscal 2004, we
opened 31 new DSW stores and closed one DSW store. We plan to open approximately 30 stores per
year in each of the next four fiscal years. During fiscal 2004, the average investment required to
open a typical new DSW store was approximately $1.7&nbsp;million. Of this amount, gross inventory
typically accounted for approximately $880,000, fixtures and leasehold improvements typically
accounted for approximately $600,000 (prior to tenant allowances) and pre-opening advertising and
other pre-opening expenses typically accounted for approximately $250,000. We plan to finance
investment in new stores with cash flows from operating activities and by drawing from our $150
million secured revolving credit facility when necessary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the thirty-nine week period ended October&nbsp;29, 2005, our net cash provided by financing
activities was $32.8&nbsp;million, compared to $19.9&nbsp;million for the corresponding period in fiscal
2004. The majority of the current year financing is related to the sale of stock during the IPO.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>The Value City Revolving Credit Facility. </I>On July&nbsp;5, 2005, the Company was released from its
obligation as co-borrower and co-guarantor under a Loan and Security Agreement, as amended
originally entered into in June&nbsp;2002. The Company, Value City and other RVI affiliates were named
as co-borrowers, and RVI was a co-guarantor. This revolving credit agreement allowed DSW and the
other Value City affiliates named as co-borrowers to draw on a $425&nbsp;million revolving credit
facility, subject to applicable borrowing base restrictions. All the capital stock of DSW and
DSWSW was pledged. The Company, RVI and the other co-borrowers and guarantors named therein were
jointly and severally liable for all liabilities incurred under the agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At January&nbsp;29, 2005, $108.5&nbsp;million was available under this revolving credit facility. Direct
borrowings by us aggregated $55.0&nbsp;million as of January&nbsp;29, 2005 while $14.9&nbsp;million letters of
credit were issued and outstanding as of January&nbsp;29, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>The DSW Secured Revolving Credit Facility. </I>Upon consummation of the IPO on July&nbsp;5, 2005, DSW and
DSWSW were released from any obligations under the existing Value City revolving credit facility
and entered into a new $150&nbsp;million secured revolving credit facility with a term of five years.
Under this new facility, DSW and DSWSW are named as co-borrowers. This new DSW facility has
borrowing base restrictions and provides for borrowings at variable interest rates based on LIBOR,
the prime rate and the Federal Funds effective rate, plus a margin. The new secured revolving
credit facility is secured by a lien on substantially all the personal property of DSW and DSWSW
and a pledge of all of the shares of DSWSW. In addition, this facility contains usual and
customary restrictive covenants relating to our management and the operation of the business.
These covenants, among other things, restrict the Company&#146;s ability to grant liens on its assets,
incur additional indebtedness, open or close stores, pay cash dividends and redeem its stock, enter
into transactions with affiliates and merge or consolidate with another entity. In addition, if at
any time the Company utilizes over 90% of its borrowing capacity under this facility, it must
comply with a fixed charge coverage ratio test set forth in the facility documents.
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At October&nbsp;29, 2005, $140.8&nbsp;million was available under this revolving credit facility. The Company
had no direct borrowings as of October&nbsp;29, 2005 while $9.2&nbsp;million letters of credit were issued
and outstanding as of October&nbsp;29, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>The Value City Term Loan Facility. </I>Until the amendment of the term loan agreement in July&nbsp;2005 in
connection with the IPO, DSW and DSWSW were also co-borrowers under a Financing Agreement, as
amended, among Cerberus, as agent, and other parties named therein, originally entered into in June
2002. Under the terms of this term loan agreement, Cerberus and SSC each provided to the Company,
Value City and other RVI affiliates a separate $50&nbsp;million three-year term loan comprised of two
tranches. As a co-borrower, we were jointly and severally liable for the performance and payment
of obligations under this financing agreement; however, this indebtedness has not been reflected in
our financial statements as it was recorded on the books of RVI.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2005, DSW and DSWSW were released from their obligations as co-borrowers pursuant to the
amendment of this term loan agreement, and Value City repaid all the term loan indebtedness. In
connection with the amendment of this term loan agreement, RVI agreed to amend the outstanding term
loan warrants to provide SSC, Cerberus and Back Bay the right, from time to time, in whole or in
part, to (i)&nbsp;acquire RVI common shares at the then current conversion price (subject to the
existing anti-dilution provisions), (ii)&nbsp;acquire from RVI Class&nbsp;A common shares of DSW at the IPO
price of $19.00 per share, (subject to anti-dilution provisions similar to those in the existing
warrants), or (iii)&nbsp;acquire a combination thereof. Effective November&nbsp;23, 2005, Back Bay
transferred and assigned its warrants to Millennium Partners, L.P. (&#147;Millennium&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SSC and Cerberus would each receive 328,915 Class&nbsp;A common shares of DSW, and Millennium would
receive 41,989 Class&nbsp;A common shares of DSW, if they were to exercise the warrants in full
exclusively for DSW common shares. These warrants expire in June&nbsp;2012. Although RVI does not
intend or plan to undertake a spin-off of common shares to RVI shareholders, in the event that RVI
were to effect such a spin-off in the future, the holders of outstanding unexercised warrants would
receive the same number of DSW common shares that they would have received had they exercised their
warrants in full for RVI common shares immediately prior to the record date of the spin-off,
without regard to any limitation on exercise contained in the warrants. Following the completion
of any such spin-off, the warrants will be exercisable solely for RVI common shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;5, 2005, DSW entered into an exchange agreement with RVI whereby DSW is required to
exchange some or all of the DSW Class&nbsp;B common shares held by RVI for DSW Class&nbsp;A common shares.
SSC and Cerberus have the right to require that DSW register for resale the Class&nbsp;A common shares
issued to them upon exercise of their warrants in specified circumstances, and each of these
entities and Millennium will be entitled to participate in the registrations initiated by the other
entities. The Company&#146;s failure to perform its obligations under the registration rights agreement
relating to these shares would result in an event of default under the Value City senior loan
facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>The Value City Senior Subordinated Convertible Loan Facility. </I>Until July&nbsp;2005, DSW and DSWSW were
also co-guarantors of a $75&nbsp;million loan under an Amended and Restated Senior Subordinated
Convertible Loan Agreement, as amended, entered into with Cerberus, as agent and lender, SSC, as
lender, and the other parties named therein, which was convertible at the option of the lenders
into common shares of RVI at an initial conversion price of $4.50 per share. This
</DIV>


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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">indebtedness has not been reflected in our financial statements as it was recorded on the books of
RVI.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2005, DSW and DSWSW were released from their obligations as co-guarantors pursuant to the
amendment and restatement of this agreement. We have been advised by RVI that Value City repaid
$25&nbsp;million of this facility in July&nbsp;2005. The remaining $50&nbsp;million convertible loan was
converted into a non-convertible loan, and the capital stock of DSW held by RVI continues to secure
the amended loan facility. In addition, in connection with the amendment and restatement of this
convertible loan agreement, RVI has issued to SSC and Cerberus convertible warrants which will be
exercisable from time to time until the later of June&nbsp;11, 2007 and the repayment in full of Value
City&#146;s obligations under the amended and restated loan agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the convertible warrants, SSC and Cerberus will have the right, from time to time, in whole
or in part, to (i)&nbsp;acquire RVI common shares at the conversion price referred to in the convertible
loan (subject to existing anti-dilution provisions), (ii)&nbsp;acquire from RVI Class&nbsp;A common shares of
DSW at an exercise price per share at the IPO price of $19.00 per share (subject to anti-dilution
provisions similar to those in the existing warrants) or (iii)&nbsp;acquire a combination thereof.
Although RVI does not intend or plan to undertake a spin-off of common shares to RVI shareholders,
in the event that RVI were to effect such a spin-off in the future, the holders of outstanding
unexercised warrants would receive the same number of DSW common shares that they would have
received had they exercised their warrants in full for RVI common shares immediately prior to the
record date of the spin-off, without regard to any limitation on exercise contained in the
warrants. Following the completion of any such spin-off, the warrants will be exercisable solely
for RVI common shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SSC and Cerberus may acquire, upon exercise of the warrants in full, an aggregate number of Class&nbsp;A
common shares of DSW from RVI which, at the IPO price of $19.00 per share, would have a value equal
to $75&nbsp;million. SSC and Cerberus would each receive 1,973,685 Class&nbsp;A common shares if they were
to exercise these warrants exclusively for DSW common shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Cross-Corporate Guarantees. </I>We have historically entered into cross-corporate guarantees with
various financing institutions pursuant to which we, RVI, Filene&#146;s Basement and Value City, jointly
and severally, guarantee payment obligations owed to these entities under factoring arrangements
they have entered into with vendors who may provide merchandise to some or all of RVI&#146;s
subsidiaries. In connection with the IPO, these cross-corporate guarantees were terminated and we
have neither outstanding balances nor potential liabilities under these past arrangements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Contractual Obligations</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">DSW had outstanding letters of credit that totaled approximately $9.2&nbsp;million at October&nbsp;29, 2005
under the DSW secured revolving credit facilit<I>y </I>and $14.9&nbsp;million at January&nbsp;29, 2005 on the Value
City revolving credit facility. If certain conditions are met under these arrangements, the Company
would be required to satisfy the obligations in cash. Due to the nature of these arrangements and
based on historical experience, DSW does not expect to make any significant payment outside of
terms set forth in these arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of October&nbsp;29, 2005, we have entered into various construction commitments, including capital
items to be purchased for projects that were under construction, or for which a lease has been
signed. Our obligations under these commitments aggregated to approximately $0.3&nbsp;million as of
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">October&nbsp;29, 2005. In addition, we have signed lease agreements for 13 new store locations with
annual rent of approximately $5.2&nbsp;million. In connection with the new lease agreements, we will
receive approximately $3.8&nbsp;million of tenant allowances, which will reimburse us for expenditures
at these locations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We operate all our stores, warehouses and corporate office space from leased facilities. Lease
obligations are accounted for either as operating leases or as capital leases based on lease by
lease review at lease inception. The Company had no capital leases outstanding as of October&nbsp;29,
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;5, 2005, subsequent to the IPO, we paid in full the principal balance of both the $165 and
$25&nbsp;million dividend notes plus accrued interest of approximately $6.6&nbsp;million to RVI, $20&nbsp;million
outstanding on the Company&#146;s old secured revolving credit facility and a $10&nbsp;million intercompany
advance from RVI used to pay down on the outstanding old credit facility borrowing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Off-Balance Sheet Arrangements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company does not intend to participate in transactions that generate relationships with
unconsolidated entities or financial partnerships, such as special purpose entities or variable
interest entities, which would facilitate off-balance sheet arrangements or other limited purposes.
As of October&nbsp;29, 2005, the Company has not entered into any &#147;off-balance sheet&#148; arrangements, as
that term is described by the SEC.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Adoption of Accounting Standards</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Financial Accounting Standards Board (&#147;FASB&#148;) periodically issues Statements of Financial
Accounting Standards (&#147;SFAS&#148;), some of which require implementation by a date falling within or
after the close of the fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004), Share-Based Payment (&#147;SFAS No.
123R&#148;). This statement revised SFAS No.&nbsp;123, Accounting for Stock-Based Compensation, (&#147;SFAS No.
123&#148;) and requires a fair value measurement of all stock-based payments to employees, including
grants of employee stock options and recognition of those expenses in the statements of operations.
SFAS No.&nbsp;123R establishes standards for the accounting for transactions in which an entity
exchanges its equity instruments for goods and services and focuses on accounting for transactions
in which an entity obtains employee services in share-based payment transactions. In addition,
SFAS No.&nbsp;123R will require the recognition of compensation expense over the period during which an
employee is required to provide service in exchange for an award. The effective date of this
standard was originally established to be interim and annual periods beginning after June&nbsp;15, 2005.
In April&nbsp;2005, the SEC delayed the compliance date for SFAS No.&nbsp;123R until the beginning of the
Company&#146;s fiscal year 2006. The Company is currently evaluating the impact of this statement and
has not yet determined the method of adoption under SFAS No.&nbsp;123R and whether the adoption will
result in amounts that are similar to the pro forma disclosures required under SFAS No.&nbsp;123.
</DIV>


<P align="center" style="font-size: 10pt">-24-
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3. Quantitative and Qualitative Disclosures About Market Risk.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has been exposed to market risk from changes in interest rates, which may adversely
affect its financial condition, results of operations and cash flows. In seeking to minimize the
risks from interest rate fluctuations, the Company manages exposures through its regular operating
and financing activities and, when deemed appropriate, through the use of derivative financial
instruments. The Company does not use financial instruments for trading or other speculative
purposes and is not party to any leveraged financial instruments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is exposed to interest rate risk primarily through its borrowings under its new secured
revolving credit facility. At October&nbsp;29, 2005, no direct borrowings were outstanding under this
facility. The new secured revolving credit facility permits debt commitments up to $150&nbsp;million,
includes a letter of credit facility, extends for a term of five years, and provides for borrowings
at variable interest rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A hypothetical 100 basis point increase in the interest rate of the debt outstanding under the
Value City revolving credit facility (prior to July&nbsp;5, 2005) or the DSW new secured revolving
credit facility (after July&nbsp;5, 2005) for the thirty-nine week period ended October&nbsp;29, 2005, net of
income taxes, would have had an approximate $0.1&nbsp;million impact on our results of operations for
such period.
</DIV>

<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4. Controls and Procedures.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company, under the supervision and with the participation of its management, including its
Chief Executive Officer and Chief Financial Officer, performed an evaluation of the Company&#146;s
disclosure controls and procedures, as contemplated by Securities Exchange Act Rule&nbsp;13a-15. Based
on that evaluation, the Company&#146;s Chief Executive Officer and Chief Financial Officer concluded, as
of the end of the period covered by this report, that such disclosures and procedures were
effective.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">No change in the Company&#146;s internal control over financial reporting occurred during the Company&#146;s
most recent fiscal quarter that has materially affected, or is reasonably likely to materially
affect, the Company&#146;s internal control over financial reporting.<BR>
</DIV>


<P align="center" style="font-size: 10pt">-25-
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>PART II. OTHER INFORMATION</B>
</DIV>

<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;1. Legal Proceedings.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On March&nbsp;8, 2005, RVI announced that it had learned of the theft of credit card and other purchase
information from a portion of DSW customers. On April&nbsp;18, 2005, RVI issued the findings from its
investigation into the theft. The theft took place primarily over two weeks and covered all
customers who made purchases at 108 DSW stores, primarily during a three-month period from
mid-November&nbsp;2004 to mid-February&nbsp;2005. Transaction information involving approximately 1.4&nbsp;million
credit cards was obtained. For each card, the stolen information included credit card or debit card
numbers, name and transaction amount. In addition, data from transactions involving approximately
96,000 checks were stolen. In these cases, checking account numbers and driver&#146;s license numbers
were obtained.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has contacted and is cooperating with law enforcement and other authorities with regard
to this matter. To mitigate potential negative effects on its business and financial performance,
the Company is working with credit card companies and issuers and has contacted as many of its
affected customers as possible. In addition, the Company worked with a leading computer security
firm to minimize the risk of any further data theft. The Company is involved in several legal
proceedings arising out of this incident that, after consultation with counsel, it believes will
not exceed the reserves the Company has currently recorded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with this matter, the Company entered into a proposed consent order with the Federal
Trade Commission (&#147;FTC&#148;), which has jurisdiction over consumer protection matters. The FTC
published the proposed order for public comment on December&nbsp;1, 2005, and copies of the complaint
and consent order are available from the FTC&#146;s Web site at http://www.ftc.gov and also from the
FTC&#146;s Consumer Response Center, Room&nbsp;130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
The public comment period expires on January&nbsp;2, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has not admitted any wrongdoing or that the facts alleged in the FTC&#146;s proposed
unfairness complaint are true. Under the consent order as proposed, DSW will pay no fine or
damages. DSW has agreed, however, to maintain a comprehensive information security program, much of
which was put in place shortly after DSW first learned of the theft, and to undergo a biannual
assessment of such program by an independent third party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There can be no assurance that there will not be additional proceedings or claims brought against
the Company in the future. We have contested and will continue to vigorously contest the claims
made against us and will continue to explore our defenses and possible claims against others.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of October&nbsp;29, 2005, the Company estimates that the potential exposure for losses related to
this theft, including exposure under currently pending proceedings, ranges from approximately $6.5
million to approximately $9.5&nbsp;million. Because of many factors, including the early development of
information regarding the theft and recoverability under insurance policies, there is no amount in
the estimated range that represents a better estimate than any other amount in the range.
Therefore, in accordance with Financial Accounting Standard No.&nbsp;5, <I>Accounting for Contingencies</I>,
the Company has accrued a charge to operations in the first quarter of fiscal 2005 equal to the low
end of the range set forth above. As the situation develops and more
</DIV>
<P align="center" style="font-size: 10pt">-26-
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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">information becomes available, the amount of the reserve may increase or decrease accordingly. The
amount of any such change may be material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Although difficult to quantify, since the announcement of the theft, the Company has not discerned
any material negative effect on sales trends it believes is attributable to the theft. However,
this may not be indicative of the long-term developments regarding this matter.
</DIV>

<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Unregistered Sales of Equity Securities and Use of Proceeds.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(a)&nbsp;Recent sales of unregistered securities. Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(b)&nbsp;Use of Proceeds. Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(c)&nbsp;Purchases of equity securities by the issuer and affiliated purchasers
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides information with respect to purchases DSW made of its common shares
during the third quarter of the 2005 fiscal year, if any:
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Issuer Purchases of Equity Securities</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Maximum</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>number of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>purchased</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>shares that</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>as part of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>may yet be</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>publicly</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>purchased</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>announced</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>under the</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>paid per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>plans or</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>plans or</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>purchased</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>programs</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>programs</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">July&nbsp;31, 2005 &#150; August&nbsp;27, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">None
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">None</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">August&nbsp;28, 2005 &#150; October&nbsp;1, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">None
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">None</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">October&nbsp;2, 2005 &#150; October&nbsp;29, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">None
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">None</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Total
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">None
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">None</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<A name="112"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;3. Defaults Upon Senior Securities. </B>None.
</DIV>

<DIV align="left">
<A name="113"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;4. Submission of Matters to a Vote of Security Holders. </B>None.
</DIV>

<DIV align="left">
<A name="114"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;5. Other Information. </B>None.
</DIV>

<DIV align="left">
<A name="115"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;6. Exhibits. </B>See Index to Exhibits on page 29.
</DIV>
<P align="center" style="font-size: 10pt">-27-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

</DIV>

<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><font style="width=25%; border-bottom:1px solid #000000"><B>DSW INC.</B></font></TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">(Registrant)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: December&nbsp;8, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Douglas J. Probst</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Douglas J. Probst</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-28-

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>INDEX TO EXHIBITS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:25px; text-indent:-0px">&nbsp;&nbsp;4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Term Loan Warrant for Millennium Partners, L.P.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:25px; text-indent:-0px">31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rule&nbsp;13a-14(a)/15d-14(a) Certification of Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:25px; text-indent:-0px">31.2&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rule&nbsp;13a-14(a)/15d-14(a) Certification of Chief Financial Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:25px; text-indent:-0px">32.1&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Section&nbsp;1350 Certification of Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:25px; text-indent:-0px">32.2&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Section&nbsp;1350 Certification of Chief Financial Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:25px; text-indent:-0px">99
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Safe Harbor Under the Private Securities Litigation Reform Act of 1995</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-29-
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>2
<FILENAME>l17332aexv4w1.htm
<DESCRIPTION>EXHIBIT 4.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 4.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;4.1</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE TERMS AND CONDITIONS
SPECIFIED IN THIS WARRANT.</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="68%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>RETAIL VENTURES, INC.</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">COMMON STOCK PURCHASE WARRANT No.&nbsp;W-9
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;, 2005</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Warrant to Purchase<BR>
177,288 Shares of RVI Common Stock (plus up to 87,500 additional<BR>
Shares of RVI Common Stock under Section&nbsp;3.1(b) hereof, if applicable)<BR>
or 41,989 DSW Class&nbsp;A Shares<BR>
(subject to adjustment as set forth herein)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RETAIL VENTURES, INC., an Ohio corporation (the &#147;<U>Company</U>&#148;), for value received, hereby
certifies that MILLENNIUM PARTNERS, L.P., or its registered assigns (the &#147;<U>Holder</U>&#148;), is
entitled to purchase from the Company that number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Shares, no par value per share, of the Company (the &#147;<U>Common
Stock</U>&#148;) equal to the Common Stock Exercise Amount (as defined below) or, in the alternative,
after the consummation of a Qualifying IPO (as defined below) but prior to the consummation of a
Spin-Off (as defined below) and the satisfaction of the Company&#146;s obligations pursuant to Section
3.3(b), and in the Holder&#146;s discretion, that number of shares of DSW Stock (as defined below) equal
to the DSW Stock Exercise Amount (as defined below) owned by the Company, in each case, at a
purchase price equal to the applicable Purchase Price (as defined below), at any time or from time
to time but prior to 5:00 P.M., New York City time, on June&nbsp;11, 2012 (the &#147;<U>Expiration
Date</U>&#148;), all subject to the terms, conditions and adjustments set forth below in this Warrant
(this &#147;<U>Warrant</U>&#148;); <U>provided</U>, that the purchase price per share of Common Stock or
DSW Stock, as the case may be, hereunder shall not in any event be less than the par value of such
Common Stock or DSW Stock, as applicable. For the avoidance of doubt, in the case of an exercise
for DSW Stock, this Warrant shall initially be exercisable only for Class&nbsp;A Shares (as defined
below).
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <U>DEFINITIONS</U>. As used herein, unless the context otherwise requires, the following
terms shall have the meanings indicated:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Additional Shares of Common Stock</U>&#148; shall mean all shares (including treasury shares)
of Common Stock issued or sold (or, pursuant to Section&nbsp;3.2(b) or 3.5(b), deemed to be issued) by
the Company after September&nbsp;26, 2002, whether or not subsequently reacquired or retired by the
Company, other than
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i)&nbsp;shares of Common Stock issued upon the exercise of the Term Loan Warrants and (ii)
such additional number of shares of Common Stock as may become issuable upon the exercise of the
Term Loan Warrants by reason of adjustments required pursuant to the anti-dilution provisions
applicable to the Term Loan Warrants as in effect on the date hereof or on the date of original
issuance;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;up to 5,000,000 shares of Common Stock (and following June&nbsp;11, 2007, up to an additional
5,000,000 shares of Common Stock) that are issued to Persons other than Affiliates of the Company,
including (i)&nbsp;shares of Common Stock or options exercisable therefor, issued or to be issued under
the Company&#146;s 2000 Stock Option Plan as in effect on September&nbsp;26, 2002 or under any other employee
stock option or purchase plan or plans, or pursuant to compensatory or incentive agreements, for
officers, employees or consultants of the Company or any of its Subsidiaries, in each case adopted
or assumed after such date by the Company&#146;s Board of Directors; <U>provided</U> in each case that
the exercise or purchase price for any such share shall not be less than 95% of the fair market
value (determined in good faith by the Company&#146;s Board of Directors) of the Common Stock on the
date of the grant, and such additional number of shares as may become issuable pursuant to the
terms of any such plans by reason of adjustments required pursuant to antidilution provisions
applicable to such securities in order to reflect any subdivision or combination of Common Stock,
by reclassification or otherwise, or any dividend on Common Stock payable in Common Stock, (ii)
shares of restricted stock issued by the Company to executive officers of the Company, and (iii)
shares of Common Stock issued by the Company as charitable gifts; and <U>provided</U>,
<U>however</U>, that all options that are issued and expire unexercised because the vesting
requirements thereof are not satisfied shall not be included in the issued shares pursuant to this
(b);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;up to 2,153,000 shares of Common Stock issued pursuant to options that are granted to
executive officers of the Company or its Subsidiaries under the Company&#146;s 2000 Stock Option Plan as
in effect on September&nbsp;26, 2002 at an exercise price of no less than $4.50 per share and such
additional number of shares as may become issuable pursuant to the terms of any such options under
the terms of such plan by reason of adjustments required pursuant to antidilution provisions
applicable to such securities in order to reflect any subdivision or combination of Common Stock,
by reclassification or otherwise, or any dividend on Common Stock payable in Common Stock;
<U>provided</U>, <U>however</U>, that all options that are issued and expire unexercised because
the vesting requirements thereof are not satisfied shall not be included in the issued shares
pursuant to this (c); and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) (i)&nbsp;shares of Common Stock issued upon exercise of the Conversion Warrants and (ii)&nbsp;such
additional number of shares of Common Stock as may become issuable upon the exercise of the
Conversion Warrants by reason of adjustments required pursuant to anti-
</DIV>


<P align="center" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">dilution provisions applicable to the Conversion Warrants as in effect on the date hereof or
on the date of original issuance.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Additional Shares of DSW Stock</U>&#148; shall mean all shares (including treasury shares) of
DSW Stock issued or sold (or, pursuant to Section&nbsp;3.2(b) or 3.5(b), deemed to be issued) by DSW
after the closing date of a Qualifying IPO (and for the avoidance of doubt shall not include shares
issued pursuant to the over-allotment option in such Qualifying IPO after such closing date),
whether or not subsequently reacquired or retired by DSW, other than
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i)&nbsp;shares of DSW Stock issued upon the exercise of the Term Loan Warrants and (ii)
such number of additional shares of DSW Stock as may become issuable upon the exercise of
the Term Loan Warrants by reason of adjustments required pursuant to the antidilution
provisions applicable to the Term Loan Warrants as in effect on the date hereof or on the
date of original issuance; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) (i)&nbsp;shares of DSW Stock issued upon exercise of the Conversion Warrants and (ii)
such additional number of shares as may become issuable upon the exercise of the Conversion
Warrants by reason of adjustments required pursuant to antidilution provisions applicable to
the Conversion Warrants as in effect on September&nbsp;26, 2002 or on the date hereof; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) shares of DSW Stock, shares of restricted stock, options exercisable for DSW Stock,
or any other securities or interests (including shares of DSW Stock issued upon conversion,
settlement or exercise of any such options, securities or other interests), issued or to be
issued under the DSW Inc. Equity Incentive Plan or any other employee stock option or
purchase plan or plans, or pursuant to compensatory or incentive agreements, for officers,
directors, employees or consultants of the Company, DSW or any of its respective
Subsidiaries, and such additional number of shares as may become issuable pursuant to the
terms of any such plans by reason of adjustments required pursuant to antidilution
provisions applicable to such securities in order to reflect any subdivision or combination
of DSW Stock, by reclassification or otherwise, or any dividend or distribution on DSW Stock
payable in DSW Stock or other equity securities or interests; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) shares of Class&nbsp;A Shares issued upon exchange of Class&nbsp;B Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Aggregate Purchase Price</U>&#148; shall have the meaning set forth in Section&nbsp;2.1(a).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Business Day</U>&#148; shall mean any day other than a Saturday or a Sunday or any day on
which national banks are authorized or required by law to close. Any reference to &#147;days&#148; (unless
Business Days are specified) shall mean calendar days.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Class&nbsp;A Shares</U>&#148; means the shares of the Class&nbsp;A common shares, no par value, of DSW.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Class&nbsp;B Shares</U>&#148; means the shares of the Class&nbsp;B common shares, no par value, of DSW.
</DIV>


<P align="center" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Commission</U>&#148; shall mean the Securities and Exchange Commission or any successor agency
having jurisdiction to enforce the Securities Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Common Stock</U>&#148; shall have the meaning assigned to it in the introduction to this
Warrant, such term to include any stock into which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common Stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the right, without limitation
as to amount, either to all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares entitled to preference.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Common Stock Exercise Amount</U>&#148; shall initially mean the Initial Common Stock Exercise
Amount, as the same may be adjusted and readjusted pursuant to Section&nbsp;3 hereof; and shall be
reduced upon each exercise of this Warrant (i)&nbsp;if exercised for Common Stock, by such number of
shares of Common Stock for which this Warrant is then being exercised or (ii)&nbsp;if exercised for DSW
Stock, by the Corresponding Common Stock Number applicable to the number of shares of DSW Stock for
which this Warrant is then being exercised.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Common Stock Purchase Price</U>&#148; shall mean initially $4.50 per share, subject to
adjustment and readjustment from time to time as provided in Section&nbsp;3, and, as so adjusted or
readjusted, shall remain in effect until a further adjustment or readjustment thereof is required
by Section&nbsp;3.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company</U>&#148; shall have the meaning assigned to it in the introduction to this Warrant,
such term to include any corporation or other entity which shall succeed to or assume the
obligations of the Company hereunder in compliance with Section&nbsp;4.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Conversion</U>&#148; shall have the meaning assigned to it in Section&nbsp;3.1(b).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Conversion
Warrants</U>&#148; means those certain warrants issued as of July 5,
2005, in
connection with an amendment and restatement of the Convertible Facility.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Convertible Facility</U>&#148; shall mean that certain Amended and Restated Senior
Subordinated Convertible Loan Agreement, dated as of June&nbsp;11, 2002, among the Company, CPLP and
SSC, as amended by Amendment No.&nbsp;1 to Amended and Restated Senior Convertible Loan Agreement, dated
as of June&nbsp;11, 2002, and by Amendment No.&nbsp;2 to Amended and Restated Senior Convertible Loan
Agreement, dated as of October&nbsp;7, 2003, and by Amendment No.&nbsp;3 to Amended and Restated Senior
Convertible Loan Agreement, dated as of December&nbsp;29, 2004, and as amended and restated by the
Second Amended and Restated Senior Loan Agreement, dated as of July&nbsp;5, 2005 (as amended,
supplemented, restated otherwise modified through the date hereof).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Convertible Securities</U>&#148; shall mean any evidences of indebtedness, shares of stock
(other than Common Stock or DSW Stock) or other securities directly or indirectly convertible into
or exchangeable for, in the case of the Company, Additional Shares of Common Stock or, in the case
of DSW, Additional Shares of DSW Stock.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Corresponding Common Stock Number</U>&#148; shall mean, with respect to a specified number of
shares of DSW Stock, the number of shares of Common Stock obtained by dividing: (i)&nbsp;the product of
(A)&nbsp;the number of shares of DSW Stock with respect to which such determination is being made and
(B)&nbsp;the DSW Stock Purchase Price by (ii)&nbsp;the Common Stock Purchase Price; rounding up in the case
of any fractional share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Corresponding DSW Stock Number</U>&#148; shall mean, with respect to a specified number of
shares of Common Stock, the number of shares of DSW Stock obtained by dividing (i)&nbsp;the product of
(A)&nbsp;the number of shares of Common Stock with respect to which such determination is being made and
(B)&nbsp;the Common Stock Purchase Price by (ii)&nbsp;the DSW Stock Purchase Price; rounding up in the case
of any fractional share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>CPLP</U>&#148; shall mean Cerberus Partners, L.P., or its assignees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Current Market Price</U>&#148; shall mean, with respect to a security, on any date specified
herein, the average of the daily Market Price of such security during the 10 consecutive trading
days before such date, except that, if on any such date the shares of such security are not listed
or admitted for trading on any national securities exchange or quoted in the over-the-counter
market, the Current Market Price shall be the Market Price on such date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>DSW</U>&#148; shall mean DSW Inc., an Ohio corporation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>DSW Registration Rights Agreement</U>&#148; shall mean the registration rights agreement,
dated as of July 5, 2005, among DSW and the Initial Holders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>DSW Stock</U>&#148; shall mean shares of Class&nbsp;A Shares, such term to include any stock into
which such DSW Stock shall have been changed or any stock resulting from any reclassification of
such DSW Stock, and all other stock of any class or classes (however designated) of DSW the holders
of which have the right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>DSW Stock Exercise Amount</U>&#148; shall initially mean the Initial DSW Stock Exercise
Amount, as the same may be adjusted and readjusted pursuant to Section&nbsp;3 hereof; and shall be
reduced upon each exercise of this Warrant (i)&nbsp;if exercised for DSW Stock, by such number of shares
of DSW Stock for which this Warrant is then being exercised or (ii)&nbsp;if exercised for Common Stock,
by the Corresponding DSW Stock Number applicable to the number of shares of Common Stock for which
this Warrant is then being exercised.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>DSW Stock Purchase Price</U>&#148; shall mean initially, the IPO Price, subject to adjustment
and readjustment from time to time as provided in Section&nbsp;3, and, as so adjusted or readjusted,
shall remain in effect until a further adjustment or readjustment thereof is required by Section&nbsp;3.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Exchange Act</U>&#148; shall mean the Securities Exchange Act of 1934, as amended from time to
time, and the rules and regulations thereunder, or any successor statute.
</DIV>


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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Expiration Date</U>&#148; shall have the meaning assigned to it in the introduction to this
Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Fair Value</U>&#148; shall mean, on any date specified herein (i)&nbsp;in the case of cash, the
dollar amount thereof, (ii)&nbsp;in the case of a security, the Current Market Price, and (iii)&nbsp;in all
other cases, the fair value thereof (as of a date which is within 20&nbsp;days of the date as of which
the determination is to be made) determined in good faith by a committee of the Company&#146;s Board of
Directors consisting of directors who are not Affiliates of the Company, SSC or the Holder;
<U>provided</U>, however, that at the reasonable request of the Holder, the Fair Value shall be
determined in good faith by an independent investment banking firm selected jointly by the Company
and the Holder or, if that selection cannot be made within 10&nbsp;days, by an independent investment
banking firm selected by the American Arbitration Association in accordance with its rules, and
<U>provided</U>, further, that the Company shall pay all of the reasonable fees and expenses of
any third parties incurred in connection with determining the Fair Value.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Financing Agreement</U>&#148; shall mean that certain Financing Agreement, dated as of June
11, 2002, among the Company, certain Affiliates of the Company, CPLP and SSC, as subsequently
amended and modified through the date hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Holder</U>&#148; shall have the meaning assigned to it in the introduction to this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Initial Common Stock Exercise Amount</U>&#148; means 177,288 shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Initial DSW Stock Exercise Amount</U>&#148; shall mean the number of shares of DSW Stock
obtained by dividing (i)&nbsp;the product of (A)&nbsp;177,288 and $4.50 by (ii)&nbsp;the IPO Price; rounding up
for any fractional share, which such amount is equal to 41,989 shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Initial Holders</U>&#148; shall mean CPLP and SSC.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>IPO Effective Date</U>&#148; means the date on which a Qualifying IPO is consummated in
accordance with the terms set forth in (i)&nbsp;Section&nbsp;4.02 of the Convertible Facility and (ii)&nbsp;the
Form S-1 Registration Statement as filed with the SEC on June&nbsp;28, 2005 as amended from time to
time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>IPO Price</U>&#148; means the price at which a share of DSW Stock is initially offered to the
public in a Qualifying IPO as set forth on the cover page to the prospectus in such IPO, or $19.00
per share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Lien</U>&#148; shall have the meaning set forth in the Convertible Facility.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Market Price</U>&#148; shall mean, on any date specified herein, with respect to any security,
the amount per share of such security equal to (i)&nbsp;the last reported sale price of such security,
regular way, on such date or, in case no such sale takes place on such date, the average of the
closing bid and asked prices thereof regular way on such date, in either case as officially
reported on the principal national securities exchange on which such security is then listed or
admitted for trading, (ii)&nbsp;if such security is not then listed or admitted for trading on any
national securities exchange but is designated as a national market system security by the NASD,
the last
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reported trading price of such security on such date, (iii)&nbsp;if there shall have been no
trading on such date or if such security is not so designated, the average of the closing bid and
asked prices of such security on such date as shown by the NASD automated quotation system, (iv)&nbsp;if
trading in such security is quoted in the over-the-counter market, the average of the closing bid
and asked prices of the security on such date as shown on the OTC Bulletin Board, or (v)&nbsp;if such
security is not then listed or admitted for trading on any national exchange or quoted in the
over-the-counter market, the fair value thereof (as of a date which is within 20&nbsp;days of the date
as of which the determination is to be made) determined in good faith by a committee of the
Company&#146;s Board of Directors consisting of directors who are not Affiliates of the Company, SSC or
the Holder; <U>provided</U>, <U>however</U>, that at the request of the Holder, the Market Price
shall be determined in good faith by an independent investment banking firm selected jointly by the
Company and the Holder or, if that selection cannot be made within 10&nbsp;days, by an independent
investment banking firm selected by the American Arbitration Association in accordance with its
rules, and <U>provided</U>, further, that the Company shall pay all of the fees and expenses of
any third parties incurred in connection with determining the Market Price.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>NASD</U>&#148; shall mean the National Association of Securities Dealers, Inc.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>New Issuance Price</U>&#148; shall have the meaning set forth in Section&nbsp;3.2.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Options</U>&#148; shall mean any rights, options or warrants to subscribe for, purchase or
otherwise acquire, in the case of the Company, Additional Shares of Common Stock or Convertible
Securities of the Company, and, in the case of DSW, Additional Shares of DSW Stock or Convertible
Securities of DSW.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Original Issuance Date</U>&#148; means September&nbsp;26, 2002.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Other Securities</U>&#148; shall mean any stock (other than Common Stock or DSW Stock) and
other securities of the Company or DSW, as applicable, or any other Person (corporate or otherwise)
which the holders of the Term Loan Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Term Loan Warrants, in lieu of or in addition to Common Stock or
DSW Stock, or which at any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or DSW Stock or Other Securities pursuant to Section&nbsp;4 or otherwise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Permitted Lien</U>&#148; shall have the meaning set forth in the Convertible Facility.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Person</U>&#148; shall mean any individual, firm, partnership, corporation, trust, joint
venture, association, joint stock company, limited liability company, unincorporated organization
or any other entity or organization, including a government or agency or political subdivision
thereof, and shall include any successor (by merger or otherwise) of such entity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Purchase Price</U>&#148; shall mean, with respect to the Common Stock, the Common Stock
Purchase Price, and with respect to the DSW Stock, the DSW Stock Purchase Price, as applicable.
</DIV>


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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Qualifying IPO</U>&#148; shall mean an initial public offering of DSW (a)&nbsp;in which the sale
price of the Class&nbsp;A Shares sold in the initial public offering shall reflect the fair market value
of such shares at the time of the initial public offering as determined by the Company&#146;s Board of
Directors; (b)&nbsp;from which the net proceeds are sufficient to repay in full all obligations
outstanding under the Financing Agreement and $25,000,000 of the principal amount under the
Convertible Facility; and (c)&nbsp;which is consummated on or prior to December&nbsp;31, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registration Rights Agreement</U>&#148; shall mean the Second Amended and Restated
Registration Rights Agreement, dated as of July 5, 2005, among the Company and the Initial
Holders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Restricted Securities</U>&#148; shall mean (i)&nbsp;any Term Loan Warrants bearing the applicable
legend set forth in Section&nbsp;10.1, (ii)&nbsp;any shares of Common Stock or DSW Stock (or Other
Securities) issued or issuable upon the exercise of Term Loan Warrants which are (or, upon
issuance, will be) evidenced by a certificate or certificates bearing the applicable legend set
forth in Section&nbsp;10.1, and (iii)&nbsp;any shares of Common Stock or DSW Stock (or Other Securities)
issued subsequent to the exercise of any of the Term Loan Warrants as a dividend or other
distribution with respect to, or resulting from a subdivision of the outstanding shares of Common
Stock or DSW Stock (or Other Securities) into a greater number of shares by reclassification, stock
splits or otherwise, or in exchange for or in replacement of the Common Stock or DSW Stock (or
Other Securities) issued upon such exercise, which are evidenced by a certificate or certificates
bearing the applicable legend set forth in Section&nbsp;10.1.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Securities Act</U>&#148; shall mean the Securities Act of 1933, as amended from time to time,
and the rules and regulations thereunder, or any successor statute.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Spin-Off</U>&#148; shall have the meaning assigned to it in Section&nbsp;3.3.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>SSC</U>&#148; shall mean Schottenstein Stores Corporation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Term Loan Warrants</U>&#148; shall mean all warrants initially issued pursuant to the
Financing Agreement (as amended and restated), including this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Warrant</U>&#148; shall have the meaning assigned to it in the introduction to this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Warrant Shares</U>&#148; means (a)&nbsp;the shares of Common Stock or DSW Stock issued or issuable
upon exercise of this Warrant in accordance with Section&nbsp;2, (b)&nbsp;all other securities or other
property issued or issuable upon any such exercise or exchange in accordance with this Warrant and
(c)&nbsp;any securities of the Company or DSW distributed with respect to the securities referred to in
the preceding clauses (a)&nbsp;and (b).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <U>EXERCISE OF WARRANT</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1. <U>Manner of Exercise; Payment of the Purchase Price</U>. (a)&nbsp;This Warrant may be
exercised by the Holder hereof, in whole or in part, at any time or from time to time prior to the
Expiration Date, by surrendering to the Company at its principal office this Warrant, with
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the form of Election to Purchase Shares attached hereto as Exhibit&nbsp;A, or (provided that the
Company has not consummated a Spin-Off and satisfied its obligation pursuant to Section&nbsp;3.3(b)) if
this Warrant is being exercised for Shares of DSW Stock, Exhibit&nbsp;B (or a reasonable facsimile
thereof) duly executed by the Holder and accompanied by payment of the applicable Purchase Price
for the number of shares of Common Stock or, after the consummation of a Qualifying IPO (provided
that the Company has not consummated a Spin-Off and satisfied its obligations pursuant to Section
3.3(b), DSW Stock specified in such form (the &#147;<U>Aggregate Purchase Price</U>&#148;). Any partial
exercise of this Warrant shall be for a whole number of Warrant Shares only.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Payment of the Aggregate Purchase Price may be made as follows (or by any combination of
the following): (i)&nbsp;in United States currency by cash or delivery of a certified check or bank
draft payable to the order of the Company or by wire transfer to the Company, (ii)&nbsp;by cancellation
of such number of Warrant Shares otherwise issuable to the Holder upon such exercise as shall be
specified for cancellation in such Election to Purchase Shares, such that the excess of the
aggregate Current Market Price of such specified number and type of shares on the date of exercise
over the portion of the Aggregate Purchase Price attributable to such shares shall equal the
Aggregate Purchase Price attributable to the shares of Common Stock or DSW Stock, as the case may
be, to be issued upon such exercise, in which case such excess amount shall be deemed to have been
paid to the Company and the number of shares issuable upon such exercise shall be reduced by such
number specified for cancellation, or (iii)&nbsp;by surrender to the Company for cancellation
certificates representing shares of Common Stock or transfer to the Company certificates
representing shares of DSW Stock owned by the Holder (properly endorsed for transfer in blank)
having a Current Market Price on the date of Warrant exercise equal to the Aggregate Purchase
Price.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Upon the consummation of a Spin-Off and the satisfaction of the Company&#146;s obligations to
make the distribution to the Holder required by Section&nbsp;3.3(b), this Warrant shall no longer be
exercisable for shares of DSW Stock and the Holder shall not be entitled to the pro rata share of
the dividend or distribution pursuant to Section&nbsp;3.3(a) in respect of such Spin-Off and
distribution; provided, however, that this Warrant shall continue to be exercisable for shares of
Common Stock without any adjustment to the Common Stock Purchase Price or Common Stock Exercise
Amount as a result of such Spin-Off and distribution to the holders of the Term Loan Warrants and
Conversion Warrants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Notwithstanding anything herein to the contrary, the Holder agrees that this Warrant shall
not be exercisable for shares of DSW Stock from and after the record date for a Spin-Off (as set
forth in the notice provided to the Holder pursuant to Section&nbsp;8 hereof) until the earliest to
occur of (i)&nbsp;the abandonment of the Spin-Off, (ii)&nbsp;the date that is 60&nbsp;days after the record date
for such Spin-Off and (iii)&nbsp;two Business Days prior to the Expiration Date of this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2. <U>When Exercise Effective</U>. Each exercise of this Warrant shall be deemed to have
been effected immediately prior to the close of business on the Business Day in the case of Common
Stock and on the next succeeding Business Day in the case of DSW Stock on which this Warrant shall
have been surrendered to, and the Purchase Price shall have been received by, the Company as
provided in Section&nbsp;2.1, and, to the extent permitted by law, at such time the
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Person or Persons in whose name or names any certificate or certificates for shares of Common
Stock (or Other Securities of the Company) in the case of an exercise of this Warrant for Common
Stock shall be issuable upon such exercise as provided in Section&nbsp;2.3 shall be deemed to have
become the holder or holders of record thereof for all purposes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3. <U>Delivery of Stock Certificates, etc.; Charges, Taxes and Expenses</U>. (a)&nbsp;As
soon as practicable after each exercise of this Warrant, in whole or in part, and in any event
within two Business Days thereafter in the case of Common Stock and within three Business Days in
the case of DSW Stock, the Company shall cause to be issued, in the case of Common Stock, and shall
use reasonable best efforts to cause to be transferred, in the case of DSW Stock, in the name of
and delivered to the Holder hereof or, subject to Section&nbsp;10, as the Holder may direct,
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a certificate or certificates for the number and type of Warrant Shares (or Other
Securities) to which the Holder shall be entitled upon such exercise, and any cash payment in
lieu of any fractional shares, as provided in Section&nbsp;12.5 hereof, and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) in case such exercise is for less than all of the Warrant Shares purchasable under
this Warrant, a new Warrant or Warrants of like tenor, for the balance of the Warrant Shares
purchasable hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be
made without charge to the Holder hereof for any issue or transfer tax or other incidental expense,
in respect of the issuance or transfer of such certificates, all of which such taxes and expenses
shall be paid by the Company; <U>provided</U>, <U>however</U>, that the Company shall not be
required to pay any tax that may be payable in respect of any issuance of any Warrant or any
certificate for, or any other evidence of ownership of, Warrant Shares in a name other than that of
the Holder of this Warrant being exercised or exchanged.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Upon delivery of notice of exercise of this Warrant for shares of DSW Stock, the Company
shall promptly effect the exchange of a sufficient number of Class&nbsp;B Shares for Class&nbsp;A Shares so
as to permit the transfer of Class&nbsp;A Shares to the Holder in the manner and time periods provided
in paragraph (a)&nbsp;of this Section&nbsp;2.3.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4. <U>Tax Basis</U>. The Company and the Holder shall mutually agree as to the tax basis
of this Warrant for purposes of the Internal Revenue Code of 1986, as amended, and the treatment of
this Warrant under such Code by each of the Company and the Holder shall be consistent with such
agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <U>ADJUSTMENT OF PURCHASE PRICE AND WARRANT SHARES ISSUABLE UPON EXERCISE</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1. <U>Adjustment of Number of Shares</U>.
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Upon each adjustment of the Common Stock Purchase Price or the DSW Stock Purchase Price as
a result of the calculations made in this Section&nbsp;3, this Warrant shall thereafter evidence the
right to receive, at the adjusted Purchase Price, that number of shares of Common Stock or DSW
Stock, as the case may be, (calculated to the nearest one-hundredth) obtained by dividing (i)&nbsp;the
product of the aggregate number of such shares covered by this Warrant immediately prior to such
adjustment and the applicable Purchase Price in effect immediately prior to such adjustment of the
Purchase Price by (ii)&nbsp;the applicable Purchase Price in effect immediately after such adjustment of
the Purchase Price. For the avoidance of doubt, adjustments to the Common Stock Purchase Price
shall result in an adjustment only in the number of shares of Common Stock issuable hereunder and
an adjustment to the DSW Stock Purchase Price shall result in an adjustment only in the number of
shares of DSW Stock issuable hereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;In the event that, prior to the exercise in full of this Warrant, the Company issues any
shares of Common Stock upon the conversion of Convertible Securities outstanding as of the Original
Issuance Date (including, without limitation, upon exercise of the Conversion Warrants) (a
&#147;<U>Conversion</U>&#148;), the number of shares of Common Stock issuable upon the exercise of this
Warrant (whether or not this Warrant has been partially exercised) shall be automatically increased
by the number of shares equal to 0.525% of the shares of Common Stock issued upon such Conversion,
and the Purchase Price shall not be adjusted in connection with such increase. Any adjustments
made to the Purchase Price or the number of shares of Common Stock issuable upon exercise of the
Warrant prior to such Conversion shall be made as if the Warrant were initially exercisable for
such increased number of shares. Upon each such Conversion, the Company shall promptly deliver to
the Holder the report required by Section&nbsp;7 hereof. For the avoidance of doubt, this section
3.1(b) shall only apply to exercise of this Warrant for Common Stock and a corresponding increase
shall not be made with respect to DSW Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2. <U>Adjustment of Purchase Price for New Issuances</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Issuance of Additional Shares</U>. If at any time or from time to time after the date
hereof, the Company shall issue or sell Additional Shares of Common Stock or, DSW shall issue
Additional Shares of DSW Stock (including, in each case, Additional Shares of Common Stock or
Additional Shares of DSW Stock, as applicable, deemed to be issued pursuant to Section&nbsp;3.2(b) and
excluding shares issued pursuant to Section&nbsp;3.3 and 3.4) without consideration or for a
consideration per share less than the applicable Purchase Price in effect immediately prior to such
issue or sale (the &#147;<U>New Issuance Price</U>&#148;), then, and in each such case, subject to Section
3.8, in the case of an issuance of Additional Shares of Common Stock the Common Stock Purchase
Price or, in the case of an issuance of Additional Shares of DSW Stock, the DSW Stock Purchase
Price, shall be reduced concurrently with such issue or sale, to the applicable New Issuance Price.
For the avoidance of doubt, issuances of Additional Shares of Common Stock shall result in an
adjustment only to the Common Stock Purchase Price and issuances of Additional Shares of DSW Stock
shall result in an adjustment only to the DSW Stock Purchase Price.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Treatment of Options and Convertible Securities</U>. Shares of Additional Shares of
Common Stock or Additional Shares of DSW Stock shall be deemed issued if the Company or DSW, as
applicable, at any time or from time to time after the date hereof shall

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">issue, sell, grant or assume, or shall fix a record date for the determination of holders of
any class of securities of the Company or DSW, as the case may be, entitled to receive, any Options
or Convertible Securities (whether or not the rights thereunder are immediately exercisable) for a
consideration per share (determined pursuant to Section&nbsp;3.6) that is less than, in the case of
Additional Shares of Common Stock, the Common Stock Purchase Price or, in the case of Additional
Shares of DSW Stock, the DSW Stock Purchase Price, in effect on the date of and immediately prior
to such issue, sale, grant or assumption or immediately prior to the close of business on such
record date (or, if the Common Stock or DSW Stock, as applicable, trades on an ex-dividend basis,
on the date prior to the commencement of ex-dividend trading). Such issuance shall be deemed to
occur (i)&nbsp;as of the time of such issue, sale, grant or assumption of the Convertible Securities or
Options or (ii)&nbsp;in case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock or DSW Stock, as applicable, trades on an ex-dividend
basis, on the date prior to the commencement of ex-dividend trading). No further adjustment of the
Purchase Price shall be made upon the subsequent issuance of shares of Common Stock or DSW Stock,
as the case may be, upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;In addition, for the avoidance of doubt, after the consummation of a Spin-Off and
satisfaction of the Company&#146;s obligations to make the distribution to the Holder required by
Section&nbsp;3.3(b), no adjustment shall be made pursuant to this Section&nbsp;3.2 as a result of an issuance
by DSW of Additional Shares of DSW Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3. <U>Extraordinary Dividends and Distributions; Payment of Dividend in Case of
Spin-Off</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject to Section&nbsp;3.3(b), if the Company or DSW at any time or from time to time after
the date hereof shall declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of other or additional stock or other securities or property
or Options by way of dividend or spin-off, reclassification, recapitalization or similar corporate
rearrangement) on, in the case of the Company, the Common Stock or, in the case of DSW, the DSW
Stock, other than (a)&nbsp;a dividend payable in shares of Common Stock or, in the case of DSW, DSW
Stock, subject to Section&nbsp;3.4, or (b)&nbsp;a regularly scheduled cash dividend payable out of
consolidated earnings or earned surplus, determined in accordance with generally accepted
accounting principles or (c)&nbsp;a deemed issuance of Additional Shares of Common Stock or Additional
Shares of DSW Stock pursuant to Section&nbsp;3.2(b), in each such case, subject to Section&nbsp;3.8, adequate
provision shall be made so that the Holder shall receive, upon Warrant exercise for such type of
Warrant Shares, a pro rata share of such dividend or other distribution based upon the maximum
number of shares of Common Stock or DSW Stock, as applicable, at the time issuable to the Holder
(determined without regard to whether the Warrant is exercisable at such time). For the avoidance
of doubt, subject to Section&nbsp;3.3(b), dividends and distributions pursuant to this Section&nbsp;3.3(a)
with respect to DSW Stock shall only be receivable upon exercise by a Holder of this Warrant for
DSW Stock (and only with respect to the number of shares of DSW Stock for which this Warrant is
exercised) and dividends and distributions with respect to Common Stock shall only be receivable
upon exercise by a Holder of this Warrant for Common Stock (and only with respect to the number of
shares of Common Stock for which this Warrant is exercised). In addition, for the avoidance of
doubt, after the
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">consummation of a Spin-Off and satisfaction of the Company&#146;s obligations to make the
distribution to the Holder required by Section&nbsp;3.3(b), no adjustment shall be made pursuant to this
Section&nbsp;3.3(a) as a result of an issuance by DSW of Additional Shares of DSW Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Notwithstanding anything in this Warrant to the contrary, if the Company shall make any
distribution of all shares of DSW Stock owned by it to its shareholders (a &#147;<U>Spin-Off</U>&#148;),
then the Holder of this Warrant shall receive, and the Company shall deliver to the Holder, upon
consummation of the Spin-Off, that number of shares of DSW Stock which the Holder would have
received in such Spin-Off had the Holder exercised this Warrant, immediately prior to the record
date for such Spin-Off, for the greatest number of shares of Common Stock for which this Warrant
was then exercisable but only with respect to the portion of the Warrant that remains unexercised
on the date of such distribution. Such shares of DSW Stock shall be distributed to the Holder
without payment therefor by the Holder to the Company and without any action of any kind required
by the Holder to the Company. Upon the consummation of a Spin-Off and receipt by the Holder of the
DSW Stock as provided for in this Section&nbsp;3.3(b), this Warrant shall no longer be exercisable for
shares of DSW Stock and shall only be exercisable for Common Stock in accordance with Section
2.1(c). The Holder shall be entitled to at least 90&nbsp;days&#146; prior written notice of the record date
for any Spin-Off.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4. <U>Treatment of Stock Dividends, Stock Splits, etc.</U> In case the Company or DSW at
any time or from time to time after the date hereof, shall declare or pay any dividend on, in the
case of the Company, the Common Stock payable in Common Stock or, in the case of DSW, the DSW Stock
payable in DSW Stock, or shall effect a subdivision of the outstanding shares, in the case of the
Company, of Common Stock or, in the case of DSW, of DSW Stock, into a greater number of such
shares (by reclassification or otherwise than by payment of a dividend in Common Stock or DSW
Stock), then, and in each such case, the number of shares of Common Stock or DSW Stock, as the case
may be, obtainable upon exercise of this Warrant shall be proportionately increased and the
applicable Purchase Price shall be proportionately decreased. In case the Company or DSW at any
time or from time to time after the date hereof, shall effect any combination or consolidation of
the outstanding shares of, in the case of the Company, Common Stock or, in the case of DSW, DSW
Stock, into a lesser number of such shares, then, and in each such case, the number of shares of
Common Stock or DSW Stock, as the case may be, obtainable upon exercise of this Warrant shall be
proportionately decreased and the applicable Purchase Price shall be proportionately increased.
Any adjustment made under this Section shall become effective (a)&nbsp;in the case of any such dividend,
immediately after the close of business on the record date for the determination of holders of any
class of securities entitled to receive such dividend, or (b)&nbsp;in the case of any such subdivision,
at the close of business on the day immediately prior to the day upon which such corporate action
becomes effective. For the avoidance of doubt, after the consummation of a Spin-Off and
satisfaction of the Company&#146;s obligations to make the distribution to the Holder required by
Section&nbsp;3.3(b) no adjustment shall be made pursuant to this Section&nbsp;3.4 for any dividend or
subdivision or consolidation or combination that is effected by DSW.
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5. <U>Adjustment of Purchase Price for Other Issuances</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Issuance of Additional Shares</U>. If at any time or from time to time after the date
hereof, the Company shall issue or sell Additional Shares of Common Stock or DSW shall issue or
sell Additional Shares of DSW Stock, (including Additional Shares of Common Stock or Additional
Shares of DSW Stock, as the case may be, deemed to be issued pursuant to Section&nbsp;3.5(b)) for a
consideration per share less than the Current Market Price thereof but greater than the applicable
Purchase Price in effect immediately prior to such issue or sale, then, and in each such case,
subject to Section&nbsp;3.8, the applicable Purchase Price shall be reduced concurrently with such issue
or sale, to a price (calculated to the nearest .01 of a cent) determined by multiplying such
applicable Purchase Price by a fraction
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;The numerator of which shall be the sum of (i)&nbsp;the number of shares of, in the case of the
issuance of Additional Shares of Common Stock, Common Stock or, in the case of an issuance of
Additional Shares of DSW Stock, DSW Stock, outstanding immediately prior to such issue or sale and
(ii)&nbsp;the number of shares of, in the case of the issuance of Additional Shares of Common Stock,
Common Stock or, in the case of an issuance of Additional Shares of DSW Stock, DSW Stock, which the
aggregate consideration received by the Company or DSW, as applicable, for the total number of such
Additional Shares of Common Stock or Additional Shares of DSW Stock, as the case may be, so issued
or sold would purchase at the Current Market Price thereof, and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;The denominator of which shall be the number of shares of, in the case of the issuance of
Additional Shares of Common Stock, Common Stock, or, in the case of an issuance of Additional
Shares of DSW Stock, of DSW Stock, outstanding immediately after such issue or sale,
<U>provided</U> that, for the purposes of this Section&nbsp;3.5, (x)&nbsp;immediately after any Additional
Shares of Common Stock or Additional Shares of DSW Stock are deemed to have been issued pursuant to
Section&nbsp;3.5(b), such additional shares shall be deemed to be outstanding, and (y)&nbsp;treasury shares
shall not be deemed to be outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Treatment of Options and Convertible Securities</U>. In case the Company or DSW at
any time or from time to time after the date hereof, shall issue, sell, grant or assume, or shall
fix a record date for the determination of holders of any class of securities of the Company or
DSW, as the case may be, entitled to receive, any Options or Convertible Securities (other than
those excluded from the definition of Additional Shares of Common Stock or the definition of
Additional Shares of DSW Stock) (whether or not the rights thereunder are immediately exercisable)
and the consideration per share (determined pursuant to Section&nbsp;3.6) of the shares issuable upon
the exercise of such Options or, in the case of Convertible Securities and the Options therefor,
the conversion or exchange of such Convertible Securities would be less than the Current Market
Price thereof but greater than the applicable Purchase Price in effect on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior to the close of
business on such record date (or, if the Common Stock or DSW Stock, as applicable, trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend trading), then, and in each
such case, the maximum number of Additional Shares of Common Stock or Additional Shares of DSW
Stock (as set forth in the instrument relating thereto, without regard to any provisions contained
therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or,
in the case of Convertible Securities and Options therefor, the
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock or Additional Shares of DSW Stock, as the case may be, issued for the purposes of
Section&nbsp;3.5 as of the time of such issue, sale, grant or assumption or, in case such a record date
shall have been fixed, as of the close of business on such record date (or, if the Common Stock or
DSW Stock, as applicable, trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading, <U>provided</U>, that in any such case in which Additional Shares of Common
Stock or Additional Shares of DSW Stock are deemed to be issued:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) whether or not the Additional Shares of Common Stock or Additional Shares of DSW
Stock underlying such Options or Convertible Securities are deemed to be issued, no further
adjustment of the applicable Purchase Price shall be made upon the subsequent issue or sale
of Convertible Securities or shares of Common Stock or DSW Stock upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, except in the case of
any such Options or Convertible Securities which contain provisions requiring an adjustment,
subsequent to the date of the issue or sale thereof, of the number of Additional Shares of
Common Stock or Additional Shares of DSW Stock as issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities by reason of (x)&nbsp;a change of
control of the Company or DSW, (y)&nbsp;the acquisition by any Person or group of Persons of any
specified number or percentage of the voting securities of the Company or (z)&nbsp;any similar
event or occurrence, each such case to be deemed hereunder to involve a separate issuance of
Additional Shares of Common Stock, Additional Shares of DSW Stock, Options or Convertible
Securities, as the case may be;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if such Options or Convertible Securities by their terms provide, with the passage
of time or otherwise, for any increase in the consideration payable to the Company or DSW, or
decrease in the number of Additional Shares of Common Stock or Additional Shares of DSW Stock
issuable, upon the exercise, conversion or exchange thereof (by change of rate or otherwise),
the Purchase Price computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options, or the rights of
conversion or exchange under such Convertible Securities, which are outstanding at such time;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) upon the expiration (or purchase by the Company or DSW, as the case may be, and
cancellation or retirement) of any such Options which shall not have been exercised or the
expiration of any rights of conversion or exchange under any such Convertible Securities
which (or purchase by the Company or DSW, as applicable, and cancellation or retirement of
any such Convertible Securities the rights of conversion or exchange under which) shall not
have been exercised, the applicable Purchase Price computed upon the original issue, sale,
grant or assumption thereof (or upon the occurrence of the record date, or date prior to the
commencement of ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon,
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">shall, upon such expiration (or such cancellation or retirement, as the case may be), be
recomputed as if:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) in the case of Options for Common Stock or DSW Stock, or Convertible
Securities, the only Additional Shares of Common Stock or Additional Shares of DSW
Stock, issued or sold were the Additional Shares of Common Stock or Additional
Shares of DSW Stock, if any, actually issued or sold upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
Company or DSW, as the case may be, for the issue, sale, grant or assumption of all
such Options, whether or not exercised, plus the consideration actually received by
the Company or DSW, as the case may be, upon such exercise, or for the issue or sale
of all such Convertible Securities which were actually converted or exchanged, plus
the additional consideration, if any, actually received by the Company or DSW, as
the case may be, upon such conversion or exchange, and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) in the case of Options for Convertible Securities, only the Convertible
Securities, if any, actually issued or sold upon the exercise of such Options were
issued at the time of the issue or sale, grant or assumption of such Options, and
the consideration received by the Company or DSW, as the case may be, for the
Additional Shares of Common Stock or Additional Shares of DSW Stock, deemed to have
then been issued was the consideration actually received by the Company or DSW, as
the case may be, for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to have been received by the
Company or DSW, as the case may be, (pursuant to Section&nbsp;3.6) upon the issue or sale
of such Convertible Securities with respect to which such Options were actually
exercised; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) no readjustment pursuant to subdivision (ii)&nbsp;or (iii)&nbsp;above shall have the effect
of decreasing the applicable Purchase Price by an amount in excess of the amount of the
adjustment thereof originally made in respect of the issue, sale, grant or assumption of such
Options or Convertible Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;For the avoidance of doubt, after the consummation of a Spin-Off and satisfaction of the
Company&#146;s obligations to make the distribution required by Section&nbsp;3.3(b), no adjustment shall be
made pursuant to this Section&nbsp;3.5 as a result of any issuance by DSW of Additional Shares of DSW
Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6. <U>Computation of Consideration</U>. For the purposes of this Section&nbsp;3,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;the consideration for the issue or sale of any Additional Shares of Common Stock or
Additional Shares of DSW Stock shall, irrespective of the accounting treatment of such
consideration,
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) insofar as it consists of cash, be computed at the gross cash proceeds to the
Company or DSW, as the case may be, without deducting any expenses
</DIV>

<P align="center" style="font-size: 10pt">16
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">paid or incurred by such company, or any commissions or compensations paid or
concessions or discounts allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) insofar as it consists of property (including securities) other than cash, be
computed at the Fair Value thereof at the time of such issue or sale, and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) in case Additional Shares of Common Stock or Additional Shares of DSW Stock are
issued or sold together with other stock or securities or other assets of the Company or DSW,
as the case may be, for a consideration which covers both, be the portion of such
consideration so received, computed as provided in clauses (i)&nbsp;and (ii)&nbsp;above, allocable to
such Additional Shares of Common Stock or Additional Shares of DSW Stock, such allocation to
be determined in the same manner that the Fair Value of property not consisting of cash or
securities is to be determined as provided in the definition of &#147;Fair Value&#148; herein; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Additional Shares of Common Stock or Additional Shares of DSW Stock deemed to have been
issued pursuant to Sections&nbsp;3.2(b) and 3.5(b), relating to Options and Convertible Securities,
shall be deemed to have been issued for a consideration per share determined by dividing
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the total amount, if any, received and receivable by the Company or DSW, as
applicable, as consideration for the issue, sale, grant or assumption of the Options or
Convertible Securities in question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such consideration to protect
against dilution) payable to the Company or DSW, as the case may be, upon the exercise in
full of such Options or the conversion or exchange of such Convertible Securities or, in the
case of Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, in each case
computing such consideration as provided in the foregoing subclause (a),
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;by
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the maximum number of shares of Common Stock or DSW Stock, as applicable, (as set
forth in the instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such number to protect against dilution) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7. <U>Dilution in Case of Other Securities</U>. In case any Other Securities shall be
issued or sold or shall become subject to issue or sale upon the conversion or exchange of any
stock (or Other Securities) of the Company or DSW (or any issuer of Other Securities or any other
Person referred to in Section&nbsp;4) or to subscription, purchase or other acquisition pursuant to any
Options issued or granted by the Company or DSW (or any such other issuer or Person) for a
consideration such as to dilute, on a basis consistent with the standards established in the other
</DIV>


<P align="center" style="font-size: 10pt">17
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">provisions of this Section&nbsp;3, the purchase rights, if any, with respect to such Other
Securities, granted by this Warrant, then, and in each such case, the computations, adjustments and
readjustments provided for in this Section&nbsp;3 with respect to the applicable Purchase Price shall be
made as nearly as possible in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8. <U>De Minimis Adjustments</U>. If the amount of any adjustment of the Purchase Price
required pursuant to Section&nbsp;3.5 would be less than one tenth (1/10) of one percent (1%) of such
Purchase Price in effect at the time such adjustment is otherwise so required to be made, such
amount shall be carried forward and adjustment with respect thereto made at the time of and
together with any subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate a change in such Purchase Price of at least one tenth
(1/10) of one percent (1%) of such Purchase Price. All calculations under this Warrant shall be
made to the nearest one-hundredth of a share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9. <U>Abandoned Dividend or Distribution</U>. If the Company shall take a record of the
holders of Common Stock or, if DSW shall take a record of the holders of DSW Stock for the purpose
of entitling them to receive a dividend or other distribution (which results in an adjustment to
the applicable Purchase Price under the terms of this Warrant) and shall, thereafter, and before
such dividend or distribution is paid or delivered to shareholders entitled thereto, legally
abandon its plan to pay or deliver such dividend or distribution, then any adjustment made to the
applicable Purchase Price by reason of the taking of such record shall be reversed, and any
subsequent adjustments, based thereon, shall be recomputed; <U>provided</U>, however, that no
additional Purchase Price or any other adjustment shall be required with regard to Warrant Shares
that have been issued upon exercise of the Warrant prior to such abandonment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10. <U>Ownership of DSW Stock</U>. The Company shall at all times while this Warrant is
outstanding, but only prior to the consummation of a Spin-Off and satisfaction of the Company&#146;s
obligations pursuant to Section&nbsp;3.3(b), retain ownership of at least that number of shares of DSW
Stock sufficient to permit exercise in full of this Warrant and any other outstanding Conversion
Warrants and Term Loan Warrants for shares of DSW Stock. The Company shall take all actions
necessary such that the shares of DSW Stock required hereby to be owned by it shall remain free of
all Liens, other than Permitted Liens.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <U>CONSOLIDATION, MERGER, ETC.</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1. <U>By the Company</U>. In case the Company after the date hereof (a)&nbsp;shall consolidate
with or merge into any other Person and shall not be the continuing or surviving corporation of
such consolidation or merger, or (b)&nbsp;shall permit any other Person to consolidate with or merge
into the Company and the Company shall be the continuing or surviving Person but, in connection
with such consolidation or merger, the Common Stock or Other Securities of the Company shall be
changed into or exchanged for stock or other securities of any other Person or cash or any other
property, or (c)&nbsp;shall transfer all or substantially all of its properties or assets to any other
Person, or (d)&nbsp;shall effect a capital reorganization or reclassification of the Common Stock or
Other Securities of the Company (other than a capital reorganization or reclassification for which
adjustment in the Purchase Price and the number of shares of Common Stock
</DIV>


<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">obtainable upon exercise of this Warrant is provided in Section&nbsp;3.4), then, and in the case of
each such transaction, proper provision shall be made so that, upon the basis and the terms and in
the manner provided in this Warrant, the Holder of this Warrant, upon the exercise hereof for
Common Stock at any time after the consummation of such transaction, shall be entitled to receive
(at the aggregate Common Stock Purchase Price in effect at the time of such consummation for all
Common Stock or Other Securities issuable upon such exercise immediately prior to such
consummation), in lieu of the Common Stock or Other Securities issuable upon such exercise prior to
such consummation, the highest amount of securities, cash or other property to which such Holder
would actually have been entitled as a shareholder upon such consummation if such Holder had
exercised this Warrant for Common Stock immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the adjustments provided for
in Sections&nbsp;3 through 5, <U>provided</U> that if a purchase, tender or exchange offer shall have
been made to and accepted by the holders of more than 50% of the outstanding shares of Common
Stock, and if the Holder so designates in a notice given to the Company on or before the date
immediately preceding the date of the consummation of such transaction, the Holder of this Warrant
shall be entitled to receive the highest amount of securities, cash or other property to which it
would actually have been entitled as a shareholder if the Holder of this Warrant had exercised this
Warrant, including the payment of the Purchase Price in accordance with Section&nbsp;2.1(b) hereof,
prior to the expiration of such purchase, tender or exchange offer and accepted such offer, subject
to adjustments (from and after the consummation of such purchase, tender or exchange offer) as
nearly equivalent as possible to the adjustments provided for in Section&nbsp;3 through 5.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2. <U>By DSW</U>. In case DSW after the date hereof, but prior to the consummation of a
Spin-Off and satisfaction of the Company&#146;s obligations pursuant to Section&nbsp;3.3(b), (a)&nbsp;shall
consolidate with or merge into any other Person and shall not be the continuing or surviving
corporation of such consolidation or merger, or (b)&nbsp;shall permit any other Person to consolidate
with or merge into DSW and DSW shall be the continuing or surviving Person but, in connection with
such consolidation or merger, the DSW Stock or Other Securities of DSW shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other property, or (c)
shall transfer all or substantially all of its properties or assets to any other Person, or (d)
shall effect a capital reorganization or reclassification of the DSW Stock or Other Securities of
DSW (other than a capital reorganization or reclassification for which adjustment in the Purchase
Price and the number of shares of DSW Stock obtainable upon exercise of this Warrant is provided in
Section&nbsp;3.4), then, the Holder of this Warrant, upon the exercise hereof for DSW Stock at any time
after the consummation of such transaction, shall be entitled to receive (at the aggregate DSW
Stock Purchase Price in effect at the time of such consummation for all DSW Stock or Other
Securities issuable upon such exercise immediately prior to such consummation), in lieu of the DSW
Stock or Other Securities issuable upon such exercise prior to such consummation, the highest
amount of securities, cash or other property to which such Holder would actually have been entitled
as a shareholder upon such consummation if such Holder had exercised this Warrant for DSW Stock
immediately prior thereto, subject to adjustments (subsequent to such consummation) as nearly
equivalent as possible to the adjustments provided for in Sections&nbsp;3 through 5.
</DIV>


<P align="center" style="font-size: 10pt">19
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3. <U>Assumption of Obligations</U>. Notwithstanding anything contained in this Warrant or
in the Financing Agreement to the contrary, the Company shall not effect, and, prior to the
consummation of a Spin-Off and satisfaction of the Company&#146;s obligations pursuant to Section
3.3(b), shall not consent to the effecting by DSW of, any of the transactions described in clauses
(a)&nbsp;through (d)&nbsp;of Section&nbsp;4.1 and Section&nbsp;4.2, respectively, unless, prior to the consummation
thereof, each Person (other than the Company or DSW (as the case may be)), which may be required to
deliver any stock, securities, cash or property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder
of this Warrant, (a)&nbsp;the obligations of the Company under this Warrant (and if the Company shall
survive the consummation of such transaction, such assumption shall be in addition to, and shall
not release the Company from, any continuing obligations of the Company, under this Warrant), (b)
the obligations of the Company under the Registration Rights Agreement or the obligations of DSW
under the DSW Registration Rights Agreement, and (c)&nbsp;the obligation of the Company to deliver to
the Holder such shares of stock, securities, cash or property as, in accordance with the foregoing
provisions of this Section&nbsp;4, the Holder may be entitled to receive. Unless expressly stated
herein, nothing in this Section&nbsp;4 shall be deemed to authorize the Company to enter into, or to
consent to the entering by DSW into, any transaction.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <U>OTHER DILUTIVE EVENTS</U>. In case any event shall occur as to which the provisions of
Section&nbsp;3 or Section&nbsp;4 hereof are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Holder in accordance with the essential intent and
principles of such Sections, then in each such case, the Board of Directors of the Company shall
make an adjustment in the application of such provisions, in accordance with such essential intent
and principles, so as to preserve, without dilution, the purchase rights represented by this
Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <U>NO DILUTION OR IMPAIRMENT</U>. The Company shall not, (i)&nbsp;by amendment of its articles
of incorporation or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, or (ii)&nbsp;prior to the
consummation of a Spin-Off and satisfaction of the Company&#146;s obligations pursuant to Section
3.3(b), by consent to or approval of any amendment of DSW&#146;s articles of incorporation or any
consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities
or any other voluntary action by DSW, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against dilution or other impairment. Without
limiting the generality of the foregoing, the Company (a)&nbsp;shall not permit the par value of any
shares of stock receivable upon the exercise of this Warrant to exceed the amount payable therefor
upon such exercise, (b)&nbsp;shall take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of stock, in the case
of Common Stock, or transfer shares of DSW Stock, in the case of DSW Stock, free from all liens,
security interests, encumbrances (in each of the foregoing cases, other than those imposed by the
Holder), taxes, preemptive rights and charges on the exercise of the Warrants from time to time
outstanding, and (c)&nbsp;shall not take any action, or consent to the taking or approval of any action
by DSW, which results in any adjustment of the Purchase Price if the total number of Warrant Shares
issuable after the action upon the exercise of all of the
</DIV>


<P align="center" style="font-size: 10pt">20
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Warrants would exceed the total number of shares of Common Stock then authorized by the
Company&#146;s articles of organization, or, in the case of shares of DSW Stock, the number of shares of
DSW Stock owned by the Company and available for the purpose of issue upon such exercise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <U>ACCOUNTANTS&#146; REPORT</U>. In each case of any adjustment or readjustment in the number
of the Warrant Shares issuable upon the exercise of this Warrant or in the applicable Purchase
Price, including, without limitation, pursuant to Section&nbsp;3.1, 3.2, 3.4 or 3.5, the Company at its
sole expense shall promptly (after becoming aware of an adjustment with respect to the DSW Stock)
compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a
report setting forth such adjustment or readjustment and showing in reasonable detail the method of
calculation thereof and the facts upon which such adjustment or readjustment is based, including a
statement of (a)&nbsp;the consideration received or to be received by the Company for any Additional
Shares of Common Stock or by DSW for any Additional Shares of DSW Stock issued or sold or deemed to
have been issued under Section&nbsp;3, (b)&nbsp;the number of shares of Common Stock or DSW Stock outstanding
or deemed to be outstanding, and (c)&nbsp;the applicable Purchase Price in effect immediately prior to
such issue or sale and as adjusted and readjusted (if required by Section&nbsp;3) on account thereof.
The Company shall forthwith mail a copy of each such report to the Holder. In the event that the
Holder disagrees with such report, the Company shall cause independent certified public accountants
of recognized national standing (which may be the regular auditors of the Company) selected by the
Company to review and verify or revise such computation (other than any computation of the Fair
Value of property) and report. The Company shall also keep copies of all such reports at its
principal office and shall cause the same to be available for inspection at such office during
normal business hours by the Holder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <U>NOTICES OF CORPORATE ACTION</U>. In the event of:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;any taking by the Company or, prior to the consummation of a Spin-Off and satisfaction of
the Company&#146;s obligations pursuant to Section&nbsp;3.3(b), DSW, of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive any other right, or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;any capital reorganization of the Company or, prior to the consummation of a Spin-Off and
satisfaction of the Company&#146;s obligations pursuant to Section&nbsp;3.3(b), DSW, any reclassification or
recapitalization of the capital stock of the Company or, prior to the consummation of a Spin-Off
and satisfaction of the Company&#146;s obligations pursuant to Section&nbsp;3.3(b), DSW, any consolidation or
merger involving the Company or, so long as no Spin-Off shall have occurred, DSW and any other
Person, any transaction or series of transactions in which more than 50% of the voting securities
of the Company are transferred to another Person, or any transfer, sale or other disposition of all
or substantially all the assets of the Company or, prior to the consummation of a Spin-Off and
satisfaction of the Company&#146;s obligations pursuant to Section&nbsp;3.3(b), DSW to any other Person, or
</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;any voluntary or involuntary dissolution, liquidation or winding-up of the Company or,
prior to the consummation of a Spin-Off and satisfaction of the Company&#146;s obligations pursuant to
Section&nbsp;3.3(b), DSW, or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;any Spin-Off, or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;the exercise by the Company of any right or remedy with respect to its Lien on the capital
stock of DSW,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the Company shall mail to each holder of a Warrant a notice specifying (i)&nbsp;the date or expected
date on which any such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right, and (ii)&nbsp;the date or
expected date on which any such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, sale, disposition, dissolution, liquidation or winding-up is to take place and
the time, if any such time is to be fixed, as of which the holders of record of Common Stock or DSW
Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock or DSW Stock
(or Other Securities) for the securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 20&nbsp;days prior to the date therein specified, and
in the case of a Spin-off, such notice shall be mailed at least 90&nbsp;days prior to the record date of
such Spin-Off.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <U>REGISTRATION OF STOCK</U>. If any shares of Common Stock required to be reserved for
purposes of exercise of this Warrant require registration with or approval of any governmental
authority under any federal or state law (other than the Securities Act) before such shares may be
issued or transferred upon exercise, the Company shall, at its expense and as expeditiously as
possible, use its best efforts to cause such shares to be duly registered or approved, as the case
may be. At any such time as Common Stock is listed on any national securities exchange, the
Company shall, at its expense, obtain promptly and maintain the approval for listing on each such
exchange, upon official notice of issuance, the shares of Common Stock issuable upon exercise of
the then outstanding Warrants and maintain the listing of such shares after their issuance; and the
Company shall also list on such national securities exchange, register under the Exchange Act and
maintain such listing of, any Other Securities of the Company that at any time are issuable upon
exercise of the Warrants, if and at the time that any securities of the same class shall be listed
on such national securities exchange by the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <U>RESTRICTIONS ON TRANSFER</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1. <U>Restrictive Legends</U>. Except as otherwise permitted by this Section&nbsp;10, each
Warrant (including each Warrant issued upon the transfer of any Warrant) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAW OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR
</DIV>

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT
AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS SPECIFIED IN THIS WARRANT.&#148;
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as otherwise permitted by this Section&nbsp;10, each certificate for Common Stock or DSW Stock
(or Other Securities) issued upon the exercise of any Warrant, and each certificate issued upon the
transfer of any such Common Stock or DSW Stock (or Other Securities), shall be stamped or otherwise
imprinted with a legend in substantially the following form:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
SUCH LAWS.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2. <U>Transfer to Comply With the Securities Act</U>. Restricted Securities may not be
sold, assigned, pledged, hypothecated, encumbered or in any manner transferred or disposed of (a
&#147;<U>Transfer</U>&#148;), in whole or in part, except in compliance with the provisions of the
Securities Act and state securities or Blue Sky laws and the terms and conditions hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3. <U>Notice of Transfer</U>. Each Holder shall, prior to any Transfer of any Warrants,
give written notice to the Company of such Holder&#146;s intention to Transfer.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4. <U>Termination of Restrictions</U>. The restrictions imposed by this Section&nbsp;10 on the
transferability of Restricted Securities shall cease and terminate as to any particular Restricted
Securities (a)&nbsp;when a registration statement with respect to the sale of such securities shall have
been declared effective under the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b)&nbsp;when such securities are sold pursuant to Rule&nbsp;144
(or any similar provision then in force) under the Securities Act, or (c)&nbsp;when, in the reasonable
opinion of both counsel for the Holder and counsel for the Company or DSW, as applicable, such
restrictions are no longer required or necessary in order to protect the Company or DSW, as
applicable, against a violation of the Securities Act upon any sale or other disposition of such
securities without registration thereunder. Whenever such restrictions shall cease and terminate
as to any Restricted Securities of the Company, the Holder shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing the applicable legends required
by Section&nbsp;10.1.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5. <U>Exempt Transfers</U>. The restrictions on the transfer of this Warrant or the
Warrant Shares set forth in this Section&nbsp;10 shall not apply to any transfer to an affiliate of the

<P align="center" style="font-size: 10pt">23
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Holder or to any transfer to any other Person, <U>provided</U> that such transfer is made in
compliance with the provisions of the Securities Act and state securities laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <U>RESERVATION OF STOCK, ETC.</U> The Company shall at all times reserve and keep
available, solely for issuance (in the case of Common Stock) or transfer and delivery upon exercise
of this Warrant, the number of shares of Common Stock, DSW Stock (which, for the avoidance of
doubt, may be Class&nbsp;B Shares) or Other Securities from time to time issuable or transferable upon
exercise of this Warrant. The Company shall cause all shares of Common Stock, or Other Securities
of the Company issuable and shall use its reasonable best efforts to cause all shares of DSW Stock
transferable, upon exercise of any Warrants to be duly authorized and, when issued or transferred
upon such exercise, to be validly issued and, in the case of shares, fully paid and nonassessable,
with no liability on the part of the holders thereof, and, in the case of all securities, shall be
free from all liens, security interests, encumbrances (in each of the foregoing cases, other than
those imposed by the Holder), taxes, preemptive rights and charges. The transfer agent for the
Common Stock, and every subsequent transfer agent for any shares of the Company&#146;s capital stock
issuable upon the exercise of any of the purchase rights represented by this Warrant, are hereby
irrevocably authorized and directed at all times until the Expiration Date to reserve such number
of authorized and unissued shares as shall be requisite for such purpose. The Company shall keep
copies of this Warrant on file with the transfer agent for the Common Stock and with every
subsequent transfer agent for any shares of the Company&#146;s capital stock issuable upon the exercise
of the rights of purchase represented by this Warrant. The Company shall supply such transfer
agent with duly executed stock certificates for such purpose. All Warrants surrendered upon the
exercise of the rights thereby evidenced shall be canceled, and such canceled Warrants shall
constitute sufficient evidence of the number of shares of common stock, if exercised for Common
Stock, which have been issued upon the exercise of such Warrants. Subsequent to the Expiration
Date, no shares of stock need be reserved in respect of any unexercised Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <U>REGISTRATION AND TRANSFER OF WARRANTS, ETC.</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1. <U>Warrant Register; Ownership of Warrants</U>. Each Warrant issued by the Company
shall be numbered and shall be registered in a warrant register (the &#147;Warrant Register&#148;) as it is
issued and transferred, which Warrant Register shall be maintained by the Company at its principal
office or, at the Company&#146;s election and expense, by a Warrant agent or the transfer agent. The
Company shall be entitled to treat the registered Holder of any Warrant on the Warrant Register as
the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other Person, and shall not be
affected by any notice to the contrary, except that, if and when any Warrant is properly assigned
in blank, the Company may (but shall not be obligated to) treat the bearer thereof as the owner of
such Warrant for all purposes. Subject to Section&nbsp;10, a Warrant, if properly assigned, may be
exercised by a new holder without a new Warrant first having been issued.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2. <U>Transfer of Warrants</U>. Subject to compliance with Section&nbsp;10, if applicable,
this Warrant and all rights hereunder are transferable in whole or in part, without charge to the
Holder hereof, upon surrender of this Warrant with a properly executed Form of Assignment attached
hereto as Exhibit&nbsp;C at the principal office of the Company. Upon any
</DIV>





<P align="center" style="font-size: 10pt">24
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">partial transfer, the Company shall at its expense issue and deliver to the Holder a new
Warrant of like tenor, in the name of the Holder, which shall be exercisable for such number of
shares of Common Stock with respect to which rights under this Warrant were not so transferred.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3. <U>Replacement of Warrants</U>. On receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office and cancellation
thereof, the Company at its expense shall execute and deliver, in lieu thereof, a new Warrant of
like tenor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.4. <U>Adjustments to Purchase Price and Number of Shares</U>. Notwithstanding any
adjustment in the Purchase Price or in the number or kind of Warrant Shares purchasable upon
exercise of this Warrant, any Warrant theretofore or thereafter issued may continue to express the
same number and kind of Warrant Shares as are stated in this Warrant, as initially issued.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.5. <U>Fractional Shares</U>. Notwithstanding any adjustment pursuant to Section&nbsp;3 in the
number of Warrant Shares covered by this Warrant or any other provision of this Warrant, the
Company shall not be required to issue or transfer fractions of shares upon exercise of this
Warrant or to distribute certificates which evidence fractional shares. In lieu of fractional
shares, the Company shall make payment to the Holder, at the time of exercise of this Warrant as
herein provided, in an amount in cash equal to such fraction multiplied by the Current Market Price
of a share of Common Stock or DSW Stock, as applicable, on the date of Warrant exercise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <U>SECURITIES ACT MATTERS</U>. The Holder represents and warrants to the Company as of
the date hereof that:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Holder is acquiring this Warrant for its own account, without a view to, or sale in
connection with, the distribution thereof. The Holder has no present agreement, undertaking,
arrangement, commitment or obligation providing for the disposition of the Warrant or the Warrant
Shares, all without prejudice, however, to the right of the Holder at any time, in accordance with
this Warrant, lawfully to sell or otherwise to dispose of all or any part of the Warrant or Warrant
Shares held by it;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Holder is an &#147;accredited investor&#148; within the meaning of Regulation&nbsp;D under the
Securities Act. The Holder has not retained, utilized or been represented by any broker or finder
in connection with the transactions contemplated by this Warrant;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Holder acknowledges that, subject to the Registration Rights Agreement and the DSW
Registration Rights Agreement (A)&nbsp;the Warrants and the Warrant Shares have not been registered
under the Securities Act, in reliance on the non-public offering exemption contained in Section
4(2) of the Securities Act and Regulation&nbsp;D thereunder; (B)&nbsp;because the Warrants and the Warrant
Shares are not so registered, the Holder must bear the economic risk of holding this Warrant and
the Warrant Shares for an indefinite period of time unless the Warrants and the Warrant Shares are
subsequently registered under the Securities Act
</DIV>


<P align="center" style="font-size: 10pt">25
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or an exemption from such registration is available with respect thereto; (C)&nbsp;Rule&nbsp;144 under
the Securities Act may or may not be available for resales of the Warrants or the Warrant Shares in
the future and, if so, may only be available for sales in limited amounts; (D)&nbsp;there is presently
no trading market for the Warrants and there is no assurance that such market will exist in the
future; and (E)&nbsp;while there is presently a trading market for the Warrant Shares, there is no
assurance that such market will be in existence in the future; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;If the Holder decides to dispose of this Warrant or the Warrant Shares, which it does not
now contemplate, the Holder can do so only in accordance and in compliance with the Securities Act
and Rule&nbsp;144 or another exemption from the registration requirements of the Securities Act, as then
in effect or through an effective registration statement under the Securities Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <U>REMEDIES; SPECIFIC PERFORMANCE</U>. The Company stipulates that there would be no
adequate remedy at law to any Holder in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this Warrant and accordingly,
the Company agrees that, in addition to any other remedy to which the Holder may be entitled at law
or in equity, the Holder shall be entitled to seek to compel specific performance of the
obligations of the Company under this Warrant, without the posting of any bond, in accordance with
the terms and conditions of this Warrant in any court of the United States or any State thereof
having jurisdiction, and if any action should be brought in equity to enforce any of the provisions
of this Warrant, the Company shall not raise the defense that there is an adequate remedy at law.
Except as otherwise provided by law, a delay or omission by the Holder hereto in exercising any
right or remedy accruing upon any such breach shall not impair the right or remedy or constitute a
waiver of or acquiescence in any such breach. No remedy shall be exclusive of any other remedy.
All available remedies shall be cumulative.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <U>NO RIGHTS OR LIABILITIES AS SHAREHOLDER</U>. Nothing contained in this Warrant shall
be construed as conferring upon the Holder hereof any rights as a shareholder of the Company or as
imposing any obligation on the Holder to purchase any securities or as imposing any liabilities on
the Holder as a shareholder of the Company, whether such obligation or liabilities are asserted by
the Company or by creditors of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <U>NOTICES</U>. All notices and other communications (and deliveries) provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier, any
nationally-recognized courier guaranteeing overnight delivery or first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">If to the Company:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Retail Ventures Inc.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3241 Westerville Road</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbus, OH 43224</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attn: James McGrady, Chief Financial Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fax No. (614)&nbsp;473-2721</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">with copies to:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Retail Ventures, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">26
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3241 Westerville Road</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbus, OH 43224</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attn: General Counsel</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fax No. (614)&nbsp;337-4682</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">If to Holder:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Millennium Partners, L.P.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">c/o Millennium Management, L.L.C.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">666 Fifth Avenue, 8<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, NY 10103</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attn: David Nolan</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fax No. (212)&nbsp;841-4141</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">with copies to:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Millennium Partners, L.P.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">c/o Millennium Management, L.L.C.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">666 Fifth Avenue, 8<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, NY 10103</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attn: Lisa Halustick, Esq.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fax No. (212)&nbsp;905-4413</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All such notices and communications (and deliveries) shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; when receipt is acknowledged, if
telecopied; on the next Business Day, if timely delivered to a courier guaranteeing overnight
delivery; and five days after being deposited in the mail, if sent first class or certified mail,
return receipt requested, postage prepaid; <U>provided</U>, that the exercise of any Warrant shall
be effective in the manner provided in Section&nbsp;2.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <U>AMENDMENTS</U>. This Warrant and any term hereof may not be amended, modified,
supplemented or terminated, and waivers or consents to departures from the provisions hereof may
not be given, except by written instrument duly executed by the Company and the Holder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. <U>DESCRIPTIVE HEADINGS, ETC.</U> The headings in this Warrant are for convenience of
reference only and shall not limit or otherwise affect the meaning of terms contained herein.
Unless the context of this Warrant otherwise requires: (1)&nbsp;words of any gender shall be deemed to
include each other gender; (2)&nbsp;words using the singular or plural number shall also include the
plural or singular number, respectively; (3)&nbsp;the words &#147;hereof&#148;, &#147;herein&#148; and &#147;hereunder&#148; and words
of similar import when used in this Warrant shall refer to this Warrant as a whole and not to any
particular provision of this Warrant, and Section and paragraph references are to the Sections and
paragraphs of this Warrant unless otherwise specified; (4)&nbsp;the word &#147;including&#148; and words of
similar import when used in this Warrant shall mean &#147;including, without limitation,&#148; unless
otherwise specified; (5) &#147;or&#148; is not exclusive; and (6)&nbsp;provisions apply to successive events and
transactions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. <U>GOVERNING LAW</U>. This Agreement shall be governed by and construed in accordance
with the law of the State of New York.
</DIV>


<P align="center" style="font-size: 10pt">27
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. <U>REGISTRATION RIGHTS AGREEMENT</U>. The shares of Common Stock (and Other Securities
of the Company) issuable upon exercise of this Warrant shall constitute Registrable Securities (as
such term is defined in the Registration Rights Agreement). The shares of DSW Stock issuable upon
exercise of this Warrant shall constitute Registrable Securities (as such term is defined in the
DSW Registration Rights Agreement). Each Holder shall be entitled to all of the benefits afforded
to a holder of any such Registrable Securities under the Registration Rights Agreement and such
Holder, by its acceptance of this Warrant, agrees to be bound by and to comply with the terms and
conditions of the Registration Rights Agreement and the DSW Registration Rights Agreement,
applicable to such Holder as a holder of such Registrable Securities. In addition to the
foregoing, to the extent the Holder exercises this Warrant into DSW Stock within 180&nbsp;days of a
Qualifying IPO, such Holder agrees not to transfer such Warrant Shares until the date that is 181
days after the closing date of such Qualifying IPO.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. <U>EXPIRATION</U>. The right to exercise this Warrant shall expire at 5:00 p.m., New
York City time, on June&nbsp;11, 2012.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22. <U>COSTS AND ATTORNEYS&#146; FEES</U>. In the event that any action, suit or other proceeding
is instituted concerning or arising out of this Warrant, the Company agrees and the Holder, by
taking and holding this Warrant agrees, that the prevailing party shall recover from the
non-prevailing party all of such prevailing party&#146;s costs and reasonable attorneys&#146; fees incurred
in each and every such action, suit or other proceeding, including any and all appeals or petitions
therefrom.
</DIV>


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</DIV>


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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company has executed and delivered this Warrant as of the date first
above written.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">RETAIL VENTURES, INC.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD colspan="2" align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">James A. McGrady</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">29
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">EXHIBIT A to</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top"><U>Common Stock Purchase Warrant</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">FORM OF<BR>
ELECTION TO PURCHASE SHARES OF COMMON STOCK
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby irrevocably elects to exercise the Warrant to purchase &#95;&#95;&#95;Common
Shares, no par value per share (&#147;Common Stock&#148;), of RETAIL VENTURES, INC. and hereby makes payment
of $&#95;&#95;&#95;therefor <B>&#091;</B>or<B>&#093; </B>makes payment by reduction pursuant to Section&nbsp;2.1(b)(ii) of the Warrant
of the number of shares of Common Stock otherwise issuable to the Holder upon Warrant exercise by
&#95;&#95;&#95;shares <B>&#091;</B>or<B>&#093; </B>makes payment therefor by delivery of the following Common Stock Certificates of
the Company (properly endorsed for transfer in blank) for cancellation by the Company pursuant to
Section&nbsp;2.1(b)(iii) of the Warrant, certificates of which are attached hereto for cancellation
___<B>&#091;</B>list certificates by number and amount<B>&#093;</B>. The undersigned hereby requests that certificates for
such shares be issued and delivered as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">ISSUE TO:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt">(NAME)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(ADDRESS, INCLUDING ZIP CODE)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="89%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">DELIVER TO:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt">(NAME)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(ADDRESS, INCLUDING ZIP CODE)</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the number of shares of Common Stock purchased (and/or reduced) hereby is less than the
number of shares of Common Stock covered by the Warrant, the undersigned requests that a new
Warrant representing the number of shares of Common Stock not so purchased (or reduced) be issued
and delivered as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">ISSUE TO:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt">(NAME OF HOLDER</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(ADDRESS, INCLUDING ZIP CODE)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="89%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">DELIVER TO:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt">(NAME OF HOLDER)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(ADDRESS, INCLUDING ZIP CODE)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated: &#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;, 20&#95;&#95;&#95;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">NAME OF HOLDER</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">30
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">EXHIBIT B to</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top"><U>Common Stock Purchase Warrant</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">FORM OF<BR>
ELECTION TO PURCHASE SHARES OF DSW STOCK
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby irrevocably elects to exercise the Warrant to purchase &#95;&#95;&#95;Class&nbsp;A
Common Shares, no par value, of DSW Inc. (&#147;DSW Stock&#148;) and hereby makes payment of $&#95;&#95;&#95;
therefor <B>&#091;</B>or<B>&#093; </B>makes payment by reduction pursuant to Section&nbsp;2.1(b)(ii) of the Warrant of the
number of shares of DSW Stock otherwise issuable to the Holder upon Warrant exercise by &#95;&#95;&#95;shares
<B>&#091;</B>or<B>&#093; </B>makes payment therefor by delivery of the following DSW Stock Certificates of DSW Inc.
(properly endorsed for transfer in blank) for transfer to the Company pursuant to Section
2.1(b)(iii) of the Warrant, certificates of which are attached hereto
for cancellation ___<B>&#091;</B>list
certificates by number and amount<B>&#093;</B>. The undersigned hereby requests that certificates for such
shares be issued and delivered as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">ISSUE TO:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt">(NAME)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(ADDRESS, INCLUDING ZIP CODE)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="89%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">DELIVER TO:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt">(NAME)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(ADDRESS, INCLUDING ZIP CODE)</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the number of shares of DSW Stock purchased (and/or reduced) hereby is less than the number
of shares of DSW Stock covered by the Warrant, the undersigned requests that a new Warrant
representing the number of shares of DSW Stock not so purchased (or reduced) be issued and
delivered as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">ISSUE TO:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt">(NAME OF HOLDER</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(ADDRESS, INCLUDING ZIP CODE)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="89%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">DELIVER TO:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt">(NAME OF HOLDER)</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt">(ADDRESS, INCLUDING ZIP CODE)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated: &#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;, 20&#95;&#95;&#95;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">NAME OF HOLDER</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">31
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">EXHIBIT C to</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top"><U>Common Stock Purchase Warrant</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">FORM OF ASSIGNMENT
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto the Assignee
named below all of the rights of the undersigned to purchase Common Shares, no par value per share
(&#147;<U>Common Stock</U>&#148;) of RETAIL VENTURES, INC. (the &#147;Company&#148;) or, after the consummation of a
Qualifying IPO (as defined in the Warrant) but prior to the consummation of a Spin-Off (as defined
in the Warrant) and satisfaction of the Company&#146;s obligations pursuant to Section&nbsp;3.3(b) and at its
election, Class&nbsp;A common shares no par value per share (&#147;<U>DSW Stock</U>&#148;) of DSW Inc. owned by
the Company, and represented by the Warrant, with respect to the number of shares of Common Stock
and DSW Stock set forth below:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Name of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">No. of Shares of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">No. of Shares of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Assignee</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Address</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Common Stock</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">DSW Stock</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and does hereby irrevocably constitute and appoint <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> Attorney to make such transfer on the
books of maintained for that purpose, with full power of substitution in the premises.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated: &#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;, 20&#95;&#95;&#95;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">NAME OF HOLDER</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>l17332aexv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;31.1
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Jay L. Schottenstein, certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this quarterly report on Form 10-Q of DSW Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules&nbsp;13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules&nbsp;13a-15(f) and 15d-15(f)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;Reserved&#093;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the registrant&#146;s disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the registrant&#146;s internal
control over financial reporting that occurred during the registrant&#146;s most
recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant&#146;s internal control over financial reporting;
and</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant&#146;s auditors and the audit committee of registrant&#146;s board of directors (or
persons performing the equivalent functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant&#146;s ability to record,
process, summarize and report financial information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant&#146;s internal control
over financial reporting.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: December&nbsp;8, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Jay L. Schottenstein</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jay L. Schottenstein</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer and Chairman of the Board</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>l17332aexv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;31.2
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Douglas J. Probst, certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this quarterly report on Form 10-Q of DSW Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules&nbsp;13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules&nbsp;13a-15(f) and 15d-15(f)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;Reserved&#093;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the registrant&#146;s disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the registrant&#146;s internal
control over financial reporting that occurred during the registrant&#146;s most
recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant&#146;s internal control over financial reporting;
and</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant&#146;s auditors and the audit committee of registrant&#146;s board of directors (or
persons performing the equivalent functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant&#146;s ability to record,
process, summarize and report financial information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant&#146;s internal control
over financial reporting.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: December&nbsp;8, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Douglas J. Probst</TD>
</TR>
<TR style="font-size: 6px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Douglas J. Probst</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>l17332aexv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;32.1
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">SECTION 1350 CERTIFICATION
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report of DSW Inc. (the &#147;Company&#148;) on Form 10-Q for the
period ending October&nbsp;29, 2005, as filed with the Securities and Exchange Commission on the date
hereof (the &#147;Report&#148;), I, Jay L. Schottenstein, Chief Executive Officer and Chairman of the Board
of the Company, certify, pursuant to 18 U.S.C. &#167; 1350, as adopted pursuant to &#167; 906 of the
Sarbanes-Oxley Act of 2002, that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;The Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;The information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">December&nbsp;8, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Jay L. Schottenstein</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jay L. Schottenstein</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer and Chairman of the Board</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A signed original of this written statement required by Section&nbsp;906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>l17332aexv32w2.htm
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32.2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;32.2
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">SECTION 1350 CERTIFICATION
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report of DSW Inc. (the &#147;Company&#148;) on Form 10-Q for the
period ending October&nbsp;29, 2005, as filed with the Securities and Exchange Commission on the date
hereof (the &#147;Report&#148;), I, Douglas J. Probst, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. &#167; 1350, as adopted pursuant to &#167; 906 of the Sarbanes-Oxley Act of 2002, that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;The Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;The information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">December&nbsp;8, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Douglas J. Probst</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Douglas J. Probst</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A signed original of this written statement required by Section&nbsp;906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>7
<FILENAME>l17332aexv99.htm
<DESCRIPTION>EXHIBIT 99
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 99</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT 99</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DSW INC.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>Safe Harbor Under the Private Securities Litigation Reform Act of 1995</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Private Securities Litigation Reform Act of 1995 (the &#147;Act&#148;) provides a &#147;safe harbor&#148; for
forward-looking statements to encourage companies to provide prospective information, so long as
those statements are identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to differ materially from
those discussed in the statement. Retail Ventures, Inc. (the &#147;Company&#148;) desires to take advantage
of the &#147;safe harbor&#148; provisions of the Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain information in this Form 10-Q, particularly information regarding future economic
performance and finances, and plans, expectations and objectives of management, is forward looking.
The following factors, in addition to other possible factors not listed, could affect the Company&#146;s
actual results and cause such results to differ materially from those expressed in forward-looking
statements:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We intend to open new DSW stores at an increased rate compared to historical years, which could
strain our resources and have a material adverse effect on our
business and financial performance.</B></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our continued and future growth largely depends on our ability to successfully open and operate new
DSW stores on a profitable basis. During fiscal 2004, fiscal 2003 and fiscal 2002, we opened 30
(net of one store closing during that period), 16 and 22 new DSW stores, respectively. We intend
to open approximately 30 stores per year in each of the next four fiscal years. This continued
expansion could place increased demands on our financial, managerial, operational and
administrative resources. For example, our planned expansion will require us to increase
continually the number of people we employ as well as to monitor and upgrade our management
information and other systems and our distribution facilities. These increased demands and
operating complexities could cause us to operate our business less efficiently, adversely affect
our operations and financial performance and slow our growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We may be unable to open all the stores contemplated by our growth strategy on a timely basis, and
new stores we open may not be profitable or may have an adverse impact on the profitability of
existing stores, either of which could have a material adverse effect on our business, financial
condition and results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We intend to open approximately 30 stores per year in each of the next four fiscal years. However,
we may not achieve our planned expansion on a timely and profitable basis or achieve results in new
locations similar to those achieved in existing locations in prior periods. Our ability to open
and operate new DSW stores successfully on a timely and profitable basis depends on many factors,
including, among others, our ability to:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>identify suitable markets and sites for new store locations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>negotiate favorable lease terms;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>build-out or refurbish sites on a timely and effective basis;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtain sufficient levels of inventory to meet the needs of new stores;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtain sufficient financing and capital resources or generate sufficient cash
flows from operations to fund growth;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>open new stores at costs not significantly greater than those anticipated;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>successfully open new DSW stores in regions of the United States in which we
currently have few or no stores;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>control the costs of other capital investments associated with store openings,
including, for example, those related to the expansion of distribution facilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>hire, train and retain qualified managers and store personnel; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>successfully integrate new stores into our existing infrastructure, operations
and management and distribution systems or adapt such infrastructure, operations and
systems to accommodate our growth.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result, we may be unable to open new stores at the rates expected or at all. If we fail to
successfully implement our growth strategy, the opening of new DSW stores could be delayed or
prevented, could cost more than anticipated and could divert resources from other areas of our
business, any of which could have a material adverse effect on our business, financial condition
and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To the extent that we open new DSW stores in our existing markets, we may experience reduced net
sales in existing stores in those markets. As the number of our stores increases, our stores will
become more concentrated in the markets we serve. As a result, the number of customers and
financial performance of individual stores may decline and the average sales per square foot at our
stores may be reduced. This could have a material adverse effect on our business, financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We rely on our good relationships with vendors to purchase brand name and designer merchandise at
favorable prices. If these relationships were to be impaired, we may not be able to obtain a
sufficient selection of merchandise at attractive prices, and we may not be able to respond
promptly to changing fashion trends, either of which could have a negative impact on our
competitive position, our business and financial performance.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We do not have long-term supply agreements or exclusive arrangements with any vendors and,
therefore, our success depends on maintaining good relations with our vendors. Our growth strategy
depends to a significant extent on the willingness and ability of our vendors to supply us with
sufficient inventory to stock our new stores. If we fail to strengthen our relations with our
existing vendors or to enhance the quality of merchandise they supply us, and if we cannot maintain
or acquire new vendors of in-season brand name and designer merchandise, our ability to obtain a
sufficient amount and variety of merchandise at favorable prices may be limited, which could have a
negative impact on our competitive position. In addition, our inability to stock our DSW stores
with in-season merchandise at attractive prices could result in lower net sales and decreased
customer interest in our stores, which, in turn, would adversely affect our financial performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We may be unable to anticipate and respond to fashion trends and consumer preferences in the
markets in which we operate, which could adversely affect our business, financial condition and
results of operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our merchandising strategy is based on identifying each region&#146;s customer base and having the
proper mix of products in each store to attract our target customers in that region. This requires
us to anticipate and respond to numerous and fluctuating variables in fashion trends and other
conditions in the markets in which our stores are situated. A variety of factors will affect our
ability to maintain the proper mix of products in each store, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>variations in local economic conditions, which could affect our customers&#146; discretionary spending;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unanticipated fashion trends;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our success in developing and maintaining vendor relationships that provide us
access to in-season merchandise at attractive prices;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our success in distributing merchandise to our stores in an efficient manner; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in weather patterns, which in turn affect consumer preferences.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">2
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If we are unable to anticipate and fulfill the merchandise needs of each region, we may experience
decreases in our net sales and may be forced to increase markdowns in relation to slow-moving
merchandise, either of which could have an adverse effect on our business, financial condition and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Our comparable store sales and quarterly financial performance may fluctuate for a variety of
reasons, which could result in a decline in the price of our Class&nbsp;A Common Shares.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our business is sensitive to customers&#146; spending patterns, which in turn are subject to prevailing
regional and national economic conditions and the general level of economic activity. Our
comparable store sales and quarterly results of operations have fluctuated in the past, and we
expect them to continue to fluctuate in the future. A variety of other factors affect our
comparable store sales and quarterly financial performance, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in our merchandising strategy;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>timing and concentration of new DSW store openings and related pre-opening and
other start-up costs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>levels of pre-opening expenses associated with new DSW stores;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in our merchandise mix;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in and regional variations in demographic and population characteristics;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>timing of promotional events;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>seasonal fluctuations due to weather conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>actions by our competitors; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general United States economic conditions and, in particular, the retail sales environment.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Accordingly, our results for any one fiscal quarter are not necessarily indicative of the results
to be expected for any other quarter, and comparable store sales for any particular future period
may decrease. Our future financial performance may fall below the expectations of securities
analysts and investors. In that event, the price of our Class&nbsp;A Common Shares would likely
decline.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We rely on a single distribution center. The loss or disruption of our centralized distribution
center or our failure in the future to add additional distribution facilities could have an adverse
effect on our business and operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Most of our inventory is shipped directly from suppliers to a single centralized distribution
center in Columbus, Ohio, where the inventory is then processed, sorted and shipped to one of 11
pool locations located throughout the country and then on to our stores. Our operating results
depend on the orderly operation of our receiving and distribution process, which in turn depends on
third-party vendors&#146; adherence to shipping schedules and our effective management of our
distribution facilities. We may not anticipate all the changing demands that our expanding
operations will impose on our receiving and distribution system, and events beyond our control,
such as disruptions in operations due to fire or other catastrophic events, labor disagreements or
shipping problems, may result in delays in the delivery of merchandise to our stores.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We may need to increase our distribution capacity in the future to accommodate our expanding retail
store base. Because our ability to expand our distribution facilities at our current site is
limited, we may need to acquire, construct or lease additional distribution facilities in other
geographic locations to accommodate our planned expansion. We may also need to invest in
additional information technology to achieve a unified receiving and distribution system.
</DIV>


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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we maintain business interruption and property insurance, in the event our distribution
center were to be shut down for any reason or if we were to incur higher costs and longer lead
times in connection with a disruption at our distribution center, our insurance may not be
sufficient, and insurance proceeds may not be timely paid to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We are dependent on Retail Ventures to provide us with many key services for our business. The
agreements we entered into with Retail Ventures in connection with our IPO could restrict our
operations and adversely affect our financial condition. Our prior and continuing relationship
with Retail Ventures exposes us to risks attributable to Retail Ventures&#146; business.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">From 1998 until the completion of its IPO, DSW was operated as a wholly-owned subsidiary of Value
City Department Stores, Inc. or Retail Ventures, and many key services required by DSW for the
operation of its business were provided by Retail Ventures and its subsidiaries. In connection
with our IPO, we entered into agreements with Retail Ventures related to the separation of our
business operations from Retail Ventures including, among others, a master separation agreement, a
shared services agreement and a tax separation agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the terms of the shared services agreement, which when signed became effective as of January
30, 2005, Retail Ventures will provide us with key services relating to import administration, risk
management, information technology, tax, logistics and inbound transportation management, legal
services, financial services, shared benefits administration and payroll and will maintain
insurance for us and for our directors, officers, and employees. In turn, we will provide several
subsidiaries of Retail Ventures with services relating to planning and allocation support,
distribution services and outbound transportation management, site research, lease negotiation,
store design and construction management. The initial term of the shared services agreement will
expire at the end of fiscal 2007 and will be extended automatically for additional one-year terms
unless terminated by one of the parties. We expect some of these services to be provided for
longer or shorter periods than the initial term. We believe it is necessary for Retail Ventures to
provide these services for us under the shared services agreement to facilitate the efficient
operation of our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Once the transition periods specified in the shared services agreement have expired and are not
renewed, or if Retail Ventures does not or is unable to perform its obligations under the shared
services agreement, we will be required to provide these services ourselves or to obtain substitute
arrangements with third parties. We may be unable to provide these services because of financial
or other constraints or be unable to timely implement substitute arrangements on terms that are
favorable to us, or at all, which would have an adverse effect on our business, financial condition
and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The tax separation agreement, which became effective upon the consummation of our IPO, governs the
respective rights, responsibilities, and obligations of Retail Ventures and us with respect to tax
liabilities and benefits, tax attributes, tax contests and other matters regarding taxes and
related tax returns. Although Retail Ventures does not intend or plan to undertake a spin-off of
our stock to Retail Ventures stockholders, we and Retail Ventures have agreed to set forth our
respective rights, responsibilities and obligations with respect to any possible spin-off in the
tax separation agreement. If Retail Ventures were to decide to pursue a possible spin-off, we have
agreed to cooperate with Retail Ventures and to take any and all actions reasonably requested by
Retail Ventures in connection with such a transaction. We have also agreed not to knowingly take
or fail to take any actions that could reasonably be expected to preclude Retail Ventures&#146; ability
to undertake a tax-free spin-off. In addition, we generally would be responsible for any taxes
resulting from the failure of a spin-off to qualify as a tax-free transaction to the extent such
taxes are attributable to, or result from, any action or failure to act by us or certain
transactions in our stock (including transactions over which we would have no control, such as
acquisitions of our stock and the exercise of warrants, options, exchange rights, conversion rights
or similar arrangements with respect to our stock) following or preceding a spin-off. We would
also be responsible for a percentage (based on the relative market capitalizations of DSW and
Retail Ventures at the time of such spin-off) of such taxes to the extent such taxes are not
otherwise attributable to DSW or Retail Ventures. Our agreements in connection with such tax
matters last indefinitely.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Retail Ventures is obligated to indemnify us for losses that a party may seek to impose upon us or
our affiliates for liabilities relating to the Retail Ventures business that are incurred through a
breach of the master separation agreement between us and Retail Ventures or any ancillary agreement
between us and Retail Ventures or its non-DSW affiliates, if such losses are attributable to Retail
Ventures in connection with our IPO or are not expressly
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">assumed by us under the master separation agreement. Any claims made against us that are properly
attributable to Retail Ventures or Value City in accordance with these arrangements would require
us to exercise our rights under the master separation agreement to obtain payment from Retail
Ventures. We are exposed to the risk that, in these circumstances, Retail Ventures cannot, or will
not, make the required payment. If this were to occur, our business and financial performance
could be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to our IPO, we had not been operated as a stand-alone company since 1998. Our business no
longer has access to the borrowing capacity, cash flow, assets and some services provided by Retail
Ventures and its subsidiaries as we did while we were wholly-owned by Retail Ventures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Our failure to retain our existing senior management team and to continue to attract qualified new
personnel could adversely affect our business.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our business requires disciplined execution at all levels of our organization to ensure that we
continually have sufficient inventories of assorted brand name merchandise at below traditional
retail prices. This execution requires an experienced and talented management team. If we were to
lose the benefit of the experience, efforts and abilities of any of our key executive and buying
personnel, our business could be materially adversely affected. We have entered into employment
agreements with several of these officers. Furthermore, our ability to manage our retail expansion
will require us to continue to train, motivate and manage our employees and to attract, motivate
and retain additional qualified managerial and merchandising personnel. Competition for these
types of personnel is intense, and we may not be successful in attracting, assimilating and
retaining the personnel required to grow and operate our business profitably.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We may be unable to compete favorably in our highly competitive market.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The retail footwear market is highly competitive with few barriers to entry. We compete against a
diverse group of retailers, both small and large, including locally owned shoe stores, regional and
national department stores, specialty retailers and discount chains. Some of our competitors are
larger and have substantially greater resources than we do. Our success depends on our ability to
remain competitive with respect to style, price, brand availability and customer service. The
performance of our competitors, as well as a change in their pricing policies, marketing activities
and other business strategies, could have a material adverse effect on our business, financial
condition, results of operations and our market share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A decline in general economic conditions, or the outbreak or escalation of war or terrorist acts,
could lead to reduced consumer demand for our footwear and accessories.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consumer spending habits, including spending for the footwear and related accessories that we sell,
are affected by, among other things, prevailing economic conditions, levels of employment, salaries
and wage rates, prevailing interest rates, income tax rates and policies, consumer confidence and
consumer perception of economic conditions. In addition, consumer purchasing patterns may be
influenced by consumers&#146; disposable income. A general slowdown in the United States economy or an
uncertain economic outlook could adversely affect consumer spending habits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consumer confidence is also affected by the domestic and international political situation. The
outbreak or escalation of war, or the occurrence of terrorist acts or other hostilities in or
affecting the United States, could lead to a decrease in spending by consumers. In the event of an
economic slowdown, we could experience lower net sales than expected on a quarterly or annual basis
and be forced to delay or slow our retail expansion plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We rely on foreign sources for our merchandise, and our business is therefore subject to risks
associated with international trade.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We purchase merchandise from domestic and foreign vendors. In addition, many of our domestic
vendors import a large portion of their merchandise from abroad, primarily from China, Brazil and
Italy. We believe that almost all
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the merchandise we purchase is manufactured outside the United States. For this reason, we face
risks inherent in purchasing from foreign suppliers, such as:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>economic and political instability in countries where these suppliers are
located;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>international hostilities or acts of war or terrorism affecting the United
States or foreign countries from which our merchandise is sourced;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increases in shipping costs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>transportation delays and interruptions, including as a result of increased
inspections of import shipments by domestic authorities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>work stoppages;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>adverse fluctuations in currency exchange rates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>United States laws affecting the importation of goods, including duties,
tariffs and quotas and other non-tariff barriers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expropriation or nationalization;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in local government administration and governmental policies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in import duties or quotas;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>compliance with trade and foreign tax laws; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>local business practices, including compliance with local laws and with
domestic and international labor standards.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We require our vendors to operate in compliance with applicable laws and regulations and our
internal requirements. However, we do not control our vendors or their labor and business
practices. The violation of labor or other laws by one of our vendors could have an adverse effect
on our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Our new secured revolving credit facility could limit our operational flexibility.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2005, we entered into a new $150&nbsp;million secured revolving credit facility with a term of
five years. Under this new facility, we and our subsidiary, DSW Shoe Warehouse, Inc. (&#147;DSWSW&#148;),
are named as co-borrowers. This new facility has borrowing base restrictions and provides for
borrowings at variable interest rates based on the London Interbank Offered Rate, the prime rate
and the Federal Funds effective rate, plus a margin. Our obligations under our new secured
revolving credit facility are secured by a lien on substantially all of our and DSWSW&#146;s personal
property and a pledge of all of our shares of DSWSW. In addition, this facility contains usual and
customary restrictive covenants relating to our management and the operation of our business.
These covenants, among other things, restrict our ability to grant liens on our assets, incur
additional indebtedness, open or close stores, pay cash dividends and redeem our stock, enter into
transactions with affiliates and merge or consolidate with another entity. In addition, if at any
time we utilize over 90% of our borrowing capacity under this facility, we must comply with a fixed
charge coverage ratio test set forth in the facility documents. These covenants could restrict our
operational flexibility, and any failure to comply with these covenants or our payment obligations
would limit our ability to borrow under the new secured revolving credit facility and, in certain
circumstances, may allow the lenders thereunder to require repayment.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>From 1998 until its IPO, DSW was not operated as an entity separate from Value City and Retail
Ventures, and, as a result, DSW&#146;s historical and pro forma financial information may not be
indicative of DSW&#146;s historical financial results or future financial performance.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our consolidated financial information included in this Form 10-Q, as it relates to periods before
July&nbsp;5, 2005, may not be indicative of our future financial performance. This is because these
statements do not necessarily reflect the historical financial condition, results of operations and
cash flows of DSW as they would have been had we been operated during the periods presented as a
separate, stand-alone entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our consolidated financial information, as it relates to periods before July&nbsp;5, 2005, assumes that
DSW, for the periods presented, had existed as a separate legal entity, and has been derived from
the consolidated financial statements of Retail Ventures. Some costs have been reflected in the
consolidated financial statements that are not necessarily indicative of the costs that we would
have incurred had we operated as an independent, stand-alone entity for all periods presented.
These costs include allocated portions of Retail Ventures&#146; corporate overhead, interest expense and
income taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We face security risks related to our electronic processing and transmission of confidential
customer information. On March&nbsp;8, 2005, we announced the theft of credit card and other purchase
information relating to DSW customers. This security breach could adversely affect our reputation
and business and subject us to liability.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We rely on commercially available encryption software and other technologies to provide security
for processing and transmission of confidential customer information, such as credit card numbers.
Advances in computer capabilities, new discoveries in the field of cryptography, or other events or
developments, including improper acts by third parties, may result in a compromise or breach of the
security measures we use to protect customer transaction data. Compromises of these security
systems could have a material adverse effect on our reputation and business, and may subject us to
significant liabilities and reporting obligations. A party who is able to circumvent our security
measures could misappropriate our information, cause interruptions in our operations, damage our
reputation and customers&#146; willingness to shop in our stores and subject us to possible liability.
We may be required to expend significant capital and other resources to protect against these
security breaches or to alleviate problems caused by these breaches.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On March&nbsp;8, 2005, Retail Ventures announced that it had learned of the theft of credit card and
other purchase information from a portion of DSW customers. On April&nbsp;18, 2005, Retail Ventures
issued the findings from our investigation into the theft. The theft took place primarily over two
weeks and covered all customers who made purchases at 108 DSW stores, primarily during a
three-month period from mid-November&nbsp;2004 to mid-February&nbsp;2005. Transaction information involving
approximately 1.4&nbsp;million credit cards was obtained. For each card, the stolen information
included credit card or debit card numbers, name and transaction amount. In addition, data from
transactions involving approximately 96,000 checks were stolen. In these cases, checking account
numbers and driver&#146;s license numbers were obtained.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have contacted and are cooperating with law enforcement and other authorities with regard to
this matter. To mitigate potential negative effects on our business and financial performance, we
are working with credit card companies and issuers and have contacted as many of our affected
customers as possible. In addition, we worked with a leading computer security firm to minimize
the risk of any future data theft. We are involved in several legal proceedings arising out of
this incident that, after consultation with counsel, we believe will not exceed the reserves we
have currently recorded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with this matter, we entered into a proposed consent order with the Federal Trade
Commission (&#147;FTC&#148;), which has jurisdiction over consumer protection matters. The FTC published the
proposed order for public comment on December&nbsp;1, 2005, and copies of the complaint and consent
order are available from the FTC&#146;s Web site at http://www.ftc.gov and also from the FTC&#146;s Consumer
Response Center, Room&nbsp;130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The public
comment period expires on January&nbsp;2, 2006.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have not admitted any wrongdoing or that the facts alleged in the FTC&#146;s proposed unfairness
complaint are true. Under the consent order as proposed, DSW will pay no fine or damages. DSW has
agreed, however, to maintain a comprehensive information security program, much of which was put in
place shortly after DSW first learned of the theft, and to undergo a biannual assessment of such
program by an independent third party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There can be no assurance that there will not be additional proceedings or claims brought against
us in the future. We have contested and will continue to vigorously contest the claims made against
us and will continue to explore our defenses and possible claims against others.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of October&nbsp;29, 2005, we estimate that the potential exposures for losses related to this theft,
including exposure under currently pending proceedings, range from approximately $6.5&nbsp;million to
approximately $9.5&nbsp;million. Because of many factors, including the early development of
information regarding the theft and recoverability under insurance policies, there is no amount in
the estimated range that represents a better estimate than any other amount in the range.
Therefore, in accordance with Financial Accounting Standard No.&nbsp;5, &#147;Accounting for Contingencies,&#148;
we have accrued a charge to operations in the first quarter of fiscal 2005 equal to the low end of
the range set forth above, or $6.5&nbsp;million. As the situation develops and more information becomes
available to us, the amount of the reserve may increase or decrease accordingly. The amount of any
such change may be material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Although
difficult to quantify, since the announcement of the theft, we have not yet discerned any
material negative effect on sales trends we believe are attributable to the theft. However, this
many not be indiciative of the long-term developments regarding this matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We are controlled directly by Retail Ventures and indirectly by Schottenstein Stores Corporation,
whose interests may differ from other shareholders.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Retail Ventures, a public corporation, owns 100% of our Class&nbsp;B Common Shares, which represents
approximately 63.0% of our outstanding Common Shares. These shares collectively represent
approximately 93.2% of the combined voting power of our outstanding Common Shares. Approximately
48.2% of Retail Ventures&#146; common shares on a fully diluted basis are beneficially owned by
Schottenstein Stores Corporation, or SSC, a privately held corporation controlled by Jay L.
Schottenstein, the Chairman of the Board of Directors of DSW and Retail Ventures and the Chief
Executive Officer of DSW, and members of his immediate family. Given their respective ownership
interests, Retail Ventures and, indirectly, SSC, will be able to control or substantially influence
the outcome of all matters submitted to our shareholders for approval, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the election of directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>mergers or other business combinations; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquisitions or dispositions of assets.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The interests of Retail Ventures or SSC may differ from or be opposed to the interests of our other
shareholders, and their control may have the effect of delaying or preventing a change in control
that may be favored by other shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>SSC and Retail Ventures or its affiliates may compete directly against us.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Corporate opportunities may arise in the area of potential competitive business activities that may
be attractive to Retail Ventures, SSC and us in the area of employee recruiting and retention. Any
competition could intensify if Value City Department Stores LLC, or Value City, begins to carry an
assortment of shoes in its stores similar to those found in our stores, target customers similar to
ours or adopt a similar business model or strategy for its shoe businesses. Given that Value City
is a wholly-owned subsidiary of Retail Ventures and DSW is not wholly-owned, Retail Ventures and
SSC may be inclined to direct relevant corporate opportunities to Value City rather than us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our amended and restated articles of incorporation (our &#147;Articles&#148;) provide that Retail Ventures
and SSC are under no obligation to communicate or offer any corporate opportunity to us. In
addition, Retail Ventures and SSC have the right to engage in similar activities as us, do business
with our suppliers and customers and, except as limited by
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the master separation agreement between us and Retail Ventures, employ or otherwise engage any of
our officers or employees. SSC and its affiliates engage in a variety of businesses, including,
but not limited to, business and inventory liquidations and real estate acquisitions. Our Articles
also outline how corporate opportunities are to be assigned in the event that our, Retail Ventures&#146;
or SSC&#146;s directors and officers learn of corporate opportunities.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Some of our directors and officers also serve as directors or officers of Retail Ventures, and may
have conflicts of interest because they may own Retail Ventures stock or options to purchase Retail
Ventures stock, or they may receive cash-based or equity-based awards based on the performance of
Retail Ventures.</B>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Some of our directors and officers also serve as directors or officers of Retail Ventures and may
own Retail Ventures stock or options to purchase Retail Ventures stock, or they may be entitled to
participate in the Retail Ventures incentive plans. Jay L. Schottenstein is our Chief Executive
Officer and Chairman of the Board of Directors and Chairman of the Board of Directors of Retail
Ventures; Heywood Wilansky is a director of DSW and Chief Executive Officer of Retail Ventures;
Harvey L. Sonnenberg is a director of DSW and of Retail Ventures; Julia A. Davis is Executive Vice
President and General Counsel of both DSW and Retail Ventures, and serves as Secretary and
Assistant Secretary for DSW and Retail Ventures, respectively; Steven E. Miller is Senior Vice
President and Controller of both DSW and Retail Ventures; and James A. McGrady is a Vice President
of DSW and Executive Vice President, Chief Financial Officer, Treasurer and Secretary of Retail
Ventures. Retail Ventures&#146; incentive plans provide cash-based and equity-based compensation to
employees based on Retail Ventures&#146; performance. These employment arrangements and ownership
interests or cash-based or equity-based awards could create, or appear to create, potential
conflicts of interest when directors or officers who own Retail Ventures stock or stock options or
who participate in the Retail Ventures&#146; incentive plans are faced with decisions that could have
different implications for Retail Ventures than they do for us. These potential conflicts of
interest may not be resolved in our favor.
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