10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For The Fiscal Year Ended February 2, 2008

OR

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

Commission file number 1-10767

RETAIL VENTURES, INC.

(Exact name of registrant as specified in its charter)

Ohio	20-0090238
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
Organization)

3241 Westerville Road, Columbus, Ohio	43224
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (614) 471-4722

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

Title of each class: Name of each exchange on which registered:

Common Shares, without par value New York Stock Exchange

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

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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

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

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

The aggregate market value of voting common equity held by non-affiliates of the registrant computed by reference to the price at which such voting common equity was last sold, as of August 4, 2007, was $354,764,968.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 48,635,629 Common Shares were outstanding at March 31, 2008.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Retail Ventures, Inc.’s fiscal 2007 Proxy Statement, which will be filed no later than 120 days after February 2, 2008, are incorporated by reference into Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

Item No.		Page
PART I
1.	Business		5
1.A	Risk Factors		13
1.B	Unresolved Staff Comments		26
2.	Properties		27
3.	Legal Proceedings		28
4.	Submission of Matters to a Vote of Security Holders		28
PART II
5.	Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities		29
6.	Selected Financial Data		31
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
7A.	Quantitative and Qualitative Disclosures about Market Risk		47
8.	Financial Statements and Supplementary Data		48
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		48
9A.	Controls and Procedures		48
9B.	Other Information		49
PART III
10.	Directors, Executive Officers and Corporate Governance		49
11.	Executive Compensation		49
12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholders Matters		49
13.	Certain Relationships and Related Transactions, and Director Independence		49
14.	Principal Accountant Fees and Services		49
PART IV
15.	Exhibits, Financial Statement Schedules		51
SIGNATURES			52
EX-4.13
EX-10.2
EX-10.55.1
EX-10.90
EX-10.91
EX-10.92
EX-12
EX-21
EX-23
EX-24
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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TABLE OF CONTENTS TO FINANCIAL STATEMENTS AND SCHEDULES

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-4
Consolidated Statements of Shareholders’ Equity	F-5
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8
SCHEDULES
I- Condensed Financial Information of Registrant	S-1
II-Valuation and Qualifying Accounts	S-2
Index to Exhibits	E-1

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PART I

As used in this Annual Report on Form 10-K (“Annual Report on Form 10-K” or “Form 10-K”) and except as the context otherwise may require, Retail Ventures, Inc. (“Retail Ventures” or “RVI”) and its wholly-owned subsidiaries, including but not limited to, Filene’s Basement, Inc. (“Filene’s Basement”), and DSW Inc. (“DSW”), a controlled subsidiary, and DSW’s wholly-owned subsidiary, DSW Shoe Warehouse, Inc. (“DSWSW”), are herein referred to collectively as the “Company.” Value City Department Stores LLC (“Value City”) was a wholly-owned subsidiary through January 22, 2008.

This Annual Report on Form 10-K contains trade dress, tradenames and trademarks of other companies. Use or display of other parties’ trademarks, trade dress or tradenames is not intended to, and does not, imply a relationship with the trademark, tradename or trade dress owner.

Cautionary Statement Regarding Forward-Looking Information for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

Some of the statements in this Annual Report on Form 10-K contain forward-looking statements which reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or other comparable words or the negative version of those words. Any forward-looking statements contained in this Annual Report on Form 10-K are based upon our historical performance and on current plans, estimates and expectations and assumptions relating to our operations, results of operations, financial condition, growth strategy and liquidity. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to numerous risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In addition to other factors discussed elsewhere in this report, including those described under “Part I, Item 1A. Risk Factors,” some important factors that could cause actual results, performance or achievements for the Company to differ materially from those discussed in forward-looking statements include, but are not limited to, the following:

• our success in opening new stores and operating stores on a timely and profitable basis;

• maintaining good relationships with our vendors;

• our ability to anticipate and respond to fashion trends;

• fluctuation of our comparable store sales and quarterly financial performance;

• impact of the disposition of a majority interest in Value City and the reliance on remaining subsidiaries to pay indebtedness and intercompany service obligations;

• the risk of Value City deciding to discontinue operations or otherwise not pay its creditors;

• disruption of our distribution operations;

• our dependence on DSW for key services;

• DSW’s success in the development and launch of a DSW e-commerce business;

• failure to retain our key executives or attract qualified new personnel;

• our competitiveness with respect to style, price, brand availability and customer service;

• declining general economic conditions;

• liquidity risks related to our investments;

• risks inherent to international trade with countries that are major manufacturers of apparel and footwear; and

• security risks related to the electronic processing and transmission of confidential customer information.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results, performance or achievements may vary materially from what we may have projected. Furthermore, new factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, RVI undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

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ITEM 1. BUSINESS.

History of Our Business

The first Value City department store was opened in Columbus, Ohio in 1917. Until the initial public offering of Value City Department Stores, Inc. on June 18, 1991, Value City department stores operated as a division of Schottenstein Stores Corporation (“SSC”).

On October 8, 2003, the Company reorganized its corporate structure into a holding company form whereby Retail Ventures, an Ohio corporation, became the successor issuer to Value City Department Stores, Inc. As a result of the reorganization, Value City Department Stores, Inc. became a wholly-owned subsidiary of Retail Ventures. In connection with the reorganization, holders of common shares of Value City Department Stores, Inc. became holders of an identical number of common shares of Retail Ventures. The reorganization was effected by a merger which was previously approved by Value City Department Stores, Inc.’s shareholders. Since October 2003, Retail Ventures’ Common Shares have been listed for trading under the ticker symbol “RVI” on the New York Stock Exchange.

As of February 2, 2008, SSC owned approximately 39.5% of the outstanding RVI Common Shares and beneficially owned approximately 50.2% (assumes issuance of (i) 8,333,333 RVI Common Shares issuable upon the exercise of conversion warrants, (ii) 1,731,460 RVI Common Shares issuable upon the exercise of term loan warrants and (iii) 342,709 RVI Common Shares issuable upon exercise of term loan warrants) of the outstanding RVI common shares. In addition to SSC’s ownership of our common shares, we also have a number of ongoing related party agreements and arrangements with SSC, which are more fully described in Item 13 of this Annual Report on Form 10-K beginning on page 49.

In December 2004, the Company completed another corporate reorganization whereby Value City Department Stores, Inc. merged with and into Value City Department Stores LLC, a newly created, wholly-owned subsidiary of Retail Ventures. In connection with this reorganization, Value City transferred all the issued and outstanding shares of DSW and Filene’s Basement to Retail Ventures in exchange for a promissory note.

On July 5, 2005, DSW completed an initial public offering (“IPO”) of 16,171,875 Class A Common Shares sold at a price to the public of $19.00 per share and raising net proceeds of $285.8 million, net of the underwriters’ commission and before expenses of approximately $7.8 million. RVI accounted for the sale of DSW as a capital transaction. Associated with this transaction, a deferred tax liability of $65.5 million was recorded. As of February 2, 2008, Retail Ventures owned Class B Common Shares of DSW representing approximately 63.0% of DSW’s outstanding common shares and approximately 93.2% of the combined voting power of such shares. DSW is a controlled subsidiary of Retail Ventures and its Class A Common Shares are traded on the New York Stock Exchange under the symbol “DSW”.

In conjunction with the separation of their businesses following the IPO, Retail Ventures and DSW entered into several agreements, including, among others, a master separation agreement, a shared services agreement, a tax separation agreement and subsequently an IT transfer agreement. Retail Ventures’ current intent is to continue to hold its DSW Class B Common Shares, except to the extent necessary to satisfy obligations under warrants it has granted to SSC, Cerberus Partners, L.P. (“Cerberus”) and Millennium Partners L.P. (“Millennium”) and under its 6.625% Mandatorily Exchangeable Notes due September 15, 2011, or Premium Income Exchangeable Securities^SM (“PIES”). Retail Ventures is subject to contractual obligations (a) with its warrantholders to retain enough DSW common shares to be able to satisfy its obligations to deliver such shares to its warrantholders if the warrantholders elect to exercise their warrants in full for DSW Class A common shares and (b) with the holders of its PIES to retain ownership of a number of DSW Class B common shares (which are exchangeable by Retail Ventures for DSW Class A common shares) equal to the maximum number of Class A common shares deliverable by Retail Ventures upon exchange of the PIES.

On January 23, 2008, Retail Ventures disposed of an 81% ownership interest in its Value City Department Stores business to VCHI Acquisition Co., a newly formed entity owned by VCDS Acquisition Holdings, LLC, Emerald Capital Management LLC and Crystal Value, LLC. Retail Ventures received no net cash proceeds from the sale, paid a fee of $500,000 to the purchaser, and recognized an after-tax loss of $90.0 million on the transaction. As part of the transaction, Retail Ventures issued warrants to VCHI Acquisition Co. to purchase 150,000 RVI common shares, at an exercise price of $10.00 per share, and exercisable within 18 months of January 23, 2008. To facilitate the change in ownership and operation of Value City Department Stores, Retail Ventures agreed to provide or arrange for the provision of certain transition services principally related to information technology, finance and human resources to Value City Department Stores for a period of one year unless otherwise extended by both parties.

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General

We operate our business in the three segments described below:

DSW. DSW is a leading U.S. specialty branded footwear retailer operating 259 shoe stores in 37 states as of February 2, 2008. Its stores offer a wide selection of better-branded dress, casual and athletic footwear for women and men. DSW’s typical customers are brand-, quality- and style-conscious shoppers who have a passion for footwear and accessories. DSW’s core focus is to create a distinctive store experience that satisfies both the rational and emotional shopping needs of its customers by offering them a vast, exciting selection of in-season styles and brands combined with the convenience and value they desire. The stores average approximately 24,000 square feet and hold approximately 30,000 pairs of shoes. DSW believes this combination of selection, convenience and value differentiates it from its competitors and appeals to consumers from a broad range of socioeconomic and demographic backgrounds. In addition, DSW operates leased shoe departments for three non-related retailers in a combined 342 stores and in 36 stores for RVI’s wholly-owned subsidiary Filene’s Basement.

Filene’s Basement. Filene’s Basement stores are located primarily in major metropolitan areas of the Northeast and Midwest United States. Filene’s Basement’s mission is to provide the best selection of stylish, high-end designer and famous brand name merchandise at surprisingly affordable prices in men’s and women’s apparel, jewelry, shoes, accessories and home goods. Filene’s Basement focuses on serving the customer with discriminating fashion taste who appreciates an excellent value. These stores have a large selection of upscale designer and better-branded merchandise, including couture items imported directly from the fashion capitals of Europe. Famous for its unique bridal dress promotions, now hailed as the “Running of the Brides™,” Filene’s Basement believes that it is also distinctive in its offering of great fashion, high quality and affordable prices. As of February 2, 2008, there were 36 Filene’s Basement stores in operation.

Corporate. The Corporate segment represents the corporate assets, liabilities and expenses not allocated to other segments through corporate allocation or shared service arrangements. The remaining results of operation are comprised of debt related expenses, income on investments and interest on intercompany notes, the latter of which is eliminated in consolidation.

See Note 13 of Notes to Consolidated Financial Statements beginning on page F-31 of this Annual Report on Form 10-K for detailed financial information regarding our three operating segments.

.
DSW

DSW’s goal is to continue to strengthen its position as a leading better-branded footwear retailer by pursuing the following three primary strategies for growth in sales and profitability: expanding its store base, driving sales through enhanced merchandising and investment in its infrastructure.

DSW operates leased departments for three non-affiliated retailers and one affiliated retailer. DSW entered into supply agreements to merchandise the non-affiliated shoe departments in Stein Mart, Inc., Gordmans, Inc., and Frugal Fannie’s Fashion Warehouse stores as of July 2002, June 2004 and September 2003, respectively. DSW has operated leased shoe departments for Filene’s Basement since its acquisition by Retail Ventures in March 2000. DSW owns the merchandise, records sales of merchandise net of returns and sales tax, owns the fixtures (except for Filene’s Basement) and provides supervisory assistance in the covered locations. Stein Mart, Gordmans, Frugal Fannie’s and Filene’s Basement provide the sales associates. DSW pays a percentage of net sales as rent. As of February 2, 2008, DSW supplied merchandise to 278 Stein Mart stores, 63 Gordmans stores, one Frugal Fannie’s store and 36 Filene’s Basement stores. Beginning in fiscal 2006, DSW’s leased shoe department segment has been supported by a store field operations group, a merchandising group and a planning and allocation group (except for Filene’s Basement) that are separate from the DSW stores group.

Merchandising

Selection. DSW’s goal is to excite its customers with a “sea of shoes” that fulfill a broad range of style and fashion needs. DSW stores sell a large selection of better-branded merchandise. It purchases directly from more than 400 domestic and foreign vendors, primarily in-season footwear found in specialty and department stores and branded make-ups (shoes made exclusively for a retailer), with selection at each store geared toward the particular demographics of the location. A typical DSW store carries approximately 30,000 pairs of shoes in over 2,000 styles compared to a significantly smaller product offering at typical department stores.

DSW separates its merchandise into four primary categories — women’s dress and casual footwear; men’s dress and casual footwear; athletic footwear; and accessories. While shoes are the main focus of DSW, also offered is a complementary assortment of handbags, hosiery and other accessories.

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Value. Through the DSW buying organization, DSW is able to provide its customers with high-quality, in-season fashions at prices that it believes are competitive with the typical sale price found at specialty retailers and department stores. DSW generally employs a consistent pricing strategy that typically provides its customers with the same price on its merchandise from the day it is received until it goes into DSW’s planned clearance rotation. The DSW pricing strategy differentiates DSW from competitors who usually price and promote merchandise at discounts available only for limited time periods. DSW finds customers appreciate having the power to shop for value when it is most convenient for them, rather than waiting for a department store or specialty retailer to have a sale event.

In order to provide additional value to its customers, DSW maintains a customer loyalty program for the DSW stores in which program members receive a future discount on qualifying purchases. This program offers additional savings to frequent shoppers and encourages repeat sales. Upon reaching the target-earned threshold, members receive certificates for these discounts which must be redeemed in six months.

Convenience. DSW believes it provides customers with the highest level of convenience based on DSW’s belief that customers should be empowered to control and personalize their shopping experiences. DSW merchandise is displayed on the selling floor with self-service fixtures to enable customers to view and touch the merchandise. DSW stores are laid out in a logical manner that groups together similar styles such as dress, casual, seasonal and athletic merchandise. DSW believes this self-service aspect provides DSW customers with maximum convenience as they are able to browse and try on the merchandise without feeling rushed or pressured into making a decision too quickly.

Advertising and Promotion

The marketing strategy for DSW focuses on communicating the selection, convenience and value offered by DSW through the use of television, radio and print media advertising as well as in-store promotions. DSW also maintains a gift card program with the intent to generate additional sales by reaching new customers.

During the third quarter of 2006 DSW re-launched its loyalty program, which included changing the name from “Reward Your Style” to “DSW Rewards,” the points threshold to receive a certificate and the certificate amounts. The changes were designed to improve customer awareness, customer loyalty and DSW’s ability to communicate with its customers. DSW target markets to “DSW Rewards” members throughout the year. DSW classifies these members by frequency and uses direct mail and on-line communications to stimulate further sales and traffic. As of February 2, 2008, over 8.6 million members enrolled in the “DSW Rewards” loyalty program had purchased merchandise in the previous two fiscal years, up from approximately 7.3 million members as of February 3, 2007. In fiscal 2007, approximately 69% of DSW store net sales were generated by shoppers in the loyalty program, up from approximately 66% of DSW store net sales in fiscal 2006.

Stores

Store Location, Design and Operations. Typical DSW stores are approximately 24,000 square feet, with over 85% of total square footage used as selling space. Most DSW stores are organized on a single level, which allows customers to view the entire store and product offering as they enter and move quickly to the area where their desired styles are located. Interiors are well-lit, with informative signage, and spacious aisles allow ease of movement throughout the store. Shoes in the stores are displayed in a logical manner that groups together similar styles such as dress, casual, seasonal and athletic merchandise. Clearance shoes are grouped by size and displayed on racks in the rear of the store.

Store associates receive training to maximize the customer shopping experience in DSW’s self-service environment. Training components consist of customer service, maintaining neat, clean and orderly store conditions for ease of shopping, efficient checkout process and friendly service. DSW also maintains a store management training program to develop the skills of management personnel and to provide an ongoing talent pool for future store expansion. DSW prefers to fill store management and field supervisor positions through internal promotions.

Expansion. DSW opened 37 new stores in fiscal 2007, and as of February 2, 2008, DSW has signed leases for 37 new stores that are scheduled to open in fiscal 2008 and fiscal 2009.

DSW plans to open at least 30 stores in each fiscal year from fiscal 2008 through fiscal 2010. DSW’s plan is to open stores in both new and existing markets while continuing to expand its store portfolio to include lifestyle and regional mall locations in addition to its traditional power strip venues. In general, DSW’s evaluation of potential new stores focuses on location within a retail area, demographics, co-tenancy, store size and configuration, and lease terms. DSW’s long-range planning model includes analysis of every major metropolitan area in the country with the objective of understanding the demand for its products in each market over time,

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and its ability to capture that demand. The analysis also looks at DSW’s current penetration levels in the markets DSW serves and DSW’s expected deepening of its penetration levels as DSW continues to grow its brand to become the shoe retailer of choice in the market.

During fiscal 2007, the average investment required to open a new DSW store was approximately $1.6 million, prior to construction and tenant allowances. Of this amount, in fiscal 2007, gross inventory typically accounted for approximately $0.6 million, fixtures and leasehold improvements typically accounted for approximately $0.9 million and pre-opening advertising and other pre-opening expenses typically accounted for approximately $0.1 million.

Distribution

DSW’s primary distribution center is located in an approximately 700,000 square foot facility in Columbus, Ohio. The design of the distribution center facilitates the prompt delivery of priority purchases and fast-selling footwear to stores so DSW can take full advantage of each selling season. In January 2007, DSW implemented a distribution center bypass process which improved speed-to-market for initial deliveries to stores on the West Coast. As part of this process, DSW has engaged a third party logistics service provider to receive orders originating from suppliers on the West Coast or imports entering the United States at a West Coast port of entry. These initial shipments are then shipped by this service provider to DSW pool points and onwards to the stores bypassing the Columbus distribution center facility. DSW will continue to evaluate expansion of this process for applicability in other parts of the country. In fiscal 2007, DSW signed a lease for a fulfillment center which will process orders from its e-commerce channel.

Leased Departments and Supply Agreements

DSW has operated leased shoe departments for Filene’s Basement since March 2000. The intercompany activity is eliminated in the consolidated financial statements. Effective January 30, 2005, DSW updated and reaffirmed its contractual relationship with Filene’s Basement. Under the new agreement, DSW owns the merchandise and provides supervisory assistance in all covered locations and receives a percentage of net sales as payment. Filene’s Basement provides the fixtures and sales associates. As of February 2, 2008, DSW operated leased shoe departments in 36 Filene’s Basement locations.

As of February 2, 2008, DSW also supplied merchandise to 278 Stein Mart stores, 63 Gordmans stores and one Frugal Fannie’s store, as discussed in greater detail above.

Segment Seasonality

DSW’s business is subject to seasonal trends. DSW store net sales have typically been higher in spring and early fall, when its customers’ interest in new seasonal styles increases. Unlike many other retailers, DSW has not historically experienced a large increase in net sales during its fourth quarter associated with the winter holiday season.

Service Marks, Trademarks and Tradenames

DSW has registered a number of trademarks and service marks in the United States and internationally, including DSW® and DSW Shoe Warehouse®. The renewal dates for these U.S. trademarks are April 25, 2015 and May 23, 2015, respectively. DSW believes that its trademarks and service marks, especially those related to the DSW concept, have significant value and are important to building name recognition. To protect the brand identity, DSW has also protected the DSW trademark in several foreign countries.

DSW also holds patents related to its unique store fixture, which gives DSW greater efficiency in stocking and operating those stores that have the fixture. DSW aggressively protects its patented fixture designs, as well as its packaging, store design elements, marketing slogans and graphics.

FILENE’S BASEMENT

Filene’s Basement’s mission is to be the premiere destination for discriminating value-driven shoppers for their designer and famous brand fashion needs. Filene’s Basement strives to provide the best selection of stylish, designer and famous brand name merchandise at surprisingly affordable prices in men’s and women’s apparel, jewelry, shoes, accessories and home goods. Filene’s Basement stores have a large selection of upscale designer and better-branded merchandise, including couture items imported directly from the fashion capitals of Europe. Famous for its unique bridal dress promotions, now hailed as the “Running of the Brides,”™ Filene’s Basement believes that it is also unique in its offering of great fashion, high quality and extraordinary prices. The Downtown Crossing Boston store temporarily closed in the fall of 2007 to allow for extensive building renovations by the landlord, at the landlord’s cost. The store will open when the renovation is completed and is expected to resume operations in the spring of 2009.

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Merchandising

Designer and Famous Brand Merchandise. Filene’s Basement stores offer designer and famous name brand apparel, home goods and accessories. The merchandise represents a focused assortment of fashionable, nationally recognized men’s and women’s apparel, shoes, handbags and other accessories, fine jewelry, fragrances, giftware and home goods bearing prominent designers’ and manufacturers’ names. Branded merchandise constitutes most of the product line. Filene’s Basement believes that up-front purchasing will promote a reliable flow of branded merchandise to its stores for opening season assortments in February and August. Accordingly, Filene’s Basement now places a significant portion of its purchases up front. Filene’s Basement also has been placing purchases of make-up goods in Europe, such as sweaters, knits and cold weather goods. The remaining branded goods are obtained through opportunistic purchases from a diverse group of quality manufacturers and vendors, including direct imports from some of the most prominent European designers. Because of the longstanding relationships that Filene’s Basement has with vendors, it receives quality buying opportunities at competitive prices. Filene’s Basement purchases merchandise from approximately 2,000 suppliers. During fiscal 2007, merchandise supplied by Filene’s Basement’s three top vendors accounted for approximately 12.4% of Filene’s Basement’s net sales.

Value Pricing. With the exception of special event merchandising and some promotions, Filene’s Basement offers everyday low pricing in key fashion categories. The Filene’s Basement customer base has a high fashion I.Q. and recognizes the value in what is being offered and the need to purchase or risk losing unique items because of the changing nature of the assortment. This allows Filene’s Basement to eliminate some of the expenses associated with a larger sales floor labor force and heavy promotional activity to keep prices low. The Downtown Crossing Boston store used an automatic markdown policy, where the longer a product remained in the store, the lower its price became.

There are several factors which allow Filene’s Basement to achieve its value pricing. First, it has excellent, longstanding relationships with its suppliers. This makes Filene’s Basement a preferred choice for vendors with designer and famous brand overruns, department store cancellations and unmet volume objectives. These vendors understand that goods will be sold in an environment that supports the stature of their brands. Second, Filene’s Basement imports directly from Europe, cutting out middleman costs. Third, Filene’s Basement understands the market for these high-end brands and has access to numerous up-front and opportunistic buys.

Advertising and Promotion

Filene’s Basement employs a multi-media approach to advertising, using print, broadcast, direct mail, online, e-mail and out-of-home media. The primary method of communicating with the market throughout the year is via advertising in daily newspapers, typically quarter and half page ads. With a substantial increase in customer data base enrollment, direct mail and email communications are becoming a growing part of the advertising mix.

Filene’s Basement is not typically an item advertiser. Instead, Filene’s Basement focuses on promoting advantageous purchases from manufacturers or retail stores and the Filene’s Basement store as a brand. The intent is to build the reputation and awareness of having the best prices for European and American designer brands, as well as quality basics for all shoppers. As a result, the customers gain confidence that whenever they visit Filene’s Basement, they will find exceptional values on fashionable brands. A large part of this approach relies on promoting major events, the most famous of which is the Bridal Event. Brides-to-be line up in front of the store hours before the store opens — when the doors open, there is a stampede by the customers, now regularly hailed as the “Running of the Brides,”™ to get their hands on a designer wedding gown at a significantly reduced price before the selection runs out. The event is so interesting and unique that the event gets significant free media coverage in every market where the promotion is held. Other major events include ladies suits, a men’s suit promotion, premier designer denims, and end-of-season clearance events. These events are not only effective during the time of the promotion, but also help establish the reputation for Filene’s Basement as a leader in these categories year-round.

Filene’s Basement creates a distinctive look to the print advertising by using fashion illustrations rather than photography since its advertisements are not item specific. This enhances the impression that Filene’s Basement deals in designer merchandise, since the illustrations look similar to designer drawings and are unique among its competitors.

By not emphasizing item-based advertising, Filene’s Basement avoids the high expense of running large weekly circulars. As of 2005, it began issuing category-based catalogs to emphasize the breadth of the assortment in leading fashion trends rather than to sell individual items. As a result, Filene’s Basement’s advertising as a percent of net sales is relatively low, typically around 2.5%, excluding grand openings.

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Stores

Store Location, Design and Operations. Filene’s Basement stores are typically located in leased facilities within suburban areas, near large residential neighborhoods and average approximately 31,000 square feet of selling space per store (approximately 45,000 square feet of total space per store). Certain stores in Boston, New York, Chicago, Atlanta and Washington D.C. are located in key urban areas. As of February 2, 2008, Filene’s Basement operated 36 stores in nine states and the District of Columbia. The stores are designed to be convenient and attractive in their merchandise presentation, dressing rooms, checkouts and customer service areas.

Our Filene’s Basement Downtown Crossing Boston store is a landmark institution recognized by generations of New England families and visitors as a source of quality off-price men’s and women’s merchandise. The Downtown Crossing Boston Store temporarily ceased operations in the fall of 2007, due to the extensive renovation planned for the host building by the building’s new owner. The store will open when the renovation is completed and is expected to resume operations in the spring of 2009. Before the temporary closing, the Downtown Crossing Boston store subleased 178,000 square feet (approximately 65,300 square feet of selling space) on four floors. When the new space is available, the store premises will be 128,000 square feet (approximately 70,000 square feet of selling space) on five floors. The sublease has been amended to extend its term, and now terminates in 2024 with rights exercisable by Filene’s Basement to extend at its option until 2044. The Downtown Crossing Boston store generated approximately 12.9% and 15.1% of Filene’s Basement’s segment sales during fiscal 2006 and 2005, respectively. Due to the temporary closing, the $5.8 million loss attributable to the Downtown Crossing Boston store is reflected in income from continuing operations during fiscal 2007.

All of Filene’s Basement stores are designed for self-service shopping, although fine jewelry counters maintain a dedicated staff and sales personnel are available to help customers locate merchandise and to assist in the selection and fitting of apparel and footwear. In all stores, a customer service desk is conveniently located generally adjacent to the central checkout area. To promote the ease of checkout, we utilize point of sale scanning systems that expedite the checkout process by providing automated check and credit approval and price lookup. Sales associates are trained to create a “customer-friendly” environment. Filene’s Basement accepts all major credit cards, and also provides a private label credit card program. Filene’s Basement maintains a return policy of 30 days.

Our Filene’s Basement stores’ typical staff consists of a general manager, an assistant store manager, merchandising group managers and full and part-time associates. Typically, general managers report to a Regional Vice President who in turn reports to the Executive Vice President, Stores & Operations.

Filene’s Basement store managers are responsible on a day-to-day basis for customer relations, personnel hiring and scheduling, and all other operational matters arising in the stores. Each store manager is compensated, in part, based on the performance of the manager’s store. The store managers are an important source of information concerning local market conditions, trends and customer preferences. Filene’s Basement prefers to fill management positions through promotion of existing associates.

Expansion. We opened six new Filene’s Basement stores and reopened a fully remodeled store during fiscal 2007. We plan to open at least one new store in fiscal 2008. Typical new stores are expected to have a gross square footage of approximately 32,000 to 42,000 square feet. Sites will tend to be in urban and key suburban locations. Based upon our experience, we estimate the average cost of opening a new Filene’s Basement store is approximately $4.3 million (prior to tenant allowance) including leasehold improvements, fixtures, inventory, pre-opening expenses and other costs. Preparations for opening a Filene’s Basement store generally take nine weeks. We charge pre-opening expenses to operations as incurred.

We continually update our stores by changing the merchandise displays and in-store signage. The annual cost of refurbishing on a per store basis is generally not substantial and is treated as on-going cost of operations.

Distribution

Filene’s Basement’s merchandise is processed and distributed from a 457,000 square foot leased distribution facility situated on 32.8 acres with adjacent rail service in Auburn, Massachusetts, outside of metropolitan Boston, Massachusetts. In 2005, the Auburn distribution center was upgraded to accommodate the current volume of business and the anticipated growth in new stores. Filene’s Basement plans to invest capital dollars in the 2008 fiscal year to further improve the existing facility.

We have a dedicated contract carrier that manages the fleet of road tractors and our semi-trailers. Our contract carrier makes the majority of all deliveries to the stores.

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License Agreements and Leased Departments

Filene’s Basement licenses fine jewelry, cosmetics and certain other incidental departments to independent third parties. The aggregate annual license fees for the 2007 fiscal year were approximately $9.5 million. Filene’s Basement also has an agreement with DSW to supply the in-store shoe departments on a leased department basis in 36 of its stores; Value City supplied the in-store shoe department to the Downtown Crossing Boston Filene’s Basement store until it temporarily closed in the late summer of 2007. Until November, 2007, Retail Ventures Jewelry, Inc., a wholly owned subsidiary of Retail Ventures, operated the jewelry departments in all Filene’s Basement stores. Beginning in November 2007, the fine jewelry departments in the Filene’s Basement stores are operated by a third party as a leased department. The intercompany activity is eliminated in our consolidated financial statements.

Third party licensees supply their own merchandise and generally supply their own store fixtures. In most instances, licensees utilize Filene’s Basement associates to operate their departments and reimburse Filene’s Basement for all associated costs. Leased departments are operated under the general supervision of Filene’s Basement and licensees are required to abide by its policies with regard to pricing, quality of merchandise, refunds, store hours and associate conduct. Leased departments complement the operations of the stores and facilitate the uniformity of the in-store merchandising strategy.

DSW has operated leased shoe departments for Filene’s Basement since March 2000. Effective as of January 30, 2005, DSW updated and reaffirmed its contractual arrangement with Filene’s Basement. Under the new agreement, DSW owns the merchandise, records sales of merchandise net of returns and sales tax, and provides supervisory assistance in all covered locations and pays a percentage of net sales as rent. Filene’s Basement provides the fixtures and sales associates. In three of these locations, Filene’s Basement licenses and uses the DSW name in connection with the leased shoe department. This intercompany activity is eliminated in our consolidated financial statements.

Segment Seasonality

Filene’s Basement’s business is affected by the pattern of seasonality common to most retail businesses. Historically, increased sales and operating profit have been generated during the early fall and winter holiday selling seasons.

Service Marks, Trademarks and Tradenames

Filene’s Basement has an exclusive, perpetual, worldwide, royalty free license to use the name “Filene’s Basement” and “Filene’s Basement of Boston” trademark and service mark registrations, as well as certain other tradenames. Filene’s Basement’s exclusive licensee status with respect to these registered marks has been recorded with the United States Patent and Trademark Office and relevant state offices. Other trademarks and tradenames used by Filene’s Basement have been protected as well.

MANAGEMENT INFORMATION AND CONTROL SYSTEMS

Retail Ventures. We believe a high level of automation is essential to maintaining and improving our competitive position. On December 5, 2006, we entered into an Amended and Restated Shared Services Agreement with our subsidiary, DSW, effective as of October 29, 2006 (the “Amended Shared Services Agreement”). Under the terms of the Amended Shared Services Agreement, we receive information technology services from DSW. The transfer of technology services to DSW placed the requirement on DSW related to maintaining both the investment in infrastructure and the investments needed to support the shared services infrastructure.

We rely upon computerized systems to provide information at all levels of our segments, including warehouse operations, store billing, inventory control, merchandising and automated accounting. We utilize registers with full scanning capabilities to increase speed and accuracy at customer checkouts and facilitate inventory restocking. We utilize automated distribution center systems to track and control the receipt, processing, storage and shipping of product to the stores.

DSW. In order to promote DSW’s continued growth, DSW undertook several major initiatives in the past to build upon the merchandise management system and warehouse management systems that support DSW. With DSW’s top vendors, DSW utilizes an electronic data interchange for product UPC barcodes and electronic exchange of purchase orders, Advance Shipment Notifications and invoices. In DSW stores, DSW utilizes Point of Sale (“POS”) registers with full scanning capabilities to increase speed and accuracy at customer checkouts and facilitate inventory restocking. DSW uses enterprise data warehouse and customer relationship management software to manage the “DSW Rewards” program. This allows DSW to support, expand and integrate “DSW Rewards” with the POS system to improve the customer experience.

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Filene’s Basement. Filene’s Basement utilizes the JDA merchandise management system to track and manage merchandise inventory at its stores. A warehouse management system is used at the distribution center to process and distribute merchandise to the stores. Filene’s Basement utilizes POS registers with full scanning capabilities to increase speed and accuracy at customer checkout and facilitate inventory restocking. Filene’s Basement has automatic replenishment capabilities to improve the in-stock position in the stores for “basics” programs. Filene’s Basement systems run on an AS/400 and open systems computers.

Associates

The mission of the Company’s human resource functions includes ensuring that the Company’s business plans, organization structure, talent development and bench strength meet the Company’s needs for employee effectiveness to improve quality of work product, superior customer service, shareholder value and our profit.

As of February 2, 2008, we had approximately 11,800 associates across all segments of which approximately 4,300 were full-time and the remaining balance were part-time. We believe that, in general, we have satisfactory relations with our associates.

Competition

The retail industry is highly competitive. We compete with a variety of conventional and discount retail stores, including national, regional and local independent department and specialty stores, as well as with catalog operations, on-line providers, factory outlet stores and other off-price stores. The DSW and Filene’s Basement operating segments have different target customers and different strategies, but each focuses on this basic principle: the value to the customer is the result of the quality of the merchandise in relationship to the price paid.

DSW believes that its customers prefer the wide selection of on-trend merchandise compared to product offerings of typical traditional department stores, mall-based company stores, national chains, single-brand specialty retailers and independent shoe retailers because those retailers generally offer a more limited selection at higher average prices and in a less convenient format than DSW does. In addition, DSW believes that it successfully competes against competitors who have attempted to duplicate DSW’s format.

Filene’s Basement provides perceived high value by offering easily recognized brand-name merchandise at discounted prices. We believe Filene’s Basement’s niche, however, is the top-tier of the off-price retailing category and its sales events help shape its image as having a special “cachet.” We believe that Filene’s Basement is more upscale than its off-price competitors and, in addition to its exclusive selection of prestige couture merchandise, carries a broader and more complete selection of better designer brands than the competition. Filene’s Basement also offers a shopping environment that is typically more fashionable than its off-price competition.

Available Information

RVI files reports with the Securities and Exchange Commission (“the SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to such reports. The public may read and copy any materials that RVI files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. Additionally, information about RVI, including its reports filed with the SEC, is available through RVI’s web site at http://www.retailventuresinc.com. Such reports are accessible at no charge through RVI’s web site and are made available as soon as reasonably practicable after such material is filed with or furnished to the SEC. The reference to the Company website address does not constitute incorporation by reference of the information contained on the website and that website information should not be considered part of this document.

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ITEM 1A. RISK FACTORS.

In addition to the other information in this Annual Report on Form 10-K, shareholders or prospective investors should carefully consider the following risk factors when evaluating RVI. If any of the events described below occurs, our business, financial condition and results of operations and future growth prospects could suffer.

We may be unable to open all the DSW and Filene’s Basement 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, cash flow and results of operations.

We intend to open at least 30 DSW stores per year in each fiscal year from 2008 through 2010, and at least one Filene’s Basement store in fiscal 2008. 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 and Filene’s Basement stores successfully on a timely and profitable basis depends on many factors, including, among others, our ability to:

• identify suitable markets and sites for new store locations;

• negotiate favorable lease terms;

• build-out or refurbish sites on a timely and effective basis;

• obtain sufficient levels of inventory to meet the needs of new stores;

• obtain sufficient financing and capital resources or generate sufficient cash flows from operations to fund growth;

• successfully open new DSW and Filene’s Basement stores in regions of the United States in which we currently have few or no stores;

• open new stores at costs not significantly greater than those anticipated;

• control the costs of other capital investments associated with store openings, including, for example, those related to the expansion of distribution facilities;

• hire, train and retain qualified managers and store personnel; and

• 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.

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 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, cash flow and results of operations.

To the extent that we open new 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, cash flow and results of operations.

We intend to open at least 30 new DSW stores per year from fiscal 2008 to 2010, which could strain our resources and have a material adverse effect on our business and financial performance.

Our continued and future growth in our DSW segment largely depends on our ability to successfully open and operate new stores on a profitable basis. During fiscal 2007, 2006 and 2005, DSW opened 37, 29 and 29 new stores, respectively. DSW intends to continue to open at least 30 new stores per year in each fiscal year from fiscal 2008 through 2010. As of February 2, 2008, DSW has signed leases for an additional 37 new stores to be opened in fiscal 2008 and fiscal 2009. During fiscal 2007, the average investment required to open a typical new DSW store was approximately $1.6 million. This continued expansion could place increased demands on

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DSW’s financial, managerial, operational and administrative resources. For example, DSW’s planned expansion will require DSW to increase the number of people it employs, as well as to monitor and upgrade its management information and other systems and its distribution facilities. These increased demands and operating complexities could cause DSW to operate its business less efficiently, have a material adverse effect on its operations and financial performance and slow its growth.

The temporary cessation of operations at the Downtown Crossing Boston Filene’s Basement store could lead to reduced sales when that location resumes operations.

The Downtown Crossing Boston Filene’s Basement is the original, landmark Filene’s Basement store. The Downtown Crossing store generated 12.9% and 15.1% of Filene’s Basement segment sales during fiscal 2006 and 2005, respectively. Filene’s Basement temporarily ceased operations at the Downtown Crossing Boston store in the fall of 2007 due to the complex redevelopment of the building housing the original store. Filene’s Basement plans to resume operations in the new development in the spring of 2009. The approximately 18-month temporary cessation of business in this Downtown Crossing store could result, upon its reopening, in reduced customer traffic and sales at this location.

DSW plans to launch an e-commerce business in the first half of fiscal 2008 which may not be successful and could adversely affect DSW’s results of operations or distract management from DSW’s core business.

DSW plans to launch an e-commerce business to sell shoes and related accessories through its website in fiscal 2008. As of February 2, 2008, DSW has invested $26.3 million in capital for the development of this e-commerce business. In addition, DSW has entered into a ten-year lease agreement for space to serve as fulfillment center for e-commerce distribution. The development and launch of such a business channel could cost more than expected, distract management from DSW’s core business, take business from DSW’s existing store base resulting in lower sales in DSW stores, or be unsuccessful. In addition, as this is a new business channel, DSW will be purchasing inventory based upon anticipated sales. In the event that DSW’s sales are lower than planned, DSW will likely need to take markdowns on inventory which will adversely affect gross margin. In the event that DSW spends more than anticipated, loses focus on its core business, impacts sales in its existing store base, or is unsuccessful in the development or execution of an e-commerce business, this may have a material adverse effect to DSW’s business, results of operations or financial condition.

We rely on our good relationships with vendors and their factors which provide vendor financing 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 material adverse effect on our competitive position, business and financial performance.

Except for those few vendors with whom we have licensed department arrangements, we do not have long-term supply agreements or exclusive arrangements, and, therefore, our success depends on maintaining good relations with our vendors in all business segments. Since our business is fundamentally dependent on selling brand name and designer merchandise at attractive prices, we must continue to obtain from our vendors a wide selection of this merchandise at favorable wholesale prices. 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 stores, and of their factors to provide them with vendor financing. If we fail to continue to deepen and strengthen our relations with our existing vendors and their factors, 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, this may limit our ability to obtain a sufficient amount and variety of merchandise at favorable prices, which could have a negative impact on our competitive position.

During fiscal 2007, merchandise supplied to our DSW segment by three key vendors accounted for in the aggregate approximately 21.0% of DSW’s net sales. During fiscal 2007, merchandise supplied to our Filene’s Basement segment by three key vendors accounted for in the aggregate approximately 12.4% of Filene’s Basement’s net sales. The loss or reduction in the amount of merchandise made available by any one of these key vendors could have a material adverse effect on our business.

We may be unable to anticipate and respond to fashion trends and consumer preferences in the markets in which we operate, which could materially adversely affect our business, financial condition, cash flow and results of operations.

Our merchandising strategy is based on identifying each region’s customer base and having the proper mix of products in each store across our segments to attract its target customers. 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:

• variations in local economic conditions, which could affect our customers’ discretionary spending;

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• unanticipated fashion trends;

• our success in developing and maintaining vendor relationships that provide us access to in-season merchandise at attractive prices;

• our success in distributing merchandise to our stores in an efficient manner; and

• changes in weather patterns, which in turn affect consumer preferences.

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 a material adverse effect on our business, financial condition, cash flow and results of operations.

Our operations are affected by seasonal variability.

Our operations have been historically seasonal, with a disproportionate amount of sales and a majority of net income occurring in the early fall and winter holiday selling seasons for Filene’s Basement. DSW net sales have typically been higher in spring and early fall. As a result of seasonality, any factors negatively affecting us during these periods, including adverse weather, the timing and level of markdowns or unfavorable economic conditions, could have a material adverse effect on our financial condition, cash flow and results of operations for the entire year.

Our comparable store sales and quarterly financial performance may fluctuate for a variety of reasons in addition to seasonal factors, which could result in a decline in the price of our common shares.

Our business is sensitive to customers’ 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. In addition to seasonal fluctuations, including weather patterns, a variety of other factors affect our comparable store sales and quarterly financial performance, including:

• changes in our merchandising strategy;

• timing and concentration of new store openings and related pre-opening and other start-up costs;

• levels of pre-opening expenses associated with new stores;

• changes in our merchandise mix;

• changes in and regional variations in demographic and population characteristics;

• timing of promotional events;

• actions by our competitors; and

• general United States economic conditions and, in particular, the retail sales environment.

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. In the future, our financial performance may fall below the expectations of securities analysts and investors. In that event, the price of our common shares would likely decline.

Retail Ventures is a holding company and relies on its subsidiaries to make payments on its indebtedness and meet its obligations.

Retail Ventures is a holding company and all our operations are conducted through our subsidiaries. Therefore, we rely on the cash flow of our subsidiaries to meet our obligations, including our obligations under the PIES. The ability of our subsidiaries to distribute to Retail Ventures by way of dividends, distributions, interest or other payments (including intercompany loans) is subject to various restrictions, including restrictions imposed by the credit facilities governing our and our subsidiaries’ indebtedness, and future indebtedness may also limit or prohibit such payments. In addition, the ability of our subsidiaries to make such payments may be limited by relevant provisions of the laws of their respective jurisdictions of organization.

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As a result of our disposition of 81% of our ownership interest in the Value City subsidiary, we now rely on our remaining operating segments to make payments on our indebtedness and meet our obligations. For example, Filene’s Basement and DSW will need to absorb certain costs previously paid by Value City. DSW, Filene’s Basement and Value City receive shared services from and through RVI, and DSW provides services to RVI and its subsidiaries and to Value City. The costs associated with many of these shared services are allocated among the entities based upon the percent of an entity’s sales compared to total sales, or, in some cases, a usage based charge. In the event that Value City significantly reduces or ceases operations, its allocation percentage of shared expenses would decrease, which would increase DSW’s and Filene’s Basement allocation percentage of future shared service expenses. Additionally, in the event that Value City significantly reduces or ceases operations, DSW would not be able to allocate as much or any expense to Value City relating to Value City’s utilization of information technology and shoe processing services. This increased allocation percentage and reduction in expense allocation could be material and have a negative effect on the financial position of the Company.

If Value City decides to discontinue its operations or otherwise not pay creditors whose obligations RVI has guaranteed, RVI may become subject to various risks associated with such refusal to pay creditors, any insolvency or bankruptcy proceedings.

On January 23, 2008, Retail Ventures disposed of an 81% ownership interest in its Value City Department Stores business to VCHI Acquisition Co., a newly formed entity owned by VCDS Acquisition Holdings, LLC, Emerald Capital Management LLC and Crystal Value, LLC. If Value City decides to significantly reduce or cease its operations or otherwise does not pay creditors whose obligations RVI has guaranteed, RVI may become subject to risks associated with any such possible failure to pay or a possible insolvency or bankruptcy filing by Value City. There are risks and uncertainties inherent in such events and RVI is unable to predict the precise effect of any Value City reorganization and/or liquidation process on RVI’s operations and financial condition. In the event of a Value City bankruptcy filing, creditors of Value City may seek to assert claims against RVI and its subsidiaries, whether or not such claims currently exist or have any merit. If such claims were successfully asserted and proved, RVI would have to obtain funding sources to the extent cash on hand, lending facilities, cash generated from operations or other assets were insufficient to satisfy those claims. RVI may also be required to record impairment charges or write-offs as a result of any bankruptcy proceeding and to incur expenses and liabilities associated with any bankruptcy proceeding. Additionally, any Value City bankruptcy and the publicity surrounding its filing could adversely affect RVI’s and its subsidiaries’ businesses and relationships with employees, customers and suppliers. All of the foregoing circumstances or events could have a material adverse impact on RVI’s financial condition and results of operations.

If Value City defaults on its lease for the premises at 3241 Westerville Rd., RVI and DSW may become subject to various risks associated with the location of operations on these premises.

Concurrent with RVI’s disposition of its 81% ownership interest in the Value City business, RVI and DSW entered into an Occupancy Licensing Agreement with Value City to provide for RVI’s and DSW’s continuing occupancy of a portion of the premises at 3241 Westerville Road. If Value City defaults on its lease of this premises, RVI and DSW may become subject to risks associated with such a default, including the inability to access the premises, which could have a material adverse impact on RVI’s and DSW’s financial condition and results of operations. RVI’s corporate offices as well as significant IT operations are located at this premises.

We have debt which could have consequences if we were unable to repay the balances or interest due.

We have debt on our balance sheet which could have consequences if we were unable to repay the balances or interest due. For example, it could:

• limit our flexibility in planning for, or reacting to, changes in our industry in which we operate;

• place us at a competitive disadvantage compared to our competitors that have less debt;

• limit our ability to seek and borrow additional funds; and

• expose us to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates.

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to some extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

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Our business may not generate sufficient cash flow from operating activities or future availability under our credit facilities may not be in amounts sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, on or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all.

Upon the occurrence of an event of default under our existing credit facilities, the lenders could elect to declare the applicable outstanding indebtedness immediately due and payable and terminate all commitments to extend further credit. We cannot be sure that our lenders would waive a default or that we could pay the indebtedness in full if it were accelerated.

Filene’s Basement and DSW’s secured revolving credit facilities could limit operational flexibility.

$100 Million Secured Revolving Credit Facility — The Filene’s Basement Revolving Loan

Under the Filene’s Basement Revolving Loan expiring January 23, 2013, Filene’s Basement is named as the borrower. The Filene’s Basement Revolving Loan is guaranteed by Retail Ventures and certain of its wholly-owned subsidiaries. Neither DSW nor DSWSW are borrowers or guarantors under the Filene’s Basement Revolving Loan. The Filene’s Basement Revolving Loan has borrowing base restrictions and provides for borrowings at variable interest rates based on the London Interbank Offered Rate or LIBOR, the prime rate and the Federal Funds effective rate, plus a margin. In addition to the borrowing base restrictions, 10% of the facility is deemed an “excess reserve” and is not available for borrowing. Obligations under the Filene’s Basement Revolving Loan are secured by a lien on substantially all of the personal property of Filene’s Basement, and of Retail Ventures and its other wholly-owned subsidiaries, excluding shares of DSW owned by Retail Ventures. In addition, the secured revolving credit facility contains usual and customary restrictive convenants relating to the management and operation of our business. These covenants, among other things, restrict Filene’s Basement’s ability to grant liens on Filene’s Basement’s assets, incur additional indebtedness, open or close stores, pay cash dividends and redeem Filene’s Basement’s stock, enter into transactions with affiliates and merge or consolidate with another entity. These covenants could restrict Filene’s Basement’s operational flexibility, and any failure to comply with these convenents or Filene’s Basement’s payment obligations would limit Filene’s Basement’s ability to borrow under the secured revolving credit facility and, in certain circumstances, may allow the lenders thereunder to require repayment.

$150 Million Secured Revolving Credit Facility — The DSW Revolving Loan

DSW has entered into a $150 million secured revolving credit facility with a term expiring July 2010. Under this facility, DSW and its subsidiary DSWSW, are named as co-borrowers. This facility is subject to a borrowing base restriction and provides for borrowings at variable interest rates based on the London Interbank Offered Rate, or LIBOR, the prime rate and the Federal Funds effective rate, plus a margin. DSW’s obligations under its secured revolving credit facility are secured by a lien on substantially all DSW’s personal property and a pledge of DSW’s shares of DSWSW. In addition, the secured revolving credit facility contains usual and customary restrictive covenants relating to the management and operation of our business. These covenants, among other things, restrict DSW’s ability to grant liens on DSW’s assets, incur additional indebtedness, open or close stores, pay cash dividends and redeem DSW’s stock, enter into transactions with affiliates and merge or consolidate with another entity. In addition, if at any time DSW utilizes over 90% of DSW’s borrowing capacity under the facility, DSW must comply with a fixed charge coverage ratio test set forth in the facility documents. These covenants could restrict DSW’s operational flexibility, and any failure to comply with these covenants or DSW’s payment obligations would limit DSW’s ability to borrow under the secured revolving credit facility and, in certain circumstances, may allow the lenders thereunder to require repayment.

Our stock price may fluctuate significantly, which could negatively affect the trading of our common shares.

The market price of our common shares has fluctuated significantly in the past and may likely continue to fluctuate in the future, which could negatively affect the trading of our common shares. Various factors and events have caused this fluctuation and are likely to cause the fluctuations to continue. These factors include, among others:

• developments related to DSW and fluctuations in the market price of DSW shares;

• quarterly variations in actual or anticipated operating results;

• changes by securities analysts in estimates regarding Retail Ventures;

• conditions in the retail industry;

• the condition of the stock market; and

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• general economic conditions.

Our failure to retain our existing senior management team and to continue to attract qualified new personnel could materially adversely affect our business.

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 our key executive and key buying personnel, our business could be materially adversely affected. We have entered into employment agreements with certain of these key personnel. 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 personnel is intense, and we may not be successful in attracting, assimilating and retaining the personnel required to grow and operate profitably.

We may be unable to compete favorably in our highly competitive markets.

The off-price retail, department store and retail footwear markets are highly competitive with few barriers to entry. We compete against a diverse group of retailers, both small and large, including locally owned, regional and national department stores, specialty retailers, discount chains and off-price retailers. 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, cash flow, results of operations and our market share.

SSC and/or its affiliates may compete directly against us.

Corporate opportunities may arise in the area of potential competitive business activities that may be attractive to SSC and us in the area of employee recruiting and retention. Any competition could intensify if SSC acquired a business that carried an assortment of shoes or merchandise in these stores similar to those found in our stores, targeted customers similar to ours or adopted a similar business model or strategy for its shoe businesses. Given that RVI and DSW are not wholly-owned by SSC, SSC may be inclined to direct relevant corporate opportunities to its other affiliates rather than us.

SSC is under no obligation to communicate or offer any corporate opportunity to us. In addition, SSC has the right to engage in similar activities as us, do business with our suppliers and customers and 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, real estate management and real estate acquisitions.

A decline in general economic conditions, or the outbreak or escalation of war or terrorist acts, could lead to reduced consumer demand for our merchandise.

Consumer spending habits, including spending for the merchandise 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’ disposable income. A general slowdown in the United States economy or an uncertain economic outlook could adversely affect consumer spending habits.

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.

We rely on foreign sources for our merchandise, and our business is therefore subject to risks associated with international trade.

We purchase merchandise from domestic and foreign vendors. In addition, many of our domestic vendors import a large portion of their merchandise from abroad. For this reason, we face risks inherent in purchasing from foreign suppliers, such as:

• economic and political instability in countries where these suppliers are located;

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• international hostilities or acts of war or terrorism affecting the United States or foreign countries from which our merchandise is sourced;

• increases in shipping costs;

• transportation delays and interruptions, including as a result of increased inspections of import shipments by domestic authorities;

• work stoppages;

• adverse fluctuations in currency exchange rates;

• laws of the United States affecting the importation of goods, including duties, tariffs and quotas and other non-tariff barriers;

• expropriation or nationalization;

• changes in local government administration and governmental policies;

• changes in import duties or quotas;

• compliance with trade and foreign tax laws; and

• local business practices, including compliance with local laws and with domestic and international labor standards.

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 a material adverse effect on our business.

DSW and Filene’s Basement each relies on a primary distribution center. The loss or disruption of either of these centralized distribution centers could have a material adverse effect on our business and operations.

Most of DSW’s inventory is shipped directly from suppliers to a primary centralized distribution center in Columbus, Ohio, where the inventory is then processed, sorted and shipped to one of DSW’s pool locations located throughout the country and then on to DSW stores. In the fourth quarter of fiscal 2006, DSW began operations of its West Coast bypass.

Inventory for Filene’s Basement stores is processed and shipped from a primary distribution facility in Auburn, Massachusetts.

Our operating results depend on the orderly operation of our receiving and distribution process, which in turn depends on third-party vendors’ adherence to shipping schedules and our effective management of our distribution facilities. We may not anticipate all the changing demands that our expanding operations in these two segments will impose on our receiving and distribution systems, 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.

While we maintain business interruption and property insurance, in the event a 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 a distribution center, our insurance may not be sufficient, and insurance proceeds may not be timely paid to us.

We will require strong cash flows from our DSW and Filene’ Basement operations to support capital requirements, operations and debt repayment.

We will require strong cash flows from our DSW and Filene’s Basement operations to support our capital requirements, our general operating activities and to fund debt repayment. Our inability to generate sufficient cash flows to support these activities or the lack of availability of financing in adequate amounts and on appropriate terms could adversely affect our financial performance or our earnings per share growth.

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If we fail to execute our opportunistic buying and inventory management well for Filene’s Basement, our business could be materially adversely affected.

We purchase some of the inventory for our Filene’s Basement stores opportunistically with our buyers purchasing close to need. To drive traffic to the stores and to increase same store sales, the treasure hunt nature of the off-price buying experience requires continued replenishment of fresh high quality, attractively priced merchandise. While the practice of opportunistic buying enables our buyers to buy at the right time and price, in the quantities we need and into market trends, it places considerable discretion in our buyers. This discretion subjects us to risks that our buyers will miscalculate on the timing, quantity and nature of inventory flowing to the stores. We rely on our distribution infrastructure to support delivering goods to our stores on time. We must effectively and timely distribute inventory to stores, maintain an appropriate mix and level of inventory and effectively manage pricing and markdowns. Failure to acquire and manage our inventory well and to operate our distribution infrastructure effectively could materially adversely affect our performance and our relationship with our customers.

If we do not attract and retain quality sales, distribution center and other associates in sufficient numbers as well as experienced buying and management personnel, our performance could be materially adversely affected.

Our performance is dependent on attracting and retaining a large and growing number of quality associates. Many of these associates are in entry level or part-time positions with historically high rates of turnover. Our ability to meet our labor needs while controlling our costs is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation and changing demographics. In the event of increasing wage rates, if we do not increase our wages competitively, our customer service could suffer because of a declining quality of our workforce, or our earnings would decrease if we increase our wage rates. Further, our off-price model limits the market for experienced buying and management personnel and requires us to do significant internal training and development. Changes that adversely impact our ability to attract and retain quality associates could materially adversely affect our performance.

If our information systems do not operate and our new technologies are not implemented effectively, our business could be materially disrupted or our sales or profitability could be reduced.

The efficient operation of our business is dependent on information systems, including the ability to have them operated effectively and to successfully implement new technologies, systems, controls and adequate disaster recovery systems. The failure of our information systems to perform as designed or the failure to implement and operate them effectively could materially disrupt our business or subject us to liability and thereby harm our profitability.

We are reliant on our information systems and the loss or disruption of services could affect our ability to implement our growth strategy and have a material adverse effect on our business.

Our information systems are integral to efficiently operating our stores and in managing the operations of a growing store base. The capital and other expenditures required to keep our information systems operating at peak performance may be higher than anticipated and could strain our resources. In addition, any significant disruption of the data centers upon which we rely could have a material adverse affect on those operations dependent on those systems, most specifically, store operations, our distribution centers and our merchandising teams.

While we maintain business interruption and property insurance, in the event the data centers on which we rely are shut down, our insurance may not be sufficient to cover the impact to the business, or insurance proceeds may not be timely paid to us.

On December 5, 2006, we entered into an Amended and Restated Shared Services Agreement with DSW, effective as of October 29, 2006 (the “Amended Shared Services Agreement”). Under the terms of the Amended Shared Services Agreement, we receive information technology services from DSW. RVI information technology associates are now employed by DSW. Through this agreement, DSW now provides the cash related to capital expense for information technology assets for RVI and its subsidiaries. DSW expects to recoup its expenditures by charging depreciation to RVI based on the expected lives of the assets.

We may be unable to quickly monetize our investment in DSW Common Shares.

As of February 2, 2008, Retail Ventures owned DSW Class B Common Shares representing approximately 63.0% of DSW’s outstanding Common Shares and approximately 93.2% of the combined voting power of such shares. DSW Class A Common Shares are listed on the New York Stock Exchange under the symbol “DSW.” Pursuant to an Exchange Agreement between RVI and DSW, DSW Class B Common Shares may be exchanged into DSW Class A Common Shares at Retail Ventures’ option. Absent registration, DSW Common Shares held by Retail Ventures are deemed to be restricted stock, which would limit our ability to liquidate any of such shares if we chose to do so.

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Pursuant to the terms of the Master Separation Agreement dated July 5, 2005 by and between Retail Ventures and DSW, DSW agreed to effect up to one demand registration per calendar year of DSW Class A Common Shares or DSW Class B Common Shares held by Retail Ventures. Our ability to liquidate DSW Common Shares on an expedited basis may be restricted due to the lead time required to register such shares with the Securities and Exchange Commission.

The liquidity of DSW’s investments could fluctuate based on adverse market conditions.

Recent auction failures have adversely affected the liquidity of auction rate securities as investors have not been able to sell their securities on their auction dates. If these market conditions persist, DSW may be unable to sell its auction rate securities at their scheduled auction dates. As of February 2, 2008, $38.0 million of DSW’s $82.5 million in total investments was invested in auction rate securities. DSW has reduced its investment in auction rate securities to $13.7 million as of March 31, 2008. Of the $13.7 million investment at March 31, 2008, $3.7 million in auction rate securities have not undergone an auction. Due to auction failures limiting the liquidity of our investments, we have presented $10.0 million of DSW’s investment in auction rate securities as long-term investments as of February 2, 2008 that were previously classified as short term investments.

If DSW is unable to liquidate the remaining auction rate securities at their scheduled auction dates, DSW may not have access to its funds until the maturity date of these investments, which could be until 2034. Further, in the event that it is unlikely that DSW will be able to receive the full proceeds from these investments at the maturity date, DSW may be required to impair the securities. Based on the nature of the
impairment(s) DSW would record a temporary impairment as an unrealized loss in comprehensive income or an other than temporary impairment in earnings, which could materially impact its results of operations. DSW did not record any impairment related to these investments as it does not believe that the underlying credit quality of the assets has been impacted by the reduced liquidity of these investments.

We face security risks related to our electronic processing and transmission of confidential customer information. On March 8, 2005, we announced the theft of credit card and other purchase information related to DSW customers. This security breach could subject us to liability.

We rely on commercially available encryption software and on 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, could result in a compromise or breach of 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’ 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.

As previously reported, on March 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 18, 2005, Retail Ventures issued the findings from its investigation into the theft. The theft covered transaction information involving approximately 1.4 million credit cards and data from transactions involving approximately 96,000 checks.

DSW and Retail Ventures contacted and cooperated with law enforcement and other authorities with regard to this matter. DSW is involved in a putative class action lawsuit, which seeks unspecified monetary damages, credit monitoring and other relief. The lawsuit seeks to certify a class of consumers that is limited geographically to consumers who made purchases at certain stores in Ohio.

There can be no assurance that there will not be additional proceedings or claims brought against DSW in the future. DSW has contested and will continue to vigorously contest the claims made against DSW and will continue to explore its defenses and possible claims against others.

DSW 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 million. Because of many factors, including the possible settlement of claims 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. 5, Accounting for Contingencies, DSW 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 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 to DSW’s results of operations or financial condition. As of February 2, 2008, the balance of the associated accrual for potential exposure was $0.5 million.

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We continue to be dependent on DSW to provide us with key services for our business.

From 1998 until the completion of its IPO, DSW was operated as a wholly-owned subsidiary of Retail Ventures and provided key services required for the operation of Retail Ventures’ business. In connection with the DSW IPO, we entered into agreements with DSW related to the separation of our business operations from DSW including, among others, a master separation agreement and a shared services agreement (which was amended and restated effective October 29, 2006). Under the terms of the amended and restated shared services agreement. DSW provides several of our subsidiaries with key services relating to information technology services, planning and allocation support, distribution services and outbound transportation management, store design and construction management. The initial term of the shared services agreement expired at the end of fiscal 2007 and was automatically extended to the end of fiscal 2008 by operation of the contract. The agreement provides for automatic extensions for additional one-year terms unless terminated by one of the parties. Retail Ventures and DSW are in the process of negotiating the transfer of the following shared service departments to DSW: Finance; Internal Audit; Tax; Human Resource Information Systems; Risk Management; and Import Services. The companies have taken steps to begin the transfer of employees in these departments to DSW, but the definitive terms and conditions of the transfer and the provision of these departments’ services from DSW to RVI entities have not yet been agreed upon. We believe it is necessary for DSW to provide these services for us under the shared services agreement to facilitate the efficient operation of our business.

The current term of the shared services agreement will expire at the end of fiscal 2008. RVI and DSW are in the process of negotiating the transfer of the following shared service departments to DSW: Finance, Internal Audit, Tax, Human Resource Information Systems and Risk Management. The companies have taken steps to begin the transfer of employees in these departments to DSW, however the definitive terms and conditions of the transfer to DSW and the provision of these departments’ services by DSW to RVI have not yet been agreed upon.

Once the transition periods specified in the shared services agreement have expired and are not renewed, or if DSW 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 a material adverse effect on our business, financial condition, cash flow and results of operations.

We are controlled indirectly by Schottenstein Stores Corporation, whose interests may differ from our other shareholders.

As of February 2, 2008, SSC owned approximately 39.5% of the outstanding RVI Common Shares and beneficially owned approximately 50.2% (assumes issuance of (i) 8,333,333 RVI Common Shares issuable upon the exercise of conversion warrants, (ii) 1,731,460 RVI Common Shares issuable upon the exercise of term loan warrants, and (iii) 342,709 RVI Common Shares issuable upon exercise of term loan warrants) of the outstanding RVI Common Shares. SSC, a privately held corporation, is controlled by Jay L. Schottenstein, the Chairman of our Board of Directors, and members of his immediate family. Given its ownership interests, SSC will be able to control or substantially influence the outcome of all matters submitted to our shareholders for approval, including, the election of directors, mergers or other business combinations, and acquisitions or dispositions of assets. The interests of SSC may differ from or be opposed to the interests of our other shareholders, and its control may have the effect of delaying or preventing a change in control that may be favored by other shareholders.

Some of our directors and officers also serve as directors or officers of DSW, or may have conflicts of interest because they may own DSW Common Shares or options to purchase DSW Common Shares, or they may receive cash-based or equity-based awards based on the performance of DSW.

Some of our directors and officers also serve as directors or officers of DSW or may own DSW Common Shares or options to purchase DSW Common Shares, or they may be entitled to participate in the DSW incentive plans. Jay L. Schottenstein is our Chairman of the Board of Directors and Chairman of the Board of Directors of DSW; Heywood Wilansky is our President and Chief Executive Officer and a director of DSW; Harvey L. Sonnenberg is a director of Retail Ventures and of DSW; Julia A. Davis is our Executive Vice President, General Counsel and Assistant Secretary, and previously served as Executive Vice President, General Counsel and Secretary of DSW until April 10, 2006; Steven E. Miller is Senior Vice President and Controller of both Retail Ventures and DSW; and James A. McGrady is our Executive Vice President, Chief Financial Officer, Treasurer and Secretary and is a Vice President of DSW. DSW’s incentive plans provide cash-based and equity-based compensation to employees based on DSW’s 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 DSW Common Shares or stock options or who participate in the DSW incentive plans are faced with decisions that could have different implications for DSW than they do for us. These potential conflicts of interest may not be resolved in our favor.

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Risk Factors Relating to Our PIES

PIES holders bear the full risk of a decline in the market price of the DSW Class A Common Shares between the pricing date for the PIES and the exchange date.

The number of DSW Class A Common Shares (or, if we elect, the cash value thereof) that the PIES holders will receive upon exchange is not fixed, but instead will depend on the applicable market value, which is the average of the volume weighted average prices of DSW Class A Common Shares during the 20 consecutive trading day period ending on the third trading day immediately preceding the exchange date (or, if exchange is accelerated as a result of a cash merger or an event of default, during the 10 consecutive trading day period ending on the trading day immediately preceding the effective date of the cash merger or the date of acceleration, respectively). The aggregate market value of the DSW Class A Common Shares (or, the cash value thereof) deliverable upon exchange may be less than the principal amount of the PIES. Specifically, if the applicable market value of the DSW Class A Common Shares is less than $27.41, the aggregate market value of the DSW Class A Common Shares deliverable upon exchange will be less than $50.00, and the holders’ investment in the PIES will result in a loss. Accordingly, the PIES holders will bear the full risk of a decline in the market price of the DSW Class A Common Shares. Any such decline could be substantial.

The opportunity for equity appreciation provided by an investment in the PIES is less than that provided by a direct investment in DSW Class A Common Shares.

The aggregate market value of the DSW Class A Common Shares the PIES holders receive on the exchange date (or, if we elect, the cash value thereof) will only exceed the principal amount of the PIES if the applicable market value of the DSW Class A Common Shares exceeds the threshold appreciation price of $34.95, which represents an appreciation of 27.50% over the initial price of $27.41. In this event, the PIES holders would receive on the exchange date 78.43% (which percentage is equal to the initial price of the DSW Class A Common Shares divided by the threshold appreciation price) of the value of the DSW Class A Common Shares that they would have received if they had made a direct investment in DSW Class A Common Shares. In addition, if the market value of DSW Class A Common Shares appreciates and the applicable market value is greater than the initial price but less than the threshold appreciation price, the aggregate market value of the DSW Class A Common Shares deliverable upon exchange would be only equal to the principal amount of the PIES and the PIES holders will realize no equity appreciation of the DSW Class A Common Shares.

The market price of the DSW Class A Common Shares, which may fluctuate significantly, may adversely affect the market price of the PIES.

We expect that generally the market price of DSW Class A Common Shares will affect the market price of the PIES more than any other single factor. The market price of the DSW Class A Common Shares will, in turn, be influenced by the operating results and prospects of DSW, by economic, financial and other factors and by general market conditions, including, among others:

• developments related to DSW;

• quarterly variations in DSW’s actual or anticipated operating results;

• changes by securities analysts in estimates regarding DSW;

• conditions in the retail industry;

• the condition of the stock market;

• general economic conditions; and

• sales of DSW’s Common Shares by its existing shareholders, including Retail Ventures, or holders of rights to purchase DSW Common Shares.

We expect that the market price of the PIES will be influenced by interest and yield rates in the capital markets, the dividend rate, if any, on DSW Class A Common Shares, the time remaining to the maturity of the PIES, our creditworthiness and the occurrence of certain events affecting DSW that do not require an adjustment to the exchange ratio. Fluctuations in interest rates in particular may give rise to arbitrage opportunities based upon changes in the relative value of the PIES and the DSW Class A Common Shares. Any such arbitrage could, in turn, affect the market prices of the PIES and the DSW Class A Common Shares.

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The PIES may adversely affect the market price for DSW Class A Common Shares.

The market price of the DSW Class A Common Shares is likely to be influenced by the PIES. For example, the market price of the DSW Class A Common Shares could become more volatile and could be depressed by (a) investors’ anticipation of the potential resale in the market of a substantial number of additional DSW Class A Common Shares received upon exchange of the PIES, (b) possible sales of DSW Class A Common Shares by investors who view the PIES as a more attractive means of equity participation in DSW than owning DSW Class A Common Shares and (c) hedging or arbitrage trading activity that may develop involving the PIES and DSW Class A Common Shares.

The adjustments to the exchange ratio do not cover all the events that could adversely affect the market price of the DSW Class A Common Shares.

The number of DSW Class A Common Shares that the PIES holders are entitled to receive on the exchange date (or, if we elect, the cash value thereof) is subject to adjustment for certain stock splits, stock combinations, stock dividends and certain other actions by DSW that modify its capital structure. However, other events, such as offerings by DSW of DSW Class A Common Shares for cash or in connection with acquisitions, which may adversely affect the market price of DSW Class A Common Shares, may not result in an adjustment. If any of these other events adversely affects the market price of DSW Class A Common Shares, it may also adversely affect the market price of the PIES.

PIES holders have no rights with respect to DSW Class A Common Shares, but may be negatively affected by some changes made with respect to DSW Class A Common Shares.

Until the PIES holders acquire DSW Class A Common Shares upon exchange of the PIES, they have no rights with respect to the DSW Class A Common Shares (including, without limitation, voting rights, rights to respond to tender offers or rights to receive any dividends or other distributions on the DSW Class A Common Shares, if any (other than through an exchange adjustment)) prior to the exchange date, but their investment may be negatively affected by these events. PIES holders will be entitled to rights with respect to the DSW Class A Common Shares only after we deliver the DSW Class A Common Shares on the exchange date and only if the applicable record date, if any, for the exercise of a particular right occurs after the date the holders receive the shares. For example, in the event that an amendment is proposed to the amended articles of incorporation or the amended and restated regulations of DSW requiring shareholder approval and the record date for determining the shareholders of record entitled to vote on the amendment occurs prior to delivery of the DSW Class A Common Shares, PIES holders will not be entitled to vote on the amendment, although they will nevertheless be subject to any changes in the powers, preferences or special rights of the DSW Class A Common Shares. If we elect to deliver only cash upon the exchange of the PIES, the holders will never be able to exercise any rights with respect to the DSW Class A Common Shares.

Our obligations under the PIES are effectively junior to our other existing and future secured debt to the extent of the value of the assets securing that debt and effectively subordinate to the debt and other liabilities of our subsidiaries.

The PIES are effectively junior to our other existing and future secured debt to the extent of the value of the assets securing that debt, and effectively subordinate to the debt and other liabilities, including trade payables and preferred stock, if any, of our subsidiaries. A substantial part of our operations is conducted through our subsidiaries. Certain of our subsidiaries, including Filene’s Basement, but not DSW or its subsidiaries, are borrowers and/or guarantors under our loan agreements, including the Filene’s Basement Revolving Loan (as defined herein). The obligations under the Filene’s Basement Revolving Loan are secured by a lien on substantially all the personal property of Filene’s Basement, and of Retail Ventures and its other wholly-owned subsidiaries, excluding the common shares of DSW owned by Retail Ventures. The obligations under the Filene’s Basement Revolving Loan are also secured by leasehold interests on certain of the leasehold properties of Filene’s Basement. The DSW Revolving Loan (as defined herein), is secured by substantially all the assets of DSW and DSWSW, including a pledge by DSW of the stock of DSWSW. Our intercompany note was secured by the capital stock of DSW and Filene’s Basement held by Retail Ventures. Upon completion of the PIES offering, the lien on the capital stock of DSW and Filene’s Basement that secured the intercompany note, as well as the lien on the capital stock of DSW that secured the Non-Convertible Loan (as defined herein), were released and the approximately $49.7 million remaining balance of the intercompany note was repaid. In addition, we made a payment of approximately $36.5 million on the VCDS Revolving Loan. We pledged sufficient DSW Common Shares to the collateral agent for the PIES to enable us to satisfy our obligations to deliver DSW Class A Common Shares upon exchange of the PIES, and sufficient DSW Common Shares will continue to be subject to liens and/or contractual obligations to enable us to satisfy our obligations to the warrantholders to deliver DSW Class A Common Shares upon exercise of the warrants. In addition, claims of unsecured creditors of such subsidiaries, including trade creditors, and claims of preferred shareholders, if any, of such subsidiaries will have priority with respect to the assets and earnings of such subsidiaries over the claims of creditors of Retail Ventures, including holders of the PIES. The PIES, therefore, are effectively subordinated to creditors, including trade creditors, and preferred shareholders, if any, of our subsidiaries.

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The Filene’s Basement Revolving Loan requires that we obtain the prior consent of our senior lenders before making any payments of cash or other property with respect to the PIES, other than coupon payments, if these payments come from any source other than the collateral pledged with the collateral agent for the PIES. Accordingly, we would need to obtain the consent of our senior lenders to exercise our cash settlement option under the PIES or, in the event of a cash merger, to pay the present value of all future coupon payments, or, in the event of an acceleration, to pay the yield maintenance premium. We cannot provide any assurances that our senior lenders will provide any such consent.

The tax consequences of an investment in the PIES are uncertain.

Investors should consider the tax consequences of investing in the PIES. No statutory, judicial or administrative authority directly addresses the characterization of the PIES or instruments similar to the PIES for United States federal income tax purposes. As a result, significant aspects of the United States federal income tax consequences of an investment in the PIES are not certain. We are not requesting any ruling from the Internal Revenue Service with respect to the PIES and cannot assure PIES holders that the Internal Revenue Service will agree with the anticipated treatment. We intend to treat, and by purchasing a PIES, for all purposes PIES holders agree to treat, a PIES as a variable prepaid forward contract rather than as a debt instrument. We intend to report the coupon payments as ordinary income to PIES holders, but holders should consult their own tax advisor concerning the alternative characterizations.

Holders of the PIES are urged to consult their own tax advisor regarding all aspects of the United States federal income tax consequences of investing in the PIES, as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Settling the PIES with DSW Class A Common Shares may result in a material amount of taxable income to Retail Ventures.

If we settle the PIES with DSW Class A Common Shares, it may result in a material amount of taxable income to Retail Ventures. We believe that this will not result in a material amount of cash taxes payable by Retail Ventures; however, there can be no assurance that the settlement of the PIES would not result in a material amount of cash taxes payable by Retail Ventures.

In the event of our bankruptcy, the principal amount of the PIES would not represent a debt claim against us.

Certain events of bankruptcy, insolvency or reorganization relating to us or our significant subsidiaries (including, as to the date hereof, DSW) constitute automatic acceleration events that lead to the PIES becoming immediately due for exchange into DSW Class A Common Shares. In such event, although the accrued and unpaid coupons and yield maintenance premium would be due and payable in cash, the principal amount of the PIES would not represent a debt claim against us. In addition, while the delivery of DSW Class A Common Shares and cash in payment of the accrued and unpaid coupons and yield maintenance premium will occur, to the extent permitted by law, as soon as practicable, there may be a delay.

DSW has no obligations with respect to the PIES and does not have to consider PIES holders’ interests for any reason.

DSW has no obligations with respect to the PIES. Accordingly, DSW is not under any obligation to take the PIES holders’ interests or Retail Ventures’ interests with respect to the PIES into consideration for any reason. DSW did not receive any of the proceeds of the PIES offering and did not participate in the determination of the quantities or prices of the PIES or the determination or calculation of the number of shares (or, if Retail Ventures elects, the cash value thereof) that the PIES holders will receive at maturity. DSW is not involved with the administration or trading of the PIES.

PIES holders should carefully consider the risk factors relating to DSW.

Holders of the PIES should carefully consider the information contained under the heading “Risk Factors” in the DSW prospectus relating to the PIES offering as well as factors disclosed under the caption “Risk Factors” in DSW’s 2008 Annual Report on Form 10-K and other periodic reports. The DSW prospectus and periodic reports do not constitute a part of this Annual Report on Form 10-K, nor are they incorporated into any of RVI’s periodic reports by reference.

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In the event that we or certain of our subsidiaries commence any proceeding seeking liquidation, reorganization or similar relief under any bankruptcy law, we may suffer material adverse effects on our business as a result of the acceleration of our obligations under the PIES.

Certain events of bankruptcy, insolvency or reorganization relating to us or our significant subsidiaries constitute automatic acceleration events that lead to the PIES becoming immediately due for exchange into DSW Class A Common Shares. For example, if a significant subsidiary commences a proceeding seeking liquidation, reorganization or similar relief under any bankruptcy law, our obligations under the PIES will automatically accelerate. In such event, in addition to the PIES becoming due for exchange, the accrued and unpaid coupons and yield maintenance premium would also be due and payable in cash or, at our election, additional DSW Class A Common Shares. The number of DSW Class A Common Shares deliverable to holders, in respect of the principal amount of the PIES and, if we were to so elect, the accrued and unpaid coupons and yield maintenance premium, would be calculated based on the then-current market prices of the DSW Class A Common Shares. At the market price of DSW Class A Common Shares as of the date hereof, the maximum number of DSW Class A Common Shares deliverable under the indenture in exchange for PIES would be deliverable. Upon any acceleration of our obligations under the PIES, we would lose the opportunity to benefit from any appreciation in the value of such shares, both as any such appreciation may have benefited the Company under the formula for calculation of the PIES exchange ratio and otherwise.

ITEM 1B. UNRESOLVED STAFF COMMENTS. None.

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ITEM 2. PROPERTIES.

Set forth in the following table are the locations of stores we operated as of February 2, 2008:

			Filene’s
	DSW		Basement		Total
Alabama		2				2
Arizona		5				5
California		25				25
Colorado		6				6
Connecticut		3				3
Delaware		1				1
Florida		18				18
Georgia		9		1		10
Illinois		14		4		18
Indiana		6				6
Iowa		1				1
Kansas		2				2
Kentucky		2				2
Louisiana		1				1
Maine		1				1
Maryland		8		5		13
Massachusetts		11		8		19
Michigan		12				12
Minnesota		8				8
Missouri		4				4
Nebraska		2				2
Nevada		3				3
New Hampshire		1				1
New Jersey		8		3		11
New York		18		7		25
North Carolina		4				4
Ohio		12		2		14
Oklahoma		2				2
Oregon		2				2
Pennsylvania		14		2		16
Rhode Island		1				1
Tennessee		4				4
Texas		28				28
Utah		2				2
Virginia		12		1		13
Washington		3				3
Washington D.C.				3		3
Wisconsin		4				4
		259		36		295

We maintain buying offices in Columbus, Ohio and Burlington, Massachusetts, a suburb of Boston. Our principal RVI executive offices are located in a building in Columbus, Ohio now subleased from Value City. DSW’s principal executive offices are also located next to the site of its main warehouse and distribution facility in Columbus, Ohio.

We operate one warehouse/distribution facility located in Columbus, Ohio and one distribution facility in Auburn, Massachusetts. In fiscal 2007, DSW signed a lease for a fulfillment center which will process orders from DSW’s e-commerce channel. In January 2007, DSW implemented a distribution center bypass process which has improved speed-to-market for initial deliveries to stores on the West Coast. As part of this process, DSW has engaged a third party logistics service provider to receive orders originating from suppliers on the West Coast or imports entering the United States at a West Coast port of entry. These initial shipments are then shipped by this service provider to DSW’s pool points and onwards to the stores bypassing DSW’s primary Columbus distribution center facility. In addition, to expedite the flow of merchandise to certain clusters of stores, we use third party processors and utilize vendor direct shipments where such use is advantageous. Our warehouse and distribution facilities for the DSW and Filene’s

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Basement businesses are adequate for our current needs and we believe that such facilities, with certain modifications and additional equipment, will be adequate for our foreseeable future demands. Filene’s Basement plans to invest capital dollars in the 2008 fiscal year to further improve its existing facilities.

The stores and all of the warehouse and distribution, buying and executive office facilities are leased or subleased. The Company has several leasing agreements with SSC and affiliates of SSC. The Company leases or subleases from SSC or its affiliates 22 store locations, four warehouse facilities, one office space and a parcel of land. The remaining stores and warehouses are leased from unrelated entities. Most of the store leases provide for an annual rent based upon a percentage of gross sales, with a specified minimum rent.

ITEM 3. LEGAL PROCEEDINGS.

As previously reported, on March 8, 2005, Retail Ventures announced that it had learned of the theft of credit card and other purchase information from a portion of DSW’s customers. On April 18, 2005, Retail Ventures issued the findings from its investigation into the theft. The theft covered transaction information involving approximately 1.4 million credit cards and data from transactions involving approximately 96,000 checks.

DSW and Retail Ventures contacted and cooperated with law enforcement and other authorities with regard to this matter. DSW is involved in a putative class action lawsuit which seeks unspecified monetary damages, credit monitoring and other relief. The lawsuit seeks to certify a class of consumers that is limited geographically to consumers who made purchases at certain stores in Ohio.

There can be no assurance that there will not be additional proceedings or claims brought against DSW in the future. DSW has contested and will continue to vigorously contest the claims made against DSW and will continue to explore its defenses and possible claims against others.

DSW estimated 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 million. Because of many factors, including the possible settlement of claims 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. 5, Accounting for Contingencies, the Company 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 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 to DSW’s results of operations or financial condition. As of February 2, 2008, the balance of the associated accrual for potential exposure was $0.5 million.

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 of the 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 most likely estimated liability related to the claim. In the opinion of management, the amount of any potential liability with respect to these proceedings will not be material to the Company’s results of operations or financial condition. As additional information becomes available, the Company will assess the potential liability related to its pending litigation and revise the estimates as needed. Revisions in its estimates and potential liability could materially impact the Company’s results of operations and financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common shares are listed for trading under the ticker symbol “RVI” on the New York Stock Exchange. The following table sets forth the high and low sales prices of our common shares as reported on the NYSE Composite Tape during the periods indicated. As of March 31, 2008, there were 938 holders of record of our common shares.

	High		Low
Fiscal 2006:
First Quarter	$	16.60	$	12.35
Second Quarter		18.00		14.31
Third Quarter		17.50		13.61
Fourth Quarter		20.47		15.29
Fiscal 2007:
First Quarter	$	23.30	$	19.12
Second Quarter		21.00		11.97
Third Quarter		13.64		7.87
Fourth Quarter		8.49		3.91
Fiscal 2008:
First Quarter (through March 31, 2008)	$	7.46	$	4.59

Retail Ventures made no purchases of its common shares during the fourth quarter of the 2007 fiscal year.

We have paid no cash dividends in the two most recent fiscal years and we do not anticipate paying cash dividends on our common shares during fiscal 2008. Presently we expect that all of our future earnings will be retained for development of our businesses. The payment of any future dividends will be at the discretion of our Board of Directors and will depend upon, among other things, future earnings, operations, capital requirements, our general financial condition and general business conditions. Each of the Company’s credit facilities restricts the payment of dividends by the Company or any affiliate of the borrower or guarantor, other than dividends paid in stock of the issuer or paid to another affiliate, and cash dividends can only be paid to the Company by its subsidiaries up to the aggregate amount of $5.0 million less the amount of any loans made to the Company by any subsidiaries. The Company’s credit facilities are more fully explained within the “Liquidity and Capital Resources” discussion in Item 7 on page 32 of this Annual Report on Form 10-K.

PERFORMANCE GRAPH

 

The following graph compares the performance of the Company with that of the Standard & Poor’s General Merchandise Stores Index and the Russell 2000 Index, both of which are published indexes. This comparison includes the period beginning February 1, 2003 through February 2, 2008.

The Standard & Poor’s General Merchandise Stores Index is published weekly in the Standard & Poor’s Statistical Service and the index value preceding each fiscal year end has been selected for purposes of this comparison. The Russell 2000 Index is a capitalization-weighted index of domestic equity securities traded on the New York and American Stock Exchanges and the NASDAQ that measures the performance of the 2,000 smallest companies in the Russell 3000 Index.
 

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The comparison of the cumulative total returns for each investment assumes that $100 was invested on February 1, 2003, and that all dividends earned on such investment were reinvested.

Company / Index	01-Feb-03		31-Jan-04		29-Jan-05		28-Jan-06		03-Feb-07		02-Feb-08
RETAIL VENTURES, INC.	$	100.00	$	307.18	$	338.97	$	652.82	$	1,035.38	$	364.10
RUSSELL 2000	$	100.00	$	158.03	$	168.69	$	203.89	$	228.06	$	208.33
S&P GENERAL MERCHANDISE STORES	$	100.00	$	138.16	$	164.71	$	171.91	$	202.22	$	183.70

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ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth for the periods indicated various selected financial information. Such selected consolidated financial data should be read in conjunction with the consolidated financial statements of Retail Ventures, including the notes thereto, set forth in Item 8 of this Annual Report on Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in Item 7 of this Annual Report on Form 10-K. As a result of RVI’s disposition of an 81% ownership interest in its Value City business during fiscal 2007, the results of the Value City operations are included in discontinued operations.

	For the Fiscal Year Ended (1)
	February 2,			February 3,			January 28,			January 29,			January 31,
	2008			2007			2006			2005			2004
	(dollars in thousands, except per share amounts and net sales per selling square foot)
Net sales	$	1,871,904		$	1,706,533		$	1,533,396		$	1,305,015		$	1,085,531
Operating profit before change in fair value of derivative instruments (2)	$	63,473		$	99,489		$	59,385		$	32,194		$	12,522
Change in fair value of derivative instruments	$	248,193		$	(175,955	)	$	(144,209	)
Operating profit (loss)	$	311,666		$	(76,466	)	$	(84,824	)	$	32,194		$	12,522
Income (loss) from continuing operations	$	202,104		$	(128,642	)	$	(127,103	)	$	18,992		$	(148	)
Loss from discontinued operations	$	(150,662	)	$	(22,271	)	$	(56,315	)	$	(38,440	)	$	(5,071	)
Net income (loss)	$	51,442		$	(150,913	)	$	(183,418	)	$	(19,448	)	$	(5,219	)
Basic earnings (loss) per share from continuing operations	$	4.20		$	(2.85	)	$	(3.29	)	$	0.56		$	0.00
Diluted earnings (loss) per share from continuing operations	$	3.56		$	(2.85	)	$	(3.29	)	$	0.44		$	0.00
Basic loss per share from discontinued operations	$	(3.13	)	$	(0.49	)	$	(1.46	)	$	(1.13	)	$	(0.15	)
Diluted loss per share from discontinued operations	$	(2.65	)	$	(0.49	)	$	(1.46	)	$	(0.63	)	$	(0.15	)
Basic earnings (loss) per share	$	1.07		$	(3.35	)	$	(4.75	)	$	(0.57	)	$	(0.15	)
Diluted earnings (loss) per share	$	0.91		$	(3.35	)	$	(4.75	)	$	(0.28	)	$	(0.15	)
Total assets	$	951,965		$	1,301,658		$	1,175,154		$	1,270,227		$	1,055,096
Working capital	$	295,862		$	274,439		$	147,746		$	179,767		$	102,541
Current ratio		1.98			1.45			1.25			1.43			1.26
Long-term obligations	$	157,793		$	168,053		$	79,678		$	70,001		$	55,000
Number of:(3)
DSW Stores		259			223			199			172			142
Filene’s Basement Stores		36			31			27			26			21
Net sales per selling sq. ft. (4)	$	235.34		$	270.31		$	271.57		$	266.28		$	260.88
Comparable store sales change (5)		0.3	%		2.7	%		4.9	%		4.9	%		4.6	%

(1)	Fiscal year ended February 3, 2007 consists of 53 weeks. All other years reported consist of 52 weeks.
(2)	The Company believes that the non-cash change in fair value of derivative instruments is not directly related to its retail operations and is therefore providing supplemental adjusted results that exclude this item. This financial measure should facilitate analysis by investors and others who follow the Company’s financial performance.
(3)	Includes all stores operating at the end of the fiscal year.
(4)	Presented in whole dollars and excludes leased departments and stores not operated during the entire fiscal period.
(5)	A store or leased department is considered to be comparable if it has been opened 14 months at the beginning of the fiscal year.

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

This management’s discussion and analysis of financial condition and results of operations (“Management’s Discussion and Analysis”) contains forward-looking statements that involve risks and uncertainties. Please see “Cautionary Statement Regarding Forward-Looking Information for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995” on page 4 of this Annual Report on Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements. You should read the following discussion in conjunction with our historical consolidated financial statements and the notes thereto appearing elsewhere in this Annual Report on Form 10-K. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those listed under “Risk Factors” and included elsewhere in this Annual Report on Form 10-K.

OVERVIEW

Retail Ventures is a holding company with three operating segments: Filene’s Basement, DSW and Corporate. DSW is a United States specialty branded footwear retailer operating 259 shoe stores in 37 states as of February 2, 2008. DSW offers a large selection of better-branded merchandise. DSW’s typical customers are brand-, quality- and style-conscious shoppers who have a passion for footwear and accessories. Filene’s Basement stores are located primarily in major metropolitan areas in the northeast and midwest United States. Filene’s Basement’s mission is to provide the best selection of stylish, high-end designer and famous brand name merchandise at surprisingly affordable prices in men’s and women’s apparel, jewelry, shoes, accessories and home goods. As of February 2, 2008, there were 36 Filene’s Basement stores in operation. The Corporate segment consists of all corporate assets, liabilities and expenses that are not allocated to the other segments.

On July 5, 2005, DSW completed an initial public offering (“IPO”) of 16,171,875 Class A Common Shares sold at a price to the public of $19.00 per share and raising net proceeds of $285.8 million, net of the underwriters’ commission and before expenses of approximately $7.8 million. As of February 2, 2008, Retail Ventures owned Class B Common Shares of DSW representing approximately 63.0% of DSW’s outstanding Common Shares and approximately 93.2% of the combined voting power of such shares. DSW is a controlled subsidiary of Retail Ventures and its Class A Common Shares are traded on the New York Stock Exchange under the symbol “DSW.” Retail Ventures accounted for the sale of DSW as a capital transaction. Associated with this transaction, a deferred tax liability of $65.5 million was recorded.

On January 23, 2008, Retail Ventures disposed of an 81% ownership interest in its Value City Department Stores business to VCHI Acquisition Co., a newly formed entity owned by VCDS Acquisition Holdings, LLC, Emerald Capital Management LLC and Crystal Value, LLC. Retail Ventures received no net cash proceeds from the sale, paid a fee of $500,000 to the purchaser, and recognized an after-tax loss of $90.0 million on the transaction. As part of the transaction, Retail Ventures issued warrants to VCHI Acquisition Co. to purchase 150,000 RVI Common Shares, at an exercise price of $10.00 per share, and exercisable within 18 months of January 23, 2008. To facilitate the change in ownership and operation of Value City Department Stores, Retail Ventures agreed to provide or arrange for the provision of certain transition services principally related to information technology, finance and human resources to Value City Department Stores for a period of one year unless otherwise extended by both parties.

Following the disposition of Value City certain corporate services employees that provided shared services were hired by Value City and certain other corporate service positions were eliminated. RVI and DSW are in the process of finalizing the transfer of the following shared service departments to DSW:  Finance; Internal Audit; Tax; Human Resource Information Systems; and Risk Management.  The companies have initiated steps regarding the transfer of employees in these departments to DSW. The definitive terms and conditions of the transfer have not yet been agreed upon.   The allocation of shared service expenses will have an increased expense impact on DSW and Filene’s Basement.

We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from year to year and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. The discussion also provides information about the financial results of the various segments of our business to provide a better understanding of how those segments and their results affect the financial condition and results of operations of the Company as a whole. This discussion should be read in conjunction with our financial statements and accompanying notes included in this Annual Report on Form 10-K.

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Key Financial Measures

In evaluating the results of operations, our management refers to a number of key financial and non-financial measures relating to the performance of our business segments. Among our key financial measures are net sales, operating profit, and net income. Non-financial measures that we use in evaluating our performance include number of stores, leased operations, net sales per average gross square foot for our stores and change in comparable store sales. Comparable store sales is a measure which indicates the performance of our existing stores by measuring the growth in sales for such stores for a particular period over the corresponding period in the prior year. For fiscal 2007 and prior years, we considered comparable store sales to be sales at stores that were open 14 months as of the prior fiscal year end. Comparable store sales are also referred to as “comp-store” sales by others within the retail industry. The method of calculating comparable store sales varies across the retail industry. As a result, our calculation of comparable store sales may not necessarily be comparable to similarly titled measures reported by other companies.

The Company’s revenues are generated through sales from existing stores and through sales from new stores. In fiscal 2007, DSW opened 37 new stores and closed one store, and Filene’s Basement opened seven new stores and closed two stores. For fiscal 2008, Filene’s Basement plans to open at least one new store and DSW plans to open at least 30 additional stores. During fiscal 2007, Filene’s Basement ceased operations in two stores temporarily due to remodeling, one of which reopened in fiscal 2007 while the other is not expected to reopen until fiscal 2009.

CRITICAL ACCOUNTING POLICIES

Management’s Discussion and Analysis discusses the results of operations and financial condition as reflected in our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles, or GAAP. As discussed in Note 1 to our consolidated financial statements, the preparation of financial statements in conformity with generally accepted accounting principles 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 expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including, but not limited to, those related to inventory valuation, depreciation, amortization, recoverability of long-lived assets including intangible assets, the calculation of retirement benefits, estimates for self insurance reserves for health and welfare, workers’ compensation and casualty insurance, income taxes, contingencies and litigation. Management bases its estimates and judgments on its historical experience and other relevant factors, 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.

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 financial 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 the financial statements.

We believe the following represent the most critical estimates and assumptions, among others, used in the preparation of our consolidated financial statements. We have discussed the selection, application and disclosure of the critical accounting policies with our Audit Committee.

• Revenue recognition. Revenues from merchandise sales are recognized at the point of sale, net of returns and exclude sales tax. Revenue from gift cards is deferred and the revenue is recognized upon redemption of the gift card. Our policy is to recognize income from breakage of gift cards when the likelihood of redemption of the gift card is remote. In the fourth quarter of fiscal 2007, we determined that we had accumulated enough historical data to recognize income from gift card breakage. We recognized $0.4 million as miscellaneous income from gift card breakage in fiscal 2007. Prior to the fourth quarter of fiscal 2007, we had not recognized any income from gift card breakage.

• Cost of sales and merchandise inventories. We use the retail method of accounting for substantially all of our merchandise inventories. Merchandise inventories are stated at the realizable value, 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 margins 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

33

	markdowns. Accordingly, earnings are negatively impacted as merchandise is marked down prior to sale. Reserves to value inventory at its realizable value were $31.8 million and $25.0 million at the end of fiscal 2007 and 2006, respectively.
	Inherent in the calculation of inventories are certain significant management judgments and estimates, including setting the original merchandise retail value (known as markon), markups of initial prices established, reduction of pricing due to customers’ perceived value (known as markdowns) and estimates of losses between physical inventory counts or shrinkage, which, combined with the averaging process within the retail method, can significantly impact the ending inventory valuation at cost, and the resulting gross margins.
•	Investments. Investments, which include demand notes and auction rate securities, are classified as available-for-sale securities. These demand notes and auction rate securities are recorded at cost, which approximates fair value due to their variable interest rates, which typically reset every 3 to 189 days. All income generated from these investments is recorded as interest income.
	DSW records an investment impairment charge at the point it is believed an investment has experienced a decline in value that is other-than-temporary. In determining whether an impairment has occurred, DSW reviews information about the underlying investment that is publicly available and assesses its ability to hold the securities for the foreseeable future. The investment is written down to its current market value at the time the impairment is deemed to have occurred. Any other-than-temporary impairment charge could materially affect DSW’s results of operations.
	As of February 2, 2008 and February 3, 2007, DSW held $70.0 million and $98.7 million, respectively, in short-term investments. As of February 2, 2008, DSW held $12.5 million in long-term investments and held no long-term investments as of February 3, 2007. DSW’s long-term investment balance includes $10.0 million in auction rate securities that failed at auction after February 2, 2008 and were presented as long-term as it is unknown if DSW will be able to liquidate these securities within one year.
•	Asset impairment and long-lived assets. 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 amount of the asset exceeds the expected future cash flows from the asset. Our reviews are conducted at the lowest identifiable level which includes a store. The impairment loss recognized is the excess of the carrying value of the asset over its fair value, based on discounted future cash flows. Should an impairment loss be realized, it will be included in operating expenses. Assets acquired for stores that have been previously impaired are not capitalized when acquired if the store’s expected future cash flow remains negative. During fiscal 2007, 2006 and 2005, we recorded impairment losses of $5.6 million, $0.8 million, and $0.5 million, respectively, related to long-lived assets at store operating units. We believe at this time that the carrying values and useful lives of long-lived assets continue to be appropriate. To the extent these future projections or our strategies change, the conclusion regarding impairment may differ from our current estimates.
•	Store closing reserve. During the 2007 fiscal year, the Company recorded charges associated with the closing of one DSW and two Filene’s Basement stores. During the 2006 fiscal year, the Company recorded charges associated with the closing of five DSW stores. The operating lease at one of the five stores was terminated through the exercise of a lease kick-out option. During the first quarter of 2006, the Company closed one Filene’s Basement store for which closing costs were accrued during the fourth quarter of fiscal 2005. These reserves are monitored on at least a quarterly basis for changes in circumstances. The store closing reserves were $0.4 million and $0.1 million at the end of fiscal 2007 and 2006, respectively.
•	Self-insurance reserves. We record estimates for certain health and welfare, workers’ compensation and casualty insurance costs that are self-insured programs. Self insurance reserves include actuarial estimates of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet reported. Our liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. Health and welfare estimates are calculated utilizing claims development estimates based on historical experience and other factors. Workers’ compensation and general liability estimates are calculated, utilizing claims development estimates based on historical experience and other factors. We have purchased stop loss insurance to limit our exposure to any significant exposure on a per person basis for health and welfare and on a per claim basis for workers’ compensation and casualty insurance. Although we do not anticipate the amounts ultimately paid will differ significantly from our estimates, self-insurance reserves could be affected if future claims experience differs significantly from the historical trends and the actuarial assumptions. For example, for workers’ compensation and general liability estimates, a 1% increase or decrease to the assumptions for claims costs and loss development factors would increase or decrease our self-insurance by less than $0.1 million. The self-insurance reserves were $3.0 million and $3.6 million at the end of fiscal 2007 and 2006, respectively. The decrease in self-insurance reserves was principally associated with the decrease in general liability.

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•	Pension. The obligations and related assets of defined benefit retirement plans are presented in Note 8 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. Plan assets, which consist primarily of marketable equity and debt instruments, are valued using market quotations. Plan obligations and the annual pension expense are determined by independent actuaries and through the use of a number of assumptions. Key assumptions in measuring the plan obligations include the discount rate and the estimated future return on plan assets. In determining the discount rate, we utilize the yield on fixed-income investments currently available with maturities corresponding to the anticipated timing of the benefit payments. Asset returns are based upon the anticipated average rate of earnings expected on the invested funds of the plans. At both February 3, 2007 and February 2, 2008, the weighted-average actuarial assumptions applied to our plan were a discount rate of 6.0% and long-term rate of return on plan assets of 8.0%. To the extent actual results vary from assumptions, earnings would be impacted.
•	Customer loyalty program. DSW maintains a customer loyalty program for the DSW stores in which program members receive a discount on future purchases. Upon reaching the target-earned threshold, members receive certificates for these discounts which must be redeemed within six months. During the third quarter of fiscal 2006 DSW re-launched its loyalty program, which included changing the name from “Reward Your Style” to “DSW Rewards”, the points threshold to receive a certificate and the certificate amounts. The changes were designed to improve customer awareness, customer loyalty and DSW’s ability to communicate with its customers. DSW accrues the anticipated redemptions of the discount earned at the time of the initial purchase. To estimate these costs, DSW is required to make assumptions related to customer purchase levels and redemption rates based on historical experience. The accrued liability as of February 2, 2008 and February 3, 2007 was $6.4 million and $5.0 million, respectively.
•	Change in fair value of derivative instruments. In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, the Company recognizes all derivatives on the balance sheet at fair value. For derivatives that are not designated as hedges under SFAS No. 133, changes in the fair values are recognized in earnings in the period of change. The Company uses the Black-Scholes Pricing Model to calculate the fair value of derivative instruments.
	For the fiscal years ended February 2, 2008 and February 3, 2007, the Company recorded a benefit of $154.6 million and a charge of $124.8 million, respectively, related to the change in fair value of warrants. For the fiscal years ended February 2, 2008 and February 3, 2007, the Company recorded a reduction of expenses of $93.6 million and a charge of $51.1 million, respectively, related to the change in the fair value of the conversion feature of the PIES.
•	Income taxes. 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 in which we do business. 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 our management had made these determinations on a different basis, our tax expense, assets and liabilities could be different. During fiscal 2007, we established an additional valuation reserve of $84.9 million for deferred tax assets. During fiscal 2006, we established an additional valuation reserve of $2.2 million for deferred tax assets. During fiscal 2005, we established an additional valuation reserve of $14.4 million for state net operating loss carry forwards and wrote off $4.0 million of deferred tax assets no longer deductible as a result of changes in state income tax laws in Ohio.
	Following the completion of the DSW IPO in June 2005, DSW is no longer included in Retail Ventures’ consolidated federal tax return. Following the disposition of an 81% ownership interest in the Value City operations during January 2008, Value City is no longer included in Retail Ventures’ consolidated federal tax return.

RESULTS OF OPERATIONS

We operate three business segments. Our Filene’s Basement segment operates full-line, off-price junior department stores. Our DSW segment is a specialty branded footwear retailer. As of February 2, 2008, a total 36 Filene’s Basement and 259 DSW stores were open. The Corporate segment consists of all corporate assets, liabilities and expenses not allocated to the other segments through corporate allocation or shared service arrangements. As a result of RVI’s disposition of an 81% ownership interest in its Value City operations during fiscal 2007, the results of the Value City Operations are included in discontinued operations.

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Seasonality

Our business is affected by the pattern of seasonality common to most retail businesses. Historically, the majority of our sales and operating profit have been generated during the early fall and winter holiday selling seasons for our Filene’s Basement segment. DSW net sales have typically been higher in spring and early fall, when DSW’s customers’ interest in new seasonal styles increases.

Fiscal Year

We follow a 52/53-week fiscal year that ends on the Saturday nearest to January 31. Fiscal years 2007 and 2005 consisted of 52 weeks. Fiscal year 2006 consisted of 53 weeks. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years.

The following table sets forth, for the periods indicated, the percentage relationships to net sales of the listed items included in our Consolidated Statements of Operations.

	Fifty-two			Fifty-three			Fifty-two
	Weeks			Weeks			Weeks
	Ended			Ended			Ended
	February 2,			February 3,			January 28,
	2008			2007			2006
Net sales		100.0	%		100.0	%		100.0	%
Cost of sales		(59.9	)		(58.5	)		(59.7	)
Gross profit		40.1			41.5			40.3
Selling, general and administrative expenses		(37.1	)		(36.0	)		(36.6	)
Change in fair value of derivative instruments		13.3			(10.3	)		(9.4	)
License fees and other income		0.3			0.3			0.2
Operating profit (loss)		16.6			(4.5	)		(5.5	)
Interest expense		(0.7	)		(0.5	)		(0.8	)
Interest income		0.6			0.4			0.0
Interest expense, net		(0.1	)		(0.1	)		(0.8	)
Income (loss) from continuing operations before income taxes and minority interest		16.5			(4.6	)		(6.3	)
Income tax expense		(4.6	)		(1.5	)		(1.5	)
Income (loss) from continuing operations before minority interest		11.9			(6.1	)		(7.8	)
Minority interest		(1.1	)		(1.4	)		(0.5	)
Net income (loss) from continuing operations		10.8	%		(7.5	)%		(8.3	)%

Fiscal Year Ended February 2, 2008 (“fiscal 2007”) Compared To Fiscal Year Ended February 3, 2007 (“fiscal 2006”)

Sales. Sales for fiscal 2007 increased by 9.7% to $1.87 billion from $1.71 billion for fiscal 2006. By operating segment, comparable store sales were:

	2007			2006
DSW		(0.8	)%		2.5	%
Filene’s Basement		3.6	%		3.1	%
Total		0.3	%		2.7	%

DSW net sales increase includes the impact of a net increase of 36 new DSW stores, 12 non-affiliated leased departments and six Filene’s Basement leased departments during fiscal 2007. Leased department sales comprised 12.5% of total net sales in fiscal 2007, compared to 10.2% in fiscal 2006. As compared to fiscal 2006, DSW stores that were new in fiscal 2007 added $66.3 million in sales, which was partially offset by a decrease in sales of $17.1 million from DSW stores that closed in fiscal 2006 and 2007. As compared to fiscal 2006, leased departments that were new in fiscal 2006, primarily the Stein Mart leased departments opened in January 2007, added $44.3 million in sales. Increases in other store classes were offset by decreases due to the impact of the 53^rd week as compared to fiscal 2006. DSW comparable store sales in fiscal 2007 decreased 0.8%, or $8.9 million, compared to the previous fiscal year.

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Compared with fiscal 2006, DSW comparable store sales for fiscal 2007 decreased in women’s and men’s by 1.0% and 2.1%, respectively, while increasing in athletic and accessories by 1.0% and 4.3%, respectively.

Filene’s Basement net sales for the fifty-two weeks ended February 2, 2008 increased 9.1%, or $38.8 million, to $466.3 million from $427.5 million in the fifty-three weeks ended February 3, 2007. The increase in net sales is primarily due to the comparable store sales increase of 3.6%, and a net increase of five stores over the prior year’s period. As compared to fiscal 2006, stores that were new in fiscal 2007 added $35.6 million in sales, which was partially offset by a decrease in sales of $24.1 million from stores that closed in fiscal 2007. The merchandise categories of men’s, women’s and accessories had comparable sale increases of 6.5%, 0.8%, and 12.4%, respectively. The merchandise categories of home and jewelry had comparable sale decreases of 1.6% and 5.8%, respectively.

Gross Profit. Total gross profit increased $42.1 million, or 5.9%, from $708.9 million to $751.0 million. Gross profit, as a percentage of sales, decreased to 40.1% compared to 41.5% for the prior year’s period. The decrease in the overall margin rate is attributable to the decreases in gross profit at the DSW and Filene’s Basement segments.

Gross profit, as a percent of sales by segment, was:

	2007			2006
DSW		41.5	%		43.1	%
Filene’s Basement		35.9	%		37.0	%
Total		40.1	%		41.5	%

DSW gross profit increased $33.1 million to $583.8 million in fiscal 2007 from $550.7 million in 2006, and decreased as a percentage of net sales from 43.1% in fiscal 2006 to 41.5% in fiscal 2007. The increase of approximately $33.1 million in gross profit is primarily attributable to the overall increase in sales. The decrease as a percentage of sales is attributable to increased markdowns partially offset by an increase in initial markup. The increase in markdowns in fiscal 2007 was a result of increased promotional activity as compared to fiscal 2006.

Filene’s Basement gross profit increased $9.0 million to $167.2 million in fiscal 2007 from $158.2 million in fiscal 2006, and decreased as a percentage of net sales from 37.0% in fiscal 2006 to 35.9% in fiscal 2007. The increase of approximately $9.0 million in gross profit is attributable to the overall increase in sales. The decrease as a percentage of sales is attributable to increased markdowns due in part to clearance merchandise sold at the Downtown Crossing Boston store partially offset by an increase in initial markup.

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses increased $80.1 million from $614.0 million in fiscal 2006 to $694.1 million in fiscal 2007. Total SG&A expense associated with new DSW and Filene’s Basement stores and new leased shoe departments not opened in the prior year, excluding pre-opening costs, was $35.8 million. Pre-opening costs increased approximately $0.3 million for fiscal 2007 compared to fiscal 2006.

SG&A expense, as a percent of sales by segment, was:

	2007			2006
DSW		36.1	%		35.4	%
Filene’s Basement		41.8	%		39.5	%
Total		37.1	%		36.0	%

For fiscal 2007, the DSW segment SG&A expense increased $54.3 million to $507.3 million from $453.0 million in fiscal 2006 which represented 36.1% and 35.4% of net sales, respectively. The increase in SG&A expenses was a result of increases in home office related expenses of $17.7 million, professional fees of $3.0 million, and $6.0 million of expenses related to the start-up of DSW’s e-commerce channel. The DSW stores and leased departments that opened subsequent to February 3, 2007 added $20.4 million and $1.2 million in SG&A expenses in fiscal 2007, respectively. The increases in SG&A expenses were partially offset by a decrease of bonus expense of $14.4 million and a decrease in marketing expenses as compared to fiscal 2006 due to nonrecurring expenses related to the change in the loyalty program in 2006. In total, the home office increase over the prior year was approximately 0.7% of sales.

The Filene’s Basement segment SG&A expense increased $25.9 million to $194.8 million in fiscal 2007 from $168.9 million in fiscal 2006 and increased as a percent of sales from 39.5% in fiscal 2006 to 41.8% in fiscal 2007. Personnel expense, occupancy expense and other operating expenses each increased $2.1 million, $19.3 million and $4.5 million, respectively. The occupancy expenses associated with new Filene’s Basement stores opened in fiscal 2007, excluding pre-opening costs was $14.2 million. Pre-opening expense increased $1.0 million to $3.7 million in fiscal 2007 from $2.7 million in fiscal 2006.

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Included in the SG&A expenses for the 2007 year are the closed store costs for the Downtown Crossing Boston location which increased $1.8 million over fiscal 2006.

Change in Fair Value of Derivatives. During fiscal 2007 and fiscal 2006, the Company recorded a non-cash reduction of expenses of $154.6 million and a charge of $124.8 million, respectively, representing the changes in fair value of Conversion Warrants and Term Loan Warrants. During fiscal 2007, $93.6 million was recorded as a reduction of expenses from the change in the fair value of the conversion feature of the PIES. During fiscal 2006, $51.1 million was recorded as a charge from the change in the fair value of the conversion feature of the PIES from the date of issuance to February 3, 2007. The Company utilizes the Black-Scholes Pricing Model to estimate the fair value of the derivatives.

The change in the fair value of the derivatives is primarily due to the declines in the RVI and DSW stock prices.

License fees and other income. License fees and other income were $6.6 million in fiscal 2007 compared to $4.6 million in the prior year. The increase was primarily attributable to an insurance recovery recorded during fiscal 2007 of $0.9 million. These sources of income can vary based on customer traffic and contractual arrangements.

Operating Profit (Loss). The operating profit for 2007 was $311.7 million compared to an operating loss of $76.5 million in 2006, an improvement of $388.2 million. The operating profit as a percentage of sales was 16.6% in 2007 compared to an operating loss as a percentage of sales of 4.5% in 2006.

Operating profit (loss) as a percentage of sales by segment was:

	2007			2006
DSW		5.8	%		7.9	%
Filene’s Basement		(3.8	)%		(0.3	)%
Total		16.6	%		(4.5	)%

The operating profit for the Corporate segment increased $424.2 million to an operating profit of $248.2 million in fiscal 2007 from an operating loss of $176.0 million in fiscal 2006, primarily due to the increase of $279.4 million between the reduction of expenses of $154.6 million versus the non-cash charge of $124.8 million for fiscal 2007 and 2006, respectively, which represents the changes in fair value of the Conversion Warrants and Term Loan Warrants. The improvement also reflects the increase of $147.4 million between the reduction of expenses of $96.3 million for fiscal 2007 versus and a charge of $51.1 million recorded for fiscal 2006 related to the change in the fair value of the conversion feature of the PIES.

Interest Expense. Interest expense was $13.5 million in fiscal 2007, a $4.1 million increase from fiscal 2006. Interest expense included the amortization of debt discount of $2.0 million and $0.9 million fiscal 2007 and 2006, respectively. The increase is primarily due to the increase of $96.3 million in average borrowings during fiscal 2007.

Interest Income. During fiscal 2007, interest income rose $3.2 million to $10.5 million due to investments held by the DSW segment and an overall increase in cash and cash equivalents.

Income Taxes. Fiscal 2007 reflects a 28.1% effective tax rate as compared to a negative 32.9% fiscal 2006 effective rate. The 2007 tax rate of 28.1% reflects the impact of $154.6 million for the change in fair value on the mark to market accounting for the warrants, which are not tax deductible, and an increase in the valuation allowance provided for federal and state deferred tax assets of $84.9 million.

Minority Interest. Fiscal 2007 net income decreased by $19.9 million compared to $24.2 million in fiscal 2006, to reflect that portion of the income attributable to DSW minority shareholders.

Income (Loss) from Continuing Operations. The fiscal 2007 income from continuing operations improved $330.7 million compared to fiscal 2006 and represents 10.8% versus a negative 7.5% of net sales, respectively. Major contributing elements to this improvement are the $424.1 million increase in fair value of derivatives and the $3.2 million increase in interest income, offset by the $4.3 million increase in income attributable to the minority interest.

Loss from Discontinued Operations. The $128.4 million increase in the loss from discontinued operations is primarily due to the $90.0 million loss on the disposition of the 81% ownership interest in the Value City operations recorded by Retail Ventures. The $90.0 million loss is primarily due to the recording of $26.6 million of guarantees and the balance was related to the write-off of the investment in the discontinued operations and the transfer of its assets.

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In addition, included in the increase in the loss from discontinued operations is a $38.4 million increase in the loss from the Value City operations. The increase in the loss was due to the decrease in sales of $188.4 million primarily due to a decrease in comparable store sales and a decrease in the tax benefit of $11.2 million. The decrease in sales was partially offset by a decrease in cost of sales of $85.8 million and a decrease in SG&A expense of $71.1 million. The decrease in SG&A was primarily due to a decrease in personnel and personnel related expenses as well as there being 18 less days of variable expenses in the 52 week fiscal 2007 year as compared to the 53 week fiscal 2006 year and the fiscal 2007 results include activity through the January 22, 2008 disposition date.

Fiscal Year Ended February 3, 2007 (“fiscal 2006”) Compared To Fiscal Year Ended January 28, 2006 (“fiscal 2005”)

Sales. Sales for fiscal 2006 increased by 11.8% to $1.71 billion from $1.53 billion for fiscal 2006. By operating segment, comparable store sales were:

	2006			2005
DSW		2.5	%		5.4	%
Filene’s Basement		3.1	%		3.5	%
Total		2.7	%		4.9	%

DSW net sales for the fifty-three weeks ended February 3, 2007 increased by 11.8%, or $135.0 million, to $1.28 billion from $1.14 billion in the fifty-two weeks ended January 28, 2006. Comparable store sales in fiscal 2006 improved 2.5% compared to the previous fiscal year. The increase in DSW net sales includes the impact of a 53^rd week in fiscal 2006 and a net increase of 24 DSW stores, 117 non-affiliated leased shoe departments and five Filene’s Basement leased shoe departments during fiscal 2006. The new DSW locations added $53.3 million in net sales compared to fiscal 2005, while the new leased shoe departments added $6.6 million in net sales. Leased shoe department sales comprised 10.2% of total net sales in fiscal 2006, compared to 10.5% in fiscal 2005.

Compared with fiscal 2005, DSW comparable store sales for fiscal 2006 increased in women’s, athletic, and accessories by 3.0%, 5.8%, and 1.8%, respectively, while decreasing in men’s by 0.1%. In the women’s category, the casual class was the best performing group while athletic increases are still driven by the fashion class. In accessories, positive results from DSW’s ongoing product offerings were partially offset by the transition to a consignment program for DSW’s shoe care products. In men’s, positive seasonal results were offset by negatives in the dress and casual classifications.

Filene’s Basement net sales for the fifty-three weeks ended February 3, 2007 increased 9.8%, or $38.2 million, to $427.5 million from $389.3 million in the fifty-two weeks ended January 28, 2006. The increase in net sales is primarily due to the comparable store sales increase of 3.1%, the impact of a 53^rd week in fiscal 2006 and a net increase of four stores over the prior year’s period. Net sales for the new stores opened in fiscal 2006 added $24.3 million to sales. The merchandise categories of men’s, women’s and accessories had comparable sale increases of 4.1%, 1.1%, and 6.5%, respectively. The merchandise categories of home and jewelry had comparable sale decreases of 2.7% and 3.6 %, respectively. The home and jewelry categories each represented 5.8% of total comparative stores sales in fiscal 2006.

Gross Profit. Total gross profit increased $90.5 million, or 14.6%, from $618.4 million to $708.9 million. Gross profit, as a percentage of sales, increased to 41.5% compared to 40.3% for the prior year’s period. The increase in the overall margin rate is attributable to the increase in gross profit from the DSW and Filene’s Basement segments.

Gross profit, as a percent of sales by segment, was:

	2006			2005
DSW		43.1	%		42.4	%
Filene’s Basement		37.0	%		34.3	%
Total		41.5	%		40.3	%

The DSW gross profit increased $65.9 million to $550.7 million in fiscal 2006 from $484.8 million in 2005, and increased as a percentage of net sales from 42.4% in fiscal 2005 to 43.1% in fiscal 2006. The increase of approximately $58.2 million in gross profit is primarily attributable to the overall increase in sales of which $8.0 million was attributable to the 53^rd week. The increase is also attributable to an increased initial markup.

Filene’s Basement gross profit increased $24.6 million to $158.2 million in fiscal 2006 from $133.6 million in fiscal 2005, and increased as a percentage of net sales from 34.3% in fiscal 2005 to 37.0% in fiscal 2006. The increase of approximately $13.4 million in gross profit is attributable to the overall increase in sales of which $2.4 million is attributable to the 53^rd week. The increase is also attributable to an increased initial markup and lower markdowns as a percent of sales.

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Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $52.2 million from $561.8 million in fiscal 2005 to $614.0 million in fiscal 2006. Total SG&A expense associated with new DSW and Filene’s Basement stores and new leased shoe departments not opened in the prior year, excluding pre-opening costs, were $25.0 million. Pre-opening costs increased approximately $1.3 million for fiscal 2006 compared to fiscal 2005. During fiscal 2005 DSW accrued $6.5 million related to the estimated liability for credit card data theft.

SG&A expense, as a percent of sales by segment, was:

	2006			2005
DSW		35.4	%		36.3	%
Filene’s Basement		39.5	%		39.5	%
Total		36.0	%		36.6	%

For fiscal 2006, the DSW segment SG&A expense increased $37.4 million to $453.0 million from $415.6 million in fiscal 2005, which represented 35.4% and 36.3% of net sales, respectively. The percentage decrease results from reductions in marketing and preopening costs of $9.0 million and $0.5 million, respectively. The marketing favorability was the result of a positive variance related to the “Reward Your Style” loyalty program compared with the prior fiscal year, resulting in a $7.1 million year over year impact. DSW was also able to reduce its marketing spend by realizing efficiencies in its media buying and moving some marketing services in house. Additional favorability in the reduced operating percent is that operating costs for fiscal 2005 included a charge of $6.5 million related to an accrual of potential losses related to the theft of credit card and other purchase information. Those positive factors were offset by an increase in store expense of $16.3 million and personnel related expenses in DSW’s home office of $18.3 million. The store expense increase is due to new stores and remained at 12% of sales compared to the prior year. The personnel expenses include additional headcount and related costs, additional incentive compensation, and the costs related to the adoption of SFAS 123R. In total, the home office increase over the prior year was approximately 1.2% of sales.

The Filene’s Basement segment SG&A expense increased 9.9% or $15.1 million to $168.9 million in fiscal 2006 from $153.8 million in fiscal 2005. Personnel expense, occupancy expense and other operating expenses all increased $2.1 million, $1.4 million and $1.8 million, respectively. The total SG&A expense associated with new Filene’s Basement stores not opened in fiscal 2005, excluding pre-opening costs, was $8.0 million.

Change in Fair Value of Derivatives. During fiscal 2006 and fiscal 2005, the Company recorded a non-cash charge of $124.8 million and $144.2 million, respectively, representing the changes in fair value of the Conversion Warrants and Term Loan Warrants. The decrease in the charge is primarily due to the exercise by Cerberus Partners, L.P. (“Cerberus”) of 7,000,000 warrants during fiscal 2006. During fiscal 2006, $51.1 million was recorded related to the change in the fair value of the conversion feature of the PIES from the date of issuance to February 3, 2007. There were no PIES outstanding during fiscal 2005. The Company utilizes the Black-Scholes Pricing Model to estimate the fair value of the derivatives.

License fees and other income. License fees and other income were $4.6 million in fiscal 2006 compared to $2.8 million in the prior year. License fees and other income are comprised of fees from licensees and vending income. These sources of income can vary based on customer traffic and contractual arrangements.

Operating (Loss) Profit. The operating loss for 2006 was $76.5 million compared to an operating loss of $84.8 million in 2005, an improvement of $8.3 million. The operating loss as a percentage of sales was 4.5% in 2006 compared to 5.5% in 2005.

Operating (loss) profit as a percent of sales by segment was:

	2006			2005
DSW		7.9	%		6.1	%
Filene’s Basement		(0.3	)%		(2.8	)%
Total		(4.5	)%		(5.5	)%

The increase in the operating loss for the Corporate segment of $31.7 million is primarily due to the $51.1 million charge recorded related to the change in the fair value of the conversion feature of the PIES from the date of issuance to February 3, 2007. There were no PIES outstanding during fiscal 2005. The $51.1 million charge was partially offset by the decrease in the non-cash charge of $124.8 million in fiscal 2006 versus $144.2 million for fiscal 2005, which represents the changes in fair value of the Conversion Warrants and Term Loan Warrants.

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Interest Expense. Interest expense was $9.4 million in fiscal 2006 a $2.1 million decrease from fiscal 2005. Interest expense included the amortization of debt discount of $0.9 million and $0.8 million fiscal 2006 and 2005, respectively. The increase is primarily due to the increase of $56.9 million in average borrowings during fiscal 2006.

Interest Income. During fiscal 2006, interest income rose to $7.3 million due to short-term securities held by the DSW segment and an overall increase in cash and cash equivalents.

Income Taxes. Fiscal 2006 reflects a negative 32.9% effective tax rate as compared to a negative 24.6% fiscal 2005 effective rate. The 2006 tax rate of negative 32.9% reflects the impact of $43.7 million for the change in fair value on the mark to market accounting for the warrants, which are not tax deductible, a decrease in the valuation allowance provided for federal and state deferred tax assets of $2.9 million, and an increase in deferred tax liability for the basis in subsidiary of $6.0 million.

Minority Interest. Fiscal 2006 net income decreased by $24.2 million compared to $7.0 million in fiscal 2005, to reflect that portion of the income attributable to DSW minority shareholders.

Loss from Continuing Operations. The fiscal 2006 loss from continuing operations increased $1.5 million compared to fiscal 2005 and represents 7.5% versus 8.3% of net sales, respectively. Major contributing elements in the change in loss from continuing operations from fiscal 2005 to fiscal 2006 are the $90.5 million increase in gross profit offset by the $52.2 million increase in SG&A expense, the $31.7 million increase in derivatives and the $17.2 million increase in minority interest expense.

Loss from Discontinued Operations. The $34.0 million decrease in the loss from discontinued operations from fiscal 2005 to fiscal 2006 is primarily due to the increase in gross profit of $15.7 million, the decrease in SG&A expense of $19.7 million and the increase in the income tax benefit of $0.7 million partially offset by a decrease in net sales of $18.8 million. The decrease in net sales was primarily due to the decrease in comparable store sales of 1.3% partially offset by the impact of a 53^rd week in fiscal 2006. The increase in gross profit was primarily attributable to higher initial markups and reduced markdown rates partially offset by an increase in shrinkage expense. The decrease in SG&A expense was primarily due to reductions in personnel expense, administrative overhead expense and occupancy expenses. The increase in the income tax benefit is due to the change in the effective tax rate from 15.7% in fiscal 2005 to 33.5% in fiscal 2006. The tax rate for fiscal 2006 was impacted by the recording of $2.2 million of additional valuation allowances.

Inflation

The results of operations and financial condition are presented based upon historical cost. While it is difficult to accurately measure the impact of inflation because of the nature of the estimates required, management believes that the effect of inflation, if any, on the results of operations and financial condition has been minor; however, there can be no assurance that the business will not be affected by inflation in the future.

Liquidity and Capital Resources

Our primary ongoing cash requirements are for debt service plus seasonal and new store inventory purchases, capital expenditures in connection with expansion and remodeling and infrastructure growth, primarily information technology development. The primary sources of funds for these liquidity needs are cash flow from operations and credit facilities. Our working capital and inventory levels typically build throughout the fall, peaking during the winter holiday selling season for Filene’s Basement. For DSW the inventory levels increase relative to the expected sales increase when its customers’ interest in new seasonal styles increases.

Net working capital was $295.9 million and $274.4 million at February 2, 2008 and February 3, 2007, respectively. Current ratios at those dates were 1.98 and 1.45, respectively. Net cash provided by operating activities from continuing operations totaled $76.2 million and $84.3  ;million in fiscal 2007 and 2006, respectively. The fiscal 2007 decrease of $8.1 million in net cash provided by operating activities is primarily due to the (i) $13.1 million decrease from the change in working capital assets and liabilities, (ii) $330.7 million increase in the fiscal 2007 net income from continuing operations and (iii) $424.1 million decrease in the non cash change in the fair value of derivatives.

Net working capital was $274.4 million and $147.7 million at February 3, 2007 and January 28, 2006, respectively. Current ratios at those dates were 1.45 and 1.25, respectively. Net cash provided by operating activities totaled $84.3 million and $68.6 million in fiscal 2006 and 2005, respectively. The fiscal 2006 increase of $15.7 million in net cash provided by operating activities is primarily due to the (i) $23.5 million decrease in deferred income taxes and other non current liabilities, (ii) $1.5 million increase in the fiscal 2006 net income from continuing operations and (iii) $31.7 million increase in the non cash charge from the change in fair value of warrants.

Cash used for capital expenditures was $118.9 million and $58.2 million in fiscal 2007 and 2006, respectively, and excludes the impact of capital expenditures in accounts payable. During fiscal 2007, capital expenditures included $52.4 million for new stores,

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$9.4 million for improvements in existing stores, $15.9 million for office and warehousing, $26.3 million related to the start-up of DSW’s e-commerce channel and $14.9 million for information technology upgrades and new systems, excluding the e-commerce channel.

DSW expects to spend approximately $90 million for capital expenditures in fiscal 2008. DSW’s future investments will depend heavily on the number of stores they open and remodel, infrastructure and information technology programs that they undertake and the timing of these expenditures. In fiscal 2007, DSW opened 37 new stores. DSW plans to open at least 30 stores per year in each fiscal year from fiscal 2008 through fiscal 2010. During fiscal 2007, the average investment required to open a typical new DSW store was approximately $1.6 million, prior to construction and tenant allowances. Of this amount, gross inventory typically accounted for $0.6 million, fixtures and leasehold improvements typically accounted for $0.9 million and pre-opening advertising and other pre-opening expenses typically accounted for $0.1 million.

Filene’s Basement plans to open at least one new store and fully remodel a store and improve its existing distribution facility in fiscal 2008. Filene’s Basement expects to spend $6.5 million for capital expenditures over the next fiscal year.

On August 16, 2006, Retail Ventures issued $125 million of 6.625% Mandatorily Exchangeable Notes due September 15, 2011, or PIES. On September 15, 2006, Retail Ventures closed on the exercise by the sole underwriter of its entire option to purchase an additional aggregate principal amount of $18,750,000 of PIES. RVI used a portion of the net proceeds of the offering to repay an intercompany note due to Value City, and Value City used such proceeds and other funds to repay $49.5 million of the outstanding principal amount of the Non-Convertible Loan. The Filene’s Basement Revolving Loan, DSW Revolving Loan, Non-Convertible Loan and PIES are sometimes referred to collectively as the “Credit Facilities.”

The Company is not subject to any financial covenants; however, the Credit Facilities contain numerous restrictive covenants relating to the Company’s management and operation. These non-financial covenants include, among other restrictions, limitations on indebtedness, guarantees, mergers, acquisitions, fundamental corporate changes, financial reporting requirements, budget approval, disposition of assets, investments, loans and advances, liens, dividends, stock purchases, transactions with affiliates, issuance of securities and the payment of and modifications to debt instruments under these agreements.

The Credit Facilities are described more fully below:

Revolving Credit Facilities

$100 Million Secured Revolving Credit Facility — The Filene’s Basement Revolving Loan

In connection with RVI’s disposition of its 81% ownership of its Value City business segment effective January 23, 2008, Value City was released from its obligations under the $275 million secured revolving credit facility (referred to herein as the “VCDS Revolving Loan”), which was terminated, and any collateral security granted by Value City to secure such obligations was also released. The VCDS Revolving Loan included Filene’s Basement as a co-borrower. Effective January 23, 2008, Filene’s Basement entered into a $100 million secured revolving credit facility (the “Filene’s Basement Revolving Loan”) through an amendment and restatement of its indebtedness and obligations as a co-borrower under the VCDS Revolving Loan. 

Under the Filene’s Basement Revolving Loan, Filene’s Basement is named as the borrower. The Filene’s Basement Revolving Loan is guaranteed by Retail Ventures and certain of its wholly-owned subsidiaries. Neither DSW nor DSWSW are borrowers or guarantors under the Filene’s Basement Revolving Loan. The Filene’s Basement Revolving Loan 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. In addition to the borrowing base restrictions, 10% of the facility is deemed an “excess reserve” and is not available for borrowing. Obligations under the Filene’s Basement Revolving Loan are secured by a lien on substantially all of the personal property of Filene’s Basement and of Retail Ventures and its other wholly-owned subsidiaries, excluding shares of DSW owned by Retail Ventures. At February 2, 2008, $27.0 million was available under the Filene’s Basement Revolving Loan. Direct borrowings aggregated $22.5 million and $3.4 million letters of credit were issued and outstanding. There were no borrowings or letters of credit under the Filene’s Basement Revolving Loan as of February 3, 2007. The maturity date of the Filene’s Basement Revolving Loan is January 23, 2013.

$150 Million Secured Revolving Credit Facility — The DSW Revolving Loan

Under the DSW Revolving Loan, DSW and its wholly-owned subsidiary, DSWSW, are named as co-borrowers. The DSW Revolving Loan is subject to a borrowing base restriction and provides for borrowings at variable interest rates based on LIBOR, the prime rate and the Federal Funds effective rate, plus a margin. In addition, if at any time DSW utilizes over 90% of DSW’s borrowing capacity under the facility, DSW must comply with a fixed charge coverage ratio test set forth in the facility document. DSW’s and DSWSW’s obligations under the DSW Revolving Loan are secured by a lien on substantially all of their personal property and a pledge of all of

42

DSW’s shares of DSWSW. At February 2, 2008, $134.3 million was available under the DSW Revolving Loan and no direct borrowings were outstanding. At February 2, 2008 and February 3, 2007, $15.7 million and $13.4 million, respectively, in letters of credit were issued and outstanding. At February 3, 2007, $136.6 million was available under the DSW Revolving Loan and no direct borrowings were outstanding. The maturity of the DSW Revolving Loan is July 5, 2010.

Term Loans — Related Parties

The principal balances of the $100 million Term Loans were repaid in full on July 5, 2005.

The Company issued 2,954,792 Term Loan Warrants to purchase RVI Common Shares, at an initial exercise price of $4.50 per share, to Cerberus and SSC in connection with one of the Term Loans. The Term Loan Warrants are exercisable at any time prior to June 11, 2012. In September 2002, Back Bay bought from each of Cerberus and SSC a $3.0 million interest in each of their Term Loans, and received a corresponding portion of the Term Loan Warrants from each of Cerberus and SSC. The Company has granted the Term Loan lenders registration rights with respect to the shares issuable upon exercise of the Term Loan Warrants. The $6.1 million value ascribed to the Term Loan Warrants was estimated as of the date of issuance using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 5.6%; expected life of 10 years; expected volatility of 47%; illiquidity discount of 10%; and an expected dividend yield of 0%. The related debt discount was amortized into interest expense over the life of the debt.

Payment of and Amendment to Term Loans

Pursuant to the July 2005 Fourth Amendment to Financing Agreement, (i) DSW was released from its obligations as a co-borrower under the Term Loans, (ii) Value City repaid all the Term Loan indebtedness, and (iii) Retail Ventures amended the outstanding Term Loan Warrants to provide SSC, Cerberus and Back Bay the right, from time to time, in whole or in part, to (A) acquire Retail Ventures Common Shares at the then current conversion price (subject to the existing anti-dilution provisions), (B) acquire from Retail Ventures Class A Common Shares of DSW at an exercise price per share equal to the price of shares sold to the public in DSW’s IPO (subject to anti-dilution provisions similar to those in the existing Term Loan Warrants), or (C) acquire a combination thereof. Effective November 23, 2005, Back Bay transferred and assigned its Term Loan Warrants to Millennium. Although Retail Ventures does not intend or plan to undertake a spin-off of its DSW Common Shares to Retail Ventures’ shareholders, in the event that Retail Ventures does effect such a spin-off in the future, the holders of outstanding unexercised Term Loan Warrants will receive the same number of DSW Class A Common Shares that they would have received had they exercised their Term Loan Warrants in full for Retail Ventures Common Shares immediately prior to the record date of such spin-off, without regard to any limitations on exercise contained in the Term Loan Warrants. Following the completion of any such spin-off, the Term Loan Warrants will be exercisable solely for Retail Ventures Common Shares.

Non-Convertible Loan — Related Parties

$75 Million Senior Subordinated Convertible Loan

As amended in 2002, borrowings under our $75 million Convertible Loan bore interest at 10% per annum. At our option, interest could be payment-in-kind (“PIK”) during the first two years, and thereafter, at our option, up to 50% of the interest due may be PIK until maturity. Prior to its amendment and restatement in July 2005, the Convertible Loan was guaranteed by all our principal subsidiaries and was secured by a lien on assets junior to liens granted in favor of the lenders on the VCDS Revolving Loan and Term Loans. All interest was paid in cash.

$50 Million Second Amended and Restated Senior Loan Agreement — The Non-Convertible Loan

On July 5, 2005, the Company entered into an amended and restated $50.0 million senior non-convertible loan facility, held equally by Cerberus and SSC, under which Value City was the borrower and RVI and certain of its wholly-owned subsidiaries were co-guarantors. Pursuant to the Non-Convertible Loan, (i) DSW was released from its obligations as a co-guarantor, (ii) Value City repaid $25 million of the Convertible Loan, (iii) the remaining $50 million Convertible Loan was converted into a non-convertible loan, (iv) the capital stock of DSW held by Retail Ventures continues to secure the Non-Convertible Loan, and (v) Retail Ventures issued to SSC and Cerberus the Conversion Warrants which will be exercisable from time to time until the later of June 11, 2007 and the repayment in full of Value City’s obligations under the Non-Convertible Loan. The maturity date of the Non-Convertible Loan is June 10, 2009 and it is not eligible for prepayment until June 10, 2007. Under the Conversion Warrants, SSC and Cerberus will have the right, from time

43

to time, in whole or in part, to (i) acquire Retail Ventures Common Shares at the conversion price referred to in the Non-Convertible Loan (subject to existing anti-dilution provisions), (ii) acquire from Retail Ventures Class A Common Shares of DSW at an exercise price per share equal to the price of the shares sold to the public in DSW’s IPO (subject to anti-dilution provisions similar to those in the existing Term Loan Warrants held by SSC and Cerberus), or (iii) acquire a combination thereof. Although Retail Ventures does not intend or plan to undertake a spin-off of its DSW Common Shares to Retail Ventures’ shareholders, in the event that Retail Ventures does effect such a spin-off in the future, the holders of outstanding unexercised Conversion Warrants will receive the same number of DSW Common Shares that they would have received had they exercised their Conversion Warrants in full for Retail Ventures Common Shares immediately prior to the record date of such spin-off, without regard to any limitations on exercise contained in the Conversion Warrants. Following the completion of any such spin-off, the Conversion Warrants will be exercisable solely for Retail Ventures Common Shares.

$0.25 Million Senior Non-Convertible Loan

On August 16, 2006, the Non-Convertible Loan was again amended and restated whereby the Company (i) paid $49.5 million of the then aggregate $50.0 million outstanding balance, (ii) secured the remaining $0.5 million balance with cash collateral accounts, (iii) pledged DSW stock sufficient for the exercise of the Conversion Warrants, and (iv) obtained a release of the capital stock of DSW held by RVI used to secure the Non-Convertible Loan. On June 11, 2007, the outstanding principal balance of the Non-Convertible Loan of $0.25 million owed to Cerberus was prepaid, together with accrued interest thereon, when Cerberus completed the exercise of its remaining Conversion Warrants. The final maturity date of the $0.25 million Non-Convertible Loan held by SSC is the earlier of (i) June 10, 2009 or (ii) the date that the Conversion Warrants held by SSC are exercised. This loan and cash collateral was assumed by RVI in connection with the disposition of its 81% ownership interest in the Value City operations on January 23, 2008.

$143,750,000 Premium Income Exchangeable Securities^SM (PIES)

On August 10, 2006, Retail Ventures announced the pricing of its 6.625% Mandatorily Exchangeable Notes due September 15, 2011, or PIES, in the aggregate principal amount of $125,000,000. The closing of the transaction took place on August 16, 2006. On September 15, 2006, Retail Ventures closed on the exercise by the sole underwriter of its entire option to purchase an additional aggregate principal amount of $18,750,000 of PIES.

The $143,750,000 PIES bear a coupon at an annual rate of 6.625% of the principal amount, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2006 and ending on September 15, 2011. Except to the extent RVI exercises its cash settlement option, the PIES are mandatorily exchangeable, on the maturity date, into Class A Common Shares of DSW, no par value per share, which are issuable upon exchange of DSW Class B Common Shares, no par value per share, beneficially owned by RVI. On the maturity date, each holder of the PIES will receive a number of DSW Class A Common Shares per $50.00 principal amount of PIES equal to the “exchange ratio” described in the RVI prospectus filed with the SEC on August 11, 2006, or if RVI elects, the cash equivalent thereof or a combination of cash and DSW Class A Common Shares. The exchange ratio is equal to the number of DSW Class A Common Shares determined as follows: (i) if the applicable market value of DSW Class A Common Shares equals or exceeds $34.95, the exchange ratio will be 1.4306 shares; (ii) if the applicable market value of DSW Class A Common Shares is less than $34.95 but greater than $27.41, the exchange ratio will be between 1.4306 and 1.8242 shares; and (iii) if the applicable market value of DSW Class A Common Shares is less than or equal to $27.41, the exchange ratio will be 1.8242 shares, subject to adjustment as provided in the PIES. The maximum aggregate number of DSW Class A Common Shares deliverable upon exchange of the PIES is 5,244,575 DSW Class A Common Shares, subject to adjustment as provided in the PIES.

RVI used a portion of the net proceeds of the offering to repay the approximately $49.7 million remaining balance of an intercompany note due to Value City, and Value City used such proceeds and other funds to repay $49.5 million of the outstanding principal amount of its $50.0 million Non-Convertible Loan, together with fees and expenses. The balance of the net proceeds was applied for general corporate purposes, which included the repayment of approximately $36.5 million of borrowings under the VCDS Revolving Loan. An additional $0.25 million of the Non-Convertible Loan was paid by Value City to Cerberus, together with interest, in fiscal 2007. During fiscal 2007, RVI assumed the remaining $0.25 million Non-Convertible Loan still held by SSC, and SSC continues to hold restricted cash of $0.25 million as collateral for the remaining balance of the Non-Convertible Loan.

The embedded exchange feature of the PIES is accounted for as a derivative, which is recorded at fair value with changes in fair value in the statement of operations. Accordingly, the accounting for the embedded derivative addresses the variations in the fair value of the obligation to settle the PIES when the market value exceeds or is less than the threshold appreciation price. The fair value of the conversion feature at the date of issuance of $11.7 million was equal to the amount of the discount of the PIES and will be amortized into interest expense over the term of the PIES.

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During fiscal 2007, the Company recorded a reduction of expenses related to the change in fair value of the conversion feature of the PIES of $93.6 million. During fiscal 2006, the Company recorded a charge related to the change in fair value of the conversion feature of the PIES from the date of issuance to February 3, 2007 of $51.1 million. As of February 2, 2008, the fair value asset recorded for the conversion feature of the PIES was $30.8 million.

Auction Rate Securities

As of February 2, 2008, $38.0 million of DSW’s $82.5 million in total investments was invested in auction rate securities. DSW has reduced its investment in auction rate securities to $13.7 million as of March 31, 2008. Due to auction failures limiting the liquidity of DSW’s investments, DSW has presented $10.0 million of its investment in auction rate securities as long-term investments as of February 2, 2008 that were previously classified as short term investments. If DSW is unable to liquidate the remaining auction rate securities at their scheduled auction dates, DSW may not have access to its funds until the maturity date of these investments, which could be until 2034. DSW believes that the current lack of liquidity relating to its auction rate securities will have no impact on its ability to fund the ongoing operations and growth initiatives.

Liquidity and Capital Resources Considerations Relating to the Value City Disposition

RVI completed the disposition of an 81% ownership interest in its Value City business on January 23, 2008. Retail Ventures or its wholly-owned subsidiary, Retail Ventures Services, Inc. (“RVS”), has guaranteed or may, in certain circumstances, be responsible for certain liabilities of Value City including, but not limited to: amounts owed under certain guarantees with various financing institutions; amounts owed under guarantees of Value City’s operations regarding certain equipment leases; amounts owed under certain employee benefit plans; amounts owed under certain income tax liabilities, amounts owed by RVS under certain service agreements through which Value City obtains general services or information technology equipment or licenses.

As of February 2, 2008, RVI had recorded a liability of $26.6 million for the guarantees of Value City commitments. If Value City does not continue as a going concern and Value City is unable to pay its obligations with respect to the foregoing indebtedness guaranteed by Retail Ventures or RVS, these guarantees may become immediately due and payable by Retail Ventures or RVS, as applicable, which would have a material adverse effect on RVI.

To facilitate the change in ownership and operation of Value City, Retail Ventures agreed to provide or arrange for the provision of certain transition services to Value City for a period of one year unless otherwise extended by both parties. If Value City does not continue as a going concern and Value City is unable to pay its obligations with respect to the transition services the Company may be unable to recover some or all of the unremitted transition service charges.

Liquidity Relating to the Filene’s Basement Downtown Crossing Boston Store

With respect to the temporary cessation of operations at the Downtown Crossing Boston Filene’s Basement store, the landlord is making payments to Filene’s Basement until the premises are renovated and turned over to Filene’s Basement.

Contractual Obligations

We have the following minimum commitments under contractual obligations. A “purchase obligation” is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction. Based on this definition, the table below includes only those contracts which include fixed or minimum obligations. It does not include normal purchases, which are made in the ordinary course of business.

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The following table provides aggregated information about known contractual obligations and other long-term liabilities as of February 2, 2008 (dollars in thousands).

	Payments due by Period
											No
			Less Than		1 - 3		3 - 5		More Than		Expiration
Contractual Obligations(6)	Total		1 Year		Years		Years		5 Years		Date
Long—term debt	$	166,500			$	250	$	143,750	$	22,500	$
Interest payments on long—term debt(1)		35,847	$	9,642		19,062		7,143
Operating lease obligations (2)		1,394,062		163,002		326,007		284,377		620,676
Construction commitments(3)		5,835		5,835
Other (4)		42,905		21,689		7,909		6,040		7,267
FIN 48 (5)		3,941								3,941
Total	$	1,649,090	$	200,168	$	353,228	$	441,310	$	654,384	$

(1)	Projected interest payments are for the PIES, Non-Convertible Loan and the Filene’s Basement Revolving Loan and are based on the outstanding principal amount at February 2, 2008 and interest rate per the agreement.
(2)	Many operating leases require us, as part of the lease, to pay for common area maintenance, real estate taxes and contingent rents. These costs vary year by year and are based almost entirely on actual costs incurred by the landlord and as such are not included in the lease obligations presented above.
(3)	Construction commitments include capital items to be purchased for projects that were under construction, or for which a lease had been signed, as of February 2, 2008.
(4)	Other contractual obligations include purchase commitments, guarantees and indemnificiations. Many of our purchase commitments are cancelable by us without payment or penalty, and we have excluded such commitments, along with all associate employment and intercompany commitments.
(5)	The amount of FIN 48 obligations as of February 2, 2008, is $3.9 million, including approximately $0.9 million of accrued interest and penalties. Uncertain tax benefits are positions taken or expected to be taken on an income tax return that may result in additional payments to tax authorities. The balance of the uncertain tax benefits are included in the “More Than 5 Years” column as we are not able to reasonably estimate the timing of the potential future payments.
(6)	Deferred taxes, minority interest, payments on RVI restricted stock units and payments related to pension plans are not included in this table.

In 2006, RVI used the proceeds from the issuance of PIES to repay the approximately $49.7 million remaining balance of an intercompany note due Value City, and to lend Value City and Filene’s Basement $62 million through intercompany loans. Value City used these and other funds to pay down $49.5 million of the outstanding principal amount of the $50 million Non-Convertible Loan and approximately $36.5 million of borrowings under the VCDS Revolving Loan. During 2005, the Company repaid the amount owed on the $100 million VCDS Term Loans plus accrued interest, $25 million of the $75 million Convertible Loan and a portion of the Revolving Credit Facility with the proceeds of DSW’s IPO used to repay intercompany promissory notes relating to dividends issued by DSW to Retail Ventures.

At February 2, 2008, the Company has outstanding $143.8 million of PIES, $22.5 million of direct borrowings under the Filene’s Basement Revolving Loan and $0.25 million under the assumed Non-Convertible Loan. At February 3, 2007, the Company had outstanding $143.8 million of PIES and $35.0 million of direct borrowings attributed to Filene’s Basement under the VCDS Revolving Loan.

The Company had outstanding letters of credit that totaled approximately $3.4 million and $15.7 million, respectively, at February 2, 2008, on the Filene’s Basement Revolving Loan and DSW Revolving Loan and $2.1 million and $13.4 million, respectively, at February 3, 2007 on the Filene’s Basement portion the VCDS Revolving Loan and DSW Revolving Loan. If certain conditions are not met under these letter of credit arrangements, the Company would be required to satisfy the obligations in cash. Due to the nature of these arrangements and based on historical experience, the Company does not expect to make any significant payment outside of the terms set forth in these arrangements.

During the current year, we have continued to enter 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 approximately $5.8 million at February 2, 2008. In addition, we signed lease agreements for 38 new store locations with annual aggregate rent of $14.0 million and average terms of approximately 10 years. Associated with the new lease agreements, we will receive approximately $10.6 million of tenant improvement allowances which will offset future capital expenditures.

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We operate substantially all our stores, warehouses and corporate office space from leased facilities. Lease obligations are accounted for either as operating leases or as capital leases. We disclose in the Notes to Consolidated Financial Statements the minimum payments due under operating or capital leases. See Note 6 — Leases beginning on page F-21.

Additional information regarding our financial commitments as of February 2, 2008 is provided in the Notes to Consolidated Financial Statements. See Note 7 — Long-Term Obligations beginning on page F-22 and Note 11 — Commitments and Contingencies beginning on page F-28.

Recent Accounting Pronouncements

Recent accounting pronouncements and their impact on Retail Ventures are disclosed in Note 1 of our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

It is not our intention 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. Retail Ventures had no “off-balance sheet” arrangements as of February 2, 2008, as that term is described by the SEC.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to market risk from changes in interest rates, which may adversely affect our financial position, results of operations and cash flows. In seeking to minimize the risks from interest rate fluctuations, we manage exposures through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. We do not use financial instruments for trading or other speculative purposes and are not party to any leveraged financial instruments.

Auction Rate Securities

As of February 2, 2008, DSW had $38.0 million invested in auction rate securities. DSW was able to successfully decrease its investment to $13.7 million as of March 31, 2008. Due to auction failures limiting the liquidity of DSW’s investment, DSW has classified $10.0 million of investment in auction rate securities to long-term investments as of February 2, 2008. While recent failures in the auction process have affected DSW’s ability to access these funds, DSW does not believe that the underlying valuation of the securities have been impaired. DSW expects to continue to earn interest at the prevailing rates on its remaining auction rate securities.

Secured Revolving Credit Facilities

We are exposed to interest rate risk primarily through our borrowings under the $100 million Filene’s Basement Revolving Loan and the $150 million DSW Revolving Loan. At February 2, 2008, direct borrowings aggregated $22.5 million and an additional $19.1 million of letters of credit were outstanding against these revolving credit facilities. A hypothetical 100 basis point increase in interest rates on our variable rate debt outstanding for the year ended February 2, 2008, net of income taxes, would have had an approximate $0.3 million impact on our financial position, liquidity and results of operations.

Warrants

VCHI Acquisition Co. Warrants

On January 23, 2008, Retail Ventures disposed of an 81% ownership interest in its Value City Department Stores business to VCHI Acquisition Co., a newly formed entity owned by VCDS Acquisition Holdings, LLC, Emerald Capital Management LLC and Crystal Value, LLC. As part of the transaction, Retail Ventures issued warrants (the “VCHI Warrants”) to VCHI Acquisition Co. to purchase 150,000 RVI Common Shares at an exercise price of $10.00 per share, and exercisable within 18 months of January 23, 2008. At the date of issuance, January 23, 2008, the closing price of the RVI Common Shares was $6.09. Upon exercise of the VCHI Warrants, Retail Ventures will deliver the shares via net-share or physical settlement at the election of the warrant holder.

The VCHI Warrants are not derivative instruments as defined under SFAS No. 133. The warrants were measured at fair value on the date of the transaction, January 23, 2008, and recorded within equity. The $0.1 million value ascribed to the VCHI Warrants was estimated as of February 2, 2008 using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 2.1%; expected life of 1.5 years; expected volatility of 58.4% and an expected dividend yield of 0.0%.

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Term Loan Warrants and Conversion Warrants

For derivatives that are not designated as hedges under SFAS No. 133, changes in the fair values are recognized in earnings in the period of change. Retail Ventures estimates the fair value of derivatives based on pricing models using current market rates and records all derivatives on the balance sheet at fair value.

During fiscal 2007, the Company recorded a reduction of expenses related to the change in the fair value of the Conversion Warrants and Term Loan Warrants of $154.6 million. As of February 2, 2008, the aggregate fair value liability recorded relating to both the Term Loan Warrants and Conversion Warrants is $42.2 million. The $26.6 million value ascribed to the Conversion Warrants was estimated as of February 2, 2008 using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 2.1%; expected life of 1.4 years; expected volatility of 55.5%; and an expected dividend yield of 0.0%. The $15.6 million value ascribed to the Term Loan Warrants was estimated as of February 2, 2008 using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 2.7%; expected life of 4.4 years; expected volatility of 55.4% and an expected dividend yield of 0.0%. As the Conversion Warrants and Term Loan Warrants may be exercised for either common shares of RVI or common shares of DSW owned by RVI, the settlement of such warrants will not result in a cash outlay by the Company.

Conversion Feature of PIES

During fiscal 2007, the Company recorded a reduction of expenses related to the change in fair value of the conversion feature of the PIES of $93.6 million. As of February 2, 2008, the fair value asset recorded for the conversion feature was $30.8 million. The fair value was estimated using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 4.2%; expected life of 3.6 years; expected volatility of 44.0%; and an expected dividend yield of 0.0%. The fair value of the conversion feature at the date of issuance of $11.7 million is equal to the amount of the discount of the PIES and will be amortized into interest expense over the term of the PIES.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements and financial statement schedule and the Report of Independent Registered Public Accounting Firm thereon are filed pursuant to this Item 8 and are included in this Annual Report on Form 10-K beginning on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

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 effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded, as of the end of the period covered by this Annual Report on Form 10-K, that such disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America.

Management assessed the effectiveness of the Company’s internal control system as of February 2, 2008. In making its assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework. Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of February 2, 2008.

Deloitte & Touche LLP, the Company’s independent registered public accounting firm, has issued an audit report covering the Company’s internal control over financial reporting, as stated in its report which begins on page F-1 of this Annual Report on Form 10-K.

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Changes in Internal Control over Financial Reporting

No change was made in the Company’s internal control over financial reporting during the Company’s fiscal quarter ended February 2, 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION. None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

In accordance with General Instruction G(3), the information contained under the captions “EXECUTIVE OFFICERS”, ELECTION OF DIRECTORS” and “OTHER DIRECTOR INFORMATION, COMMITTEES OF DIRECTORS AND CORPORATE GOVERNANCE INFORMATION” in our definitive Proxy Statement for the Annual Meeting of Shareholders to be held on June 3, 2008, to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act (the “Proxy Statement”), are incorporated herein by reference to satisfy the information required by this Item.

NYSE Certification

Mr. Wilansky, Chief Executive Officer and President of the Company, and Mr. McGrady, Executive Vice President, Chief Financial Officer, Secretary and Treasurer of the Company, have issued certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and applicable SEC regulations with respect to this Annual Report on Form 10-K. The full text of the certifications are set forth in Exhibits 31 and 32 to this Annual Report on Form 10-K.

Mr. Wilansky submitted his annual certification to the New York Stock Exchange (“NYSE”) on June 22, 2007, stating that he was not aware of any violation by the Company of the NYSE’s corporate governance listing standards, as required by Section 303A.12(a) of the NYSE Listed Company Manual.

Item 11. EXECUTIVE COMPENSATION.

In accordance with General Instruction G(3), the information contained under the captions “COMPENSATION OF MANAGEMENT” and “OTHER DIRECTOR INFORMATION COMMITTEES OF DIRECTORS AND CORPORATE GOVERNANCE INFORMATION — GENERAL” in the Proxy Statement is incorporated herein by reference to satisfy the information required by this Item. The report of the Compensation Committee of the Company’s Board of Directors on executive compensation included in the Proxy Statement shall not be deemed to be incorporated herein by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

SHAREHOLDER MATTERS.

In accordance with General Instruction G(3), the information contained under the captions “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS” and EQUITY COMPENSATION PLAN INFORMATION” in the Proxy Statement is incorporated herein by reference to satisfy the information required by this Item.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

In accordance with General Instruction G(3), the information contained under the caption “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” and “OTHER DIRECTOR INFORMATION, COMITTEES OF DIRECTORS AND CORPORATE GOVERNANCE INFORMATION- CORPORATE GOVERNANCE PRINCIPLES.” in the Proxy Statement is incorporated herein by reference to satisfy the information required by this Item.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

In accordance with General Instruction G(3), the information contained under the caption “AUDIT AND OTHER SERVICE FEES” in the definitive Proxy Statement is incorporated herein by reference to satisfy the information required by this Item.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

15(a)(1) Financial Statements

The documents listed below are filed as part of this Form 10-K:

	Page in
	Form 10-K
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets at February 2, 2008 and February 3, 2007		F-2
Consolidated Statements of Operations for the years ended February 2, 2008, February 3, 2007 and January 28, 2006		F-4
Consolidated Statements of Shareholders’ Equity for the years ended February 2, 2008, February 3, 2007 and January 28, 2006		F-5
Consolidated Statements of Cash Flows for the years ended February 2, 2008, February 3, 2007 and January 28, 2006		F-7
Notes to Consolidated Financial Statements		F-8
15(a)(2) Consolidated Financial Statement Schedules:
The schedule listed below is filed as part of this Form 10-K:
Schedule I. Condensed Financial Information of Registrant		S-1
Schedule II. Valuation and Qualifying Accounts		S-2

Schedules not listed above are omitted because of the absence of the conditions under which they are required or because the required information is included in the financial statements or the notes thereto.

15(a)(3) and (b) Exhibits:

See Index to Exhibits which begins on page E-1.

15(c) Additional Financial Statement Schedules:

None.

50

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	RETAIL VENTURES, INC.
April 24, 2008	By:	/s/ James A. McGrady
		James A. McGrady, Executive Vice President, Chief
		Financial Officer, Treasurer and Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
*	Chairman of the Board of Directors	April 24, 2008
Jay L. Schottenstein
/s/ Heywood Wilansky Heywood Wilansky	President, Chief Executive Officer and Director (Principal Executive Officer)	April 24, 2008
/s/ James A. McGrady James A. McGrady	Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)	April 24, 2008
*	Director	April 24, 2008
Henry L. Aaron
*	Director	April 24, 2008
Ari Deshe
*	Director	April 24, 2008
Jon P. Diamond
*	Director	April 24, 2008
Elizabeth M. Eveillard
*	Director	April 24, 2008
Lawrence J. Ring
*	Director	April 24, 2008
Harvey L. Sonnenberg
*	Director	April 24, 2008
James L. Weisman

*By: /s/ James A. McGrady   James A. McGrady (Attorney-in-fact)

51

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Retail Ventures, Inc.
Columbus, Ohio

We have audited the accompanying consolidated balance sheets of Retail Ventures, Inc. and subsidiaries (the “Company”) as of February 2, 2008 and February 3, 2007 and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended February 2, 2008. Our audits also included the consolidated financial statement schedules listed in the Index at Item 15. We also have audited the Company’s internal control over financial reporting as of February 2, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedules and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Retail Ventures, Inc. and subsidiaries as of February 2, 2008 and February 3, 2007, and the results of their operations and their cash flows for each of the three years in the period ended February 2, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such consolidated financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 2, 2008, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As discussed in Note 2 to the consolidated financial statements, the Company discontinued the Value City segment of its operations in January 2008 when it disposed of an 81% ownership interest in its Value City operations to VCHI Acquisition Co. on January 23, 2008. The loss on the sale and operating results prior to the sale are included in loss from discontinued operations in the accompanying consolidated financial statements.

/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
April 24, 2008

F-1

RETAIL VENTURES, INC.

CONSOLIDATED BALANCE SHEETS

February 2, 2008 and February 3, 2007
(in thousands, except share amounts)

	February 2,			February 3,
	2008			2007
ASSETS
Cash and equivalents	$	112,951		$	143,020
Restricted cash		257
Short-term investments		70,005			98,650
Accounts receivable, net		14,373			9,369
Accounts receivable from related parties		2,245			3,767
Inventories		339,320			328,560
Prepaid expenses and other current assets		31,232			27,508
Deferred income taxes		28,225			25,737
Current assets of discontinued operations					251,336
Total current assets		598,608			887,947
Property and equipment, at cost:
Furniture, fixtures and equipment		242,369			178,110
Leasehold improvements		176,380			140,748
		418,749			318,858
Accumulated depreciation and amortization		(164,090	)		(139,390	)
Property and equipment, net		254,659			179,468
Goodwill		25,899			25,899
Long-term investments		12,500
Note receivable from discontinued operations					34,441
Tradenames and other intangibles, net		19,927			26,401
Deferred income taxes					26,114
Conversion feature of long-term debt		30,848
Other assets		9,524			8,926
Non current assets of discontinued operations					112,462
Total assets	$	951,965		$	1,301,658

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

F-2

RETAIL VENTURES, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
February 2, 2008 and February 3, 2007
(in thousands, except share amounts)

	February 2,			February 3,
	2008			2007
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	149,900		$	144,037
Accounts payable to related parties		2,431			48,652
Accrued expenses:
Compensation		8,407			33,260
Taxes		22,857			19,696
Guarantees from discontinued operations		17,477
Other		59,461			60,769
Warrant liability		936			3,594
Warrant liability-related parties		41,277			212,806
Current liabilities of discontinued operations					90,694
Total current liabilities		302,746			613,508
Long-term obligations		157,793			168,053
Conversion feature of long-term debt					62,770
Other noncurrent liabilities		128,497			89,698
Deferred income taxes		29,657
Non current liabilities of discontinued operations					137,581
Minority interest		160,349			138,428
Commitments and contingencies
Shareholders’ equity:
Common shares, without par value; 160,000,000 authorized; issued and outstanding, including 7,551 treasury shares, 48,623,430 and 47,270,777 outstanding, respectively		305,254			276,690
Accumulated deficit		(130,577	)		(184,461	)
Treasury shares, at cost, 7,551 shares		(59	)		(59	)
Warrants		124
Accumulated other comprehensive loss		(1,819	)		(233	)
Accumulated other comprehensive loss from discontinued operations					(317	)
Total shareholders’ equity		172,923			91,620
Total liabilities and shareholders’ equity	$	951,965		$	1,301,658

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

F-3

RETAIL VENTURES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended February 2, 2008, February 3, 2007 and January 28, 2006
(in thousands, except per share amounts)

	February 2,			February 3,			January 28,
	2008			2007			2006
Net sales	$	1,871,904		$	1,706,533		$	1,533,396
Cost of sales		(1,120,899	)		(997,667	)		(915,009	)
Gross profit		751,005			708,866			618,387
Selling, general and administrative expenses		(694,108	)		(614,015	)		(561,845	)
Change in fair value of derivative instruments		96,276			(53,012	)		(151	)
Change in fair value of derivative instruments- related parties		151,917			(122,943	)		(144,058	)
License fees and other income		6,576			4,638			2,843
Operating profit (loss)		311,666			(76,466	)		(84,824	)
Non-related parties interest expense		(13,536	)		(7,159	)		(4,125	)
Related parties interest expense		(12	)		(2,284	)		(7,407	)
Total interest expense		(13,548	)		(9,443	)		(11,532	)
Interest income		10,472			7,306			—
Interest expense, net		(3,076	)		(2,137	)		(11,532	)
Income (loss) from continuing operations before income taxes and minority interest		308,590			(78,603	)		(96,356	)
Income tax expense		(86,607	)		(25,873	)		(23,745	)
Income (loss) from continuing operations before minority interest		221,983			(104,476	)		(120,101	)
Minority interest		(19,879	)		(24,166	)		(7,002	)
Income (loss) from continuing operations		202,104			(128,642	)		(127,103	)
Loss from discontinued operations, net of tax		(150,662	)		(22,271	)		(56,315	)
Net income (loss)	$	51,442		$	(150,913	)	$	(183,418	)
Basic earnings (loss) per share from continuing operations	$	4.20		$	(2.85	)	$	(3.29	)
Diluted earnings (loss) per share from continuing operations	$	3.56		$	(2.85	)	$	(3.29	)
Basic loss per share from discontinued operations	$	(3.13	)	$	(0.49	)	$	(1.46	)
Diluted loss per share from discontinued operations	$	(2.65	)	$	(0.49	)	$	(1.46	)
Basic earnings (loss) per share	$	1.07		$	(3.35	)	$	(4.75	)
Diluted earnings (loss) per share	$	0.91		$	(3.35	)	$	(4.75	)
Basic shares		48,165			45,088			38,586
Diluted shares		56,794			45,088			38,586

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

F-4

RETAIL VENTURES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Years Ended February 2, 2008, February 3, 2007 and January 28, 2006
(in thousands)

	Number of Shares
											Retained									Accumulated
			Common								Earnings			Deferred						Other
	Common		Shares in		Common						(Accumulated			Compensation			Treasury			Comprehen-
	Shares		Treasury		Shares			Warrants			Deficit)			Expense			Shares			sive Loss			Total
Balance, January 29, 2005		34,111		8	$	143,477		$	6,074		$	42,756		$	(3	)	$	(59	)	$	(7,068	)	$	185,177
Loss from continuing operations												(127,103	)											(127,103	)
Loss from discontinued operations												(56,315	)											(56,315	)
Change in minimum pension liability, net of income tax benefit of $495																					159			159
Change in minimum pension liability, net of income tax benefit of $429, discontinued operations																					(20	)		(20	)
Total comprehensive loss																								(183,279	)
Initial public offering of subsidiary												104,187												104,187
Capital transactions of subsidiary												393												393
Exercise of stock options		5,754				26,286																		26,286
Excess tax benefit related to stock option excercises						9,974																		9,974
Amortization of deferred compensation expense															2									2
Warrant reclassification to liability									(6,074	)														(6,074	)
Warrant adjustment to fair value						(20,120	)																	(20,120	)
Balance, January 28, 2006		39,865		8	$	159,617		$			$	(36,082	)	$	(1	)	$	(59	)	$	(6,929	)	$	116,546
Loss from continuing operations												(128,642	)											(128,642	)
Loss from discontinued operations												(22,271	)											(22,271	)
Change in minimum pension liability, net of income tax expense of $44																					500			500
Change in minimum pension liability, net of income tax expense of $109, discontinued operations																					692			692
Total comprehensive loss																								(149,721	)
Capital transactions of subsidiary												2,534												2,534
Stock based compensation expense, before related tax effects						634																		634
Exercise of stock options		406				2,934																		2,934
Exercise of warrants		7,000				110,317																		110,317
Deferred income tax adjustment						3,189																		3,189
Reclassification of unamortized deferred compensation						(1	)								1
Adjustment to initially apply FASB Statement No. 158, net of tax expense of $1,543																					2,403			2,403
Adjustment to initially apply FASB Statement No. 158, net of tax expense of $1,787, discontinued operations																					2,784			2,784
Balance, February 3, 2007		47,271		8	$	276,690		$			$	(184,461	)	$			$	(59	)	$	(550	)	$	91,620

F-5

RETAIL VENTURES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Continued)
Years Ended February 2, 2008, February 3, 2007 and January 28, 2006
(in thousands)

	Number of Shares
									Retained							Accumulated
			Common						Earnings			Deferred				Other
	Common		Shares in		Common				(Accumulated			Compensation	Treasury			Comprehen-
	Shares		Treasury		Shares		Warrants		Deficit)			Expense	Shares			sive Loss			Total
Balance, February 3, 2007		47,271		8	$	276,690	$		$	(184,461	)	$	$	(59	)	$	(550	)	$	91,620
Income from continuing operations										202,104										202,104
Loss from discontinued operations										(150,662	)									(150,662	)
Change in minimum pension liability, net of income tax expense of $1,004																	(1,269	)		(1,269	)
Total comprehensive income																				50,173
Capital transactions of subsidiary										3,083										3,083
Cumulative effect of FIN 48 adoption for discontinued operations										(641	)									(641	)
Reclassification of stock appreciation rights						1,934														1,934
Stock based compensation expense, before related tax effects						947														947
Exercise of stock options		19				71														71
Exercise of warrants		1,333				25,612														25,612
Issuance of warrants								124												124
Balance, February 2, 2008		48,623		8	$	305,254	$	124	$	(130,577	)	$	$	(59	)	$	(1,819	)	$	172,923

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

F-6

RETAIL VENTURES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended February 2, 2008, February 3, 2007 and January 28, 2006
(in thousands)

	February 2,			February 3,			January 28,
	2008			2007			2006
Cash flows from operating activities:
Net income (loss)	$	51,442		$	(150,913	)	$	(183,418	)
Less: Loss from discontinued operations, net of tax		150,662			22,271			56,315
Income (loss) before discontinued operations		202,104			(128,642	)		(127,103	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of debt issuance costs and discount on debt		3,495			2,147			1,044
Amortization of deferred compensation					1			2
Stock based compensation expense		947			634
Stock based compensation expense of subsidiary		3,083			2,534
Depreciation and amortization		40,785			33,071			30,997
Change in fair value of derivative instruments (($151,917), $122,943 and $144,058 - related party)		(248,193	)		175,955			144,209
Deferred income taxes and other noncurrent liabilities		70,931			(21,475	)		2,050
Excess tax benefit related to stock option exercises								9,472
Impairment of assets		5,622			832			507
Loss on disposal of assets		350			1,183			1,305
Minority interest in consolidated subsidiary		19,879			24,166			7,002
Other		(186	)		1,865			1,586
Change in working capital, assets and liabilities:
Accounts receivable		(3,482	)		(1,262	)		9,216
Inventories		(10,760	)		(43,935	)		(11,161	)
Prepaid expenses and other assets		(4,690	)		(9,186	)		(7,936	)
Accounts payable		9,396			26,721			(11,969	)
Proceeds from lease incentives		14,002			10,168			10,781
Accrued expenses		(27,052	)		9,536			8,598
Net cash provided by operating activities from continuing operations		76,231			84,313			68,600
Net cash provided by (used in) operating activities from discontinued operations		12,944			12,667			(35,856	)
Cash flows from investing activities:
Cash paid for property and equipment		(115,408	)		(58,657	)		(29,913	)
Purchases of available-for-sale investments		(209,855	)		(188,250	)
Maturities and sales from available-for-sale investments		226,000			89,600
Acquisition of tradename		(21	)
Net cash used in investing activities from continuing operations		(99,284	)		(157,307	)		(29,913	)
Net cash used in investing activities from discontinued operations		(658	)		(7,408	)		(16,421	)
Cash flows from financing activities:
Net (decrease) increase in revolving credit facility		(12,500	)		5,000			(40,021	)
Payments on notes to discontinued operations					(84,119	)		(190,322	)
Proceeds from issuance of Premium Income Exchangeable Securities					143,750
Proceeds from exercise of warrants		6,000			31,500
Proceeds from exercise of stock options		71			2,934			26,286
Debt issuance costs		(587	)		(6,156	)		(1,297	)
Proceeds from sale of stock of subsidiary								277,963
Net cash (used in) provided by financing activities from continuing operations		(7,016	)		92,909			72,609
Net cash (used in) provided by financing activities from discontinued operations		(29,487	)		(3,684	)		(50,454	)
Net (decrease) increase in cash and equivalents from continuing operations	$	(30,069	)	$	19,915		$	111,296
Cash and equivalents from continuing operations, beginning of year		143,020			123,105			11,809
Cash and equivalents from continuing operations, end of year	$	112,951		$	143,020		$	123,105
Net (decrease) increase in cash and equivalents from discontinued operations	$	(17,201	)	$	1,575		$	(1,823	)
Cash and equivalents from discontinued operations, beginning of year		17,201			15,626			17,449
Cash and equivalents from discontinued operations, end of year	$	0		$	17,201		$	15,626

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

F-7

1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Operations

Retail Ventures, Inc. (“Retail Ventures” or “RVI”) and its wholly-owned subsidiaries and majority-owned subsidiary are herein referred to collectively as the “Company”. Retail Ventures’ common shares are listed on the New York Stock Exchange under the ticker symbol “RVI”. The Company operates three segments in the United States of America (“United States”). Filene’s Basement, Inc. (“Filene’s Basement”) is an off-price retailer and DSW Inc. (“DSW”) is a specialty branded footwear retailer. The Corporate segment consists of all revenue and expenses that are not allocated to the other segments. As of February 2, 2008, there were 259 DSW stores located in major metropolitan areas throughout the United States and 36 Filene’s Basement stores located in major metropolitan areas in the northeast and midwest. DSW also supplies shoes, under supply arrangements, for 342 locations for other non-related retailers in the United States.

On July 5, 2005, DSW completed an initial public offering (“IPO”) of 16,171,875 Class A Common Shares sold at a price of $19.00 per share and raising net proceeds of $285.8 million, net of the underwriters’ commission and before expenses of approximately $7.8 million. As of February 2, 2008, Retail Ventures owned Class B Common Shares of DSW representing approximately 63.0% of DSW’s outstanding Common Shares and approximately 93.2% of the combined voting power of such shares. RVI accounted for the sale of DSW as a capital transaction. Associated with this transaction, a deferred tax liability of $65.5 million was recorded. DSW is a controlled subsidiary of Retail Ventures and its Class A Common Shares are listed on the New York Stock Exchange under the ticker symbol “DSW”.

On January 23, 2008, Retail Ventures disposed of an 81% ownership interest in its Value City Department Stores business to VCHI Acquisition Co., a newly formed entity owned by VCDS Acquisition Holdings, LLC, Emerald Capital Management LLC and Crystal Value, LLC. Retail Ventures received no net cash proceeds from the sale, paid a fee of $500,000 to the purchaser, and recognized an after-tax loss of $90.0 million on the transaction. As part of the transaction, Retail Ventures, Inc. issued warrants to VCHI Acquisition Co. to purchase 150,000 RVI common shares, at an exercise price of $10.00 per share, and exercisable within 18 months of January 23, 2008. To facilitate the change in ownership and operation of Value City Department Stores, Retail Ventures agreed to provide or arrange for the provision of certain transition services principally related to information technology, finance and human resources to Value City Department Stores for a period of one year unless otherwise extended by both parties.

Principles of Consolidation

The consolidated financial statements include the accounts of Retail Ventures, its wholly-owned subsidiaries and its majority-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. As a result of RVI’s disposition of an 81% ownership interest in its Value City operations during fiscal 2007, the results of Value City’s operations are included in discontinued operations (see Note 2 to the Consolidated Financial Statements).

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest to January 31. Fiscal year 2007 contains 52 weeks, fiscal year 2006 contains 53 weeks and fiscal 2005 contains 52 weeks. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates are required as a part of inventory valuation, depreciation, amortization, recoverability of long-lived assets, establishing reserves for insurance, calculating retirement benefits and derivative valuations. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, actual results could differ from these estimates.

Cash and Equivalents

Cash and equivalents represent cash, highly liquid investments with original maturities of three months or less at the date of purchase and credit card receivables which generally settle within three days to be cash equivalents.

F-8

Investments

Investments include auction rate securities and demand notes and are classified as available-for-sale securities. These securities are recorded at cost and have variable interest rates that typically reset every 3 to 189 days. All income generated from these investments is recorded as interest income.

The Company evaluates its investments for impairment and whether impairment is other-than-temporary, and measurement of an impairment loss. Based on the nature of the impairment(s), the Company would record a temporary impairment as an unrealized loss in comprehensive income or an other than temporary impairment in earnings. The Company did not recognize any impairment on investments during fiscal 2007, fiscal 2006 or fiscal 2005. Please see Note 5 for additional discussion of the investment in auction rate securities.

Accounts Receivable, Net

Accounts receivable are classified as current assets because the average collection period is generally less than one year. The carrying amount approximates fair value because of the relatively short average maturity of the instruments and no significant change in interest rates. The allowance for doubtful accounts was $0.2 million and $0.1 million at February 2, 2008 and February 3, 2007, respectively.

Concentration of Credit Risk

Financial instruments, which principally subject the Company to concentration of credit risk, consist of cash, equivalents, and short term investments. The Company invests excess cash when available through financial institutions in overnight investments. At times, such amounts may be in excess of FDIC insurance limits. The Company also maintains auction rate securities and demand notes with a creditworthy institution.

Concentration of Vendor Risk

During fiscal years 2007, 2006, and 2005, merchandise supplied to DSW by three key vendors accounted for approximately 21%, 22%, and 22% of net sales, respectively. During fiscal 2007, merchandise supplied to the Filene’s Basement segment by three key vendors accounted for approximately 12.4% of Filene’s Basement’s net sales in the aggregate.

Inventories

Merchandise inventories are stated at the realizable value, determined using the first-in, first-out basis, or market, using the retail inventory method. The retail 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 margins are calculated by applying a calculated cost to retail ratio to the retail value of inventories. The cost of the inventory reflected on the 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. Hence, earnings are negatively impacted as the merchandise is marked down prior to sale. Reserves to value inventory at its realizable value were $31.8 million and $25.0 million at the end of fiscal year 2007 and 2006, respectively.

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’ 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.

Pre-Opening Expenses

Pre-opening costs associated with the opening of new stores are expensed as incurred for stores opened during the fiscal year and those under construction and to be opened in future fiscal years. Pre-opening costs expensed were $10.0 million, $9.7 million and $8.4 million for fiscal 2007, 2006 and 2005, respectively. During these respective periods, the Company opened 37 DSW and seven Filene’s Basement stores in 2007, 29 DSW stores and five Filene’s Basement stores in 2006 and 29 DSW stores and one Filene’s Basement store in 2005.

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Property and Equipment

Depreciation and amortization are recognized principally on the straight line method in amounts adequate to amortize costs over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the shorter of their useful lives (10 years) or initial lease term. The estimated useful lives of furniture, fixtures and equipment are three to ten years.

Asset Impairment and Long-Lived Assets

The Company must periodically evaluate the carrying amount of its 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 from the asset. The Company’s review is conducted at the lowest identifiable level of cash flows which includes a store. The impairment loss recognized is the excess of the carrying value of the asset over its fair value, based on discounted future cash flows. The impairment loss is included in selling, general and administrative expense. Assets acquired for stores that have been previously impaired are not capitalized when acquired if the store’s expected future cash flow remains negative.

Impairment charges by segment, excluding goodwill, are as follows (in thousands):

	Fiscal Year
	2007		2006		2005
DSW	$	2,081	$	832	$	234
Filene’s Basement		3,541				273
	$	5,622	$	832	$	507

Store Closings

During fiscal 2007, the Company recorded additional reserves for the closing of one DSW store and two Filene’s Basement stores. During fiscal 2006, the Company recorded additional reserves for the closing of five DSW stores. The operating lease at one of the five stores was terminated through the exercise of a lease kick-out option. During the first quarter of 2006, the Company closed one Filene’s Basement store for which closing costs were accrued during the fourth quarter of 2005. These estimates are monitored on at least a quarterly basis for changes in circumstances.

The table below sets forth the significant components and activity related to these closing reserves (in thousands):

	Balance at		Related						Balance at
	2/3/07		Charges		Payments			Adjustments	2/2/08
Employee severance and termination benefits			$	2,104	$	(1,715	)	$	$	389
Lease Costs	$	75		300		(360	)			15
Other				771		(771	)
Total	$	75	$	3,175	$	(2,846	)	$	$	404

	Balance at		Related							Balance at
	1/28/06		Charges		Payments			Adjustments		2/3/07
Employee severance and termination benefits	$	86	$	37	$	(123	)
Lease Costs		282		552		(992	)	$	233	$	75
Other				64		(64	)
Total	$	368	$	653	$	(1,179	)	$	233	$	75

Goodwill

Goodwill represents the excess cost over the estimated fair values of net assets including identifiable intangible assets of businesses acquired. Goodwill is tested for impairment at least annually in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets.

F-10

Tradenames and Other Intangible Assets

Tradenames and other intangible assets are comprised of values assigned to names and leases the Company acquired. The accumulated amortization for these assets is $25.9 million and $23.5 million at February 2, 2008 and February 3, 2007, respectively. During fiscal 2007, the Company wrote off a tradename in its entirety. The impact of this write-off is included in discontinued operations in the statement of operations.

							Filene’s
	Corporate			DSW			Basement			Total
	(dollars in thousands)
As of February 2, 2008
Domain name:
Not subject to amortization				$	21					$	21
Tradenames:
Gross amount					12,750		$	9,900			22,650
Accumulated amortization					(8,287	)		(5,225	)		(13,512	)
Useful life				15 years			15 years
Favorable lease values:
Gross amount				$	140		$	23,057		$	23,197
Accumulated amortization					(102	)		(12,327	)		(12,429	)
Useful life				14 years			19 years
As of February 3, 2007
Tradenames:
Gross amount	$	4,066		$	12,750		$	9,900		$	26,716
Accumulated amortization		(814	)		(7,437	)		(4,565	)		(12,816	)
Useful life	15 years			15 years			15 years
Favorable lease values:
Gross amount				$	140		$	23,057		$	23,197
Accumulated amortization					(98	)		(10,598	)		(10,696	)
Useful life				14 years			17 years

Aggregate amortization expense for the current and each of the five succeeding years is as follows (in thousands):

					Filene’s
Fiscal Year	Corporate		DSW		Basement		Total
2007	$	271	$	854	$	2,389	$	3,514
2008				854		2,334		3,188
2009				854		1,531		2,385
2010				854		1,531		2,385
2011				854		1,531		2,385
2012				854		1,475		2,329

Self-insurance Reserves

The Company records estimates for certain health and welfare, workers compensation and casualty insurance costs that are self insured programs. Self insurance reserves include actuarial estimates of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet reported. The liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. Health and welfare estimates are calculated utilizing claims development estimates based on historical experience and other factors. Workers’ compensation and general liability estimates are calculated, utilizing claims development estimates based on historical experience and other factors. The Company has purchased stop loss insurance to limit its exposure to any significant exposure on a per person basis for health and welfare and on a per claim basis for workers compensation and general liability. Although the Company does not anticipate the amounts ultimately paid will differ significantly from the estimates, self-insurance reserves could be affected if future claim experience differs significantly from the historical trends and the actuarial assumptions. The self-insurance reserves were $3.0 million and $3.6 million at the end of fiscal 2007 and 2006, respectively.

Deferred Rent

Many of the Company’s operating leases contain predetermined fixed increases of the minimum rental rate during the initial lease term. For these leases, the Company recognizes the related rental expense on a straight-line basis and records the difference between the amount charged to expense and the rent paid as deferred rent and begins amortizing such deferred rent upon the delivery of the lease location by the lessor. The amounts included in the other noncurrent liabilities caption were $38.1 million and $32.4 million, at February 2, 2008 and February 3, 2007, respectively.

Construction and Tenant Allowances

The Company receives cash allowances from landlords, which are deferred and amortized on a straight-line basis over the life of the lease as a reduction of rent expense. These allowances are included in the caption other non-current liabilities and were $76.2 million and $57.0 million, at February 2, 2008 and February 3, 2007, respectively.

Revenue Recognition

Revenues from merchandise sales are recognized at the point of sale, net of returns and exclude sales tax. Revenue from gift cards is deferred and the revenue is recognized upon redemption of the gift card. Our policy is to recognize income from breakage of gift cards

F-11

when the likelihood of redemption of the gift card is remote. In the fourth quarter of fiscal 2007, it was determined that there was enough historical data to recognize income from gift card breakage. The Company recognized $0.4 million as miscellaneous income from gift card breakage in fiscal 2007. Prior to the fourth quarter of fiscal 2007, we had not recognized any income from gift card breakage.

Customer Loyalty Program

DSW maintains a customer loyalty program for the DSW stores in which program members receive a discount on future purchases. Upon reaching the target-earned threshold, members receive certificates for these discounts which must be redeemed within six months. During the third quarter of fiscal 2006 DSW re-launched its loyalty program, which included changing: the name from “Reward Your Style” to “DSW Rewards”, the points threshold to receive a certificate and the certificate amounts. The changes were designed to improve customer awareness, customer loyalty and DSW’s ability to communicate with its customers. DSW accrues the anticipated redemptions of the discount earned at the time of the initial purchase. To estimate these costs, DSW is required to make assumptions related to customer purchase levels and redemption rates based on historical experience. The accrued liability as of February 2, 2008 and February 3, 2007 was $6.4 million and $5.0 million, respectively.

Derivative Financial Instruments

In accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), as amended, the Company recognizes all derivatives on the balance sheet at fair value. For derivatives that are not designated as hedges under SFAS 133, changes in the fair values are recognized in earnings in the period of change. There were no derivatives designated as hedges outstanding as of February 2, 2008 or February 3, 2007. The Company does not hold or issue derivative financial instruments for trading purposes. Retail Ventures estimates the fair values of derivatives based on the Black-Scholes model using current market information and records all derivatives on the balance sheet at fair value.

Minority Interest

The minority interest liability represents the portion of DSW’s total shareholders’ equity owned by unaffiliated investors in DSW. The minority interest percentage is computed by the ratio of shares held by unaffiliated interests to total shares outstanding. Minority interest in the statement of operations is calculated using the same ratio. In the statement of cash flows, the non-cash minority interest represents the minority shareholders’ portion of DSW’s income as well as their allocable portion of DSW equity transactions other than retained earnings.

Earnings Per Share

Basic earnings per share is based on net income (loss) and a simple weighted average of common shares outstanding. Diluted earnings per share reflects the potential dilution of common shares, related to outstanding stock options, stock appreciation rights and warrants, calculated using the treasury stock method. The numerator for the diluted earnings (loss) per share calculation is the net income (loss). The denominator is the weighted average number of shares outstanding.

	Fiscal Year Ended
	February 2,		February 3,		January 28,
	2008		2007		2006
			(in thousands)
Assumed exercise of dilutive weighted average shares outstanding		48,165		45,088		38,586
Assumed exercise of dilutive stock appreciation rights		227
Assumed exercise of dilutive stock options		527
Assumed exercise of dilutive term loan warrants		2,607
Assumed exercise of dilutive conversion warrants		5,268
Number of shares for computation of dilutive earnings per share		56,794		45,088		38,586

F-12

The amount of securities outstanding at February 2, 2008, February 3, 2007 and January 28, 2006 that were not included in the computation of dilutive earnings per share because the equity unit’s exercise price was greater than the average market price of the common shares for the period and, therefore, the effect would be anti-dilutive, was as follows (in thousands):

	February 2,		February 3,		January 28,
	2008		2007		2006
VCHI warrants		150
Stock options		334		1,335		1,782
SARs		499		978		1,308
Term loan warrants				4,413		4,413
Conversion warrants				9,667		16,667
Total of all potentially dilutive instruments		983		16,393		24,170

Stock-Based Compensation

For purposes of applying the provisions of SFAS No. 123 (revised 2004) Share-Based Payment (“SFAS 123R”), the fair value of options granted is estimated on the date of grant using the Black-Scholes option pricing model. See Note 4 for a detailed discussion of stock-based compensation.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The Company presents other comprehensive income (loss) in its consolidated statements of shareholders’ equity.

Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. The evaluation of a tax position in accordance with FIN 48 is a two step process. The first step is recognition: The enterprise determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is measurement: A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. FIN 48 provides for a cumulative effect of a change in accounting principle to be recorded upon the initial adoption. This interpretation is effective for fiscal years beginning after December 15, 2006. The impact of the adoption of this statement is described in Note 12.

In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements (“SFAS 157”) which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The intent of this standard is to ensure consistency and comparability in fair value measurements and enhanced disclosures regarding the measurements. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. FASB has provided a one-year deferral for the implementation of SFAS 157 for non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis. The Company is currently evaluating the impact this statement may have on its consolidated financial statements.

In September 2006, the FASB issued FASB Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans- an amendment of FASB Statements No. 87, 88, 106, and 132(R) (“SFAS 158”), which requires an employer to recognize the overfunded or underfunded status of a defined benefit post-retirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity. This statement also requires the employer to measure the funded status of the plan as of the date of its year-end statement of financial position. The employer still must disclose any additional information about certain effects of net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation in the notes to financial statements. The adoption of SFAS 158 at February 3, 2007 decreased its liabilities by $2.4 million and increased shareholders’ equity by $2.4 million. These changes to the Company’s financial statements were non-cash and have no impact on the Company’s existing debt covenants, credit ratings or financial flexibility.

F-13

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). This statement allows entities to choose to measure financial instruments and certain other financial assets and financial liabilities at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact this statement may have on its consolidated financial statements.

In December 2007, the FASB issued FASB Statement No. 141R, Business Combinations, (“SFAS 141R”), FAS 141R establishes a framework for how an acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures the goodwill acquired in a business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R will be effective for fiscal years beginning after December 15, 2008 and early adoption is not permitted. Adoption of SFAS 141R will not impact our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. This statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary (previously referred to as minority interest) and for the deconsolidation of a subsidiary. This statement shall be applied prospectively as of the beginning of the fiscal year in which this statement is initially adopted, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with early adoption prohibited. The Company is currently evaluating the impact this statement may have on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, (“SFAS 161”). This statement establishes enhanced disclosures about the entity’s derivative and hedging activities. This statement is effective for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. Adoption of SFAS 161 will result in enhanced disclosure regarding the Company’s derivatives.

2. DISCONTINUED OPERATIONS

On January 23, 2008, Retail Ventures disposed of an 81% ownership interest in its Value City operations to VCHI Acquisition Co., a newly formed entity owned by VCDS Acquisition Holdings, LLC, Emerald Capital Management LLC and Crystal Value, LLC. Retail Ventures received no net cash proceeds from the sale, paid a fee of $500,000 to the purchaser, and recognized an after-tax loss of $90.0 million on the transaction. As part of the transaction, Retail Ventures issued warrants to VCHI Acquisition Co. to purchase 150,000 RVI Common Shares, at an exercise price of $10.00 per share, and exercisable within 18 months of January 23, 2008. To facilitate the change in ownership and operation of Value City Department Stores, Retail Ventures agreed to provide or arrange for the provision of certain transition services principally related to information technology, finance and human resources to Value City Department Stores for a period of one year unless otherwise extended by both parties.

Included in the fiscal 2007 loss from discontinued operations of $150.7 million is $60.7 million of after-tax net loss for the Value City operations through January 22, 2008 and the loss on the sale of the Value City operations of $90.0 million. The loss on the sale is comprised of $26.6 million for the recording of guarantees, the write off of the remaining investment in the discontinued operations and the balance was related to the transfer of assets. See additional information regarding the guarantees within Note 11 to the consolidated financial statements.

The following table presents the significant components of Value City operating results included in discontinued operations.

	Fiscal Years Ended
	February 2,			February 3,			January 28,
	2008			2007			2006
	(in thousands)
Net sales	$	1,172,687		$	1,361,125		$	1,379,975
Loss before income taxes	$	(60,653	)	$	(33,514	)	$	(66,836	)
Income tax benefit					11,243			10,521
Loss from discontinued operations, net of tax	$	(60,653	)	$	(22,271	)	$	(56,315	)

F-14

The following table presents the assets and liabilities of Value City reflected as discontinued operations in the Consolidated Balance Sheet (in thousands).

	February 3,
	2007
Cash	$	17,201
Restricted cash		511
Accounts receivable, net		7,667
Inventories		217,024
Prepaid expenses and other		8,933
Total current assets		251,336
Property and equipment, net		100,440
Tradenames and intangibles, net		8,574
Other non current assets		3,448
Total non current assets		112,462
Total assets	$	363,798
Accounts payable, net	$	24,647
Accrued expenses		65,281
Current maturities of long-term obligations		766
Total current liabilities		90,694
Note payable to parent		34,441
Long-term obligations, net of current maturities		97,730
Other non current liabilities		5,410
Total non current liabilities		137,581
Total liabilities	$	228,275

3. RELATED PARTY TRANSACTIONS

The Company purchases merchandise from affiliates of Schottenstein Stores Corporation (“SSC’’), the direct owner of approximately 39.5% of the common shares of Retail Ventures (excluding common shares underlying warrants held by SSC). The amount of purchases from SSC and its affiliates in fiscal 2007, fiscal 2006 and fiscal 2005 was $0.7 million, $2.2 million and $2.4 million, respectively.

The Company also leases certain store and warehouse locations owned by SSC.

Accounts receivable from and payable to SSC and its affiliates principally result from commercial transactions with entities owned or controlled by SSC or intercompany transactions with SSC. Settlement of affiliate receivables and payables are in the form of cash. These transactions settle normally in 30 to 60 days. The Company shares certain personnel, administrative and service costs with SSC and its affiliates. The costs of providing these services are allocated among the Company, SSC and its affiliates without a premium. The allocated amounts are not significant. SSC does not charge the Company for general corporate management services. SSC provides certain real estate services to the Company for which the Company expensed $0.2 million in fiscal 2007. In fiscal 2007, SSC also assisted in the closing of the Downtown Crossing Boston store, resulting in expense to the Company of $0.7 million.

Cerberus, as a beneficial owner of approximately 4.3% of the outstanding common shares of Retail Ventures, is also a related party. Cerberus is the holder of 1,731,460 term loan warrants as of February 2, 2008.

See Notes 6, 7 and 10 to the consolidated financial statements for additional related party disclosures.

4. STOCK BASED COMPENSATION

On January 29, 2006, Retail Ventures adopted the fair value recognition provisions of SFAS 123R relating to its stock-based compensation plans. Prior to January 29, 2006, Retail Ventures had accounted for stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations (“APB 25”). In accordance with APB 25, compensation expense for employee stock options was generally not recognized for options granted that had an exercise price equal to the market value of the underlying common shares on the date of grant.

Under the modified prospective method of SFAS 123R, compensation expense was recognized during the year ended February 2, 2008 for all unvested stock options, based on the grant date fair value estimated in accordance with the original provisions of SFAS

F-15

123, and for all stock based payments granted after January 29, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. Stock-based compensation expense was recorded in selling, general and administrative expenses in the Consolidated Statements of Operations. Retail Ventures’ financial results for the prior periods have not been restated as a result of this adoption.

Prior to the adoption of SFAS 123R, the Company presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Consolidated Statements of Cash Flows. Beginning in fiscal 2006 with the adoption of SFAS 123R, the cash flows resulting from the tax benefits resulting from tax deductions in excess of compensation expense recognized for those options (excess tax benefits) are classified as financing cash flows.

Consistent with the valuation method used for the disclosure only provisions of SFAS 123, the Company is using the Black-Scholes option-pricing model to value stock-based compensation expense. This model assumes that the estimated fair value of options is amortized over the options’ vesting periods and the compensation costs would be included in selling, general and administrative costs in the Consolidated Statements of Operations. RVI recognizes compensation expense for stock option awards granted subsequent to the adoption of SFAS 123R and time-based restricted stock awards on a straight-line basis over the requisite service period of the award. Compensation expense for stock option awards granted prior to the adoption of SFAS 123R is recorded using an accelerated method.

Retail Ventures Stock Compensation Plans

The Company has a 2000 Stock Incentive Plan that provides for the issuance of options to purchase up to 13,000,000 common shares or the issuance of restricted stock to management, key employees of Retail Ventures and affiliates, consultants (as defined in the plan), and directors of Retail Ventures. Options generally vest 20% per year on a cumulative basis. Options granted under the 2000 Stock Plan remain exercisable for a period of ten years from the date of grant.

An option to purchase 2,500 common shares is automatically granted to each non-employee director on the first New York Stock Exchange trading day in each calendar quarter. The exercise price for each option is the fair market value of the common shares on the date of grant. All options become exercisable one year after the grant date and remain exercisable for a period of ten years from the grant date, subject to continuation of the option holders’ service as directors of the Company.

The Company has a 1991 Stock Option Plan that provided for the grant of options to purchase up to 4,000,000 common shares. Such options are generally exercisable 20% per year on a cumulative basis and remain exercisable for a period of ten years from the date of grant.

During fiscal 2007 and 2006, included in income from continuing operations is stock based compensation expense of approximately $5.1 million and $4.0 million, respectively, which includes approximately $4.2 million and $3.4 million, respectively, of expenses recorded by DSW. In fiscal 2007 and 2006, the impact of FAS123R on the Company’s basic and diluted earnings per share was a negative $0.04 and a negative $0.03, respectively.

The following table illustrates the pro forma effect on net loss and loss per share for fiscal 2005 if the Company had applied the fair value recognition of SFAS 123 (in thousands, except per share amounts):

	January 28,
	2006
Net loss, as reported	$	(183,418	)
Add: Stock-based employee compensation expense included in reported net loss, net of tax		4,698
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards		(5,748	)
Pro forma net loss	$	(184,468	)
Loss per share:
Basic and diluted as reported	$	(4.75	)
Basic and diluted pro forma	$	(4.78	)

F-16

Stock Options

Forfeitures of options are estimated at the grant date based on historical rates and reduce the compensation expense recognized. The risk-free interest rate is based on the yield for the U.S. Treasury securities with a remaining life equal to the five year expected term of the options at the grant date. Expected volatility is based on the historical volatility of Retail Ventures Common Shares. The expected term of options granted is derived from historical data on exercises. The expected dividend yield is zero, which is based on the Company’s history and current intent of not declaring dividends to shareholders.

The weighted-average grant date fair value of options granted in fiscal 2007, 2006 and 2005 was $8.00 per share, $9.18 per share and $6.34 per share, respectively. The following table illustrates the weighted-average assumptions used in the option-pricing model for options granted in each of the periods presented:

	Fiscal year ended
	February 2,			February 3,			January 28,
	2008			2007			2006
Assumptions
Risk-free interest rate		4.4	%		4.6	%		4.3	%
Expected volatility of Retail Ventures Common Shares		56.1	%		62.5	%		71.8	%
Expected option term	5.0		years	4.8		years	4.5		years
Expected dividend yield		0.0	%		0.0	%		0.0	%

The following table summarizes the Company’s stock options for fiscal 2007, including the related Weighted Average Exercise Prices (“WAEP”), Weighted Average Remaining Contract Life (“WARCL”) and Weighted Average Grant Date Fair Value (“GDFV”), using the Black-Scholes option pricing model (shares and aggregate intrinsic value in thousands):

	Shares			WAEP
Outstanding beginning of year		1,335		$	5.59
Granted		50		$	15.09
Exercised		(19	)	$	3.67
Canceled		(54	)	$	5.83
Outstanding end of year		1,312		$	5.97
Options exercisable end of year		1,207		$	5.76
Shares available for additional grants		5,629

							Weighted
							Average	Aggregate
							Remaining	Intrinsic
Year ended February 2, 2008:	Shares		WAEP		GDFV		Contract Life	Value
Options outstanding		1,312	$	5.97	$	3.61	4 years	$	3,244
Options vested or expected to vest		1,304	$	5.96	$	3.61	4 years	$	3,224
Options exercisable		1,207	$	5.76	$	3.51	4 years	$	2,982

The aggregate intrinsic value is calculated as the amount by which the fair value of the underlying common shares exceeds the option exercise price. Total intrinsic value of options exercised during fiscal 2007, 2006 and 2005 was $0.3 million, $3.5 million and $28.6 million, respectively.

As of the end of fiscal 2007, the total compensation cost related to nonvested options not yet recognized was $0.1 million with a weighted average expense recognition period remaining of 2.1 years. The total fair value of options that vested during fiscal 2007, 2006 and 2005 was $0.6 million, $1.9 million and $ 1.6 million, respectively.

Stock Appreciation Rights

The SARs are subject to an Option Price Protection Provision (“OPPP”) which provides that until the Company receives certain approvals from its lenders, the issuance of the options underlying the SARs is contingent. Further, if any of these SARs would have vested before they are actually granted, at or after that time, the grantee may exercise the OPPP on some or all of the SARs that would have vested. Pursuant to an exercise of SARs, the grantee is compensated by the Company in the amount of the gain, if any, represented by the difference between the closing price of the RVI Common Shares on the New York Stock Exchange on the date of the exercise and the strike price per share. The OPPP does not apply once SARs are actually granted. SARs are granted to employees

F-17

and are subject to a vesting schedule or a performance vesting formula, as applicable. Prior to fiscal 2007, SARs were recorded as liabilities in the balance sheets due to their ability to be settled in cash or common shares and the historical exercises being settled in cash.

During fiscal 2007, the Compensation Committee of the Board of Directors determined to settle all future exercises of SARs granted under the 2000 Stock Incentive Plan in the form of common shares, except as prohibited by the individual’s award agreement. As a result of this change, $1.9 million was reclassified from noncurrent liabilities to equity on the balance sheet, including $0.7 million accrued by the discontinued operations.

SARs generally vest ratably over five years although some of the more recent grants vest over a three year period with 50% vesting at the end of the third year. The exercise price is equal to the fair market value on the date of the grant. SARs compensation costs of negative $2.5 million, $7.4 million and $6.2 million were recorded in continuing operations during fiscal 2007, fiscal 2006 and fiscal 2005, respectively, relating to SARs. Included in the SARs expense for fiscal 2006 and fiscal 2005 are expenses relating to the accelerated vesting of some performance based SARs. During fiscal 2007, 2006 and 2005 approximately $0.3 million, $5.1 million and $3.2 million, respectively, was paid to settle exercised SARs by continuing operations. Compensation costs of less than $0.1 million, $2.1 million and $1.3 million was recorded by the discontinued operations in fiscal 2007, 2006 and 2005, respectively. During fiscal 2007, 2006 and 2005, the discontinued operations paid less than $0.1 million $1.3 million and $0.7 million, respectively, to settle exercised SARs.

The following table summarizes the Company’s SARs for the year ended February 2, 2008 (shares in thousands):

	Fiscal year ended February 2, 2008
	Shares			WAEP
Outstanding beginning of period		978		$	9.49
Granted		140		$	20.72
Exercised		(205	)	$	6.21
Forfeited		(188	)	$	13.05
Outstanding end of period		725		$	11.66
Exercisable end of period		307		$	7.97

The weighted-average grant date fair value of SARs granted during fiscal 2007 was $10.69 per share. The weighted-average assumptions used in the Black-Scholes option-pricing model for SARs granted in fiscal 2007 were: risk-free interest rate of 4.5%; expected volatility of 54.5%; expected term of 5.0 years and an expected dividend yield of 0.09%.

Restricted Stock Units

The Company issues restricted stock units to certain executives of the Company. The restricted stock units issued by Retail Ventures, generally vest over three years, in one-third increments per year and are settled immediately upon vesting. The restricted stock units are settled only in cash in an amount equal to the fair market value of an equivalent number of the Company’s common shares on the date of vesting. The restricted stock units provide that no common shares of the Company will be issued, authorized, reserved, purchased or sold at any time in connection with the restricted stock units. The restricted stock units are under no circumstances considered common shares nor do they entitle the holder of the restricted stock units to the exercise of any other rights arising from the ownership of common shares, including dividend and voting rights.

Total compensation expense costs recognized for continuing operations related to the restricted stock units in fiscal 2007, fiscal 2006 and fiscal 2005 was a negative $0.6 million, $2.1 million and $2.4 million, respectively. The amount of restricted stock units attributable to continuing operations accrued at February 2, 2008 and February 3, 2007 was $0.2 million and $1.7 million, respectively. The Company paid $0.9 million, $1.9 million and $1.3 million to settle vested restricted stock units in fiscal 2007, 2006 and fiscal 2005 respectively for continuing operations.

The discontinued operations recorded compensation expense related to the restricted stock units in fiscal 2007, fiscal 2006 and fiscal 2005 of negative $0.3 million, $0.7 million and $0.9 million, respectively. The amount of restricted stock units accrued by discontinued operations at February 3, 2007 was $0.6 million. The discontinued operations paid $0.3 million, $0.6 million and $0.5 million to settle vested restricted stock units in fiscal 2007, 2006 and 2005, respectively.

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The following table summarizes the Company’s outstanding restricted stock units for fiscal 2007 and 2006 (units in thousands):

	Fiscal year ended			Fiscal year ended
	February 2, 2008			February 3, 2007
	Units			Units
Outstanding beginning of period		170			300
Granted		47			35
Vested		(160	)		(160	)
Forfeited					(5	)
Outstanding end of period		57			170

DSW Stock Compensation Plan

DSW has a 2005 Equity Incentive Plan that provides for the issuance of equity awards to purchase up to 4,600,000 common shares, including stock options and restricted stock units to management, key employees of DSW and affiliates, consultants (as defined in the plan), and directors of DSW. Options generally vest 20% per year on a cumulative basis. Options granted under the 2005 Equity Incentive Plan generally remain exercisable for a period of ten years from the date of grant. Prior to fiscal 2005, DSW did not have a stock option plan or any equity units outstanding.

Stock Options

Forfeitures of options are estimated at the grant date based on historical rates of RVI’s stock option activity and reduce the compensation expense recognized. The expected term of options granted is derived from historical data of RVI’s stock options due to the limited historical data on DSW stock activity. The risk-free interest rate is based on the yield for U.S. Treasury securities with a remaining life equal to the five year expected term of the options at the grant date. The expected dividend yield is zero, which is based on DSW’s intention of not declaring dividends to shareholders combined with the limitations on declaring dividends as set forth in DSW’s credit facility.

The following table illustrates the weighted-average assumptions used in the Black-Scholes option-pricing model for options granted in each of the periods presented.

	February 2,			February 3,			January 28,
	2008			2007			2006
Assumptions:
Risk-free interest rate		4.5	%		4.6	%		4.1	%
Year end volatility of DSW common stock		39.4	%		39.9	%		42.3	%
Expected option term	5.0		years	4.8		years	5.0		years
Dividend yield		0.0	%		0.0	%		0.0	%

The weighted average grant date fair value of each DSW option granted in fiscal years 2007, 2006 and 2005 was $17.27, $13.01 and $8.43, respectively. As of February 2, 2008, the total compensation cost related to nonvested options not yet recognized was approximately $8.7 million, with a weighted average expense recognition period remaining of 3.4 years. The following tables summarize DSW’s stock options, including the related per share Weighted Average Exercise Prices (“WAEP”) and Weighted Average Grant Date Fair Value (“GDFV”), using the Black-Scholes option pricing model. (shares and intrinsic value in thousands):

	Year Ended
	February 2, 2008
	Shares			WAEP
Outstanding beginning of year		1,084		$	22.14
Granted		527		$	41.67
Exercised		(13	)	$	20.04
Forfeited		(78	)	$	27.46
Outstanding end of year		1,520		$	28.65
Options exercisable end of year		379		$	20.90
Shares available for additional grants		2,832

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							Weighted
							Average	Aggregate
							Remaining	Intrinsic
Year ended February 2, 2008:	Shares		WAEP		GDFV		Contract Life	Value
Options outstanding		1,520	$	28.65	$	12.12	8 years	$	683
Options vested or expected to vest		1,435	$	30.34	$	12.06	8 years	$	655
Options exercisable		379	$	20.90	$	9.00	8 years	$	297

The aggregate intrinsic value is calculated as the amount by which the fair value of the underlying common shares exceeds the option exercise price. The total intrinsic value of options exercised during the years ended February 2, 2008, February 3, 2007 and January 28, 2006 was $0.2 million, $0.5 million and less than $0.1 million, respectively. The total fair value of options that vested during the years ended February 2, 2008 and February 3, 2007 was $2.0 million and $1.6 million, respectively. There were no options that vested during the year ended January 28, 2006.

Restricted Stock Units

Restricted stock units generally cliff vest at the end of four years from the date of grant and are settled immediately upon vesting. Restricted stock units granted to employees that are subject to the risk of forfeiture are not included in the computation of basic earnings per share.

Compensation cost is measured at fair value on the grant date and recorded over the vesting period. Fair value is determined by multiplying the number of units granted by the grant date market price. The total aggregate intrinsic value of nonvested restricted stock units at February 2, 2008 and February 3, 2007 was $3.0 million and $5.5 million, respectively. As of February 2, 2008 and February 3, 2007, the total compensation cost related to nonvested restricted stock units not yet recognized was approximately $1.9 million and $2.1 million, respectively, with a weighted average expense recognition period remaining of 1.6 years and 2.3 years, respectively. The weighted average exercise price for all restricted stock units is zero.

The following table summarizes DSW’s restricted stock units for the periods presented (shares in thousands):

	Fiscal year ended February 2, 2008					Fiscal year ended February 3, 2007
				Weighted-Average					Weighted-Average
				Grant Date Fair					Grant Date Fair
	Units			Value		Units			Value
Outstanding beginning of period		135		$	22.03		131		$	20.46
Granted		29		$	28.69		23		$	30.91
Exercised/ Vested		(10	)	$	24.85		(10	)	$	24.85
Forfeited		(3	)	$	27.96		(9	)	$	19.00
Outstanding end of period		151		$	23.92		135		$	22.03

Director Stock Units

DSW issues stock units to directors who are not employees of DSW or RVI. During the years ended February 2, 2008 and February 3, 2007, DSW granted 10,398 and 10,525 director stock units, respectively, and expensed $0.3 million in both fiscal years, related to these grants. Stock units are automatically granted to each director who is not an employee of DSW or RVI on the date of each annual meeting of shareholders for the purpose of electing directors. The number of stock units granted to each non-employee director is calculated by dividing one-half of the director’s annual retainer (including committee retainer fees but excluding any amount paid for service as the chair of a board committee) by the fair market value of a share of the DSW Class A Common Shares on the date of the meeting. In addition, each director eligible to receive compensation for board service may elect to have the cash portion of such directors compensation paid in the form of stock units. Stock units granted to directors vest immediately and are settled upon the director terminating service from the board. Stock units granted to directors which are not subject to forfeiture are considered to be outstanding for the purposes of computing basic earnings per share. The exercise price of the director stock units is zero. As of February 2, 2008, 37,936 director stock units had been issued and no director stock units had been settled.

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5. INVESTMENTS

During the years ended February 2, 2008 and February 3, 2007, $209.9 million and $188.3 million, respectively, of cash was used to purchase available-for-sale securities while $226.0 million and $89.6 million, respectively, was generated by the sale of available-for-sale securities. As of February 2, 2008 and February 3, 2007, DSW held $70.0 million and $98.7 million in short-term investments, respectively. At February 2, 2008, DSW held $12.5 million in long-term investments, and at February 3, 2007, DSW had no long-term investments.

DSW’s long-term investments balance includes $10.0 million in auction rate securities that failed at auction subsequent to February 2, 2008 and were presented as long-term as it is unknown if DSW will be able to liquidate these securities within one year. In fiscal 2007, DSW did not record any impairment related to these investments as it does not believe that the underlying credit quality of the assets has been impacted by the reduced liquidity of these investments.

6. LEASES

The Company leases stores and warehouses under various arrangements with related and unrelated parties. Such leases expire through 2024 and in most cases provide for renewal options. Generally, the Company is required to pay real estate taxes, maintenance, insurance and contingent rentals based on sales in excess of specified levels. There were no capital leases outstanding during fiscal 2007 or 2006 in continuing operations.

Future minimum lease payments required under the aforementioned leases, exclusive of real estate taxes, insurance and maintenance costs, at February 2, 2008 are as follows (in thousands):

	Operating Leases
			Unrelated		Related
Fiscal Year	Total		Party		Party
2008	$	163,002	$	145,486	$	17,516
2009		166,087		148,315		17,772
2010		159,920		142,190		17,730
2011		149,997		132,118		17,879
2012		134,380		116,096		18,284
Future Years		620,676		497,714		122,962
Total minimum lease payments	$	1,394,062	$	1,181,919	$	212,143

The composition of rental expense was as follows (in thousands):

	February 2,		February 3,		January 28,
	2008		2007		2006
Minimum rentals:
Unrelated parties	$	125,381	$	108,741	$	100,548
Related parties		12,945		10,311		8,825
Contingent rentals:
Unrelated parties		25,391		17,749		17,311
Related parties
Total	$	163,717	$	136,801	$	126,684

Many of the Company’s leases contain fixed escalations of the minimum annual lease payments during the original term of the lease. For these leases, the Company recognizes rental expense on a straight-line basis and records the difference between the average rental amount charged to expense and the amount payable under the lease as deferred rent. At the end of fiscal 2007 and 2006, the balance of deferred rent was $38.1 million and $32.4 million, respectively, and is included in other noncurrent liabilities. Certain store and warehouse leases provided landlord incentives totaling $76.2 million and $57.0 million in fiscal 2007 and 2006, respectively. These incentives are recorded as other noncurrent liabilities in the accompanying consolidated balance sheet and are amortized as a reduction of rent expense over the remaining minimum lease term.

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7. LONG TERM OBLIGATIONS

Long term obligations consist of the following (in thousands):

	February 2,			February 3,
	2008			2007
Credit facilities:
Revolving credit facilities	$	22,500		$	35,000
Senior Loan Agreement — related parties		250
Premium Income Exchangeable Securities (“PIES”)		143,750			143,750
Discount on PIES		(8,707	)		(10,697	)
	$	157,793		$	168,053
Letters of credit outstanding:
Filene’s Basement revolving credit facility	$	3,360
Continuing operations under previous VCDS revolving credit facility				$	2,087
DSW revolving credit facility	$	15,711		$	13,448
Availability under revolving credit facilities:
Filene’s Basement revolving credit facility	$	26,996
Continuing operations under previous VCDS revolving credit facility				$	16,839
DSW revolving credit facility	$	134,289		$	136,552

On July 5, 2005, Retail Ventures amended, or amended and restated, its prior credit facilities, including certain facilities under which DSW had rights and obligations as a co-borrower and co-guarantor, and replaced them with an aggregate $475.0 million of financing that consisted of three separate credit facilities: (i) a four-year amended and restated $275.0 million revolving credit facility (the “VCDS Revolving Loan”) under which Value City, Retail Ventures and certain wholly-owned subsidiaries of Retail Ventures (other than DSW and DSWSW) were co-borrowers or co-guarantors, (ii) a five-year $150.0 million revolving credit facility (the “DSW Revolving Loan”) under which DSW and DSWSW are co-borrowers and co-guarantors, and (iii) an amended and restated $50.0 million senior non-convertible loan facility, which was held equally by Cerberus and SSC (the “Non-Convertible Loan”), under which Value City is the borrower and Retail Ventures and certain wholly-owned subsidiaries of Retail Ventures (other than DSW and DSWSW) were co-guarantors. On January 23, 2008, Filene’s Basement entered into a five-year $100.0 million revolving credit facility (the “Filene’s Basement Revolving Loan”) under which Filene’s Basement is the borrower and Retail Ventures and certain of its other wholly-owned subsidiaries are the co-guarantors. The final maturity date of the remaining $0.25 million Non-Convertible Loan held by SSC is the earlier of (i) June 10, 2009, or (ii) the date that the Conversion Warrants held by SSC are exercised. 

On August 16, 2006, Retail Ventures issued $125 million of 6.625% Mandatorily Exchangeable Notes due September 15, 2011, or PIES. On September 15, 2006, Retail Ventures closed on the exercise by the sole underwriter of its entire option to purchase an additional aggregate principal amount of $18,750,000 of PIES. RVI used a portion of the net proceeds of the offering to repay an intercompany note due to Value City, and Value City used such proceeds and other funds to repay $49.5 million of the outstanding principal amount of the Non-Convertible Loan. The Filene’s Basement Revolving Loan, DSW Revolving Loan, Non-Convertible Loan and PIES are sometimes referred to collectively as the “Credit Facilities.”

The Company is not subject to any financial covenants; however, its credit facilities contain numerous restrictive covenants relating to the Company’s management and operation. These non-financial covenants include, among other restrictions, limitations on indebtedness, guarantees, mergers, acquisitions, fundamental corporate changes, financial reporting requirements, budget approval, disposition of assets, investments, loans and advances, liens, dividends, stock purchases, transactions with affiliates, issuance of securities and the payment of and modifications to debt instruments under these agreements.

The Credit Facilities are described more fully below:

Revolving Credit Facilities

$100 Million Secured Revolving Credit Facility — The Filene’s Basement Revolving Loan

In connection with RVI’s disposition of its 81% ownership of its Value City business effective January 23, 2008, Value City was released from its obligations under the $275 million VCDS Revolving Loan, which was terminated, and any collateral security granted by Value City to secure such obligations was also released. Effective January 23, 2008, Filene’s Basement entered into the $100

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million Filene’s Basement Revolving Loan through an amendment and restatement of its indebtedness and obligations as a co-borrower under the VCDS Revolving Loan. 

Under the Filene’s Basement Revolving Loan, Filene’s Basement is named as the borrower. The Filene’s Basement Revolving Loan is guaranteed by Retail Ventures and certain of its wholly-owned subsidiaries. Neither DSW nor DSWSW are borrowers or guarantors under the Filene’s Basement Revolving Loan. The Filene’s Basement Revolving Loan 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. In addition to the borrowing base restrictions, 10% of the facility is deemed an “excess reserve” and is not available for borrowing. Obligations under the Filene’s Basement Revolving Loan are secured by a lien on substantially all of the personal property of Filene’s Basement, and of Retail Ventures and its other wholly-owned subsidiaries, excluding shares of DSW owned by Retail Ventures. At February 2, 2008, $27.0 million was available under the Filene’s Basement Revolving Loan. Direct borrowings aggregated $22.5 million and $3.4 million letters of credit were issued and outstanding. There were no borrowings or letters of credit under the Filene’s Basement Revolving Loan as of February 3, 2007. The maturity date of the Filene’s Basement Revolving Loan is January 23, 2013.

$150 Million Secured Revolving Credit Facility — The DSW Revolving Loan

Under the DSW Revolving Loan, DSW and its wholly-owned subsidiary, DSWSW, are named as co-borrowers. The DSW Revolving Loan is subject to a borrowing base restriction and provides for borrowings at variable interest rates based on LIBOR, the prime rate and the Federal Funds effective rate, plus a margin. In addition, if at any time DSW utilizes over 90% of DSW’s borrowing capacity under the facility, DSW must comply with a fixed charge coverage ratio test set forth in the facility document. DSW’s and DSWSW’s obligations under the DSW Revolving Loan are secured by a lien on substantially all of their personal property and a pledge of all of DSW’s shares of DSWSW. At February 2, 2008, $134.3 million was available under the DSW Revolving Loan and no direct borrowings were outstanding. At February 2, 2008 and February 3, 2007, $15.7 million and $13.4 million, respectively in letters of credit were issued and outstanding. At February 3, 2007 $136.6 million was available under the DSW Revolving Loan and no direct borrowings were outstanding. The maturity of the DSW Revolving Loan is July 5, 2010.

Term Loans — Related Parties

The principal balances of the $100 million Term Loans were repaid in full on July 5, 2005.

The Company issued 2,954,792 Term Loan Warrants to purchase RVI Common Shares, at an initial exercise price of $4.50 per share, to Cerberus and SSC in connection with the one of the Term Loans. The Term Loan Warrants are exercisable at any time prior to June 11, 2012. In September 2002, Back Bay Capital Funding LLC (“Back Bay”) bought from each of Cerberus and SSC a $3.0 million interest in each of their Term Loans, and received a corresponding portion of the Term Loan Warrants from each of Cerberus and SSC. The Company has granted the Term Loan lenders registration rights with respect to the shares issuable upon exercise of the Term Loan Warrants. The $6.1 million value ascribed to the Term Loan Warrants was estimated as of the date of issuance using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 5.6%; expected life of 10 years; expected volatility of 47%; illiquidity discount of 10%; and an expected dividend yield of 0%. The related debt discount was amortized into interest expense over the life of the debt.

Payment of and Amendment to Term Loans

Pursuant to the July 2005 Fourth Amendment to Financing Agreement, (i) DSW was released from its obligations as a co-borrower under the Term Loans, (ii) Value City repaid all the Term Loan indebtedness, and (iii) Retail Ventures amended the outstanding Term Loan Warrants to provide SSC, Cerberus and Back Bay the right, from time to time, in whole or in part, to (A) acquire Retail Ventures Common Shares at the then current conversion price (subject to the existing anti-dilution provisions), (B) acquire from Retail Ventures Class A Common Shares of DSW at an exercise price per share equal to the price of shares sold to the public in DSW’s IPO (subject to anti-dilution provisions similar to those in the existing Term Loan Warrants), or (C) acquire a combination thereof. Effective November 23, 2005, Back Bay transferred and assigned its Term Loan Warrants to Millennium. Although Retail Ventures does not intend or plan to undertake a spin-off of its DSW Common Shares to Retail Ventures’ shareholders, in the event that Retail Ventures does effect such a spin-off in the future, the holders of outstanding unexercised Term Loan Warrants will receive the same number of DSW Class A Common Shares that they would have received had they exercised their Term Loan Warrants in full for Retail Ventures Common Shares immediately prior to the record date of such spin-off, without regard to any limitations on exercise contained in the Term Loan Warrants. Following the completion of any such spin-off, the Term Loan Warrants will be exercisable solely for Retail Ventures Common Shares.

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Non-Convertible Loan — Related Parties

$75 Million Senior Subordinated Convertible Loan

As amended in 2002, borrowings under the Convertible Loan bore interest at 10% per annum. At our option, interest could be PIK during the first two years, and thereafter, at the Company’s option, up to 50% of the interest due may be PIK until maturity. Prior to its amendment and restatement in July 2006, the Convertible Loan was guaranteed by all the Company’s principal subsidiaries and was secured by a lien on assets junior to liens granted in favor of the lenders on the VCDS Revolving Loan and Term Loans. All interest was paid in cash.

$50 Million Second Amended and Restated Senior Loan Agreement — The Non-Convertible Loan

Pursuant to the Non-Convertible Loan, (i) DSW was released from its obligations as a co-guarantor, (ii) Value City repaid $25 million of the Convertible Loan, (iii) the remaining $50 million Convertible Loan was converted into a non-convertible loan, (iv) the capital stock of DSW held by Retail Ventures continues to secure the Non-Convertible Loan, and (v) Retail Ventures issued to SSC and Cerberus the Conversion Warrants which will be exercisable from time to time until the later of June 11, 2007 and the repayment in full of Value City’s obligations under the Non-Convertible Loan. The maturity date of the Non-Convertible Loan is June 10, 2009 and was not eligible for prepayment until June 10, 2007. Under the Conversion Warrants, SSC and Cerberus will have the right, from time to time, in whole or in part, to (i) acquire Retail Ventures Common Shares at the conversion price referred to in the Non-Convertible Loan (subject to existing anti-dilution provisions), (ii) acquire from Retail Ventures Class A Common Shares of DSW at an exercise price per share equal to the price of the shares sold to the public in DSW’s IPO (subject to anti-dilution provisions similar to those in the existing Term Loan Warrants held by SSC and Cerberus), or (iii) acquire a combination thereof. Although Retail Ventures does not intend or plan to undertake a spin-off of its DSW Common Shares to Retail Ventures’ shareholders, in the event that Retail Ventures does effect such a spin-off in the future, the holders of outstanding unexercised Conversion Warrants will receive the same number of DSW Common Shares that they would have received had they exercised their Conversion Warrants in full for Retail Ventures Common Shares immediately prior to the record date of such spin-off, without regard to any limitations on exercise contained in the Conversion Warrants. Following the completion of any such spin-off, the Conversion Warrants will be exercisable solely for Retail Ventures Common Shares.

$0.25 Million Senior Non-Convertible Loan

On August 16, 2006, the Non-Convertible Loan was again amended and restated whereby the Company (i) paid $49.5 million of the then aggregate $50.0 million outstanding balance, (ii) secured the remaining $0.5 million balance with cash collateral accounts, (iii) pledged DSW stock sufficient for the exercise of the Conversion Warrants, and (iv) obtained a release of the capital stock of DSW held by RVI used to secure the Non-Convertible Loan. On June 11, 2007, the outstanding principal balance of the Non-Convertible Loan of $0.25 million owed to Cerberus was prepaid, together with accrued interest thereon, when Cerberus completed the exercise of its remaining Conversion Warrants. The final maturity date of the $0.25 million Non-Convertible Loan held by SSC is the earlier of (i) June 10, 2009 or (ii) the date that the Conversion Warrants held by SSC are exercised. This loan and cash collateral was assumed by RVI in connection with the disposition of Value City on January 23, 2008.

$143,750,000 Premium Income Exchangeable Securities^SM (PIES)

On August 10, 2006, Retail Ventures announced the pricing of its 6.625% Mandatorily Exchangeable Notes due September 15, 2011, or PIES in the aggregate principal amount of $125,000,000. The closing of the transaction took place on August 16, 2006. On September 15, 2006, Retail Ventures closed on the exercise by the sole underwriter of its entire option to purchase an additional aggregate principal amount of $18,750,000 of PIES.

The $143,750,000 PIES bear a coupon at an annual rate of 6.625% of the principal amount, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2006 and ending on September 15, 2011. Except to the extent RVI exercises its cash settlement option, the PIES are mandatorily exchangeable, on the maturity date, into Class A Common Shares of DSW, no par value per share, which are issuable upon exchange of DSW Class B Common Shares, no par value per share, beneficially owned by RVI. On the maturity date, each holder of the PIES will receive a number of DSW Class A Common Shares per $50.00 principal amount of PIES equal to the “exchange ratio” described in the RVI prospectus filed with the SEC on August 11, 2006, or if RVI elects, the cash equivalent thereof or a combination of cash and DSW Class A Common Shares. The exchange ratio is equal to the number of DSW Class A Common Shares determined as follows: (i) if the applicable market value of DSW Class A Common Shares equals or exceeds $34.95, the exchange ratio will be 1.4306 shares; (ii) if the applicable market value of DSW Class A Common Shares is less than $34.95 but greater than $27.41, the exchange ratio will be between 1.4306 and 1.8242 shares; and (iii) if the applicable market value of DSW Class A Common Shares is less than or equal to $27.41, the exchange

F-24

ratio will be 1.8242 shares, subject to adjustment as provided in the PIES. The maximum aggregate number of DSW Class A Common Shares deliverable upon exchange of the PIES is 5,244,575 DSW Class A Common Shares, subject to adjustment as provided in the PIES.

RVI used a portion of the net proceeds of the offering to repay the approximately $49.7 million remaining balance of an intercompany note due to Value City, and Value City used such proceeds and other funds to repay $49.5 million of the outstanding principal amount of its $50.0 million Non-Convertible Loan, together with fees and expenses. The balance of the net proceeds was applied for general corporate purposes, which included the repayment of approximately $36.5 million of borrowings under the VCDS Revolving Loan. An additional $0.25 million of the Non-Convertible Loan was paid by Value City to Cerberus, together with interest, in fiscal 2007. During fiscal 2007, RVI assumed the remaining $0.25 million Convertible Loan still held by SSC, and SSC continues to hold restricted cash of $0.25 million as collateral for the remaining balance of the Non-Convertible Loan.

The embedded exchange feature of the PIES is accounted for as a derivative, which is recorded at fair value with changes in fair value in the statement of operations. Accordingly, the accounting for the embedded derivative addresses the variations in the fair value of the obligation to settle the PIES when the market value exceeds or is less than the threshold appreciation price. The fair value of the conversion feature at the date of issuance of $11.7 million was equal to the amount of the discount of the PIES and will be amortized into interest expense over the term of the PIES.

During fiscal 2007, the Company recorded a reduction of expenses related to the change in fair value of the conversion feature of the PIES of $93.6 million. During fiscal 2006, the Company recorded a charge related to the change in fair value of the conversion feature of the PIES from the date of issuance of $51.1 million. As of February 2, 2008, the fair value asset recorded for the conversion feature was $30.8 million as estimated using the Black-Scholes pricing model with the following assumptions: risk-free rate of 4.2%, expected life of 3.6 years, expected volatility of 44.0% and an expected dividend yield of 0.0%. As of February 3, 2007, the fair value liability recorded for the conversion feature was $62.8 million as estimated using the Black-Scholes pricing model with the following assumptions: risk-free rate of 5.2%, expected life of 4.6 years, expected volatility of 39.7% and an expected dividend yield of 0.0%.

Other Debt Items

The weighted average interest rate on borrowings under the Company’s credit facilities during fiscal year 2007, 2006 and 2005 was 6.8%, 7.0% and 5.2%, respectively.

The book value of notes payable and long-term debt approximates fair value at February 2, 2008. The carrying amount of the revolving line of credit approximates fair value as a result of the variable rate-based borrowings. The carrying amount of the term loan and subordinated debt also approximates fair value, as this was the available financing in the marketplace during the fiscal year.

At February 2, 2008, future annual long-term debt payments are as follows (in thousands):

Fiscal Year	Amount
2008
2009	$	250
2010
2011		143,750
2012
Future Years		22,500
Total	$	166,500

8. PENSION BENEFIT PLANS

The Company has one qualified defined benefit pension plan assumed at the time of acquisition of Filene’s Basement. The Company’s funding policy is to contribute annually the amount required to meet ERISA funding standards and to provide not only for benefits attributed to service to date but also for those anticipated to be earned in the future. The Company uses a January 31 measurement date for its plan.

F-25

The following provides a reconciliation of projected benefit obligations, plan assets and funded status of the plan for the years as noted below (in thousands):

	February 2,			February 3,
	2008			2007
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	15,848		$	15,685
Interest cost		907			861
Benefits paid		(1,169	)		(635	)
Actuarial gain (loss)		721			(63	)
Projected benefit obligation at end of year	$	16,307		$	15,848
Accumulated benefit obligation at end of year	$	16,307		$	15,848

	February 2,			February 3,
	2008			2007
Change in plan assets:
Fair market value at beginning of year	$	15,464		$	13,794
Actual (loss) return on plan assets		(449	)		1,409
Employer contributions		900			1,000
Benefits paid		(1,169	)		(635	)
Other		(183	)		(104	)
Fair market value at end of year	$	14,563		$	15,464

The Company made contributions of $0.9 million during fiscal 2007 and $1.0 million in fiscal 2006 to the pension plan. The Company’s funding policy is to contribute an amount annually that satisfies the minimum funding requirements of ERISA and that is tax deductible under the Internal Revenue Code of 1986, as amended. The Company anticipates contributing approximately $0.5 million in fiscal 2008 to meet minimum funding requirements.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in the years indicated (in thousands):

Fiscal Year	Amount
2008	$	717
2009		722
2010		725
2011		733
2012		791
2013 - 2018		4,808

Amounts recognized in the Consolidated Balance Sheets consisted of the following (in thousands):

	February 2,			February 3,
	2008			2007
Deferred income tax asset — long term	$	884		$	150
Other non-current liabilities		(1,744	)		(383	)
Total	$	(860	)	$	(233	)

The components of net periodic benefit cost are comprised of the following for the years indicated (in thousands):

	February 2,			February 3,			January 28,
	2008			2007			2006
Interest cost	$	907		$	861		$	858
Expected return on plan assets		(1,212	)		(1,077	)		(938	)
Amortization of transition (asset) obligation		(38	)		(38	)		(38	)
Amortization of net loss		244			290			342
Net periodic benefit cost	$	(99	)	$	36		$	224

F-26

Of the amounts in accumulated other comprehensive income as of February 2, 2008, we expect the following to be recognized as net pension costs in fiscal 2008 (in thousands):

Remaining unrecognized benefit obligation existing at transition	$	(38	)
Unrecognized net loss		442
Total	$	404

The expected long-term rate of return was based on historical average annual returns for S&P 500, Russell 2000 and LB Intermediate Term Government for 10 years and since inception of the assets. Assumptions used in each year of the actuarial computations were:

	February 2,			February 3,
	2008			2007
Discount rate		6.0	%		6.0	%
Expected long-term rate of return		8.0	%		8.0	%

The Company’s investment strategy is to meet the liabilities of the plan as they are due and to maximize the return on invested assets within appropriate risk tolerances. The weighted average allocation of plan assets by category is as follows:

	February 2,			February 3,
	2008			2007
Equity securities		55.0	%		55.0	%
Fixed securities		44.4	%		44.5	%
Other		0.6	%		0.5	%
		100.0	%		100.0	%

9. OTHER BENEFIT PLANS

The Company maintains a 401(k) Plan for its employees. Eligible employees may contribute up to thirty percent of their compensation to the plan on a pre tax basis, subject to IRS limitations. As of the first day of the month following an employee’s completion of one year of service as defined under the terms of the plan, the Company matches employee deferrals into the plan, 100% on the first 3% of eligible compensation deferred and 50% on the next 2% of eligible compensation deferred. Additionally, the Company may contribute a discretionary profit sharing amount to the plan each year. The Company incurred costs associated with the 401(k) Plan of $3.1 million, $2.7 million and $2.2 million for fiscal years 2007, 2006 and 2005, respectively. The Company made no discretionary profit sharing contributions during the last three fiscal years.

10. SHAREHOLDERS’ EQUITY AND WARRANT LIABILITY

The Company issued restricted common shares to certain key employees pursuant to individual employment agreements and certain other grants has time to time, which are approved by the Board of Directors. The agreements condition the vesting of the shares generally upon continued employment with the Company with such restrictions expiring over various periods ranging from three to five years. The market value of the shares at the date of grant is charged to expense on a straight-line basis over the period that the restrictions lapse. As of February 2, 2008 the Company did not have any outstanding restricted shares. As of February 3, 2007, the Company had outstanding 500 restricted shares.

Warrants

VCHI Acquisition Co. Warrants

On January 23, 2008, Retail Ventures disposed of an 81% ownership interest in its Value City Department Stores business to VCHI Acquisition Co., a newly formed entity owned by VCDS Acquisition Holdings, LLC, Emerald Capital Management LLC and Crystal Value, LLC. As part of the transaction, Retail Ventures issued warrants (“the VCHI Warrants”) to VCHI Acquisition Co. to purchase 150,000 RVI Common Shares, at an exercise price of $10.00 per share, and exercisable within 18 months of January 23, 2008. At the date of issuance, January 23, 2008, the closing price of Retail Ventures Common Shares was $6.09. Upon exercise of the VCHI Warrants, Retail Ventures will deliver the shares via net-share or physical settlement at the election of the warrant holder.

F-27

The VCHI Warrants are not derivative instruments as defined under SFAS No. 133. The warrants were measured at fair value on the date of the transaction, January 23, 2008, and recorded within equity. The $0.1 million value ascribed to the VCHI Warrants was estimated as of January 23, 2008 using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 2.1%; expected life of 1.5 years; expected volatility of 58.4% and an expected dividend yield of 0.0%.

Term Loan Warrants and Conversion Warrants

As a result of the previously discussed Credit Facilities’ modifications made on July 5, 2005 (see Note 7, “Long-Term Obligations”), the detached Term Loan Warrants and detached Conversion Warrants with dual optionality qualified as derivatives under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS No. 133”). Due to the modifications, the fair values of the Term Loan Warrants and Conversion Warrants (together, the “Warrants”) have been recorded on the balance sheet within current liabilities. Prior to July 5, 2005, the Term Loan Warrants were recorded on the balance sheet within equity. The difference of $20.1 million between the book value of the Warrants and the fair value at the time the Warrants were modified was reclassified to a liability and was recorded to common shares. The Conversion Warrants liability is for the full amount of their fair value as a result of the modifications and a non-cash charge has been recorded within the Consolidated Statement of Operations. Regarding the change in the fair value of the Warrants, the Company recorded a charge of $144.2 million in fiscal 2005 (subsequent to the first quarter of fiscal 2005), including the initial recording of the Conversion Warrants of $134.2 million. For fiscal 2006, the Company recorded a charge of $124.8 million for the change in fair value of Warrants. For fiscal 2007, the Company recorded a reduction of expenses of $154.6 million, for the change in fair value of Warrants. No tax benefit has been recognized in connection with this charge. These derivative instruments do not qualify for hedge accounting under SFAS No. 133, therefore, changes in the fair values are recognized in earnings in the period of change. The Term Loan Warrants expire on June 11, 2012 while the Conversion Warrants expire on June 10, 2009.

Retail Ventures estimates the fair values of derivatives based on the Black-Scholes Pricing Model using current market rates and records all derivatives on the balance sheet at fair value. The fair market value of the Warrants was $42.2 million and $216.4 million at February 2, 2008 and February 3, 2007, respectively.

The $26.6 million value ascribed to the Conversion Warrants was estimated as of February 2, 2008 using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 2.1%; expected life of 1.4 years; expected volatility of 55.5% and an expected dividend yield of 0.0%. The $15.6 million value ascribed to the Term Loan Warrants was estimated as of February 2, 2008 using the Black-Scholes Pricing Model with the following assumptions: risk-free interest rate of 2.7%; expected life of 4.4 years; expected volatility of 55.4% and an expected dividend yield of 0.0%. As the Warrants may be exercised for either common shares of Retail Ventures or common shares of DSW owned by Retail Ventures, the settlement of the Warrants will not result in a cash outlay by the Company.

During fiscal 2007, Retail Ventures issued 1,333,333 of its common shares at an exercise price of $4.50 per share to Cerberus in connection with Cerberus’ exercise of its remaining Conversion Warrants. In connection with this exercise, Retail Ventures received $6.0 million and reclassified $19.6 million from the warrant liability to paid in capital during fiscal 2007. During fiscal 2006, Retail Ventures issued 7,000,000 of its common shares at an exercise price of $4.50 per share to Cerberus in connection with Cerberus’ exercise of a portion of its outstanding Conversion Warrants. In connection with these exercises, Retail Ventures received $31.5 million and reclassified $78.8 million from the warrant liability to paid in capital during fiscal 2006.

11. COMMITMENTS AND CONTINGENCIES

As previously reported, on March 8, 2005, Retail Ventures announced that it had learned of the theft of credit card and other purchase information from a portion of DSW’s customers. On April 18, 2005, Retail Ventures issued the findings from its investigation into the theft. The theft covered transaction information involving approximately 1.4 million credit cards and data from transactions involving approximately 96,000 checks.

DSW and Retail Ventures contacted and cooperated with law enforcement and other authorities with regard to this matter. DSW is involved in a putative class action lawsuit which seeks unspecified monetary damages, credit monitoring and other relief. The lawsuit seeks to certify a class of consumers that is limited geographically to consumers who made purchases at certain stores in Ohio.

There can be no assurance that there will not be additional proceedings or claims brought against DSW in the future. DSW has contested and will continue to vigorously contest the claims made against DSW and will continue to explore its defenses and possible claims against others.

F-28

DSW estimated 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 million. Because of many factors, including the possible settlement of claims 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. 5, Accounting for Contingencies, the Company 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 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 to DSW’s results of operations or financial condition. As of February 2, 2008, the balance of the associated accrual for potential exposure was $0.5 million.

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 of the 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 most likely estimated liability related to the claim. In the opinion of management, the amount of any potential liability with respect to these proceedings will not be material to the Company’s results of operations or financial condition. As additional information becomes available, the Company will assess the potential liability related to its pending litigation and revise the estimates as needed. Revisions in its estimates and potential liability could materially impact the Company’s results of operations and financial condition.

Guarantees

As discussed above, RVI completed the disposition of an 81% ownership interest in its Value City business segment on January 23, 2008. Retail Ventures or its wholly-owned subsidiary, Retail Ventures Services, Inc. (“RVS”), has guaranteed and in certain circumstances may be responsible for certain liabilities of Value City including, but not limited to: amounts owed under certain guarantees with various financing institutions; amounts owed under guarantees of Value City’s operations regarding certain equipment leases; amounts owed under certain income tax liabilities; amounts owed under certain employee benefit plans and amounts owed by RVS under certain service agreements through which Value City obtains general services or information technology equipment or licenses. As of February 2, 2008, RVI had recorded a liability of $26.6 million for the guarantees of Value City commitments.

Contractual Obligations

During fiscal 2007, the Company has continued to enter into various construction commitments, including capital items to be purchased for projects that were under construction or for which a lease has been signed. The obligations under these commitments aggregated approximately $5.8 million at February 2, 2008. In addition DSW and Filene’s Basement Collectively have signed lease agreements for 38 new store locations with annual aggregate rent of $14.0 million and average terms of approximately 10 years. Associated with the new lease agreements, the Company will receive approximately $10.6 million of tenant improvement allowances which will offset future capital expenditures.

12. INCOME TAXES

The income tax expense (benefit) for continuing operations consists of the following (in thousands):

	February 2,		February 3,			January 28,
	2008		2007			2006
Current:
Federal	$	30,260	$	37,050		$	18,602
State and local		6,538		7,051			4,944
Total current tax expense		36,798		44,101			23,546
Deferred:
Federal		47,476		(18,010	)		(4,271	)
State and local		2,333		(218	)		4,470
Total deferred tax expense (benefit)		49,809		(18,228	)		199
Income tax expense	$	86,607	$	25,873		$	23,745

F-29

A reconciliation of the expected income taxes based upon the statutory rate is as follows (in thousands):

	February 2,			February 3,			January 28,
	2008			2007			2006
Income tax (benefit) expense at federal statutory rate of 35%	$	108,136		$	(27,797	)	$	(33,855	)
Warrant liability marked to market		(54,058	)		43,685			50,473
Jobs credit		(485	)		(357	)		(685	)
State and local taxes, net		6,362			3,193			4,018
Tax exempt interest		(1,476	)		(498	)
Non-deductible interest								222
Valuation allowance		23,188			1,694			2,148
Federal reserve					1,895
Provision to return adjustments		29			(2,889	)		101
Change in subsidiary basis		4,013			6,025			910
Other		898			922			413
Income tax expense	$	86,607		$	25,873		$	23,745

The components of the net deferred tax asset (liability) as of February 2, 2008 and February 3, 2007, are (in thousands):

	February 2,			February 3,
	2008			2007
Deferred tax assets:
Basis differences in inventory	$	5,394		$	10,587
Basis differences in property and equipment		(576	)		12,311
Deferred compensation		6,587			5,667
Intangible assets		4,318			2,441
State net operating loss & credits		23,272			15,263
Federal net operating loss		97,614			22,496
Federal tax credit		14,682			13,621
FIN 45 reserves		10,371
Unrealized tax benefit		2,446
Tenant allowance		1,598			1,415
Capital leases					3,462
Workers compensation		1,283			7,160
Deferred revenue					4,663
Accrued expenses		3,725			5,294
Accrued rent		16,006			14,788
PIES		(8,949	)		24,354
Other		3,791			4,365
Total deferred tax assets		181,562			147,887
Less: Valuation allowance		(100,546	)		(15,648	)
		81,016			132,239
Deferred tax liabilities:
Basis in subsidiary		(76,493	)		(72,480	)
Prepaid expenses		(5,705	)		(6,816	)
Deferred Revenue — CAT Credit		(250	)		(1,092	)
Total deferred tax liabilities		(82,448	)		(80,388	)
Total net	$	(1,432	)	$	51,851

F-30

The net deferred tax asset (liability) is recorded in the Company’s consolidated balance sheet as follows (in thousands):

	February 2,			February 3,
	2008			2007
Current deferred tax asset	$	28,225		$	25,737
Non current deferred tax (liability) asset		(29,657	)		26,114
Net deferred tax asset (liability)	$	(1,432	)	$	51,851

The Company establishes valuation allowances for deferred tax assets when the amount of expected future taxable income is not likely to support the use of the deduction or credit. The Company has determined that it is more likely than not that future taxable income will not be sufficient to fully utilize deferred tax assets, state net operating losses and charitable contribution carry forwards which expire in future years at various dates depending on the state jurisdiction. As a result, the Company has recorded an addition to the valuation allowance in the current period of $84.9 million. The ending balances of the valuation allowance at February 2, 2008 and at February 3, 2007 were $100.5 million and $15.6 million, respectively. The Company believes it is more likely than not that the remaining deferred tax assets will be realized.

The net operating loss deferred tax asset consists of a federal and state component. The federal component is $97.6 million and the state component is $22.8 million. These net operating losses are available to reduce federal and state taxable income for the fiscal years 2008 to 2027.

Consistent with its historical financial reporting, the Company has elected to classify interest expense related to income tax liabilities, when applicable, as part of the interest expense in its condensed consolidated statement of income rather than income tax expense. The Company will continue to classify income tax penalties as part of operating expenses in its condensed consolidated statements of income. As of February 2, 2008 and February 4, 2007, $0.9 million and $0.3 million, respectively, were accrued for the payment of interest and penalties.

Effective February 4, 2007, the Company adopted the provisions of FIN 48. As of February 4, 2007 and February 2, 2008, unrecognized tax benefits of $2.0 million and $3.0 million, respectively, would affect the Company’s effective tax rate if recognized. As of February 2, 2008, the reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (amounts in thousands):

	Unrecognized Tax
	Benefits
Balance at February 4, 2007	$	2,004
Decreases — Tax Positions taken in a prior period		(1,123	)
Increases — Tax Positions taken in the current period		2,147
Balance at February 2, 2008	$	3,028

13. SEGMENT REPORTING

The Company is operated in three segments: DSW, Filene’s Basement and Corporate. All of the operations are located in the United States. In fiscal 2007, as a result of RVI’s disposition of an 81% ownership interest in its Value City Department Stores operations, the results of the previously disclosed Value City segment are included in discontinued operations (see Note 2 to the Consolidated Financial Statements) and Value City is therefore no longer included as a reportable segment of the Company. The Company has identified such segments based on chief operating decision maker responsibilities and measures segment profit (loss) as operating profit (loss), which is defined as profit (loss) before interest expense, income taxes and minority interest. The goodwill balance of $25.9 million outstanding at February 2, 2008 and February 3, 2007 is recorded in the DSW segment. The Corporate segment includes activities that are not allocated to individual segments. Capital expenditures in brackets represent assets transferred to other segments.

F-31

The tables below present segment statement of operations information (in thousands):

				Filene’s						Intersegment
	DSW			Basement			Corporate			Eliminations			Total
As of and for the year ended February 2, 2008
Net sales	$	1,405,615		$	466,289								$	1,871,904
Operating profit (loss)		81,321			(17,848	)	$	248,193						311,666
Depreciation and amortization		25,055			12,487			3,243						40,785
Interest expense		1,178			7,936			12,718		$	(8,284	)		13,548
Interest income		7,148			124			11,484			(8,284	)		10,472
Income tax expense		(33,516	)		(14,205	)		(38,886	)					(86,607	)
Capital expenditures		102,451			17,152			(715	)					118,888
Total assets		693,882			162,099			222,361			(126,377	)		951,965

				Filene’s						Intersegment
	DSW			Basement			Corporate			Eliminations			Total
As of and for the year ended February 3, 2007
Net sales	$	1,279,060		$	427,473								$	1,706,533
Operating profit (loss)		100,714			(1,225	)	$	(175,955	)					(76,466	)
Depreciation and amortization		20,686			9,282			3,103						33,071
Interest expense		614			6,791			7,873		$	(5,835	)		9,443
Interest income		7,527			40			5,574			(5,835	)		7,306
Income tax (expense) benefit		(42,164	)		2,215			14,076						(25,873	)
Capital expenditures		42,407			16,118			(317	)					58,208
Total assets		603,785			175,287			437,750			(278,962	)		937,860

				Filene’s						Intersegment
	DSW			Basement			Corporate			Eliminations			Total
For the year ended January 28, 2006
Net sales	$	1,144,061		$	389,335								$	1,533,396
Operating profit (loss)		70,112			(10,727	)	$	(144,209	)					(84,824	)
Depreciation and amortization		19,443			8,662			2,892						30,997
Interest expense		8,892			3,743			6,928		$	(8,031	)		11,532
Interest income		1,388			57			6,586			(8,031	)
Income tax (expense) benefit		(25,426	)		3,526			(1,845	)					(23,745	)
Capital expenditures		25,537			4,112			1,434						31,083

The following sets forth sales by each major merchandise category (in thousands):

	February 2,		February 3,		January 28,
	2008		2007		2006
Apparel and ready to wear	$	323,977	$	298,477	$	284,525
Jewelry, hard goods and home furnishings		69,105		68,525		65,186
Shoes and other footwear		1,478,822		1,339,531		1,183,685
Total	$	1,871,904	$	1,706,533	$	1,533,396

F-32

14. QUARTERLY FINANCIAL DATA (UNAUDITED):

Year Ended February 2, 2008

	Thirteen weeks ended
	May 5,			August 4,			November			February
(in thousands except per share data)	2007			2007			3, 2007			2, 2008
Net sales	$	465,839		$	464,638		$	489,394		$	452,033
Cost of sales		(266,426	)		(288,028	)		(284,445	)		(282,000	)
Gross profit		199,413			176,610			204,949			170,033
Selling, general and administrative expenses		(172,687	)		(171,674	)		(177,193	)		(172,554	)
Change in fair value of derivative instruments		14,596			26,953			43,497			11,230
Change in fair value of derivative instruments — related party		(2,047	)		97,831			47,850			8,283
License fees and other income		1,753			1,316			1,872			1,635
Operating profit		41,028			131,036			120,975			18,627
Non-related parties interest expense		(3,064	)		(3,129	)		(3,177	)		(4,166	)
Related parties interest expense		(4	)		(3	)		(2	)		(3	)
Total interest expense		(3,068	)		(3,132	)		(3,179	)		(4,169	)
Interest income		2,640			2,945			2,633			2,254
Interest expense, net		(428	)		(187	)		(546	)		(1,915	)
Income from continuing operations before income taxes and minority interest		40,600			130,849			120,429			16,712
Income tax expense		(18,723	)		(12,877	)		(29,701	)		(25,306	)
Income (loss) from continuing operations before minority interest		21,877			117,972			90,728			(8,594	)
Minority interest		(8,775	)		(2,411	)		(8,295	)		(398	)
Income (loss) from continuing operations		13,102			115,561			82,433			(8,992	)
Loss from discontinued operations, net of tax		(10,362	)		(9,343	)		(14,211	)		(116,746	)
Net income (loss)	$	2,740		$	106,218		$	68,222		$	(125,738	)
Earnings (loss) per share(1):
Basic earnings (loss) per share from continuing operations	$	0.28		$	2.40		$	1.70		$	(0.19	)
Diluted earnings (loss) per share from continuing operations	$	0.22		$	1.97		$	1.45		$	(0.19	)
Basic loss per share from discontinued operations	$	(0.22	)	$	(0.19	)	$	(0.29	)	$	(2.40	)
Diluted loss per share from discontinued operations	$	(0.17	)	$	(0.16	)	$	(0.25	)	$	(2.40	)
Basic earnings (loss) per share	$	0.06		$	2.21		$	1.40		$	(2.59	)
Diluted earnings (loss) per share	$	0.05		$	1.81		$	1.20		$	(2.59	)

F-33

Year Ended February 3, 2007

										Fourteen
										weeks
	Thirteen weeks ended									ended
	April 29,			July 29,			October 28,			February 3,
(in thousands except per share data)	2006			2006			2006			2007
Net sales	$	407,086		$	394,146		$	446,414		$	458,887
Cost of sales		(236,989	)		(229,202	)		(257,288	)		(274,188	)
Gross profit		170,097			164,944			189,126			184,699
Selling, general and administrative expenses		(146,393	)		(143,671	)		(163,001	)		(160,950	)
Change in fair value of derivative instruments		(926	)		(311	)		(28,009	)		(23,766	)
Change in fair value of derivative instruments — related party		(63,883	)		(15,032	)		(2,565	)		(41,463	)
License fees and other income		542			657			1,001			2,438
Operating (loss) profit		(40,563	)		6,587			(3,448	)		(39,042	)
Non-related parties interest expense		(701	)		(835	)		(2,579	)		(3,044	)
Related parties interest expense		(430	)		(430	)		(1,420	)		(4	)
Total interest expense		(1,131	)		(1,265	)		(3,999	)		(3,048	)
Interest income		646			1,390			1,969			3,301
Interest (expense) income, net		(485	)		125			(2,030	)		253
(Loss) income from continuing operations before income taxes and minority interest		(41,048	)		6,712			(5,478	)		(38,789	)
Income tax (expense) benefit		(9,755	)		(8,759	)		(11,700	)		4,341
Loss from continuing operations before minority interest		(50,803	)		(2,047	)		(17,178	)		(34,448	)
Minority interest		(6,464	)		(5,660	)		(5,909	)		(6,133	)
Loss from continuing operations		(57,267	)		(7,707	)		(23,087	)		(40,581	)
(Loss) income from discontinued operations, net of tax		(7,681	)		(8,294	)		(10,987	)		4,691
Net loss	$	(64,948	)	$	(16,001	)	$	(34,074	)	$	(35,890	)
(Loss) earnings per share(1):
Basic loss per share from continuing operations	$	(1.39	)	$	(0.17	)	$	(0.49	)	$	(0.86	)
Diluted loss per share from continuing operations	$	(1.39	)	$	(0.17	)	$	(0.49	)	$	(0.86	)
Basic (loss) earnings per share from discontinued operations	$	(0.19	)	$	(0.19	)	$	(0.23	)	$	0.10
Diluted (loss) earnings per share from discontinued operations	$	(0.19	)	$	(0.19	)	$	(0.23	)	$	0.10
Basic loss per share	$	(1.58	)	$	(0.36	)	$	(0.72	)	$	(0.76	)
Diluted loss per share	$	(1.58	)	$	(0.36	)	$	(0.72	)	$	(0.76	)

⁽¹⁾ Earnings (loss) per share calculations for each quarter are based on the applicable weighted average shares outstanding for each period and may not necessarily be equal to the full year per share amount.

F-34

15. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

	February 2,		February 3,			January 28,
	2008		2007			2006
	(in thousands)
Cash paid during the period for:
Interest to non related parties	$	14,101	$	5,045		$	1,394
Income taxes	$	35,537	$	40,530		$	14,767
Noncash investing and operating activities:
Increase (decrease) in accounts payable due to asset purchases	$	3,463	$	(752	)	$	958
Additional paid in capital transferred from warrant liability for warrant exercises	$	19,612	$	78,817
Reclassification of SARs from noncurrent liability to equity	$	1,934
Issuance of VCHI Warrants	$	124

F-35

RETAIL VENTURES, INC.
SCHEDULE I — Condensed Financial Information of Registrant
(dollars in thousands)

Description	Amount
Dividend paid to registrant from DSW Inc.:
January 28, 2006	$	190,000
February 3, 2007	None
February 2, 2008	None

S-1

RETAIL VENTURES, INC.
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
(dollars in thousands)

	Balance at		Charges to		Charges to
	Beginning of		Costs and		Other			Balance at
Description	Period		Expenses		Accounts	Deductions(1)		End of Period
Allowance deducted from asset to which it applies:
Inventory Reserve
January 28, 2006	$	20,147	$	6,427		$	3,029	$	23,545
February 3, 2007		23,545		3,643			2,156		25,032
February 2, 2008		25,032		17,933			11,212		31,753
Allowance for Sales Returns
January 28, 2006	$	1,732	$	2,148		$	1,821	$	2,059
February 3, 2007		2,059		2,075			1,472		2,662
February 2, 2008		2,662		1,896			2,796		1,762
Store Closing Reserve
January 28, 2006	$	532	$	86		$	250	$	368
February 3, 2007		368		653			946		75
February 2, 2008		75		3,175			2,846		404

⁽¹⁾ The deductions are amounts written off against the reserve.

S-2

INDEX TO EXHIBITS
Exhibits marked with an asterisk (*) are filed herewith.

Exhibit
No.	Description
2.1	Agreement and Plan of Merger among Value City Department Stores, Inc., Retail Ventures, Inc. (the “Company”) and Value City Merger Sub, Inc., effective as of October 8, 2003. Incorporated by reference to Exhibit 2 to Form 8-K (file no. 1-10767) filed on October 8, 2003.
2.2	Purchase Agreement, dated as of January 23, 2008, by and between Retail Ventures, Inc. and VCHI Acquisition Co. Incorporated herein by reference to Exhibit 2.1 to Form 8-K (file no 1-10767) filed January 24, 2008.
3.1	Amended Articles of Incorporation of the Company. Incorporated by reference to Exhibit 3(a) to Form 8-K (file No. 1-10767) filed on October 8, 2003.
3.2	Amended Code of Regulations of the Company. Incorporated by reference to Exhibit 3(b) to Form 8-K (file No. 1-10767) filed on October 8, 2003.
4.1	Amended Common Stock Purchase Warrant issued by Retail Ventures, Inc. to Cerberus Partners, L.P. Incorporated by reference to Exhibit 4.1 to Form 8-K (file no. 1-10767) filed October 19, 2005.
4.2	Amended Common Stock Purchase Warrant issued by Retail Ventures, Inc. to Schottenstein Stores Corporation. Incorporated by reference to Exhibit 4.2 to Form 8-K (file no. 1-10767) filed October 19, 2005.
4.3	Form of Term Loan Warrant issued by Retail Ventures, Inc. to Millennium Partners, L.P. Incorporated by reference to Exhibit 4.1 to Form 10-Q (file no. 1-10767) filed December 8, 2005.
4.4	Form of Conversion Warrant issued by Retail Ventures, Inc. issued to Cerberus Partners, L.P. and Schottenstein Stores Corporation. Incorporated by reference to Exhibit 4.1 to Form 8-K (file no. 1-10767) filed July 11, 2005.
4.5	Exchange Agreement, dated July 5, 2005, between Retail Ventures, Inc. and DSW Inc. Incorporated by reference to Exhibit 10.4 to Form 8-K (file no. 1-10767) filed July 11, 2005.
4.6	Second Amended and Restated Registration Rights Agreement, dated July 5, 2005, among Retail Ventures, Inc., Cerberus Partners, L.P., Schottenstein Stores Corporation and Back Bay Capital Funding LLC. Incorporated by reference to Exhibit 4.2 to Form 8-K (file no. 1-10767) filed July 11, 2005.
4.7	Specimen of Common Share Certificate. Incorporated by reference to Exhibit 4.7 to Form 10-K (file no. 1-10767) filed April 13, 2006.
4.8	Indenture, dated as of August 16, 2006, by and between Retail Ventures, Inc. and HSBC Bank USA, National Association, as indenture trustee (Form of 6.625% Mandatorily Exchangeable Notes Due September 15, 2011 filed as Exhibit A thereto). Incorporated by reference to Exhibit 4.1 to Form 8-K (file no. 001-10767) filed on August 22, 2006.
4.9	Collateral Agreement, dated as of August 16, 2006, by and between Retail Ventures, Inc., as pledgor, and HSBC Bank USA, National Association, as collateral agent, indenture trustee and securities intermediary. Incorporated by reference to Exhibit 4.2 to Form 8-K (file no. 001-10767) filed on August 22, 2006.
4.10	Form of Exchange Request by Retail Ventures, Inc. to DSW Inc. Incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3/A (file no. 333-134225) filed on July 17, 2006.
4.11	Pledge Agreement, dated as of August 16, 2006, made by Retail Ventures, Inc. with and in favor of Cerberus Partners, L.P. Incorporated by reference to Exhibit 10.4 to Form 8-K (file no. 001-10767) filed on August 22, 2006.
4.12	Pledge Agreement, dated as of August 16, 2006, made by Retail Ventures, Inc. with and in favor of Schottenstein Stores Corporation. Incorporated by reference to Exhibit 10.5 to Form 8-K (file no. 001-10767) filed on August 22, 2006.
4.13*	Common Stock Purchase Warrant, dated January 23, 2008, issued by Retail Ventures, Inc. to VCHI Acquisition Co.
10.1	Corporate Services Agreement, dated June 12, 2002, between the Company and SSC. Incorporated by reference to Exhibit 10.6 to Form 10-Q (file no. 1-10767) filed June 18, 2002.
10.1.1	Amendment to Corporate Services Agreement, dated July 5, 2005, among Schottenstein Stores Corporation, Retail Ventures, Inc. and Schottenstein Management Company, together with Side Letter Agreement, dated July 5, 2005, among DSW Inc., Schottenstein Stores Corporation, Retail Ventures, Inc. and Schottenstein Management Company. Incorporated by reference to Exhibit 10.5 to Form 8-K (file no. 1-10767) filed July 11, 2005.

E-1

Exhibit
No.	Description
10.2*	License Agreement, dated January 23, 2008, between Value City of Michigan, Inc. and Retail Ventures Licensing, Inc.
10.3	Master Separation Agreement, dated July 5, 2005, between Retail Ventures, Inc. and DSW Inc. Incorporated by reference to Exhibit 10.1 to Form 8-K (file no. 1-10767) filed July 11, 2005.
10.4	Amended and Restated Shared Services Agreement, dated as of October 29, 2006, between Retail Ventures, Inc. and DSW Inc. Incorporated by reference to Exhibit 10.8 to form 10-Q (file no. 1-10767) filed December 6. 2006.
10.5	Tax Separation Agreement, dated July 5, 2005, among Retail Ventures, Inc. and its affiliates and DSW Inc. and its affiliates. Incorporated by reference to Exhibit 10.3 to Form 8-K (file no. 1-10767) filed July 11, 2005.
10.6	Supply Agreement, effective as of January 30, 2005, between DSW Inc. and Filene’s Basement, Inc. Incorporated by reference to Exhibit 10.6 to Form 8-K (file no. 1-10767) filed July 11, 2005.
10.7#	Form of Indemnification Agreement entered into on December 22, 2005 between Retail Ventures, Inc. and each of its directors and executive officers. Incorporated by reference to Exhibit 10.1 to Form 8-K (file no. 1-10767) filed December 23, 2005
10.8#	Amended and Restated Retail Ventures, Inc. 1991 Stock Option Plan. Incorporated by reference to Exhibit 4(a) to Amendment No. 1 to Form S-8 Registration Statement (file no. 333-45852) filed October 16, 2003.
10.10#	Retail Ventures, Inc. Amended and Restated 2000 Stock Incentive Plan (the “2000 Stock Incentive Plan”). Incorporated by reference to Exhibit 4(a) to Amendment No. 1 to Form S-8 Registration Statement (file no. 333-100398) filed on October 16, 2003.
10.11#	Amended and Restated Retail Ventures, Inc. Non-Employee Director Stock Option Plan. Incorporated by reference to Exhibit 4(a) to Form S-8 Registration Statement (file no. 333-45856) filed October 16, 2003.
10.12**	Sublease, dated April 25, 1991, between the Company, as sublessor, and SSC, as sublessee, re: Baltimore, MD (Eastpoint) furniture store location. Incorporated by reference to Exhibit 10.15.1 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.
10.13**	Sublease, dated April 25, 1991, between the Company, as sublessor, and SSC, as sublessee, re: Baltimore, MD (Westview) furniture store location. Incorporated by reference to Exhibit 10.15.2 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.
10.14**	Sublease, dated April 25, 1991, between the Company, as sublessor, and SSC, as sublessee, re: Lansing, MI furniture store location. Incorporated by reference to Exhibit 10.15.3 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.
10.15**	Sublease, dated April 25, 1991, between the Company, as sublessor, and SSC, as sublessee, re: Louisville, KY (Preston Highway) furniture store location. Incorporated by reference to Exhibit 10.15.4 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.
10.16**	Form of Assignment and Assumption Agreement between the Company, as assignee, and SSC, as assignor, re:
	separate assignments of leases for 31 stores. Incorporated by reference to Exhibit 10.16 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.
10.17**	Lease Agreement, dated July 1, 1988, between the Company, by assignment from SSC, dated April 25, 1991, as sublessee, and SSC, as sublessor, re: Benwood, WV store location. Incorporated by reference to Exhibit 10.19 to Form 10-K (file no.1-10767) filed October 24, 1991.
10.18#	Form of Restricted Stock Agreement between the Company and certain employees. Incorporated by reference to Exhibit 10.27 to Amendment No. 1 to Form S-1 Registration Statement (file no. 33-47252) filed April 27, 1992.
10.19**	Lease, dated September 1, 1992, between the Company, as lessee, and SSC, as lessor, re: South Bend/Mishawaka, IN store. Incorporated by reference to Exhibit 10.29 to Form 10-K (file no.1-10767) filed October 22, 1992.
10.20	Lease, dated January 27, 1992, between the Company, as lessee, and J.A.L. Realty Company, an affiliate of SSC, as lessor, re: 3080 Alum Creek Drive, Columbus, OH warehouse. Incorporated by reference to Exhibit 10.30 to Form 10-K (file no.1-10767) filed October 22, 1992.

E-2

Exhibit
No.	Description
10.20.1	Exercise of the first five-year renewal option commencing February 1, 1997 under lease, dated January 27, 1992, as amended, between the Company, as lessee, and J.A.L. Realty Company, an affiliate of SSC, as lessor, re: 3080 Alum Creek Drive, Columbus, OH warehouse. Incorporated by reference to Exhibit 10.30.1 to Form 10-Q (file no. 1-10767) filed March 19, 1996.
10.21	Lease, dated July 29, 1992, between the Company, as lessee, and J.A.L. Realty Company, an affiliate of SSC, as lessor, re: 3232 Alum Creek Drive, Columbus, OH warehouse. Incorporated by reference to Exhibit 10.31 to Form 10-K (file no.1-10767) filed October 22, 1992.
10.22**	Ground lease, dated April 15, 1994, between the Company, as lessee, and J.A.L. Realty Company, an affiliate of SSC, as lessor, re: 19 acres (Westerville Rd., Columbus, OH). Incorporated by reference to Exhibit 10.35 to Form 10-K (file no. 1-10767) filed October 26, 1994.
10.23**	Agreement of Lease, dated March 1, 1994, between the Company, as tenant, and Jubilee Limited Partnership, an affiliate of SSC, as landlord, re: Hobart, IN store. Incorporated by reference to Exhibit 10.37 to Form 10-Q (file no. 1-10767) filed December 12, 1994.
10.24**	Agreement of Lease, dated January 13, 1995, between the Company, as tenant, and Westland Partners, an affiliate of SSC, as landlord, re: Westland, MI store. Incorporated by reference to Exhibit 10.39 to Form 10-Q, (file no. 1-10767) filed March 14, 1995.
10.25**	Agreement of Lease, dated January 13, 1995, between the Company, as tenant, and Taylor Partners, an affiliate of SSC, as landlord, re: Taylor, MI store. Incorporated by reference to Exhibit 10.40 to Form 10-Q, (file no. 1-10767) filed March 14, 1995.
10.26**	Lease, dated September 2, 1997, between the Company, as lessee, and SSC-Fort Wayne L.L.C., an affiliate of SSC, as lessor. Incorporated by reference to Exhibit 10.33.1 to Form 10-K (file no. 1-10767) filed April 29, 2002.
10.27**	Agreement of Lease, dated April 10, 1995, between the Company, as tenant, and Independence Limited Liability Company, an affiliate of SSC, as landlord, re: Charlotte, NC store. Incorporated by reference to Exhibit 10.45 to Form 10-Q (file no. 1-10767) filed December 12, 1995.
10.28**	Sublease and Occupancy Agreement, dated December 15, 1995, between the Company, SSC and SSC, dba Value City Furniture, re: Louisville, KY (Preston Highway) store. Incorporated by reference to Exhibit 10.46 to Form 10-Q (file no. 1-10767) filed March 19, 1996.
10.29**	Agreement of Lease, dated October 4, 1996, between the Company, as tenant, and Hickory Ridge Pavilion, Ltd., an affiliate of SSC, as landlord, re: Memphis, TN store. Incorporated by reference to Exhibit 10.50 to Form 10-K (file no. 1-10767) filed November 1, 1996.
10.30**	Agreement of Lease, dated October 30, 1998, between the Company, as lessee, and Jubilee Limited Partnership, an affiliate of SSC, as lessor, re: Calumet City, IL store. Incorporated by reference to Exhibit 10.56 to Form 10-K (file no. 1-10767) filed April 30, 1999.
10.31**	Agreement of Lease, dated September 29, 1998, between the Company, as tenant, and Valley Fair Irvington, LLC, an affiliate of SSC, as landlord, re: Irvington, NJ. Incorporated by reference to Exhibit 10.57 to Form 10-K (file no. 1-10767) filed April 30, 1999.
10.32	Industrial Space Lease-Net, dated March 22, 2000, between 4300 East Fifth Avenue, LLC, an affiliate of SSC, as landlord, and Shonac Corporation, as tenant, re: Building 6, Columbus International Aircenter, Columbus, OH. Incorporated by reference to Exhibit 10.60 to Form 10-K (file no. 1-10767) filed April 28, 2000.
10.33	Lease, dated August 30, 2002, by and between Jubilee Limited Partnership, an affiliate of SSC, and Shonac Corporation, re: Troy, MI DSW store. Incorporated by reference to Exhibit 10.44 to Form 10-K (file no. 1-10767) filed April 29, 2004.
10.33.1	Assignment and Assumption Agreement, dated October 23, 2002, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Troy, MI DSW store. Incorporated by reference to Exhibit 10.29.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.34	Lease, dated October 8, 2003, by and between Jubilee Limited Partnership, an affiliate of SSC, and Shonac Corporation, re: Denton, TX DSW store. Incorporated by reference to Exhibit 10.46 to Form 10-K (file no. 1-10767) filed April 29, 2004.
10.34.1	Assignment and Assumption Agreement, dated December 18, 2003 between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Denton, TX DSW store. Incorporated by reference to Exhibit 10.30.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.

E-3

Exhibit
No.	Description
10.35	Lease, dated October 28, 2003, by and between JLP-RICHMOND LLC, an affiliate of SSC, and Shonac Corporation, re: Richmond, VA DSW store. Incorporated by reference to Exhibit 10.47 to Form 10-K (file no. 1-10767) filed April 29, 2004.
10.35.1	Assignment and Assumption Agreement, dated December 18, 2003, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Richmond, VA DSW store. Incorporated by reference to Exhibit 10.31.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.36#	Employment Agreement, dated June 21, 2000, between James A. McGrady and the Company. Incorporated by reference to Exhibit 10.46 (also listed as Exhibit 10.61) to Form 10-K (file no. 1-10767) filed May 4, 2001.
10.37#	Employment Agreement, dated as of April 29, 2004, between Julia A. Davis and the Company. Incorporated by reference to Exhibit 10.51 to Form 10-K (file no. 1-10767) filed April 29, 2004.
10.38**	Amended and Restated Loan and Security Agreement, dated July 5, 2005, by and among National City Business Credit, Inc., as Administrative Agent for the ratable benefit of the Revolving Credit Lenders, National City Business Credit, Inc., as Collateral Agents for the ratable benefit of the Revolving Credit Lenders, the Revolving Credit Lenders and Value City Department Stores LLC (in such capacity, the “Lead Borrower”), as agent for the Borrower and collectively the Borrowers. Incorporated by reference to Exhibit 10.7 to Form 8-K (file no. 1-10767) filed July 11, 2005.
10.38.1**	First Amendment to Amended and Restated Loan and Security Agreement, dated as of August 16, 2006, by and among Value City Department Stores LLC, as lead borrower, the other borrowers named therein, the revolving credit lenders party thereto and National City Business Credit, Inc., as administrative agent and collateral agent. Incorporated by reference to Exhibit 10.6 to Form 8-K (file no. 001-10767) filed on August 22, 2006.
10.38.2**	Second Amendment to Amended and Restated Loan and Security Agreement, dated October 3, 2007. Incorporated herein by reference to Exhibit 10.2 to Form 8-K (file no. 1-10767) filed October 4, 2007.
10.39**	Third Amended and Restated Senior Loan Agreement, dated as of August 16, 2006, among Value City Department Stores LLC, as borrower, and Cerberus Partners, L.P., as lender. Incorporated by reference to Exhibit 10.1 to Form 8-K (file no. 001-10767) filed on August 22, 2006.
10.40**	Third Amended and Restated Senior Loan Agreement, dated as of August 16, 2006, among Value City Department Stores LLC, as borrower, and Schottenstein Stores Corporation, as lender. Incorporated by reference to Exhibit 10.2 to Form 8-K (file no. 001-10767) filed on August 22, 2006.
10.41#**	Value City Department Stores, Inc. 2003 Incentive Compensation Plan. Incorporated by reference to Exhibit 10.41 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.42#	Employment Agreement, effective November 1, 2004, between Retail Ventures, Inc. and Heywood Wilansky. Incorporated by reference to Exhibit 10.1 to Form 8-K/A (file no. 1-10767) filed November 24, 2004.
10.43#	Employment Agreement, effective October 10, 2003, between Value City Department Stores, Inc. and Steven E. Miller. Incorporated by reference to Exhibit 10.43 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.44**	Agreement of Lease, dated March 1, 1994, between Jubilee Limited Partnership, an affiliate of SSC, and Value City Department Stores, Inc., as modified by First Lease Modification, dated November 1, 1994, re: Merrilville, IN Value City store. Incorporated by reference to Exhibit 10.44 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.45**	Lease Agreement, dated July 7, 1987, by and between Schottenstein Trustees, an affiliate of SSC, and Schottenstein Stores Corp. dba Schottenstein’s Department Store, as modified by Lease Extension and Modification Agreement, dated March 12, 1998, by and between Schottenstein Trustees and Value City Department Stores, Inc. dba Schottenstein’s East Department Store, re: 6055 E. Main Street, Columbus, OH Value City store. Incorporated by reference to Exhibit 10.45 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.46**	Industrial Space Lease — Net, dated May 18, 2000, by and between 4300 East Fifth Avenue LLC, an affiliate of SSC, and Value City Department Stores, Inc., re: 4320-30 East Fifth Avenue, Columbus, OH warehouse. Incorporated by reference to Exhibit 10.47 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.47	Sublease, dated May 2000, by and between SSC, as sublessor, and Shonac Corporation dba DSW Shoe Warehouse, as sublessee,
	re: Pittsburgh, PA DSW store. Incorporated by reference to Exhibit 10.48 to Form 10-K (file no. 1-10767) filed April 14, 2005.

E-4

Exhibit
No.	Description
10.47.1	Assignment and Assumption Agreement, dated January 8, 2001, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: 451 Clariton Boulevard, Pittsburgh, PA DSW store. Incorporated by reference to Exhibit 10.48.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.48	Lease, dated May 2000, by and between Jubilee-Richmond LLC, an affiliate of SSC, and DSW Shoe Warehouse, Inc. (as assignee of Shonac Corporation), re: Glen Allen, VA DSW store. Incorporated by reference to Exhibit 10.49 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.49	Lease, dated February 28, 2001, by and between Jubilee-Springdale, LLC, an affiliate of SSC, and Shonac Corporation dba DSW Shoe Warehouse, re: Springdale, OH DSW store. Incorporated by reference to Exhibit 10.50 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.49.1	Assignment and Assumption Agreement, dated May 11, 2001, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Springdale, OH DSW store. Incorporated by reference to Exhibit 10.50.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.50	Agreement of Lease, dated 1997, between Shoppes of Beavercreek Ltd., an affiliate of SSC, and Shonac Corporation (assignee of SSC d/b/a Value City Furniture through Assignment of Tenany’t Leasehold Interst and Amendment No. 1 to Agreement of Lease, dated February 28, 2001), re: Beavercreek, OH DSW store. Incorporated by reference to Exhibit 10.51 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.50.1	Assignment and Assumption Agreement, dated May 11, 2001, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Beavercreek, OH DSW store. Incorporated by reference to Exhibit 10.51.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.51	Lease, dated February 28, 2001, by and between JLP-Chesapeake, LLC, an affiliate of SSC, and Shonac Corporation, re:
	Chesapeake, VA DSW store. Incorporated by reference to Exhibit 10.52 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.51.1	Assignment and Assumption Agreement, dated May 11, 2001, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Chesapeake, VA DSW store. Incorporated by reference to Exhibit 10.52.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.52	Ground Lease Agreement, dated April 30, 2002, by and between Polaris Mall, LLC, a Delaware limited liability company, and SSC-Polaris LLC, an affiliate of SSC, as modified by Sublease agreement, dated April 30, 2002, by and between SSC-Polaris LLC, as sublessor, and DSW Shoe Warehouse, Inc. as sublease (assignee of Shonac Corporation), re: Columbus, OH (Polaris) DSW store. Incorporated by reference to Exhibit 10.53 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.52.1	Assignment and Assumption Agreement, dated August 6, 2002, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Columbus, OH (Polaris) DSW store. Incorporated by reference to Exhibit 10.53.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.53	Lease, dated August 30, 2002, by and between JLP-Cary LLC, an affiliate of SSC, and Shonac Corporation, re: Cary, NC DSW store. Incorporated by reference to Exhibit 10.54 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.53.1	Assignment and Assumption Agreement, dated October 23, 2002, between Shonac Corporation, as assignor and DSW Shoe Warehouse, Inc., as assignee, re: Cary, NC DSW store. Incorporated by reference to Exhibit 10.54.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.54	Lease, dated August 30, 2002, by and between JLP-Madison LLC, an affiliate of SSC, and Shonac Corporation, re: Madison, TN DSW store. Incorporated by reference to Exhibit 10.55 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.54.1	Assignment and Assumption Agreement, dated October 23, 2002, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Madison, TN DSW store. Incorporated by reference to Exhibit 10.55.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.55	Lease, dated July 19, 2000, by and between Jubilee Limited Partnership, an affiliate of SSC, and Value City Department Stores, Inc., as modified by Lease Modification Agreement, dated November 2, 2000, re: 3704 W. Dublin-Granville Rd., Columbus, OH DSW/Filene’s combo store. Incorporated by reference to Exhibit 10.56 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.55.1*	Assignment and Assumption of Lease Agreement, dated January 22, 2008, between Value City Department Stores LLC, Retail Ventures, Inc. and Jubilee - Sawmill LLC, an affiliate of SSC, re: 3704 W. Dublin-Granville Rd., Columbus, OH DSW/Filene’s combo store.
10.56**	Master Store Lease, dated April 25, 1991, by and between SSC and Value City Department Stores, Inc., as modified by First Amendment to Master Store Lease, dated February 3, 1992, and Second Amendment to Master Store Lease, dated March 18, 2005, by and between SSC and Value City Department Stores LLC and Value City of Michigan, Inc., re: 4

E-5

Exhibit
No.	Description
	store locations (Clarksville, IN, Springdale, OH, Louisville, KY (Dixie Highway), and Beckley, WV). Incorporated by reference to Exhibit 10.57 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.57	Lease, dated September 24, 2004, by and between K&S Maple Hill Mall, L.P., an affiliate of SSC, and Shonac Corporation, re:
	Kalamazoo, MI DSW store. Incorporated by reference to Exhibit 10.58 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.57.1	Assignment and Assumption Agreement, dated February 28, 2005, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Kalamazoo, MI DSW store. Incorporated by reference to Exhibit 10.58.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.58	Lease, dated November 2004, by and between KSK Scottsdale Mall, L.P., an affiliate of SSC, and Shonac Corporation, re: South Bend, IN DSW store. Incorporated by reference to Exhibit 10.59 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.58.1	Assignment and Assumption Agreement, dated March 18, 2005, between Shonac Corporation, as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: South Bend, IN DSW store. Incorporated by reference to Exhibit 10.59.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.59**	Lease Agreement, dated March 18, 2005, by and between SSC and Value City of Michigan, Inc., re: Flint, MI DSW store. Incorporated by reference to Exhibit 10.60 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.60**	Lease Agreement, dated September 2, 1997, by and between SSC-Barboursville, L.L.C., an affiliate of SSC, and Value City Department Stores, Inc. Incorporated by reference to Exhibit 10.61 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.61#	Sample Nonqualified Stock Option Award Agreement issued by the Company pursuant to the 2000 Stock Incentive Plan. Incorporated by reference to Exhibit 10.62 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.62#	Sample Price Protected Stock Option Award Agreement issued by the Company pursuant to the 2000 Stock Incentive Plan. Incorporated by reference to Exhibit 10.63 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.63#	Sample Equity Compensation Approval Notice and Agreement issued by the Company to certain employees. Incorporated by reference to Exhibit 10.64 to Form 10-K (file no. 1-10767) filed April 14, 2005.
10.64**	Master Sublease, dated April 25, 1991, between the Company, as sublessee, and SSC, as sublessor, re: two stores (Covington, KY and Greenwood, IN). Incorporated by reference to Exhibit 10.11 to Registration Statement on Form S-1 (file no. 33-402144) filed April 29, 1991.
10.65#	Form of Indemnification Agreement between the Company and its directors and officers. Incorporated by reference to Exhibit 10(b) to Registration Statement on Form S-8 (file no. 333-117341) filed July 13, 2004.
10.66**	Lease Agreement, dated November 5, 1992, by and between Value City Department Stores, Inc. (successor to SSC d/b/a Elyria Value City Shopping Center), as sublessor, and SSC d/b/a Value City Furniture #17, as sublessee, as modified by Sublease Extension and Modification Agreement, dated October 11, 2001, re: Elyria, OH store. Incorporated by reference to Exhibit 10.67.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.67**	Agreement of Lease, dated March 6, 1996, between Value City of Michigan, Inc. (assignee of MRSLV Saginaw, L.L.C.), as sublessor, and SSC d/b/a Value City Furniture, as sublessee, re: Saginaw Michigan store. Incorporated by reference to Exhibit 10.68.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.
10.68	Agreement of Sublease, dated June 12, 2000, between Jubilee Limited Partnership, an affiliate of SSC, and DSW Shoe Warehouse, Inc. (assignee of DSW Inc.), re: Baileys Crossroads, VA DSW Store. Incorporated by reference to Exhibit 10.1 to Form 10-Q (file no. 1-10767) filed June 9, 2005.
10.70**	License Agreement, dated August 30, 2002, by and between Value City Department Stores, Inc. and Shonac Corporation, re: Merrillville, IN DSW store. Incorporated by reference to Exhibit 10.1 to Form 10-Q (file no. 1-10767) filed September 13, 2005.
10.71#	Employment Agreement, effective as of January 29, 2006, by and between Jed L. Norden and the Company. Incorporated by reference to Exhibit 10.1 to Form 8-K (file no. 1-10767) filed February 2, 2006.
10.72	Agreement of Lease, dated April 7, 2006, by and between JLP — Harvard Park, LLC, an affiliate of SSC, as landlord, and DSW Inc., as tenant, re: Chagrin Highlands, Warrensville, Ohio DSW store. Incorporated by reference to Exhibit 10.72 to Form 10-K (file no. 1-10767) filed April 13, 2006.

E-6

Exhibit
No.	Description
10.74#	Summary of Director Compensation. Incorporated by reference to Exhibit 10.74 to Form 10-K (file no. 1-10767) filed April 13, 2006.
10.75	Loan and Security Agreement, between DSW Inc. and DSW Shoe Warehouse, Inc., as the Borrowers, and National City Business Credit, Inc., as Administrative Agent and Collateral Agent for the Revolving Credit Lenders. Incorporated by reference to Exhibit 10.11 to DSW Inc.’s Form 10-K (file no. 001-32545) filed on April 13, 2006.
10.76	Agreement of Lease, dated April 13, 2006, between JLP — Harvard Park, LLC, an affiliate of SSC, as landlord, and Filene’s Basement, Inc. as tenant, re: Chagrin, OH Filene’s Basement store. Incorporated by reference to Exhibit 10.1 to Form 10-Q (file no. 1-10767) filed June 8, 2006.
10.77	Agreement of Lease, dated June 30, 2006, between JLPK — Levittown NY LLC, an affiliate of Schottenstein Stores Corporation and DSW Inc., re: Levittown, NY DSW store. Incorporated by reference to Exhibit 10.1 to Form 10-Q (file no. 1-10767) filed December 6, 2006.
10.78	Agreement of Lease, dated November 27, 2006, between JLP — Lynnhaven VA LLC, an affiliate of Schottenstein Stores Corporation and DSW Inc., re: Lynnhaven, Virginia DSW store. Incorporated by reference to Exhibit 10.2 to Form 10-Q (file no. 1-10767) filed December 6, 2006.
10.79	Agreement of Lease, dated November 30, 2006, between 4300 Venture 34910 LLC, an affiliate of Schottenstein Stores Corporation, and DSW Inc., re: Home office. Incorporated by reference to Exhibit 10.3 to Form 10-Q (file no. 1-10767) filed December 6, 2006.
10.80	Agreement of Lease, dated November 30, 2006, between 4300 East Fifth Avenue LLC, an affiliate of Schottenstein Stores Corporation, and DSW Inc., re: Trailer Parking spaces for home office. Incorporated by reference to Exhibit 10.4 to Form 10-Q (file no. 1-10767) filed December 6, 2006.
10.81	Lease Amendment, dated November 30, 2006 between 4300 Venture 6729 LLC, an affiliate of Schottenstein Stores Corporation, and DSW Inc., re: warehouse and corporate headquarters. Incorporated by reference to Exhibit 10.5 to Form 10-Q (file no. 1-10767) filed December 6, 2006.
10.82	Agreement of Lease, dated June 30, 2006, between JLPK — Levittown NY LLC, an affiliate of Schottenstein Stores Corporation and Filene’s Basement, re: Levittown, NY Filene’s Basement store. Incorporated by reference to Exhibit 10.6 to Form 10-Q (file no. 1-10767) filed December 6, 2006.
10.83	IT Transfer and Assignment Agreement dated October 29, 2006. Incorporated by reference to Exhibit 10.7 to Form 10-Q (file no. 1-10767) filed December 6, 2006.
10.84	Agreement of Lease, dated December 15, 2006, between American Signature, Inc., an affiliate of SSC, and DSW Shoe Warehouse, Inc., re: Langhorne, Pennsylvania DSW store. Incorporated herein by reference to Exhibit 10.84 to Form 10-K (file no. 1-10767) filed April 5, 2007.
10.85#	Sample Restricted Stock Unit Award Agreement issued by the Company to certain employees. Incorporated herein by reference to Exhibit 10.85 to Form 10-K (file no. 1-10767) filed April 5, 2007.
10.86#	Sample Stock Appreciation Right Award Agreement issued by the Company to certain employees. Incorporated herein by reference to Exhibit 10.86 to Form 10-K (file no. 1-10767) filed April 5, 2007.
10.87	Agreement of Lease, dated July 9, 2007, between Jubilee Limited Partnership, an affiliate of Schottenstein Stores Corporation, and Filene’s Basement, re: Aventura, FL Filene’s Basement store. Incorporated herein by reference to Exhibit 10.1 to Form 10-Q (file no. 1-10767) filed September 13, 2007.
10.88	Second Amended and Restated Senior Loan and Security Agreement, dated as of January 23, 2008, by and among Filene’s Basement, as borrower, the revolving credit lenders party thereto and National City Business Credit, Inc. as administrative agent and collateral agent. Incorporated herein by reference to Exhibit 10.1 to Form 8-K (file no. 1-10767) filed on January 24, 2008.
10.89	Agreement to Acquire Leases and Lease Properties, dated October 3, 2007. Incorporated herein by reference to Exhibit 10.1 to Form 8-K (file no. 1-10767) filed October 4, 2007.
10.89.1	First Amendment to Agreement to Acquire Leases and Lease Properties, dated effective as of February 15, 2008. Incorporated herein by reference to Exhibit 10.1 to Form 8-K (file no. 1-10767) filed January 28, 2008.
10.90#*	2007 Retail Ventures, Inc. Cash Incentive Compensation Plan.
10.91*	Supply Agreement (Combo Stores), effective as of January 30, 2005, between DSW Inc. and Filene’s Basement Inc.

E-7

Exhibit
No.	Description
10.92*	Assignment and Assumption of Lease, effective January 15, 2008, between Retail Ventures, Inc., American Signature, Inc., an affiliate of SSC and SSC — Alum Creek, LLC, an affiliate of SSC.
12*	Ratio of Earnings to Fixed Charges
21*	List of Subsidiaries.
23*	Consent of Independent Registered Public Accounting Firm.
24*	Power of Attorney.
31.1*	Rule 13a-14(a)/15d-14(a) Certification — Principal Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification — Principal Financial Officer.
32.1*	Section 1350 Certification — Principal Executive Officer.
32.2*	Section 1350 Certification — Principal Financial Officer.

*	Filed herewith.
#	Management contract or compensatory plan or arrangement.
**	Indicates an agreement or contract relating to the Company’s Value City Department Stores business segment. Effective January 23, 2008, the Company disposed of an 81% ownership interest in its Value City segment to VCHI Acquisition Co.

E-8

EX-4.13

Exhibit 4.13

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.

RETAIL VENTURES, INC.

COMMON STOCK PURCHASE WARRANT No. W-10            January 23, 2008

Warrant to Purchase
150,000 Shares of RVI Common Stock
(subject to adjustment as set forth herein)

RETAIL VENTURES, INC., an Ohio corporation (the “Company”), for value received, hereby certifies that VCHI Acquisition Co., a Delaware corporation (the “Holder”), is entitled to purchase from the Company that number of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock, no par value per share, of the Company (the “Common Stock”) equal to the Common Stock Exercise Amount (as defined below), at a purchase price equal to the Common Stock 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 July 23, 2009 (the “Expiration Date”), all subject to the terms, conditions and adjustments set forth below in this Warrant (this “Warrant”); provided, that the purchase price per share of Common Stock hereunder shall not in any event be less than the par value of such Common Stock.

1. DEFINITIONS. As used herein, unless the context otherwise requires, the following terms shall have the meanings indicated:

     “Additional Shares of Common Stock” shall mean all shares (including treasury shares) of Common Stock issued or sold (or, pursuant to Section 3.2(b) or 3.5(b), deemed to be issued) by the Company after January 23, 2008, whether or not subsequently reacquired or retired by the Company, other than (a) up to 5,000,000 shares of Common Stock that are issued to Persons other than affiliates of the Company, including (i) shares of Common Stock or options exercisable therefor, issued or to be issued under the Company’s 2000 Stock Option Plan as in effect on January 23, 2008 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’s Board of Directors; provided 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’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 provided, however, 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 clause (a);

     (b)(i) 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; and

     (c)(i) shares of Common Stock issued upon exercise of the Conversion Warrants and (ii) 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-dilution provisions applicable to the Conversion Warrants as in effect on the date hereof or on the date of original issuance.

     “Aggregate Purchase Price” shall have the meaning assigned to it in Section 2.1(a).

     “Business Day” 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 “days” (unless Business Days are specified) shall mean calendar days.

     “Code” shall mean the Internal Revenue Code of 1986, as amended.

     “Commission” shall mean the Securities and Exchange Commission or any successor agency having jurisdiction to enforce the Securities Act.

     “Common Stock” 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.

     “Common Stock Exercise Amount” shall initially mean the Initial Common Stock Exercise Amount, as the same may be adjusted and readjusted pursuant to Section 3 hereof; and

2

shall be reduced upon each exercise of this Warrant by such number of shares of Common Stock for which this Warrant is then being exercised.

     “Common Stock Purchase Price” shall mean initially $10.00 per share, subject to adjustment and readjustment from time to time as provided in Section 3, and, as so adjusted or readjusted, shall remain in effect until a further adjustment or readjustment thereof is required by Section 3.

     “Company” 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 4.

     “Conversion Warrants” means those certain warrants issued as of July 5, 2005 to SSC and CPLP pursuant to the Second Amended and Restated Senior Loan Agreement, dated as of July 5, 2005, by and among the Company, CPLP and SSC.

     “Convertible Securities” shall mean any evidences of indebtedness, shares of stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Additional Shares of Common Stock.

     “CPLP” shall mean Cerberus Partners, L.P., or its assignees.

     “Current Market Price” shall mean, with respect to a security, on any date specified herein, the average of the daily Market Price of such security during the ten (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.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

     “Expiration Date” shall have the meaning assigned to it in the introduction to this Warrant.

     “Fair Value” shall mean, on any date specified herein (i) in the case of cash, the dollar amount thereof, (ii) in the case of a security, the Current Market Price, and (iii) in all other cases, the fair value thereof (as of a date which is within twenty (20) days of the date as of which the determination is to be made) determined in good faith by a committee of the Company’s Board of Directors consisting of directors who are not affiliates of the Company, Schottenstein Stores Corporation or the Holder; provided, however, that at the reasonable request of the Holder, the

3

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 ten (10) days, by an independent investment banking firm selected by the American Arbitration Association in accordance with its rules, and provided, 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.

     “Financing Agreement” 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.

     “FINRA” shall mean the Financial Industry Regulatory Authority, Inc.

     “Holder” shall have the meaning assigned to it in the introduction to this Warrant.

     “Initial Common Stock Exercise Amount” means 150,000 shares.

     “Market Price” shall mean, on any date specified herein, with respect to any security, the amount per share of such security equal to (i) 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) 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 FINRA, the last reported trading price of such security on such date, (iii) 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 FINRA’s automated quotation system, (iv) 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) 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 twenty (20) days of the date as of which the determination is to be made) determined in good faith by a committee of the Company’s Board of Directors consisting of directors who are not affiliates of the Company, Schottenstein Stores Corporation or the Holder; provided, however, 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 ten (10) days, by an independent investment banking firm selected by the American Arbitration Association in accordance with its rules, and provided, further, that the Holder shall pay all of the fees and expenses of any third parties incurred in connection with determining the Market Price.

     “New Issuance Price” shall have the meaning assigned to it in Section 3.2(a).

4

     “Options” shall mean any rights, options or warrants to subscribe for, purchase or otherwise acquire Additional Shares of Common Stock or Convertible Securities of the Company.

     “Other Securities” shall mean any stock (other than Common Stock) and other securities of the Company or any other Person which the holders of shares of Common Stock of the Company at any time shall be entitled to receive, or shall have received, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4.

     “Person” 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.

     “Restricted Securities” shall mean (i) any shares of Common Stock (or Other Securities) issued or issuable upon the exercise of this Warrant, which shares are (or, upon issuance, will be) evidenced by a certificate or certificates bearing the applicable legend set forth in Section 10.1, and (ii) any shares of Common Stock (or Other Securities) issued subsequent to the exercise of this Warrant as a dividend or other distribution with respect to, or resulting from a subdivision of the outstanding shares of Common 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 Other Securities) issued upon such exercise, which are evidenced by a certificate or certificates bearing the applicable legend set forth in Section 10.1.

     “Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

     “SSC” shall mean Schottenstein Stores Corporation.

     “Term Loan Warrants” shall mean all warrants initially issued pursuant to the Financing Agreement.

     “Warrant” shall have the meaning assigned to it in the introduction to this Warrant.

     “Warrant Shares” means (a) the shares of Common Stock issued or issuable upon exercise of this Warrant in accordance with Section 2, (b) all other securities or other property issued or issuable upon any such exercise or exchange in accordance with this Warrant and (c) any securities of the Company distributed with respect to the securities referred to in the preceding clauses (a) and (b).

5

2. EXERCISE OF WARRANT.

2.1 Manner of Exercise; Payment of the Purchase Price.

     (a) This Warrant may be exercised by the Holder, 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 the form of Election to Purchase Shares attached hereto as Exhibit A (or a reasonable facsimile thereof) duly executed by the Holder and accompanied by payment of the Common Stock Purchase Price for the number of shares of Common Stock specified in such form (the “Aggregate Purchase Price”). Any partial exercise of this Warrant shall be for a whole number of Warrant Shares only.

     (b) Payment of the Aggregate Purchase Price may be made as follows (or by any combination of the following): (i) 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) 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 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) by surrender to the Company for cancellation certificates representing shares of Common Stock owned of record by the Holder having a Current Market Price on the date of Warrant exercise equal to the Aggregate Purchase Price.

2.2 When Exercise Effective. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the Business Day on which this Warrant shall have been surrendered to, and the Aggregate Purchase Price shall have been received by, the Company as provided in Section 2.1, and, to the extent permitted by law, at such time the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock (or Other Securities of the Company) is or are issuable pursuant hereto shall be deemed to have become the holder or holders of record thereof for all purposes.

2.3 Delivery of Stock Certificates, etc.; Charges, Taxes and Expenses.

     (a) As soon as practicable after each exercise of this Warrant, in whole or in part, and in any event within two (2) Business Days thereafter, the Company shall cause to be issued, in the name of and delivered to the Holder hereof or, subject to Section 10, as the Holder may direct:

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(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 12.5 hereof, and
(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.

     (b) 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; provided, however, 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.

3. ADJUSTMENT OF COMMON STOCK PURCHASE PRICE AND WARRANT SHARES ISSUABLE UPON EXERCISE.

3.1 Adjustment of Number of Shares. Upon each adjustment of the Common Stock Purchase Price as a result of the calculations made in this Section 3, this Warrant shall thereafter evidence the right to receive, at the adjusted Common Stock Purchase Price, that number of shares of Common Stock (calculated to the nearest one-hundredth (.01) of a share) obtained by dividing (i) the product of the aggregate number of such shares covered by this Warrant immediately prior to such adjustment and the Common Stock Purchase Price in effect immediately prior to such adjustment of the Common Stock Purchase Price by (ii) the Common Stock Purchase Price in effect immediately after such adjustment of the Common Stock Purchase Price.

3.2 Adjustment of Purchase Price for New Issuances.

     (a) Issuance of Additional Shares. If at any time or from time to time after the date hereof, the Company shall issue or sell Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 3.2(b) and excluding shares issued pursuant to Section 3.3 and 3.4) without consideration or for a consideration per share less than the Common Stock Purchase Price in effect immediately prior to such issue or sale (the “New Issuance Price”), then, and in each such case, subject to Section 3.8, the Common Stock Purchase Price shall be reduced concurrently with such issue or sale, to the applicable New Issuance Price.

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     (b) Treatment of Options and Convertible Securities. Shares of Additional Shares of Common Stock shall be deemed issued if the Company 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 entitled to receive, any Options or Convertible Securities (other than those excluded from the definition of Additional Shares of Common Stock) (whether or not the rights thereunder are immediately exercisable) for a consideration per share (determined pursuant to Section 3.6) that is less than the Common 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 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) as of the time of such issue, sale, grant or assumption of the Convertible Securities or Options or (ii) 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 trades on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading). No further adjustment of the Common Stock Purchase Price shall be made upon the subsequent issuance of shares of Common Stock upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

3.3 Extraordinary Dividends and Distributions. If the Company 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 the Common Stock other than (a) a dividend payable in shares of Common Stock subject to Section 3.4, or (b) a regularly scheduled cash dividend payable out of consolidated earnings or earned surplus, determined in accordance with generally accepted accounting principles or (c) a deemed issuance of Additional Shares of Common Stock pursuant to Section 3.2(b), in each such case, subject to Section 3.8, adequate provision shall be made so that the Holder shall receive, upon Warrant exercise, a pro rata share of such dividend or other distribution based upon the maximum number of shares of Common Stock at the time issuable to the Holder (determined without regard to whether the Warrant is exercisable at such time). For the avoidance of doubt, dividends and distributions pursuant to this Section 3.3 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).

3.4 Treatment of Stock Dividends, Stock Splits, etc. In case the Company at any time or from time to time after the date hereof shall declare or pay any dividend on the Common Stock payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of such shares (by reclassification or otherwise than by payment of a dividend in Common Stock), then, the number of shares of Common Stock obtainable upon exercise of this Warrant shall be proportionately increased and the Common Stock Purchase Price shall be proportionately decreased. In case the Company at any time or from time to time after the date hereof shall effect any combination or consolidation of the outstanding shares of Common Stock into a lesser number of such shares, then, the number of shares of Common Stock obtainable upon exercise of this Warrant shall be proportionately decreased and the Common Stock Purchase Price shall be proportionately increased. Any adjustment made under

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this Section 3.4 shall become effective (a) in the case of any such dividend, immediately after the close of business on the record date for the determination of holders of Common Stock entitled to receive such dividend, or (b) 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. Comparable adjustments shall be made as nearly as possible upon such events 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, to the extent applicable.

3.5 Adjustment of Purchase Price for Other Issuances.

     (a) Issuance of Additional Shares. If at any time or from time to time after the date hereof, the Company shall issue or sell Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 3.5(b)) for a consideration per share less than the Current Market Price thereof but greater than the Common Stock Purchase Price in effect immediately prior to such issue or sale, then, and in each such case, subject to Section 3.8, the Common Stock Purchase Price shall be reduced concurrently with such issue or sale, to a price (calculated to the nearest one-hundredth (.01) of a cent) determined by multiplying such Common Stock Purchase Price by a fraction (x) the numerator of which shall be the sum of (i) the number of shares of Common Stock outstanding immediately prior to such issue or sale and (ii) the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of such Additional Shares of Common Stock so issued or sold would purchase at the Current Market Price thereof, and (y) the denominator of which shall be the number of shares of Common Stock outstanding immediately after such issue or sale; provided that, for the purposes of this Section 3.5, (I) immediately after any Additional Shares of Common Stock are deemed to have been issued pursuant to Section 3.5(b), such additional shares shall be deemed to be outstanding, and (II) treasury shares shall not be deemed to be outstanding.

     (b) Treatment of Options and Convertible Securities. In case the Company 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 entitled to receive, any Options or Convertible Securities (other than those excluded from the definition of Additional Shares of Common Stock) (whether or not the rights thereunder are immediately exercisable) and the consideration per share (determined pursuant to Section 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 Common 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 trades on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), then the maximum number of Additional Shares of Common 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 conversion or exchange of such Convertible Securities, shall

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be deemed to be Additional Shares of Common Stock issued for the purposes of this Section 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 trades on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), provided, that in any such case in which Additional Shares of Common Stock are deemed to be issued:

(i)	whether or not the Additional Shares of Common 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 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 as issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities by reason of (x) a change of control of the Company, (y) the acquisition by any Person or group of Persons of any specified number or percentage of the voting securities of the Company or (z) any similar event or occurrence, each such case to be deemed hereunder to involve a separate issuance of Additional Shares of Common Stock Options or Convertible Securities, as the case may be;
(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 decrease in the number of Additional Shares of Common Stock issuable, upon the exercise, conversion or exchange thereof (by change of rate or otherwise), the Common Stock 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;
(iii)	upon the expiration (or purchase by the Company 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 and cancellation or retirement of any such Convertible Securities the rights of conversion or exchange under which) shall not have been exercised, the Common Stock Purchase Price computed upon the original issue, sale,

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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 such expiration (or such cancellation or retirement, as the case may be), be recomputed as if: (x) in the case of Options for Common Stock or Convertible Securities, the only Additional Shares of Common Stock issued or sold were the Additional Shares of Common 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 for the issue, sale, grant or assumption of all such Options, whether or not exercised, plus the consideration actually received by the Company 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 upon such conversion or exchange, and (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 for the Additional Shares of Common Stock or deemed to have then been issued was the consideration actually received by the Company 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 (pursuant to Section 3.6) upon the issue or sale of such Convertible Securities with respect to which such Options were actually exercised; and

(iv)

no readjustment pursuant to clause (ii) or (iii) above shall have the effect of decreasing the Common Stock 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.

3.6 Computation of Consideration. For the purposes of this Section 3,

     (a) The consideration for the issue or sale of any Additional Shares of Common Stock shall, irrespective of the accounting treatment of such consideration,

(i) insofar as it consists of cash, be computed at the gross cash proceeds to the Company without deducting any expenses 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,

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(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

(iii)

in case Additional Shares of Common Stock are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be the portion of such consideration so received, computed as provided in clauses (i) and (ii) above, allocable to such Additional Shares of Common 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 “Fair Value” herein; and

     (b) Additional Shares of Common Stock deemed to have been issued pursuant to Sections 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

(i)

the total amount, if any, received and receivable by the Company 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 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), by

(ii)

the maximum number of shares of Common Stock (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.

3.7 Dilution in Case of Other Securities. 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 any issuer of Other Securities or any other Person referred to in Section 4) or to subscription, purchase or other acquisition pursuant to any Options issued or granted by the Company (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 provisions of this Section 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 3

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with respect to the applicable Common Stock 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.

3.8 De Minimis Adjustments. If the amount of any adjustment of the Common Stock Purchase Price required pursuant to Section 3.5 would be less than one-tenth (.10) of one percent (1%) of such Common Stock 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 Common Stock Purchase Price of at least one-tenth (.10) of one percent (1%) of such Common Stock Purchase Price. All calculations under this Warrant shall be made to the nearest one-hundredth (.01) of a share.

3.9 Abandoned Dividend or Distribution. If the Company shall take a record of the holders of Common Stock for the purpose of entitling them to receive a dividend or other distribution (which results in an adjustment to the Common Stock 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 Common Stock Purchase Price by reason of the taking of such record shall be reversed, and any subsequent adjustments, based thereon, shall be recomputed; provided, however, that no additional Common Stock 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.

4. CONSOLIDATION, MERGER, ETC.

4.1 By the Company. In case the Company after the date hereof (a) 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) 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) 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 Common Stock Purchase Price and the number of shares of Common Stock obtainable upon exercise of this Warrant is provided in Section 3.2), 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

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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 3 and 4, provided that if a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than fifty percent (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 Common Stock Purchase Price in accordance with Section 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 Sections 3 and 4.

4.2 Assumption of Obligations. Notwithstanding anything contained in this Warrant to the contrary, the Company shall not effect any of the transactions described in clauses (a) through (c) of Section 4.1 unless, prior to the consummation thereof, each Person (other than the Company), which may be required to deliver any stock, securities, cash or property upon the exercise of this Warrant as provided herein shall agree to assume, by written instrument, (a) 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), and (b) 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 4, the Holder may be entitled to receive.

5. OTHER DILUTIVE EVENTS.

     In case any event shall occur as to which the provisions of Section 3 or Section 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 Company’s Board of Directors 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.

6. NO DILUTION OR IMPAIRMENT.

     The Company shall not, 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, 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

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the rights of the Holder of this Warrant against dilution or other impairment. Without limiting the generality of the foregoing, the Company (a) 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) 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, 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) shall not take any action which results in any adjustment of the Common Stock Purchase Price if the total number of Warrant Shares issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares of Common Stock then authorized by the Company’s articles of organization and available for the purpose of issue upon such exercise.

7. ACCOUNTANTS’ REPORT.

     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 Common Stock Purchase Price, including pursuant to Section 3, the Company at its sole expense shall promptly 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) the number of shares of Common Stock outstanding or deemed to be outstanding, and (b) the Common Stock Purchase Price in effect immediately prior to such issue or sale and as adjusted and readjusted (if required by Section 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.

8. NOTICES OF CORPORATE ACTION.

     In the event of:

     (a) any taking by the Company 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

     (b) any reorganization, reclassification or recapitalization of the capital stock of the Company, or any consolidation or merger involving the Company, or any transaction or series of transactions in which more than fifty percent (50%) of the voting securities of the Company are transferred to another Person,

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the Company shall mail to the Holder a notice specifying (i) 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) the date or expected date on which any such reorganization, reclassification, recapitalization, consolidation, or merger 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 shall be entitled to exchange their shares of Common Stock for the securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, or merger.

9. REGISTRATION OF STOCK.

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 to the Holder, 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 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.

10. RESTRICTIONS ON TRANSFER.

10.1 Restrictive Legends. Except as otherwise permitted by this Section 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:

“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 LAWS 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.”

     Except as otherwise permitted by this Section 10, each certificate for Common Stock issued (or Other Securities) upon the exercise of any Warrant, and each certificate issued upon the transfer of any such Common Stock (or Other Securities), shall be stamped or otherwise imprinted with a legend in substantially the following form:

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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS 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.”

10.2 Transfer to Comply with the Securities Act. The Holder hereby acknowledges to the Company that each Warrant and each share of Common Stock (or Other Securities) issued upon exercise of any Warrant may not be sold, assigned, pledged, hypothecated, encumbered or in any manner transferred or disposed of (a “Transfer”), 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.

10.3 Notice of Transfer. The Holder shall, prior to any Transfer of any Restricted Securities, give written notice to the Company of such Holder’s intention to Transfer.

10.4 Termination of Restrictions. The restrictions imposed by this Section 10 on the transferability of Restricted Securities shall cease and terminate as to any particular Restricted Securities (a) 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) when such securities are sold pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, or (c) when, in the reasonable opinion of both counsel for the Holder and counsel for the Company, such restrictions are no longer required or necessary in order to protect the Company 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 10.1.

10.5 Exempt Transfers. The restrictions on the transfer of this Warrant or the Warrant Shares set forth in this Section 10 shall not apply to any transfer to an affiliate of the Holder, provided that such transfer is made in compliance with the provisions of the Securities Act and state securities laws.

11. RESERVATION OF STOCK, ETC.

     The Company shall at all times reserve and keep available, solely for issuance upon exercise of this Warrant, the number of shares of Common Stock 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 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

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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’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’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 cancelled, and such cancelled 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 Common Stock need be reserved in respect of any unexercised Warrant.

12. REGISTRATION AND TRANSFER OF WARRANTS, ETC.

12.1 Warrant Register; Ownership of Warrants. Each Warrant issued by the Company shall be numbered and shall be registered in a warrant register (the “Warrant Register”) as it is issued and transferred, which Warrant Register shall be maintained by the Company at its principal office or, at the Company’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 10, a Warrant, if properly assigned, may be exercised by a new holder without a new Warrant first having been issued.

12.2 Transfer of Warrants. Subject to compliance with Section 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 B at the principal office of the Company. Upon any partial transfer, the Company shall at its expense issue and deliver to the new holder a new Warrant of like tenor, in the name of the new 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.

12.3 Replacement of Warrants. 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

18

cancellation thereof, the Company at its expense shall execute and deliver, in lieu thereof, a new Warrant of like tenor.

12.4 Adjustments to Purchase Price and Number of Shares. Notwithstanding any adjustment in the Common Stock 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.

12.5 Fractional Shares. Notwithstanding any adjustment pursuant to Section 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 on the date of Warrant exercise.

13. SECURITIES ACT MATTERS.

     The Holder represents and warrants to the Company as of the date hereof that:

     (a) 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;

     (b) The Holder is an “accredited investor” within the meaning of Regulation 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;

     (c) The Holder acknowledges that (A) 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 D thereunder; (B) 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 or an exemption from such registration is available with respect thereto; (C) Rule 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) there is presently no trading market for the Warrants and there is no assurance that such market will exist in the future; and (E) while

19

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

     (d) 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 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.

14. REMEDIES; SPECIFIC PERFORMANCE.

     The Company stipulates that there would be no adequate remedy at law to the 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.

15. NO RIGHTS OR LIABILITIES AS SHAREHOLDER.

     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.

16. NOTICES.

     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:

If to the Company:
Retail Ventures, Inc.
3241 Westerville Road
Columbus, OH 43224
Attn: James McGrady, Chief Financial Officer
Fax No. (614) 473-2721

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with a copy to:
Retail Ventures, Inc.
3241 Westerville Road
Columbus, OH 43224
Attn: General Counsel
Fax No. (614) 337-4682

If to Holder:
VCHI Acquisition Co.
3241 Westerville Road
Columbus, Ohio 43224
Attention: President
Fax No. (614) 473-2721

with a copy to:

Dewey & LeBoeuf LLP
1301 Avenue of the Americas
New York, NY 10019
Attn: Martin Bienenstock
Fax No. (212) 259-6333

     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 (5) days after being deposited in the mail, if sent first class or certified mail, return receipt requested, postage prepaid; provided, that the exercise of any Warrant shall be effective in the manner provided in Section 2.

17. AMENDMENTS.

     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.

18. DESCRIPTIVE HEADINGS, ETC.

     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) words of any gender shall be deemed to include each other gender; (2) words using the singular or plural number shall also include the plural or singular number, respectively; (3) the words “hereof,” “herein” and “hereunder” 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) the word “including” and words of similar import when

21

used in this Warrant shall mean “including, without limitation,” unless otherwise specified; (5) “or” is not exclusive; and (6) provisions apply to successive events and transactions.

19. GOVERNING LAW.

     This Warrant shall be governed by and construed in accordance with the law of the State of New York.

20. EXPIRATION.

     The right to exercise this Warrant shall expire at 5:00 p.m., New York City time, on the Expiration Date.

21. COSTS AND ATTORNEYS’ FEES.

     In the event that any action, suit or other proceeding is instituted concerning or arising out of this Warrant, each of the Company and the Holder agrees that the prevailing party shall recover from the non-prevailing party all of such prevailing party’s costs and reasonable attorneys’ fees incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom.

[Remainder of this page intentionally left blank]

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IN WITNESS WHEREOF, each of the Company and the Holder has executed and delivered this Warrant as of the date first above written.

RETAIL VENTURES, INC.
By:	/s/ James A. McGrady
	Name:	James A. McGrady
	Title:	Executive Vice President, Chief Financial Officer, Treasurer and Secretary
VCHI ACQUISITION CO.
By:	/s/ Robert DeAngelis
	Name:	Robert DeAngelis
	Title:	President

EXHIBIT A

FORM OF ELECTION TO PURCHASE SHARES OF COMMON STOCK

     The undersigned hereby irrevocably elects to exercise the Warrant to purchase                      Common Shares, no par value per share (“Common Stock”), of RETAIL VENTURES, INC. and hereby makes payment of $                     therefor [or] makes payment by reduction pursuant to Section 2.1(b)(ii) of the Warrant of the number of shares of Common Stock otherwise issuable to the Holder upon Warrant exercise by                      shares [or] 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 2.1(b)(iii) of the Warrant, certificates of which are attached hereto for cancellation                      [list certificates by number and amount]. The undersigned hereby requests that certificates for such shares be issued and delivered as follows:

ISSUE TO:

(NAME)
(ADDRESS, INCLUDING ZIP CODE)
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:

(NAME)
(ADDRESS, INCLUDING ZIP CODE)

     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:

ISSUE TO:

(NAME OF HOLDER)
(ADDRESS, INCLUDING ZIP CODE)

DELIVER TO:

(NAME OF HOLDER)
(ADDRESS, INCLUDING ZIP CODE)

Dated:	(NAME OF HOLDER)
	By:
	Name:
	Title:

EXHIBIT B

FORM OF ASSIGNMENT

     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 (“Common Stock”), of RETAIL VENTURES, INC. (the “Company”) represented by the Warrant, with respect to the number of shares of Common Stock set forth below:

Name of Assignee Address No. of Shares of Common Stock

and does hereby irrevocably constitute and appoint                      as attorney-in-fact to make such transfer on the books of the Company maintained for that purpose, with full power of substitution in the premises.

Dated:	(NAME OF HOLDER)
	By:
	Name:
	Title:

EX-10.2

Exhibit 10.2

LICENSE AGREEMENT BETWEEN VCM AND RVLI

     This License Agreement (“Agreement”), effective January 23, 2008, is entered into by and between Value City of Michigan, Inc., a Michigan corporation, located and doing business at 36901 Warren Road, Westland, Michigan 48185 (“VCM”) and Retail Ventures Licensing, Inc., a Delaware corporation, located and doing business at 3241 Westerville Road, Columbus, Ohio 43224 (“RVLI”).

     WHEREAS, RVLI desires to obtain a license from VCM under the trademarks, trade names and symbols set out in Exhibit A hereto (“the Marks”) solely for use in connection with the goods set out in Exhibit B hereto (“the Goods”); and

     WHEREAS, VCM desires to license RVLI under the Marks solely for use in connection with the Goods.

     NOW, THEREFORE, the parties hereby agree as follows:

     1. For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, VCM hereby grants to RVLI a perpetual, non-exclusive, non-transferable, royalty-free license to use the Marks and to enjoy the goodwill symbolized thereby in connection with the marketing, promotion, distribution, offer for sale and sale of the Goods, such license to be valid only within the United States (the “Territory”).

     2. Upon prior written notice to VCM, this Agreement is assignable, and the Marks and registrations thereof and applications therefor sublicensable, by RVLI to its affiliates, including Filene’s Basement, Inc. RVLI may also assign this Agreement to a purchaser of substantially the entire of any of Retail Ventures, Inc.’s retail department store businesses. RVLI must notify VCM of the assignment in writing, and any such assignee must expressly agree in writing in a form satisfactory to VCM to be bound by

Page 1 of 7

the terms of this Agreement. Other than as provided herein, RVLI may not assign or sublicense the license granted in this Agreement. This Agreement is freely assignable by VCM.

     3. RVLI and its sub-licensee(s) shall use the Marks solely in connection with the Goods, and to such additional goods as VCM agrees, at its sole discretion and upon written request by RVLI, to be added to Exhibit B.

     4. If, after the Marks are placed into use, RVLI and/or its sub-licensee(s) cease or intend to cease use of any of the Marks for more than forty-five (45) days, RVLI shall notify VCM of that decision in writing. If, after the Marks are placed into use, RVLI and/or its sub-licensee(s) cease to use of any of the Marks for more than forty-five (45) days, the license with respect to such Mark(s) shall be terminated.

     5. RVLI acknowledges that the continued maintenance of the significance and value of the Marks and their associated goodwill, the continued maintenance of the quality standards, and the merchandising of products associated with the Marks, are all essential elements of the license granted herein. Accordingly, RVLI agrees:

     a. that it will maintain the quality of all goods sold under the Marks at the same level as are being maintained as of the effective date of this Agreement, that it will do nothing that will degrade or bring into ill repute any of the Marks, that the goods sold under the Marks shall meet quality specifications supplied by VCM, if any, and that it shall in all reasonable ways aid VCM to exercise quality control over the Goods sold by RVLI under the Marks;

     b. VCM, or its duly authorized representatives, shall have the right upon reasonable notice during regular business hours, not to exceed once per calendar year per

Page 2 of 7

facility, to inspect the retail and manufacturing business operations of RVLI and/or its sub-licensee(s) to the extent they relate to the Goods being marketed, distributed, offered for sale and/or sold under the Marks for compliance with the quality specifications, such inspection to be at VCM’s expense; and

     c. all products made available under the Marks shall be manufactured, sold, marketed, advertised and rendered in compliance with all applicable laws, rules and regulations.

     6. In the event VCM determines, through an inspection or otherwise, that RVLI and/or its sub-licensee(s) are not in compliance with the quality requirements of paragraph 5 of this Agreement, including the requirement that RVLI will do nothing that will degrade or bring into ill repute any of the Marks, VCM shall notify RVLI in writing of the determination and specify the basis of the determination. RVLI shall have sixty (60) days from receipt of the written notice in which to correct the non-compliance identified in the written notice. In the event RVLI and/or its sub-licensee(s) fail to correct the non-compliance within sixty (60) days, VCM has the right, but not the obligation, to terminate this Agreement, such termination to be provided in writing.

     7. RVLI acknowledges VCM’s exclusive ownership of, and the validity of, the Marks, and agrees that it will not, during the term of this Agreement or thereafter, contest or question VCM’s ownership of, or the validity of, the Marks. RVLI also acknowledges that any such rights, and all goodwill relating to the Marks, which may arise in connection with RVLI’s use of the Marks shall inure to the benefit of and be the property of VCM. RVLI further agrees not to register or attempt to register any of the Marks, or any derivative or confusingly similar mark thereto, anywhere in the world.

Page 3 of 7

     8. Whenever requested by VCM during the Agreement, RVLI and/or its sub-licensee(s) shall execute such documents or applications VCM may deem necessary to confirm VCM’s ownership of all such rights, to maintain the validity of the Marks, or to obtain or maintain registrations thereof.

     9. In the event RVLI and/or its sub-licensee(s) wish to use a variation or derivative of one of the Marks, RVLI shall immediately notify VCM in writing of the variation or derivative. If VCM agrees to such a variation or derivative, such agreement not to be unreasonably withheld, such variation or derivative shall be added to the Marks, and Exhibits A and B hereto shall be amended, as appropriate, to include such variation or derivative under this Agreement and the license to RVLI.

     10. Subject to the provisions of paragraph 6 of this Agreement, if RVLI breaches any of the terms and/or conditions of this Agreement, VCM shall provide written notice of the breach to RVLI. If the breach is not cured within thirty (30) days from receipt of such notice, VCM shall have the right, but not the duty, to terminate this Agreement, such termination to be provided in writing.

     11. RVLI hereby indemnifies and holds harmless VCM and its shareholders, officers, directors and employees from and against any and all claims, actions, liabilities, losses, and damages (including, without limitation, costs and expenses and reasonable attorneys’ fees and disbursements) from third parties arising from (a) the use by RVLI of any of the Marks, (b) RVLI’s use of any letter, word, symbol, character, design or the like on, affixed to, or used in connection with Goods other than the Marks by RVLI or its sublicensees, (c) any alleged defects in the Goods sold under any of the Marks or in the material or workmanship thereof, or inaccurate or deceptive labeling on or in connection

Page 4 of 7

with, the Goods sold under any of the Marks, and (d) any nonconformity to or non-compliance with any laws pertaining to the design, manufacture, quality, safety, advertising, promotion or marketing of any of the Goods sold under any of the Marks. VCM shall provide written notice to RVLI of any such indemnification within a reasonable time of learning of any event giving rise to such indemnification obligation.

     12. THE MARKS ARE LICENSED ON AN “AS-IS” BASIS, AND VCM MAKES NO, AND HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES WITH RESPECT THERTO, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

     13. Any notice required to be given pursuant to this Agreement shall be in writing and forwarded by certified or registered mail, return receipt requested, or delivered by a courier service, such as Federal Express, DHL, or the like, and shall be sent to the parties at the addresses and to the individuals listed below:

As to VCM

President
Value City Holdings, Inc.
3241 Westerville Road
Columbus, Ohio 43224

As to RVLI

Julie A. Davis, Esq.
Retail Ventures, Inc.
3241 Westerville Road
Columbus, Ohio 43224

Any notice sent in accordance with the above shall for all purposes be deemed to be fully given by a party upon the earlier of actual receipt or after three (3) business days. The

Page 5 of 7

individuals and addresses set forth above can be changed by either party pursuant to written notice as provided in this paragraph.

     14. This Agreement shall be governed by and interpreted under the laws of the State of Ohio without reference to principles of conflict of laws. Any controversy arising out of this Agreement shall be resolved in a federal or state court of competent jurisdiction located in the State of Ohio, City of Columbus. The parties consent to jurisdiction in such courts and waive any objection to such venue.

     15. RVLI recognizes that the Marks possess a special and unique character which makes difficult the assessment of monetary damages which VCM might sustain by an unauthorized use of the Marks. RVLI recognizes and agrees that irreparable injury would be caused by RVLI’s unauthorized use, and that injunctive and other relief, in law and equity, would be appropriate in the event of a breach of this Agreement by RVLI.

     16. This Agreement is a complete statement of all agreements among the parties with respect to its subject matter. Any amendment, modification, alteration, change or waiver, including changes to any of the Exhibits hereto, must be in writing signed by both parties.

     17. If any provision of this Agreement is for any reason declared to be invalid or unenforceable, the validity of the remaining provisions shall not be affected thereby.

     18. This Agreement shall be construed without regard to any presumption or any other rule requiring construction against the party causing this Agreement or any part thereof to be drafted.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the parties have executed this Agreement effective                                         , 2008.

VALUE CITY OF MICHIGAN, INC			RETAIL VENTURES LICENSING, INC.
By			By
	Name:	James A. McGrady		Name:	James A. McGrady
	Title:	Executive Vice President, Chief Financial Officer, Treasurer and Secretary		Title:	Vice President

Page 7 of 7

EXHIBIT A

Marks and Federal Registrations and Applications

Mark	Application No.	Registration No.
TODAY’S LIVING	76/261,834	3,059,244
TODAY’S LIVING	76/977,232	2,929,520
TODAY’S LIVING	76/976,800	2,872,455
TODAY’S LIVING	76/976,288	2,826,251
TODAY’S LIVING	76/975,660	2,768,042
TODAY’S LIVING	76/975,259	2,805,664
PREMIER HOTEL LINENS	78/664,795
CREATIVE LIFESTYLES	76/977,228	2,929,518
CREATIVE LIFESTYLES	76/976,805	2,877,939
CREATIVE LIFESTYLES	76/976,281	2,826,249
CREATIVE LIFESTYLES	76/975,662	2,832,922
OUTDOORS BY TODAY’S LIVING	76/559,045	2,965,831
ALPINE RIDGE	77/093,153
ALPINE RIDGE	75/928,498	2,579,709
ALPINE RIDGE	75/928,483	2,499,088
ALPINE RIDGE	75/737,400	2,579,321
CHEF’S HELPER	76/977,838	3,066,472
CHEF’S HELPER	76/978,589	3,275,971
CHEF’S HELPER	76/541,064
BBQ CLASSICS	76/612,967	2,184,734
BARBECUE CLASSICS	75/167,791	2,184,734
COACH AND FOUR	77/017,958	0,581,571
COACH AND FOUR	77/017,973
COACH AND FOUR	71/633,531	0,581,571
FREE FALL	78/722,971	3,349,727
FREE FALL	73/582,912	1,410,638
HOLIDAY MAGIC BY WONDERLAND TRADITIONS	78/977,490
HOLIDAY MAGIC BY WONDERLAND TRADITIONS	78/667,366
INTIMATE SECRETS	78/857,986	3,327,632
INTIMATE SECRETS	75/341,737	2,195,611

Page 1 of 10

Mark	Application No.	Registration No.
J. D. CHRISTOPHER	75/371,891	2,299,257
LUCA ROSSI	76/569,246	3,022,468
MAZZONI	75/414,191	2263818
MAZZONI	77/061,036
MAZZONI	76/624,393	3,069,906
WONDERLAND TRADITIONS	74/703,246	2,067,780
WONDERLAND TRADITIONS	75/222,765	2,286,915
WITCH’S HAUNT	75/165,507	2,159,620
CI CLUB INTERNATIONAL	76/607,093
CLUB INTERNATIONAL	73/495,224	1,453,246
U.S.A. CLASSICS	75/979,351	2,365,350
U.S.A. CLASSICS	75/978,443	2,280,142
FLORENZI	74/389,832	1,845,683
FLORENZI	75/735,819	2,519,119
FLORENZI	76/559,653	2,895,022
MERRY GO ROUND KIDS	75/287,826	2,327,082
IOU	74/389,833	1,852,453
ROSEMARY & IVY	75/155,096	2,098,396
VILLAGE GARDENER	75/201,097	2,154,321
VILLAGE GARDENER	75/201,096	2,127,874
VILLAGE GARDENER	75/200,985	2,155,738
VILLAGE GARDENER	75/200,983	2,127,872
VILLAGE GARDENER	75/060,685	2,102,148
AUTUMN TAPESTRY	78/667,435
MEMPHIS BLUES	76/604,000	2,259,855
MEMPHIS BLUES	75/287,844	2,259,855
SUSSEX CLOCK WORKS	78/909,085	3,354,302
STACY LEWIS	76/493,692
T. EDWARDS	75/287,801	2,251,812
THERMA PLUSH	78/897,916

EXHIBIT B

Goods For Which The Marks Are Licensed

Mark	Goods/Services
TODAY’S LIVING	Decorative water fountains and waterfalls, chair pads; pillows, namely, bath pillows; bathroom mirrors; clothes

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Mark

Goods/Services

hangers; nonmetal clothes hooks; shower curtain rods; nonmetal shower curtain rings; shoe racks and garment racks; masquerade masks for decorative purposes of cold cast resin, fabric, bone, ivory, plaster, plastic, wax and wood; brushes, namely, nail, eyebrow; sponges for household purposes; tub stoppers; plungers for clearing blocked drains; candle accessories, namely, candle rings, and candle snuffers not of precious metal; plastic laundry baskets; shower caddies; towel bars; clothes drying racks; shoe trees; ironing boards; shaped ironing board covers and pads; home furnishings and housewares, namely, cookware, namely, woks, non-electric pressure cookers; storage containers, namely, stainless steel pump pots; fabric covers for kitchen appliances; wood floral sticks with attachments for making artificial floral arrangements; decorative tassels and cords; plastic and rubber mats, namely bath mats, carpet remnants, and textile welcome mats; rugs, namely bath rugs, area rugs, rag rugs, oriental rugs, dhurrie rugs, braided rugs, and kitchen rugs Live floral items, namely garlands, wreaths, basket arrangements, swags, candle rings, vines, bushes and stems, and ficus trees, live floral items, namely, centerpieces and bouquets, and topiaries, framed art pictures and prints, toilet paper holders, textile and vinyl table napkins; fabric table runners; decorator rounds and toppers for tables made of lace and/or fabric, artificial floral items, namely, garlands, wreaths, centerpieces, basket arrangements, bouquets, swags, candle rings, vines, bushes and stems, topiaries, and ficus trees, Brushes, namely, hair and cosmetic brushes; glass table tops; non-metal decorative curio boxes; figurines of earthenware, porcelain or terra cotta; candle accessories, namely, candle jars; home furnishings and housewares, namely, cookware, namely, roasters and steamers, tea kettles; decanters; cake plates; gravy boats; porcelain and china ornaments; wooden, glass and plastic coasters; plates; breadboxes; buckets; butter dishes; casserole dishes; crocks; ice buckets; salad sets consisting of various-sized bowls and serving salad tongs; kitchen utensils, gadgets and serving sets, namely, spoons, ladles, spatulas, turners, ice cream scoopers, tongs, graters, basters, corn cob holders; kitchen containers, namely, recipe boxes; canister sets; kitchen caddies; cutlery trays; napkin holders; spice racks; banana trees; cookie stampers; storage containers, *namely,* carafes, and bottles sold empty; ceramic pump pots and carafes; wicker goods, namely, portable meal tray tables, vases, and urns; decorative gifts of china, crystal, Toiletries, namely, shower gel, body lotion, room fragrances, bubble bath, non-medicated bath salts, aromatherapy oils, body oils; soap, namely face soap, deodorant soap, skin soap, shaving soap, antibacterial soap,

Page 3 of 10

Mark	Goods/Services
	beauty soap; and potpourri ,earthenware, glass, porcelain or terra cotta, namely, birdcages, and items in the shapes of cars, planes, and animals; portable ice chests for food and beverages; masquerade masks for decorative purposes of ceramic, clay dough, china, crystal, earthenware, glass, porcelain and terra cotta, window decorations, namely, curtains; bedding, namely, homemade quilts, pillow shams, bed spreads, bed-in-a-bag, comforters, duvet covers, dust ruffles, mattress pads, bedding protectors, pillow protectors; fabric tub mats; table cloths not of paper; furniture throws; fabric, namely, cotton fabric, woolen fabric, nylon fabric, polyester fabric, and rayon fabric; vinyl place mats, lighting, namely, floor, table, desk lamps, pillows, namely, toss pillows, floor pillows, and bed pillows; window blinds; window shades; picture frames; shelves; cabinets; decorative gifts made of wood and polyresin, namely, general purpose decorative storage cases, jewelry cases, and wooden animals; drapery hardware, namely, brackets sold as a unit and individually, Figurines made of stoneware, Kitchen cutlery, namely flatware, knives, forks, spoons, butcher knives, and kitchen knives; non-electric can openers; carving sets, consisting of various-sized knives, Nautical-theme home decor items of common metal, namely, two-dimensional and three-dimensional models in the shape of fish, light houses, boats, figurines made of metal, brass and copper, Wall decor, namely, wall mirrors and accent furniture; wall plaques; figurines of wood and polyresin; wood boxes; wood tables; nautical-theme wooden and polyresin home decor items, namely, wood fish, model lighthouses, model boats, wooden signs; laundry hampers made of plastic, wicker, metal, or mesh; drapery hardware, namely, drapery rods, curtain rods, sconces, sold as a unit and individually, and planters; decorative trays not of precious metal; candlesticks and candleholders not of precious metal; sconces not of precious metal; home furnishings and housewares, namely, bakeware, cookware, namely pans, pots, carafes, dinnerware, beverageware, ceramic serveware, namely, mugs, non-electric thermal insulate food and beverage containers not of precious metal; containers for food, namely, cookie jars; cutting boards; carving boards; bowls; paper towel holders; waste baskets, wicker planters, wicker goods, namely, baskets, chests and wine baskets, Window decorations, namely, draperies; bedding, namely, blankets, bed sheets and bed sheet sets, blanket throws; towels; wash cloths; towel ensembles, Candles, in the form of pillars, votives, tapers, tea lights, balls, glow candles, and imbedded candles, namely novelty, basic, aromatherapy, and candle sets.
PREMIER HOTEL LINENS	Bed pillows; plastic facial tissue box covers; bathroom accessories, namely, bathroom glass holders not of

Page 4 of 10

Mark	Goods/Services
	precious metal, drinking glasses, beverageware, plastic cups, drinking vessels, mugs, soap dishes, toothbrush holders, lotion containers with dispensing pumps, ceramic facial tissue box covers, wastebaskets, covers for spare toilet paper roll, and toilet paper holders; bed and bath linens, namely, bed sheets, comforters, throws, blankets, towels, face cloths, bath rugs, mattress pads, and pillow cases; bath rugs
CREATIVE LIFESTYLES	Garment bags for storage; laundry bags, Toilet seats; electric fans; and lighting, namely, wall, ceiling, and desk lamps; shower heads, decorative water fountains and waterfalls; electric bread warmers; electric pressure cookers, chair pads; pillows, namely, toss pillows, floor pillows, bath pillows, and bed pillows; window blinds; window shades; picture frames; clothes hangers; wall decor, namely wall mirrors; wall plaques; wood boxes; laundry hampers made of plastic, metal, or mesh; nonmetal clothes hooks; shower curtain rods; nonmetal shower curtain rings; shelves; cabinets; decorative gifts made of wood and polyresin, namely, jewelry cases; shoe racks; drapery hardware, namely, drapery rods, curtain rods, brackets, sconces, sold as a unit and individually; masquerade masks for decorative purposes of cold cast resin, fabric, bone, ivory, plaster, plastic, wax and wood, wicker goods, namely, baskets and wine baskets, laundry hampers made of wicker, Figurines made of stoneware, lighting, namely, floor, and table lamps, imbedded candles, namely aromatherapy candles, clocks, garment racks, candle accessories, namely, candle jars, towel bars, bedding, namely, bed-in-a-bag, wash cloths, mirrors; accent furniture; figurines of wood and polyresin; wood tables; nautical-theme wooden and polyresin home decor items, namely wood fish, model lighthouses, model boats, wooden signs; decorative gifts made of wood and polyresin, namely, general purpose decorative storage cases and wooden animals, artificial floral items, namely garlands, wreaths, centerpieces, basket arrangements, bouquets, swags, candle rings, vines, bushes and stems, topiaries and ficus trees, candles, in the form of pillars, votives, tapers, tea lights and candle sets, nautical-theme home decor items of common metal, namely two-dimensional and three-dimensional models in the shape of fish, lighthouses, boats, and non-luminous and non-mechanical metal signs; figurines made of metal, brass, and copper, decorative gifts made of paper mache, namely paper mache gift boxes
OUTDOORS BY TODAY’S LIVING	Metal shepherd crooks with hooks used for supporting lawn decorations; non-luminous, non-mechanical metal signs; and metal planters, Lantern with citronella candle sold as a unit, and lanterns, Patio umbrellas, Stepping stones, decorative garden stones shaped like people and

Page 5 of 10

Mark	Goods/Services
	animals, garden figurines made of stone and concrete; non-luminous, non-mechanical signs made of wood, wood fencing and edging, wooden garden stakes; benches, patio furniture, fitted protective patio furniture covers, metal stand; and wind chimes, portable thermally-insulated coolers for food and beverage, bird feeders, bird houses and bird baths, reusable plastic cubes filled with freezable material for cooling beverages, plastic drinking cups, mugs and plastic cups with straws, metal plant holders, watering cans, gardening gloves, and mesh dinner plate covers, Patio torches, Non-metal awning with supports.
ALPINE RIDGE	Men’s, women’s, and children’s clothing, namely, jeans, shirts, coats, jackets, snowsuits, sweatsuits, sweatshirts, sweaters, vests, parkas, gloves, mittens, socks, shoes, hats and scarves, backpacks, tote bags, and wallets, small suit cases and travel bags, children’s clothing, namely, children’s pants, jerseys, shirts, underwear and thermals, Camping gear, namely, sleeping bags and inflatable air mattresses, Tents; portable gazebos of fabric; portable gazebos of plastic; awnings; and fabric canopies.
CHEF’S HELPER	Kitchen housewares, namely, cutting boards and bakeware; cookware, namely, steamers, steamer inserts, saucepans, non-electric griddles, frying pans, metal cooking pans, glass cooking pans, cooking pots, pot lids, non-electric coffee pots; and household kitchen utensils, namely, napkin holders, towel holders, banana hangers, trivets, strainers, turners, tongs, whisks, basters, bottle openers, pot and pan scrapers, spatulas, graters, colanders, scoops, salt and pepper shakers, cookie presses, cookie cutters, sifters, ladles, garlic presses, basting brushes, mixing bowls, rolling pins, wine cork screws, sieves, funnels, spice racks, coaster sets comprising coasters not of linen or paper, wooden mixing and serving spoons, serving forks, pepper grinders, non-electric salad spinners, and wine racks, cutlery, including kitchen cutlery; hand-operated food choppers; pizza cutters; parers; and non-electric can openers, measuring cups, measuring spoons; and meat thermometers, non-metal key holders; and non-metal clips for closing snack bags
BBQ CLASSICS	Patio candles; colored fire torches, patio accessories, namely, fitted plastic covers for metal propane gas tanks, patio accessories, namely, fitted plastic covers for umbrellas, patio accessories, namely, fitted plastic covers for furniture
BARBECUE CLASSICS	Barbecue tools, namely, tongs and forks, barbecue grills, electric lighting fixtures for the patio, and fitted plastic covers for barbecue grills, patio accessories, namely, fitted plastic covers for patio furniture, patio accessories, namely, fitted plastic covers for metal propane gas tanks, patio accessories, namely, fitted plastic covers for umbrellas,

Page 6 of 10

Mark	Goods/Services
	barbecue tools, namely, spatulas, brushes for basting foods, brushes for cleaning grills, and cooking skewers.
COACH AND FOUR	Handbags, wallets, purses, tote bags, luggage, and small leather goods, namely, clutch purses, leather key cases and credit card cases, gloves, hats, dresses, pants, skirts, jackets, coats, shirts, blouses, vests, shorts and sweaters, belts and men’s ties, cuff links, handkerchiefs, ladies and misses shoes made of leather, suede, canvas, fabric or compositions and combinations.
FREE FALL	Clothing, namely, pants, shorts, T-shirts, and woven shirts, sweaters and sweatshirts.
CLUB INTERNATIONAL	Men’s clothing, namely suits, pants, jackets, sweaters, coats, shirts, socks and undergarments.
U. S. A. CLASSIC	Clothing, namely, shirts, sweaters, skirts, blouses, dresses, shorts, pants, jeans, coats, jackets, overalls, shortalls, hats, clothing belts, socks and hosiery, duffle bags.

Page 7 of 10

Mark	Goods/Services
HOLIDAY MAGIC BY WONDERLAND TRADITIONS	Christmas theme figurines and statuary made of wood, plastic, fabric and resin in the form of Santas, snowmen, nutcrackers, carolers, reindeer, corner kids, sleighs, wreaths, birdhouses, bears, moose and reindeer, elves, gingerbread people, angels, Mrs, Claus, candy canes and nativities; Christmas theme ornamental sculptures made of wood for indoor/outdoor decor; Christmas theme ornamental sculptures of non-precious metal for indoor/outdoor decor, namely, wind chimes, plaques and decorative fireplace screens; and plastic hooks and hangers including wreath hangers, all for hanging decorations, Christmas theme figurines and statuary of common metal, namely, Santas, kings, soldiers, snowmen, reindeer, stars, sleighs, stockings, and angels; Christmas theme ornamental sculptures of non-precious metal for indoor/outdoor décor, namely, non-luminous and non-mechanical metal signs and baskets of common metal; Christmas tins of metal; metal hooks and metal hangers for wreaths, Electric lighted wooden figure stands; Christmas electric light sets resembling icicles; electric candles; Christmas theme ornamental sculptures of non-precious metal for indoor/outdoor décor, namely, candle lanterns and oil lanterns; electric Christmas light strings and replacement bulbs; lighted Christmas garlands; lighted plastic, polyresin, wood, and ceramic figurines; and lighted Christmas tree toppers, Christmas theme figurines of terra cotta in the form of Santas, snowmen, nutcrackers, carolers, reindeer, corner kids, and nativities, Boxed Christmas cards; Christmas theme plastic window decals for decorating windows; tissue paper; Christmas theme and winter theme figurines made out of paper mache; Christmas theme chalk boards for home use; gift bags made from paper, fabric and plastic; Christmas card holders made of fabric; decorative boxes made of cardboard; advent calendars made of wood; and Christmas theme gift wrapping paper, Pet clothing, namely, hats and vests; and pet accessories, namely, collars, Jars for holding candles; candle holders not made of precious metals; Christmas theme figurines of glass and ceramic in the form of Santas, snowmen, nutcrackers, carolers, reindeer, corner kids, and nativities; Christmas theme planters made of terra cotta; Christmas theme ornamental sculptures of non-precious metal for indoor/outdoor decor, namely, bird houses; and Christmas theme baskets made of wood, Unfitted novelty chair covers and Christmas theme hanging figures and flags, all made of fabric, Santa suits and hats.
INTIMATE SECRETS	Female clothing, namely, sleepwear, loungewear, gowns, shirts and robes, bras and panties.
J. D. CHRISTOPHER	Men’s suits, sport coats, pants, shirts, and all-weather coats.

Page 8 of 10

Mark	Goods/Services
LUCA ROSSI	Suits, sport coats, slacks, all-weather coats, topcoats, overcoats, and suit separates, namely, suit jackets, suit pants and suit vests.
MAZZONI	Dress shirts, knit sport shirts, sweaters, ties, suits, sport coats, slacks, top coats and raincoats.
WONDERLAND TRADITIONS	Christmas-theme figurines of common metal, namely, Santas, snowmen, reindeer and stars; ornamental sculptures in the form of Christmas-theme greetings made of non-precious metal, Christmas-theme figurines of wood, plastic or wicker, namely, Santas, snowmen, reindeer and stars; water-ball snow globes; ornamental sculptures in the form of Christmas-theme greetings made of wood, plastic, straw, and wicker, Christmas tree ornaments; Christmas garlands; artificial Christmas trees; artificial Christmas wreaths.
WITCH’S HAUNT	paper and plastic Halloween face masks; party favors in the nature of small toys; plastic, paper, and cardboard toy pumpkins; and toy party wind socks, Halloween products, namely, paper treat bags, cardboard skeletons, stickers, paper and cardboard banners and posters, Halloween costumes, Halloween decorations, namely, plastic figurines, and plastic trees with plastic Halloween-theme ornaments suspended from the branches thereof.
CI CLUB INTERNATIONAL	Luggage sets, duffle bags, garment bags, briefcases, backpacks, totes, travel bags, and handbags.
FLORENZI	Luggage, duffle bags, garment bags for travel, tote bags, travel bags, athletic bags, beach bags, overnight bags, cosmetic and toiletry cases sold empty, knapsacks, luggage tags, suitcases; briefcases, attache cases, book bags, school bags, business and credit card cases, briefcase-type portfolios; backpacks, waistpacks, handbags, purses, wallets, billfolds, shoulder bags, clutch purses, key cases, coin purses, diaper bags, and infant carriers worn on the body, Women’s clothing, namely, pants, shirts, blouses, and jackets, Watches sold to discount stores, outlet stores and off-price retail stores, men’s clothing; namely, shirts, sweaters, jeans, pants, jackets.
MERRY GO ROUND KIDS	Children’s, infants’ and toddlers’ clothing, namely, shirts, pants, shorts, hats, jumpsuits, overalls, shortalls, sweaters, jackets, coats, jeans, warm-up suits, rompers, swimwear, sweatshirts, sweatpants and coveralls.
I. O. U.	Clothing, namely, shirts, pants, skirts, sweaters, jackets, socks, shoes, knit tops, blouses, coats, blazers, sweatshirts, ties, belts.
ROSEMARY & IVY	Female clothing, namely, sleepwear, loungewear, robes and dresses.
VILLAGE GARDENER	Hand-operated garden tools, namely, pruners, loppers, rakes, shovels, picks, spades, hedgers, trimmers, hoes, sprayers, lawn, watering, and garden hoses; and hose mending kits consisting primarily of plastic hose

Page 9 of 10

Mark	Goods/Services
	connectors, metal hose fittings and connectors; metal cans sold empty and metal lids for cans; metal broom handles; brass lawn ornaments; figures and sculptures made of non-precious metal; hand-operated garden hose reels and holders, all of common metal, hose and plastic spray nozzles; garbage cans, all-purpose portable household containers, containers not of precious metal for household use and non-metal cans sold empty; lawn sprinklers; garden hose-attached sprayers; and bird feeders and bird houses, non-metal hand-operated hose reels; non-metal broom handles; plastic lids for cans; and plastic hose fittings and connectors; plastic figures, statues and figurines.
AUTUMN TAPESTRY	Fragrances for personal use, Figurines and desktop statuary of common metal; ornamental sculptures for indoor/outdoor décor made of non-precious metal, non-luminous and non-mechanical metal signs; baskets of common metals, Candle lanterns, Figurines and desktop statuary made of wood, raffia, fabric and resin; ornamental sculptures for indoor/outdoor décor made of wood and plastic; wall plaques; picture frames not of precious metal; non-metal lawn stakes; decorative plastic flags, Candle holders not made of precious metals; figurines of glass and porcelain; signs and suncatchers made of stained glass; planters for flowers and plants; baskets made of wood.
MEMPHIS BLUES	Girls’ and women’s clothing, namely, jeans, jackets, shorts, sweatshirts, sweat pants, tops, bottoms, dresses, sweaters, jumpsuits and footwear, men’s clothing and accessories, namely, jeans.
SUSSEX CLOCK WORKS	Clocks.
STACY LEWIS	Clothing, namely, men’s suits, sport coats, pants, dress shirts, and ties.
T. EDWARDS	Men’s clothing and accessories, namely, pants, ties.
THERMA PLUSH	Bed blankets and throws.

Page 10 of 10

EX-10.55.1

Exhibit 10.55.01

ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT

          THIS ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT (this “Assignment”) is made effective this 22 day of January, 2008 (the “Effective Date”), by and between VALUE CITY DEPARTMENT STORES LLC, an Ohio limited liability company, having an address of 3241 Westerville Road, Columbus, Ohio 43224 (“Assignor”), RETAIL VENTURES, INC., an Ohio corporation, having an address of 3241 Westerville Road, Columbus, Ohio 43224 (“Assignee”), and JUBILEE-SAWMILL LLC, an Ohio limited liability company, having an address of 1800 Moler Road, Columbus, Ohio 43207 (“Landlord”).

WITNESSETH

     WHEREAS, Assignor and Landlord are tenant and landlord, respectively, under that certain Lease dated July 19, 2006 between Value City Department Stores, Inc. and Jubilee Limited Partnership, as amended pursuant to that certain Lease Modification Agreement dated November 2, 2000 (collectively, the “Lease”), for approximately 71,072 square feet of floor area (the “Leased Premises”) located in the shopping center known as Sun Shopping Center at 3704 W. Dublin-Granville Road, Columbus, Ohio; and

     WHEREAS, Assignor is the successor by merger to Value City Department Stores, Inc., and Landlord is the successor to Jubilee Limited Partnership, the landlord under the Lease; and

     WHEREAS, Assignee currently is the parent corporation to the subsidiary that occupies the Leased Premises pursuant to an oral sublease with Assignor (the “Filene’s Sublease”); and

     WHEREAS, Assignor desires to assign its interest as tenant in the Lease to Assignee as of the Effective Date, and Assignee desires to accept the assignment of tenant’s interest in the Lease from Assignor and to assume all of tenant’s right, title, estate, interest, duties and obligations under the Lease as of the Effective Date; and

     WHEREAS, Landlord is willing to consent to the assignment of the Lease as herein set forth;

Agreement

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor, Assignee and Landlord hereby agree as follows:

     1. Assignment. Assignor hereby gives, grants, bargains, sells, conveys, transfers and sets over unto Assignee, its successors and assigns, as of the Effective Date, all of Assignor’s right, title, estate, interest, duties and obligations as tenant in and to the Lease and the Leased Premises under the Lease.

     2. Assumption. Assignee hereby accepts the foregoing assignment and, in consideration thereof, Assignee hereby covenants and agrees that, from and after the Effective Date and for the remainder of the term of the Lease and all renewals and extensions thereof exercised by Assignee, Assignee will assume, observe, perform, fulfill and be bound by all terms, covenants, conditions and obligations of Assignor under the Lease (including, without limitation, the payment of all rent and other sums required to be paid by Assignor under the

Lease) which arise on and after the Effective Date and are to be observed, performed and fulfilled by Assignor on and after the Effective Date, in the same manner and to the same extent as if Assignee were the Assignor named therein.

     3. Landlord’s Consent. Landlord hereby consents to the assignment by Assignor to Assignee of the Assignor’s interest under the Lease, as herein set forth and agrees to release Assignor from all obligations and liability under the Lease from and after the Effective Date.

     4. Indemnification.

          (a) Assignee hereby indemnifies and agrees to defend and hold harmless Assignor, its shareholders, directors, officers, successors and assigns from and against any and all claims, demands, causes of action, judgments, liabilities, losses, damages, costs or expenses (including without limitation all reasonable attorneys’ fees and out-of-pocket expenses) which Assignor may or shall incur under the Lease by reason of any failure of Assignee to have complied with, or to have performed, the duties and obligations of Assignor under the Lease from and after the Effective Date.

          (b) Assignor hereby indemnifies and agrees to defend and hold harmless Assignee, its shareholders, directors, officers, successors and assigns from and against any and all claims, demands, causes of action, judgments, liabilities, losses, damages, costs or expenses (including without limitation all reasonable attorneys’ fees and out-of-pocket expenses) which Assignee may or shall incur under the Lease by reason of any failure of Assignor to have complied with, or to have performed, the duties and obligations of Assignor under the Lease arising prior to the Effective Date.

     5. Successors and Assigns. The terms and conditions of this Assignment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

     6. Assignment of Warranties and Guaranties. To the extent assignable and to the extent any exist, Assignor hereby assigns to Assignee all guaranties and warranties it owns related to the Leased Premises. Assignor shall execute such further reasonable documents to evidence such transfer as are reasonably requested by Assignee either before or after the Effective Date. If there is a cost or fee for the transfer of any warranty or guaranty, that cost shall be borne by Assignee.

     7. Counterparts. This Assignment may be executed in counterparts, each of which shall be deemed an original, and all of which shall constitute one document.

     8. Third Parties. The agreements herein are for the sole benefit of Assignor, Assignee and Landlord, and no third party is intended to benefit hereby.

     9. Assignee’s Notice Address. For the purposes of Section 33 of the Lease, notices to Assignee shall be addressed to Assignee at 3241 Westerville Road, Columbus, Ohio 42324.

     10. Governing Law. The terms of this Assignment shall be governed by the laws of the State in which the Leased Premises is located.

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     11. Entire Agreement. This Assignment shall be deemed to contain all of the terms and conditions agreed upon with respect to the assumption and assignment of the Lease, it being understood that there are no outside representations or oral agreements.

     12. Capitalized Terms. Any capitalized terms used in this Assignment and not defined shall have the same meaning set forth in the Lease.

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed on the day and year first set forth above.

ASSIGNOR: VALUE CITY DEPARTMENT STORES LLC, an Ohio limited liability company
By:
	Name:
	Title:
ASSIGNEE: RETAIL VENTURES, INC., an Ohio corporation
By:
	Name:
	Title:
LANDLORD: JUBILEE-SAWMILL, LLC, an Ohio limited liability company
By:	Jubilee Limited Partnership, an Ohio limited partnership, its sole member
By:	Schottenstein Professional Asset Management Corporation, a Delaware corporation, general partner
By:
	Name:
	Title:

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STATE OF OHIO	)
	)	ss:
COUNTY OF FRANKLIN	)

     The foregoing instrument was acknowledged before me this ___ day of                     , 2007, by                                         , the                      of Value City Department Stores LLC, an Ohio limited liability company, on behalf of the limited liability company.

      Notary Public 

STATE OF OHIO	)
	)	ss:
COUNTY OF FRANKLIN	)

     The foregoing instrument was acknowledged before me this ___ day of                     , 2007, by                                         , the                      of Filene’s Basement, Inc., a Delaware corporation, on behalf of the corporation.

      Notary Public 

STATE OF OHIO	)
	)	ss:
COUNTY OF FRANKLIN	)

     The foregoing instrument was acknowledged before me this ___ day of                     , 2007, by                                         , the                      of Schottenstein Professional Asset Management Corporation, a Delaware corporation, the general partner of Jubilee Limited Partnership, an Ohio limited partnership, the sole member of Jubilee-Sawmill LLC, an Ohio limited liability company, on behalf of the corporation, limited partnership, and limited liability company.

      Notary Public 

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EX-10.90

Exhibit 10.90

RETAIL VENTURES, INC.

2007 CASH INCENTIVE COMPENSATION PLAN

1.00 PURPOSE AND EFFECTIVE DATE

1.01 Purpose: This Plan is intended to foster and promote the financial success of the Company and Related Entities and to increase shareholder value by [1] providing Participants an opportunity to earn incentive compensation if specified objectives are met and [2] enabling the Company to achieve success by attracting and retaining talented, outstanding employees whose judgment, interest and special efforts the Company wishes to recognize.

1.02 Effective Date: The Plan will be effective upon its adoption by the Board and approval by the affirmative vote of the Company’s shareholders under applicable rules and procedures described in Code §§162(m). Any Award granted before shareholder approval will be null and void if the shareholders do not approve the Plan within the period just described.

2.00 DEFINITIONS

When used in this Plan, the following terms have the meanings given to them in this section unless another meaning is expressly provided elsewhere in this document or clearly required by the context. When applying these definitions and any other word, term or phrase used in this Plan, the form of any word, term or phrase will include any and all of its other forms.

Act. The Securities Exchange Act of 1934, as amended or any successor statute of similar effect even if the Company is not subject to the Act.

Award. A grant made under this Plan consisting of an opportunity to earn a cash bonus if terms and conditions specified in the Award Agreement are met. Notwithstanding any provision contained elsewhere in this Plan, during any calendar year no Participant may receive more than five million dollars ($5,000,000) through this Plan.

Award Agreement. The written or electronic agreement between the Company and each Participant that describes the terms and conditions that must be met if an Award is to be earned. If there is a conflict between the terms of this Plan and the terms of the Award Agreement, the terms of the Plan will govern.

Award Date. The later of [1] the date the Committee establishes the terms of an Award or [2] the date specified in the Award Agreement.

Board. The Company’s board of directors.

Cause. Unless the Committee specifies otherwise in the Award Agreement, with respect to any Participant and subject to any cure provision included in any written agreement between the Participant and the Company:

[1] A material failure to substantially perform his or her position or duties;

[2] Engaging in illegal or grossly negligent conduct that is materially injurious to the Company or any Related Entity;

[3] A material violation of any law or regulation governing the Company or any Related Entity;

[4] Commission of a material act of fraud or dishonesty which has had or is likely to have a material adverse effect upon the Company’s (or any Related Entity’s) operations or financial conditions;

[5] A material breach of the terms of any other agreement (including any employment agreement) with the Company or any Related Entity; or

[6] A breach of any term of this Plan or Award Agreement.

If a Participant Terminates (or is Terminated) for any reason other than Cause and the Company subsequently discovers an act, failure or event that, if known before the Participant’s Termination would have justified a Termination for Cause and that act, event or failure was actively concealed by the Participant and could not have been discovered through reasonable diligence before the Participant Terminated, that Participant will be retroactively treated as having been Terminated for Cause.

Code. The Internal Revenue Code of 1986, as amended or superseded after the Effective Date and any applicable rulings or regulations issued under the Code.

Committee. The Board’s Compensation Committee which also constitutes a “compensation committee” within the meaning of Treas. Reg. §1.162-27(c)(4). The Committee will be comprised of at least three persons [1] each of whom is [a] an outside director, as defined in Treas. Reg. §1.162-27(e)(3)(i) and [b] a “non-employee” director within the meaning of Rule 16b-3 under the Act and [2] none of whom may receive remuneration from the Company or any Related Entity in any capacity other than as a director, except as permitted under Treas. Reg. §1.162-27(e)(3)(ii).

Company. Retail Ventures, Inc., an Ohio corporation, and any and all successors to it.

Covered Officer. Those employees whose compensation is subject to limited deductibility under Code §162(m) as of the last day of any calendar year ending with or within any Performance Period.

Disability. Unless the Committee specifies otherwise in the Award Agreement, the Participant’s inability with a reasonable accommodation, to perform his or her duties on a full-time basis for a period of more than six consecutive calendar months beginning before Termination due to a physical or mental infirmity.

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Employee. Any person who, on any applicable date, is a common law employee of the Company or any Related Entity. A worker who is classified as other than a common law employee but who is subsequently reclassified as a common law employee of the Company for any reason and on any basis will be treated as a common law employee only from the date that reclassification occurs and will not retroactively be reclassified as an Employee for any purpose of this Plan.

Participant. Any Employee to whom an Award has been granted.

Performance Criteria. The criteria described in Section 5.01.

Performance Period. The period over which the Committee will determine if applicable Performance Criteria have been met.

Plan. The Retail Ventures, Inc. 2007 Cash Incentive Compensation Plan.

Related Entity. Any corporation, partnership or other form of unincorporated entity [1] of which the Company owns, directly or indirectly, 50 percent or more of the total combined voting power of all classes of stock, if the entity is a corporation, or of the capital or profits interest, if the entity is a partnership or another form of unincorporated entity or [2] which owns 50 percent or more of the total combined voting power of all classes of the Stock.

Retirement. The date a Participant Terminates on or after reaching age 65 and completing at least five years of service.

Stock. The common stock, without par value, issued by the Company or any security issued by the Company in substitution, exchange or in place of these shares.

Termination or Terminated. Unless the Committee specifies otherwise in the Award Agreement, [1] cessation of the employee-employer relationship between a Participant and the Company and all Related Entities for any reason or [2] with respect to a Participant who is an Employee of a Related Entity, a severance or diminution of the Company’s direct or indirect ownership after which that entity is no longer a Related Entity and after which that person is not an Employee of the Company or any entity that then is a Related Entity. However, [3] a Termination will not have occurred while the Participant is absent from active employment for a period of not more than three months (or, if longer, the period during which reemployment rights are protected by law, contract or written agreement, including the Award Agreement, between the Participant and the Company) due to illness, military service or other leave of absence approved by the Committee and [4] in the Committee’s discretion, a Termination will not have occurred for the duration of a pending Performance Period if a Participant’s status is changed from Employee to a consultant or independent contractor during a Performance Period established before that status change occurred.

3.00 PARTICIPATION

3.01 Participation.

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[1] Consistent with the terms of the Plan and subject to Section 3.02, the Committee will [a] decide which Employees will be granted Awards and [b] specify the type of Award to be granted and the terms upon which an Award will be granted and may be earned.

[2] The Committee may establish different terms and conditions [a] for each Award, [b] for each Participant receiving the same type of Award and [c] for the same Participants for each Award the Participant receives.

[3] The Committee (or the Board, as appropriate) also may amend the Plan and the Award Agreement without any additional consideration to affected Participants to the extent necessary to avoid penalties arising under Code §409A, even if those amendments reduce, restrict or eliminate rights granted under the Plan or Award Agreement (or both) before those amendments.

[4] Unless permitted by Code §409A, no Award subject to Code §409A will be granted under this Plan to any person who is performing services only for an entity that is not an affiliate of the Company within the meaning of Code §414(b) and (c).

3.02 Conditions of Participation. By accepting an Award, each Participant agrees:

[1] To be bound by the terms of the Award Agreement and the Plan and to comply with other conditions imposed by the Committee; and

[2] That the Committee (or the Board, as appropriate) may amend the Plan and the Award Agreement without any additional consideration to the extent necessary to avoid penalties arising under Code §409A, even if those amendments reduce, restrict or eliminate rights granted under the Plan or Award Agreement (or both) before those amendments.

4.00 ADMINISTRATION

4.01 Committee Duties. The Committee is responsible for administering the Plan and has all powers appropriate and necessary to that purpose. Consistent with the Plan’s objectives, the Committee may adopt, amend and rescind rules and regulations relating to the Plan, to the extent appropriate to protect the Company’s and any Related Entity’s interests, and has complete discretion to make all other decisions (including whether a Participant has incurred a Disability) necessary or advisable for the administration and interpretation of the Plan. Any action by the Committee will be final, binding and conclusive for all purposes and upon all persons.

4.02 Delegation of Ministerial Duties. In its sole discretion, the Committee may delegate any ministerial duties associated with the Plan to any person (including Employees) that it deems appropriate. However, the Committee may not delegate any duties it is required to discharge under Code §162(m).

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4.03 Award Agreement. At the time an Award is made, the Committee will prepare and deliver an Award Agreement to each affected Participant. The Award Agreement:

[1] Will describe the Award and when and how it may be earned;

[2] To the extent different from the terms of the Plan, will describe [a] any conditions that must be met before the Award may be earned, including Performance Criteria and [b] any other applicable terms and conditions affecting the Award.

5.00 AWARDS

5.01 Performance Criteria.

[1] The Performance Criteria upon which the payment of an Award to a Covered Officer that is intended to qualify as “performance-based compensation” under Code §162(m) will be based on one or more (or a combination of) the following Performance Criteria and may be applied solely with reference to the Company (and/or any Related Entity) or relatively between the Company (and/or any Related Entity) and one or more unrelated entities:

[a] Net earnings or net income (before or after taxes);

[b] Earnings per share;

[c] Net sales or revenue growth;

[d] Net operating profit;

[e] Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales or revenue);

[f] Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity and cash flow return on investment);

[g] Earnings before or after taxes, interest, depreciation and/or amortization;

[h] Gross or operating margins;

[i] Productivity ratios;

[j] Share price (including, but not limited to, growth measures and total shareholder return);

[k] Expense targets;

[l] Margins;

[m] Operating efficiency;

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[n] Market share;

[o] Customer satisfaction;

[p] Working capital targets; and

[q] Economic value added (net operating profit after tax minus the sum of capital multiplied by the cost of capital).

[2] Performance Criteria upon which the payment of an Award to Participants who are not Covered Officers may be based on one or more (or a combination of) the Performance Criteria listed in Section 5.01 or on other factors the Committee believes are relevant and appropriate.

[3] Different Performance Criteria may be applied to individual Participants or to groups of Participants and, as specified by the Committee, may be based on the results achieved [a] separately by the Company or any Related Entity, [b] any combination of the Company and Related Entities or [c] any combination of segments, products or divisions of the Company and Related Entities.

[4] The Committee:

[a] Will make appropriate adjustments to Performance Criteria to reflect the effect on any Performance Criteria of any stock dividend or stock split affecting Stock, recapitalization (including, without limitation, the payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares or similar corporate change. Also, the Committee will make a similar adjustment to any portion of a Performance Criteria that is not based on Stock but which is affected by an event having an effect similar to those just described.

[b] May make appropriate adjustments to Performance Criteria to reflect a substantive change in a Participant’s job description or assigned duties and responsibilities.

[5] Performance Criteria will be established in an Award Agreement [a] as soon as administratively practicable after established but [b] in the case of Covered Officers, no later than the earlier of [i] 90 days after the beginning of the applicable Performance Period; or [ii] the expiration of 25 percent of the applicable Performance Period.

5.02 Earning Awards. Subject to any terms, restrictions and conditions specified in the Plan or the Award Agreement, as of the end of each Performance Period, the Committee will certify to the Board the extent to which each Participant has or has not met his or her Performance Criteria. Awards will be:

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[1] Forfeited, if Performance Criteria have not been met at the end of the Performance Period; or

[2] To the extent that related Performance Criteria have been met, subject to Section 5.03, valued and distributed in a single lump sum cash payment, in the form specified in the Award Agreement, no later than the fifteenth (15^th) day of the third (3^rd) month beginning after the end of the calendar year or the Company’s fiscal year (whichever is later) during which or with which the applicable Performance Period ends.

5.03 Deferral of Distribution. Each Participant may direct the Company to defer payment of all or any portion of his or her Award by electing to have that amount [1] credited to his or her account under any nonqualified deferred compensation plan [as defined in Section 201(2) of the Employee Retirement Income Security Act of 1974, as amended] maintained by the Company and designated by the Committee as an appropriate repository for these deferrals or any successor plan and [2] distributed under the terms of that plan. This election must be made at a time and in a manner that complies with Code §409A.

5.04 Effect of Termination.

[1] Termination Other Than For Death or Disability. Unless otherwise provided in the Award Agreement, and except in the case of a Termination on account of death or Disability, no Award will be paid to a Participant who Terminates before the end of a Performance Period.

[2] Termination Because of Death or Disability. Unless otherwise provided in the Award Agreement, a prorated Award will be paid to a Participant (or to his or her Beneficiary) who Terminates on account of death or Disability but only if the Performance Criteria applicable to that Performance Period are met at the end of that Performance Period. The amount paid will equal the Award the Disabled or dead Participant would have received had his or her employment not Terminated before the end of the Performance Period multiplied by the number of days between the beginning of the Performance Period during which the Termination occurred on account of death or Disability and divided by the total number of days in that Performance Period. This amount, if any, will be paid at the same time and in the same manner as the Award would have been paid if the Disabled or dead Participant had not Terminated.

6.00 AMENDMENT, MODIFICATION AND TERMINATION OF PLAN

The Board or the Committee may terminate, suspend or amend the Plan at any time without shareholder approval except to the extent that shareholder approval is required to satisfy applicable requirements imposed by [1] Rule 16b-3 under the Act, or any successor rule or regulation, [2] applicable requirements of the Code or [3] any securities exchange, market or other quotation system on or through which the Company’s securities are listed or traded. Also, no Plan amendment may [4] result in the loss of a Committee member’s status as a

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“non-employee director” as defined in Rule 16b-3 under the Act, or any successor rule or regulation, with respect to any employee benefit plan of the Company, [5] cause the Plan to fail to meet requirements imposed by Rule 16b-3 or [6] without the consent of the affected Participant (and except as specifically provided otherwise in this Plan or the Award Agreement) adversely affect any Award granted before the amendment, modification or termination. However, nothing in this section will restrict the Committee’s right to amend the Plan and any Award Agreements without any additional consideration to affected Participants to the extent necessary to avoid penalties arising under Code §409A, even if those amendments reduce, restrict or eliminate rights granted under the Plan or Award Agreement (or both) before those amendments.

7.00 MISCELLANEOUS

7.01 Assignability. Except as described in this section, an Award may not be transferred except by will or the laws of descent and distribution.

7.02 Beneficiary Designation. Each Participant may name a Beneficiary or Beneficiaries (who may be named contingently or successively) to receive or to exercise any Award that becomes payable on account of or after the Participant’s death. Each designation made will revoke all prior designations made by the same Participant, must be made on a form prescribed by the Committee and will be effective only when filed in writing with the Committee. If a Participant has not made an effective Beneficiary designation, the deceased Participant’s Beneficiary will be his or her surviving spouse or, if none, the deceased Participant’s estate. The identity of a Participant’s designated Beneficiary will be based only on the information included in the latest beneficiary designation form completed by the Participant and will not be inferred from any other evidence.

7.03 No Guarantee of Continuing Services. Nothing in the Plan may be construed as:

[1] Interfering with or limiting the right of the Company or any Related Entity to Terminate any Employee’s employment at any time;

[2] Conferring on any Participant any right to continue as an Employee of the Company or any Related Entity;

[3] Guaranteeing that any Employee will be selected to be a Participant; or

[4] Guaranteeing that any Participant will receive any future Awards.

7.04 Tax Withholding. The Company will withhold from the Award or from other amounts owed to the Participant an amount sufficient to satisfy federal, state and local withholding tax requirements on any Award.

7.05 Indemnification. Each individual who is or was a member of the Committee or of the Board will be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may

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be made a party or in which he or she may be involved by reason of any action taken or not taken under the Plan as a Committee or Board member and against and from any and all amounts paid, with the Company’s approval, by him or her in settlement of any matter related to or arising from the Plan as a Committee or Board member or paid by him or her in satisfaction of any judgment in any action, suit or proceeding relating to or arising from the Plan against him or her as a Committee or Board member, but only if he or she gives the Company an opportunity, at its own expense, to handle and defend the matter before he or she undertakes to handle and defend it in his or her own behalf. The right of indemnification described in this section is not exclusive and is independent of any other rights of indemnification to which the individual may be entitled under the Company’s organizational documents, by contract, as a matter of law or otherwise. The foregoing right of indemnification is not exclusive and is independent of any other rights of indemnification to which the person may be entitled under the Company’s organizational documents, by contract, as a matter of law or otherwise.

7.06 No Limitation on Compensation. Nothing in the Plan is to be construed to limit the right of the Company to establish other plans or to pay compensation to its employees or directors, in cash or property, in a manner not expressly authorized under the Plan.

7.07 Requirements of Law. The grant of Awards and the issuance of shares of Stock will be subject to all applicable laws, rules and regulations and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system.

7.08 Governing Law. The Plan, and all agreements hereunder, will be construed in accordance with and governed by the laws (other than laws governing conflicts of laws) of the State of Ohio.

7.09 No Impact on Benefits. Plan Awards are incentives designed to promote the objectives described in Section 1.00. Also, Awards are not compensation for purposes of calculating a Participant’s rights under any employee benefit plan that does not specifically require the inclusion of Awards in calculating benefits.

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EX-10.91

Exhibit 10.91

SUPPLY AGREEMENT
(Combo Stores)

     THIS SUPPLY AGREEMENT (Combo Stores) (this “Agreement”) is made to be effective as of January 30, 2005 (“Effective Date”), by and between DSW Inc. (f.k.a. Shonac Corporation), an Ohio corporation with a business address at 4150 East Fifth Ave, Columbus, Ohio 43219 (the “Supplier”), and Filene’s Basement Inc., a Delaware corporation with a business address at 12 Gill Street, Suite 1600, Woburn, MA 01801 (“Filene’s”).

BACKGROUND

     The following facts constitute the background for this Agreement:

     A. Filene’s currently owns and operates certain retail stores (“Store(s)”) and Supplier is a distributor of shoes and related merchandise.

     B. Filene’s desires to have Supplier supply Merchandise (as defined herein) for footwear departments in certain of its Stores by obtaining Merchandise from Supplier who will select the Merchandise, be the sole owner of the same, and place Merchandise in such Stores with Filene’s retaining a portion of the sales price of all Merchandise sold as provided herein.

     C. Filene’s and Supplier are parties to an Agreement dated April 1, 2000 (“the Original Agreement”) relating to Supplier’s supply of Merchandise to Filene’s. Filene’s and Supplier wish to amend and restate the Original Agreement as it related to Covered Stores (as defined herein). Contemporaneously herewith, Filene’s and Supplier have also executed a Licensed Department Supply Agreement (as defined herein) to amend and restate the Original Agreement as it related to Licensed Departments (as defined herein).

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto, each intending to be legally bound hereby, agree as follows:

1. DEFINITIONS.

     In addition to the other terms defined herein, capitalized terms shall have the meanings given to them as follows:

     1.1. “Consignment Property” means, collectively, the following described property whether now consigned, owned or existing or in the future consigned, acquired or arising: (i) all Merchandise which has been, is now or in the future consigned or delivered, directly or indirectly, by Supplier to, or for the benefit of, Filene’s; (ii) all replacements, additions, accessions, substitutions, returns, repossessions and exchanges of any and all Merchandise; (iii) all records of the foregoing (whether the records are maintained in written or electronic form); and (iv) all products and proceeds of the foregoing described property (such proceeds being in whatever form, including, without limitation, additional Merchandise, accounts, inventory, instruments, documents, chattel paper, general intangibles, money, bank accounts and deposits, cash and all insurance proceeds payable by reason of any loss or damage of any or all of the foregoing described property).

     1.2. “Consignment Obligations” means, as of any date, the total unpaid Supplier Proceeds owed to Supplier for Merchandise which has been, is now, or in the future will be, delivered by Supplier to Filene’s.

     1.3. “Covered Stores” means all of the Stores operated by Filene’s that include Shoe Departments and which Supplier has agreed to supply hereunder, each of which have 10,000 or more square feet of sales floor dedicated to the Shoe Department for each such Store, which number of Stores may change, increase or decrease to reflect additional or closed Store locations from time to time during the term of this Agreement.

     1.4. “Covered Store Schedule” means that schedule attached as Exhibit A hereto of two (2) Stores in which Shoe Departments will be supplied under this Agreement. Exhibit A may be updated from time to time by written agreement of the parties. The Covered Store Schedule shall be amended from time to time to include any new Covered Stores which include a Shoe Department.

     1.5. “Force Majeure” means an event which shall prevent Supplier from performing, or causes a delay in, the performance of, any obligation required hereunder by reason of strikes, lock-outs, labor troubles, inability to procure goods, failure of power, riots, insurrection, fires, floods, explosions, vandalism, acts of a governmental authority, failure of transportation not under the reasonable control of Supplier, acts of terrorism, whether foreign or domestic, war, armed conflict, or other reasons of a like nature which are beyond the control of Supplier.

     1.6. “Gross Sales” means the gross proceeds from all sales of Merchandise, including (i) the entire sales price of all Merchandise sold, (ii) the amount of all credit sales, whether or not collected, (iii) the amount of all deposits not refunded to customers, and (iv) any sales, excise or similar tax chargeable with respect to sales of Merchandise and collected from customers.

     1.7. “Licensed Department” means a store which has less than 10,000 square feet of sales floor dedicated to the Shoe Department and which is the subject of the Licensed Department Supply Agreement.

     1.8. “Licensed Department Supply Agreement” means the Supply Agreement dated the same date hereof, between Supplier and Filene’s covering Licensed Departments.

     1.9. “Merchandise” means shoes, sneakers, boots, sandals, specialty dance footwear, cleated shoes and other sports shoes, skates, shoe care products (e.g. polish, cleaners and water proofers), and laces.

     1.10. “Net Sales” means the Gross Sales from the sale of Merchandise less the value of (i) voided sales, cash or credit refunds or adjustments made with respect to Merchandise sold and returned, (ii) all returns to manufacturers or shippers, or returns so damaged they must be written off, (iii) transfers, sales and exchanges among Shoe Departments to other locations as requested by Supplier, (iv) sales not in the ordinary course of business, (v) employee discounts actually allowed by Supplier, and (vi) sales tax or excise tax chargeable with respect to Merchandise sales and collected from customers.

     1.11. “Shoe Department” means the area in the Covered Stores in which Filene’s will offer for sale the Merchandise.

     1.12. “SKU” means the stock keeping unit number assigned to each separate item of Merchandise supplied by Supplier.

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     1.13. “Supplier’s Supervisor” means an individual or individuals employed by Supplier, at Supplier’s cost to provide supervision and recommendations as to the Shoe Departments of multiple Covered Stores.

2. GRANT OF SUPPLY RIGHT. Filene’s hereby grants to the Supplier an exclusive supply right (the “Supply Right”) to supply Merchandise to the Shoe Departments of all Covered Stores. Subject to Section 3, all Merchandise shall be owned by Supplier with Filene’s having the right to sell such Merchandise for the benefit of Supplier and Filene’s as provided in this Agreement. Filene’s shall give Supplier the first right of refusal to supply Merchandise pursuant to this Agreement to any Store that will open a Shoe Department and which Store is not on the Covered Store Schedule at the time the decision is made by Filene’s to open a Shoe Department in that Store. Filene’s shall provide Supplier ninety (90) days advance written notice of its intention to open a new footwear department in any Store that is not a Covered Store or to add a Covered Store and Supplier shall have thirty (30) days after the date of such notice to agree, in Supplier’s sole discretion, to supply Merchandise to the new Shoe Department. If Supplier does not so agree, Filene’s may supply Merchandise to the new department itself or through a third party. In the event that Filene’s intends to open a significant number of Shoe Departments within a short time period and Supplier agrees to supply such Shoe Departments as provided above, Supplier shall have a reasonable amount of time, under the circumstances, to supply such Shoe Departments. Notwithstanding anything to the contrary herein, Filene’s and Supplier agree that the Filene’s Basement Store # 51 located at 426 Washington Street, Boston, MA 02101 will not be subject to this Agreement.

3. SUPPLY OF MERCHANDISE. Supplier will supply Merchandise for each Covered Store on the Covered Store Schedule. Filene’s shall acquire no ownership rights in and to the Merchandise supplied by the Supplier hereunder and title to Merchandise shall remain in and with Supplier until actually sold, except that title to Merchandise sold to Filene’s customers shall pass to Filene’s at the instant the sale of such Merchandise is effected. In the event that Merchandise is returned by the customer to a Store, title shall automatically re-vest in Supplier.

4. MERCHANDISING AND PRICE PRACTICES.

     4.1. Merchandise Supplied. Supplier shall determine the quantity and mix of the Merchandise to be sold at the Covered Stores. Supplier shall continuously provide the Covered Stores with a complete line of salable inventory of current season Merchandise in appropriate quantities and of a quality in keeping with the quality of other merchandise sold by Filene’s and targeted to Filene’s normal customer. The Merchandise supplied will generally be shipped in pre-assorted case packs typical in the footwear industry, and Supplier will not replenish pairs sold at a size level. Supplier will coordinate with Filene’s to provide Merchandise with scannable bar codes which are readily readable by Filene’s normal ticket scanning equipment.

     4.2. Compliance with Law. Supplier shall be responsible to assure that no Merchandise will be supplied, and no Merchandise will be offered at any price or in any manner, that violates any applicable Federal, state or other applicable statute or regulation. If a Filene’s store manager or officer becomes aware of any actual or suspected violation, Filene’s will immediately advise Supplier of that violation. Filene’s agrees to comply with all applicable laws and regulations in the performance of this Agreement and in the operation of the Covered Stores.

     4.3. Delivery Responsibility. Supplier shall arrange to deliver Merchandise, at Supplier’s cost, to Covered Stores, and Filene’s employees shall be responsible for receiving the Merchandise, accounting for the Merchandise received, and stocking the Merchandise in or on the display case or fixture at each of the Covered Stores. Filene’s will maintain the Shoe Departments in a normal and neat condition consistent with other departments in the Store. Mismates, defective or damaged Merchandise received from Supplier will be noted and set aside for inspection by Supplier’s Supervisor and for

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disposition at Supplier’s direction within a reasonable time. Supplier shall be exempt from Filene’s distribution center, vendor and data exchange requirements.

     4.4. Transfers of Refunded Merchandise in non-Covered Stores. Filene’s will make good faith efforts to ensure that Merchandise returned to Stores which are not Covered Stores will be transferred or shipped to a Covered Store at Supplier’s expense.

     4.5. Prices and Discounts. Supplier will set the prices at which its Merchandise will be sold and put in force reasonable discounting policies designed to clear stale Merchandise. Except as provided below, Supplier shall have the only authority to markdown Merchandise. Nevertheless, Supplier agrees (i) to participate in limited, selected promotional events in the Covered Stores as agreed upon in advance by Supplier, and (ii) to maintain a policy of periodic markdowns based on length of time Merchandise has been on the selling floor. Supplier shall offer to employees who receive a discount from Filene’s own departments under Filene’s policies the same discount on all sales of Merchandise as is normally received by them under Filene’s then current policies in effect from time to time. Notwithstanding the foregoing, discounts for sales to Filene’s employees shall only be in accordance with Filene’s normal policies in effect from time to time and shall in no event exceed 30% of the otherwise applicable price for the Merchandise.

     4.6. Supervisors. Supplier shall provide, at its expense, a sufficient number of trained Supplier’s Supervisors who will coordinate and make recommendations as to arrangement, presentation and organization of the Shoe Departments in the Covered Stores.

     4.7. Space. Filene’s, at its expense, shall make available an amount of space for the Shoe Department in a size and location as listed on the Covered Store Schedule, which space is not to be less than the greater of (i) the existing Shoe Department space in each Shoe Department on the date of this Agreement or (ii) 15,000 square feet, unless a smaller space is agreed to by Supplier. Filene’s shall make available for Supplier’s use with a Shoe Department a minimum of 1,000 square feet of storage space in each Covered Store. Filene’s may, at Filene’s expense, relocate or renovate the Shoe Department of at any time and from time to time, upon reasonable notice to Supplier and upon prior approval from Supplier for relocations.

     4.8. Utilities and Personnel. Filene’s, at its expense, will provide all utilities and personnel to operate the Shoe Department in each Covered Store. Filene’s will be responsible for all store staffing and all decisions relating to hiring and termination of such personnel related to the Covered Stores (including all sales and stocking personnel), and will bear all expenses relating thereto including without limitation, the cost of all employee salaries, payroll taxes and employee benefits. Filene’s shall use commercially reasonable efforts to assure that the quality of the personnel in the Shoe Department is consistent with the quality of its personnel in other departments in the same Covered Store. Supplier at its expense shall provide Merchandise-related training for Filene’s personnel serving the Shoe Department. Filene’s agrees to indemnify Supplier from all damages, costs of defense and expenses (including attorneys’ fees) relating to claims based on wrongdoing by Filene’s employees, agents or contractors unless caused by Supplier or its agents’, contractors’, or employees’ active negligence (not including negligence by omission or inaction), gross negligence or willful wrongdoing.

     4.9 Advertising; License. Supplier will, upon request, provide to Filene’s information related to Merchandise to be advertised in newspapers or other public media. Filene’s will be responsible for producing the advertising copy and placing it with the appropriate media according to Filene’s normal procedures for its own merchandise. Supplier will not be obligated to pay any advertising expenses relating to the Shoe Departments of the Covered Stores. Supplier hereby grants to Filene’s, a non-exclusive and non-assignable, indivisible right and license to use the DSW name and logo (“License”) as necessary solely for the purposes of operating the Covered Stores and producing advertising copy for

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Covered Stores. Prior to the use of the DSW name or logo Filene’s shall submit to Supplier any and all advertising copy and related information for review and approval by Supplier. Commencing with the first payment which shall be due on January 30, 2005, and continuing on the first day of Filene’s fiscal year thereafter, providing (i) Filene’s maintains a 52-53 week fiscal year as traditionally done in the retail industry, or (ii) if Filene’s does not use the 52-53 week fiscal year, the first day of the traditional retail year as provided by the National Retail Federation 4-5-4 Merchandising Calendar, Filene’s shall pay to Supplier $100,000 per Covered Store, in advance, as consideration for the use of the License for the fiscal year of this Agreement then commencing. The payment shall be prorated for any Covered Store closed during the year covered by such payment, based upon the number of days such Covered Store was open, with the balance refunded to Filene’s within thirty (30) days of such Covered Store’s closing. Supplier and Filene’s shall both use their best efforts to maintain, and to cause its employees and agents to maintain, the high standard, image and prestige of the name, trademarks, service marks, symbols or logos associated with the other party hereto.

     4.10. Standards of Operation. The following standards of operation shall be applicable to the operation of Covered Stores. In the event this Section 4.10 conflicts with other provisions of this Agreement, this Section 4.10 shall control.

     4.10.1. Filene’s shall install, maintain and replace at Filene’s expense the DSW sign on the outside of Covered Stores and at such other locations in the interior of the Covered Store in such number, size and location as agreed to by Filene’s and Supplier. Supplier shall provide at Supplier’s expense specialty and basic visual merchandising and signage in the Shoe Department, which merchandising and signage will be subject to Filene’s reasonable approval.

     4.10.2. The department manager of the Shoe Department shall be an employee of Supplier and will report to Supplier’s Supervisor, but will comply with all applicable Filene’s policies. Supplier will pay the salary, applicable employer payroll taxes, employer benefits, workmen’s compensation and expenses of such department manager.

     4.10.3. Filene’s shall notify Supplier in writing no less than 180 days prior to the expiration, non-renewal or termination of any Covered Store’s lease and provide to Supplier all pertinent facts relating to such expiration, non-renewal or termination. In the event that Filene’s fails to provide such notice and that failure causes Supplier lost revenue or damages, Filene’s shall indemnify Supplier for such lost revenue or damages.

     4.10.4. Filene’s shall not operate any “going out of business sale”, “liquidation” or the like which could create any possible confusion with the public as to whether any of Supplier’s assets are being liquidated.

     4.10.5. Filene’s shall not display any merchandise in the Shoe Department other than Merchandise without the consent of Supplier and shall immediately remove any merchandise from the Shoe Department upon request by Supplier. Supplier shall not display any Merchandise outside of the Shoe Department without the consent of Filene’s and shall immediately remove any merchandise outside of the Shoe Department upon request by Filene’s.

     4.10.6. Filene’s shall use best efforts to accept returns of Merchandise which are returned under conditions that would be permitted by the return policy as in effect in DSW stores from time to time.

     4.10.7. Filene’s shall accept for return at any Covered Store any footwear merchandise purchased from a store operated by Supplier as a DSW store.

     4.10.8. Filene’s shall accept from customers for discounted purchases of Merchandise the DSW Reward Your Style program (or other similar program operated by Supplier in DSW

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stores) and transmit information related to customer’s use of such program to DSW. Filene’s shall not take any action which may discourage the enrollment in or use of the DSW Reward Your Style program. Filene’s shall accept other promotions by Supplier unless the promotion would interfere with Filene’s business.

5. FIXTURES, EQUIPMENT, LOCATION AND LAYOUT. Filene’s shall at its sole cost provide the fixtures and equipment to display Supplier’s Merchandise in the Covered Stores or as needed to replace existing fixtures. The fixtures and equipment decisions with respect to design, type, color, material, layout, and location (subject to Section 4.7) within each Covered Store and related matters for new fixtures shall be made jointly by Supplier and Filene’s. Filene’s shall maintain at its expense all displays and fixtures in good repair and condition, ordinary wear and tear excepted. Supplier shall, subject to Filene’s approval, provide individual Merchandise “case talkers” for depicting the style, price, and any other pertinent information that Supplier deems appropriate. Title to all fixtures paid for by Filene’s shall remain in Filene’s name and title to all fixtures paid for by Supplier shall remain in Supplier’s name. Upon termination of this Agreement, and at Filene’s request, Supplier will remove such fixtures not owned by Filene’s. Absent a continuing Event of Default, no fixtures or equipment belonging to Supplier or any patented fixtures of Supplier shall be transferred or removed from a Store without the consent of Supplier; and, further, in no event will Filene’s sell, transfer or otherwise dispose of any fixtures patented by Supplier without Supplier’s express written consent.

6. SALES REVENUE SHARING; ACCOUNTING PROCEDURES.

     6.1 Sales. All sales of Merchandise will be identified with the Shoe Department and shall be made through Filene’s normal cash registers or point-of-sale systems and by use of Filene’s normal sales recording equipment. Net Sales from sales of Merchandise shall be split 80% to Supplier and 20% to Filene’s. Supplier’s 80% portion of the Net Sales (“Supplier’s Proceeds”) shall be held in trust for the benefit of Supplier and Supplier’s Lender; provided however, that prior to receiving written notice to the contrary from Supplier’s Lender, Filene’s shall deliver all of Supplier’s Proceeds directly to Supplier and shall be released from any claim by Supplier’s Lender for all such funds turned over to Supplier.

     6.2 Reports. The reporting of all sales of Merchandise shall be made in conformity with the methods established by Filene’s from time to time. The costs of such methods and point-of-sale equipment and maintenance thereof shall be borne by Filene’s. Filene’s also agrees to provide and make accessible to Supplier information, statistics and reports available within Filene’s existing merchandise processing system which relate to the Merchandise. Any special reports or enhancements required by the Supplier will be subject to Filene’s approval. Filene’s hereby agrees to cooperate and coordinate with Supplier the implementation of electronic exchange and communication between Filene’s computer system and Supplier’s computer system in connection with point-of-sale, receiving and shipping and inventory information related to the Merchandise, including Merchandise returns at any Stores which are not Covered Stores.

     6.3. Books & Records. Supplier shall maintain and preserve the records required to be maintained hereunder for the length of time required by applicable law. Supplier shall have the right to obtain from Filene’s all statements, data or explanations reasonably necessary to validate each Accounting Statement (as defined in Section 6.5) provided by Filene’s to Supplier. Filene’s shall keep true and correct books of accounts in accordance with Filene’s regular accounting practices related to the Merchandise, which entries shall be open to examination and inspection by Supplier upon reasonable advance notice during all normal business hours during the term of this Agreement and for three (3) years thereafter. Such examination and inspection will not occur more than twice in any twelve (12) month period.

     6.4. Filene’s Fee. In consideration of granting the Supply Right, Filene’s shall be entitled to twenty percent (20%) of Net Sales of Merchandise (“Filene’s Fee”).

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     6.5. Accounting. No later than Friday of each week Filene’s shall send to Supplier a written statement (the “Accounting Statement”) by electronic mail or by personal delivery setting forth with respect to the immediately preceding week the following:

(i) the total amount of Gross Sales and Net Sales, and

(ii) the amount of Filene’s Fee.

     6.6. Settlement. Contemporaneously with the submission of the Accounting Statement, Filene’s shall pay to Supplier in immediately available funds or by another method agreed to by the parties, subject to the provisions of Section 13, an amount equal to Net Sales in or from the Shoe Department during the immediately preceding week less the amount identified in clause (ii) of Section 6.5. Supplier may, by notice to Filene’s given no later than ninety (90) days following the date of an Accounting Statement, question the accuracy of such Accounting Statement. Filene’s and Supplier shall make diligent, good faith efforts to resolve the disagreement within thirty (30) days following such notice. If Filene’s does not receive a notice of dispute from Supplier within one hundred twenty (120) days after the date of the applicable Accounting Statement, Supplier will be deemed to have accepted such Accounting Statement, subject to any adjustment required as permitted herein.

7. TERM AND TERMINATION.

     7.1. Basic Term and Renewals. The original term of this Agreement shall commence on January 30, 2005, and continue through and include January 29, 2010, unless previously terminated in accordance with the provisions of this Agreement. This Agreement shall be automatically extended for additional periods of one (1) year each. If either party chooses not to renew this Agreement at the end of the original term or any successive renewal term, it shall deliver a written termination notice to the other party not less than one hundred eighty (180) days prior to the end of the then effective term.

     7.2. Termination for Breach. Either party may terminate the Supply Right and obligations related thereto as to a particular Shoe Department in an individual Covered Store or as to all Covered Stores at any time for any Event of Default hereunder by the other party hereto by giving ninety (90) days prior written notice to the defaulting party. In addition, an individual Store shall no longer be a Covered Store, and this Agreement shall terminate as to such individual Store, if at any time that Store ceases for any reason to be operated by Filene’s. Filene’s shall provide to Supplier written notice no later than ninety (90) days prior to the date when any Covered Store will no longer be operated by Filene’s.

     7.3. [Intentionally deleted.]

     7.4. [Intentionally deleted.]

     7.5. Effect of Termination. Except as otherwise provided in Section 13 hereof, upon the termination of the Supply Right and obligations related hereto for any reason permitted herein as to a particular Covered Store, individually, or as to all Covered Stores (a) Supplier shall have the option to liquidate existing inventory of the Merchandise; provided, however, that such right to continue selling shall not extend beyond the date upon which this Agreement shall formally terminate unless agreed in writing by the parties, (b) Filene’s shall be entitled to offer for sale Merchandise not obtained from Supplier for a period of thirty (30) days prior to the effective date of any such termination, and (c) Filene’s will continue to display the remaining inventory of Merchandise in a manner consistent with such displays prior to such termination although the space allocated to that remaining inventory of Merchandise will be reduced as the quantity of that inventory of Merchandise is reduced. Except as otherwise provided in Section 13, Supplier shall remove, at Supplier’s expense within ninety (90) days following such termination: (y) all Merchandise supplied by Supplier located in any Filene’s Store, and (z) if demanded by Filene’s in writing, and except as otherwise provided herein, all fixtures provided by Supplier (if any) which Filene’s demands be removed. Supplier may purchase from Filene’s any patented fixtures installed in the Shoe

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Departments at a price equal to 100% of the unamortized costs of such fixtures with those costs being amortized on a straight-line basis over five (5) years; provided however, the purchase price of such patented fixtures shall not be less than 5% of the original cost of such fixtures. Supplier will promptly pay all costs associated with the repair of any damage to a Store caused by such removal. Except as otherwise provided in Section 13 hereof, any Merchandise or fixtures not removed by Supplier as provided above will be deemed abandoned and Filene’s may take such actions (including destroying) with respect to such items without liability.

8. SHORTAGES AND DAMAGES. Supplier will maintain complete and accurate records of the inventory of its Merchandise at each Store and make that information available to Filene’s. At the time of each Annual Inventory (as defined below), Filene’s, at Supplier’s expense, shall arrange for having an inventory to be taken of Supplier’s Merchandise at the same time of Filene’s scheduled year-end physical inventory (the “Annual Inventory”). Supplier, at its expense, may have a representative observe the taking of the Annual Inventory. In the event that the Annual Inventory shows shrinkage in Merchandise in excess of one percent (1%) of annual Net Sales (“Allowable Shrink”), Filene’s will pay to Supplier 50% of the retail value (as listed in Supplier’s inventory retail stock ledger) of that shrinkage amount which exceeds the Allowable Shrink (less any insurance proceeds payable to Supplier with respect to such loss) within thirty (30) days of the date of the Annual Inventory.

9. IDENTITY, INDEMNITY AND RELATIONSHIP TO PARTIES.

     9.1. No Agency. Each party to this Agreement agrees that in performing its respective duties and obligations hereunder, and in exercising any of the rights or benefits granted hereunder, neither shall at any time hold itself out to be the agent, servant, or employee of the other party, in any manner whatsoever, and it is expressly understood that it is the intention of this Agreement that neither party hereto shall at any time be or act as the agent, servant or employee of the other.

     9.2. Indemnity of Filene’s. Supplier will indemnify Filene’s and save it harmless from and against any and all claims, actions, damages, liability and expense (including attorneys’ fees) in connection with loss of life, personal injury and/or damage to property arising from or out of any occurrence caused by Supplier, by its agents, contractors, or employee negligence, omission or deliberate acts. In case Filene’s shall, without fault on its part, be made a party to any litigation commenced by or against Supplier and relating to any of the foregoing matters, then Supplier shall protect and hold Filene’s harmless and shall pay all costs, expenses and reasonable attorneys’ fees that may be incurred or paid by Filene’s in defending such action.

     9.3. Indemnity of Supplier. Filene’s will indemnify Supplier and save it harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage to property rising from or out of any occurrence caused by Filene’s or its agents, contractors, or employees’ negligence, omission or deliberate acts. In case Supplier shall, without fault on its part, be made a party to any litigation commenced by or against Filene’s and relating to any of the foregoing matters, then Filene’s shall protect and hold Supplier harmless and shall pay all costs, expenses and reasonable attorneys’ fees that may be incurred or paid by Supplier in defending such action.

     9.4. Indemnification Procedure

     9.4.1. Notice. If any third party makes a claim for which Supplier or Filene’s, as the case may be, (the “Indemnified Party”) seeks indemnity from the other party hereto (“Indemnitor”), the Indemnified Party shall as soon as practicable notify Indemnitor of the details of the claim (“Claim Notice”).

     9.4.2. Defense of Admitted Indemnified Claim. After receiving a Claim Notice, Indemnitor may elect, by written notice to the Indemnified Party, to assume the defense of such claim by using counsel selected by Indemnitor, acting reasonably. If Indemnitor assumes such

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defense and admits that the claim is subject to the Indemnitor’s indemnity obligations, then: (i) the claim shall be deemed to be a claim indemnified by the Indemnitor; (ii) the Indemnified Party may, at its election, participate in the defense of the claim, but Indemnitor will have no obligation to pay for any defense costs including attorneys’’ fees of the Indemnified Party after Indemnitor assumes the defense of the claim; and (iii) Indemnitor will have the right, without cost to Indemnified Party, to compromise and settle the claim on any basis believed reasonable, in good faith, by Indemnitor, and Indemnified Party shall be bound thereby.

     9.4.3. Disputed Indemnity. After receiving a Claim Notice, if Indemnitor either does not assume the defense thereof, or does so under a reservation of rights without admitting that the claim is subject to the Indemnitor’s indemnity obligations, then: (i) the claim shall not be deemed to be a claim indemnified by the Indemnitor and neither party shall have waived any rights to assert that the claim is or is not properly a claim subject to the Indemnitor’s indemnity obligations; (ii) both Indemnitor and Indemnified Party may, at their individual election, participate in the defense of such claim but Indemnitor will remain responsible for the costs of defense, including reasonable attorneys’’ fees of the Indemnified Party should the claim ultimately be determined to be subject to Indemnitor’s indemnity obligation; and (iii) the Indemnified Party shall have the right to compromise and settle the claim on any basis believed reasonable, in good faith, by the Indemnified Party, and the Indemnitor will be bound thereby should the claim ultimately be determined to be subject to Indemnitor’s indemnity obligation.

10. INSURANCE DAMAGE.

     10.1. Supplier Liability Insurance. Supplier shall maintain commercial general and product liability insurance coverage against any loss or liability for damages which may result from Supplier’s operations or Supplier’s Merchandise either to persons or property with limits of not less than $2 million for injury to one person; and not less than $500,000 for property damage or occurrence in each location (subject to normal deductibles and retentions). Supplier’s liability insurance shall name Filene’s as an additional insured and shall contain provisions waiving subrogation against Filene’s; provided however, that this provision shall not cover claims provided for in the indemnity clauses of Section 4.8 and/or 9.3.

     10.2. Supplier Casualty Insurance. Supplier agrees to keep, at its own cost and expense, all of its property and its Merchandise and all fixtures provided by it in the Store adequately insured against loss by fire and all other casualties covered by broad form extended coverage and sprinkler leakage insurance policies (or Supplier may self-insure the same). Supplier shall bear the entire risk of a casualty to its Merchandise and other property and all fixtures located in the Stores; provided, however, that this provision shall not cover claims provided for in the indemnity clauses Sections 4.8 and/or 9.3.

     10.3. Filene’s Liability Insurance. Filene’s shall provide broad form comprehensive commercial general liability insurance coverage insuring Filene’s and Supplier against any loss or liability for damages which may result from Filene’s operations or Supplier’s operations within the Covered Stores with limits of not less than $2 million for injury to one person, and for property damage or occurrence in each location (subject to normal deductibles and retentions); provided, however, that this provision shall not cover claims provided for in the indemnity clause of Section 9.2 for injuries to persons or damage to property. The limits indicated herein may be satisfied by a primary policy and umbrella liability policy showing the primary liability policy as an underlying policy. A certificate of insurance naming Supplier, as an additional insured shall evidence the insurance required herein. The primary liability policy shall contain provisions waiving subrogation against Supplier.

     10.4. Filene’s Worker Compensation Insurance. Filene’s shall provide to Supplier proof of insurance for worker compensation insurance for all Covered Stores which insurance shall meet or exceed the regulatory requirements of the state in which Covered Stores are located. Filene’s agrees to indemnify and defend Supplier for all claims brought by employees of Filene’s.

11. LIENS AND TAXES. Supplier agrees to pay all ad valorem, personal property, excise, use or other taxes and assessments and licenses of every description assessed against it, in respect of or

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measured by the Merchandise or other property of Supplier and all fixtures provided by Supplier. Filene’s shall be responsible for the payment of all sales taxes resulting from sales of the Merchandise under this Agreement.

12. DEFAULT.

     12.1. Any one of the following shall constitute an event of default (“Event of Default”) hereunder:

     12.1.1. Either party fails to comply with or perform as and when required or to observe any of the terms, conditions, or covenants of this Agreement, and such failure continues for a period of (a) ten (10) days after notice thereof to the defaulting party with respect to monetary defaults, and (b) thirty (30) days after notice thereof to the defaulting party with respect to non-monetary defaults; or

     12.1.2. Any proceeding under the United States Bankruptcy Code or any successor law or any law of the United States or of any state relating to insolvency, receivership, or debt adjustment is instituted by either party; any such proceeding is instituted against either party and is consented to by the respondent or remains undismissed for sixty (60) days; an order for relief is entered under the United States Bankruptcy Code or any successor law against either party; either party is adjudicated a bankrupt; a trustee, receiver or similar fiduciary is appointed to administer any substantial part of the property of either party; or either party makes an assignment for the benefit of creditors, admits in writing an inability to pay debts generally as they become due or becomes insolvent; or

     12.1.3 Any failure by Filene’s to comply with the provisions of Section 4.10 and such failure is not cured within ten (10) days after notice thereof is given by Supplier to Filene’s.

     12.2. Upon the occurrence of an Event of Default hereunder, the non-defaulting party may terminate this Agreement as provided in Section 7.2, and/or exercise any other remedy provided by law or equity. An Event of Default under Section 12.1.2 above shall be effective without notice or the taking of any action by the non-defaulting party.

13. SUPPLIER’S LENDER. If at any time during the term of this Agreement Supplier and Lender shall no longer both be “Loan Parties” (as defined in the credit facilities existing on the date hereof) to the same credit facilities, or if Supplier’s supplying of Merchandise hereunder would otherwise constitute a default under any such credit facility, Supplier’s obligations to supply Merchandise hereunder shall cease until consent therefor has been obtained from Supplier’s Lender. Upon the obtaining of such consent, Filene’s and Supplier hereby agree, for the benefit of such commercial lender(s) which from time to time provide Supplier’s principal credit facilities (“Supplier’s Lender”), to the following:

     13.1. Security Interest/Consignment.

     13.1.1. All Merchandise delivered by Supplier from time to time to Filene’s under this Agreement is made on a consignment sales basis. Filene’s acknowledges that Supplier is the sole owner of, and holds sole title to, the Merchandise.

     13.1.2. Filene’s hereby acknowledges that Supplier has granted to Supplier’s Lender a security interest in substantially all of its assets, including, without limitation, all Merchandise, fixtures, equipment and other personal property owned by Supplier and the proceeds thereof now or hereafter held by, shipped to or otherwise in possession of or controlled by Filene’s, and unremitted Supplier’s Proceeds (collectively, the “Collateral”, and as to the Merchandise, the “Collateral Merchandise”), and Filene’s waives and relinquishes any lien rights or claims of any

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kind against the Collateral. Filene’s authorizes Supplier to file UCC-1 financing statements covering the Merchandise supplied as part of this Agreement, such UCC-1 financing statements to be in a form reasonably acceptable to Filene’s and Supplier’s Lender to acknowledge Supplier’s and/or Supplier’s Lender’s interest in the Collateral. Upon Supplier’s Lender’s request, Filene’s will execute any documents reasonably required to perfect or acknowledge Supplier’s Lender’s security interest or other rights in the Collateral; Filene’s will execute any documents in a form reasonably acceptable to Filene’s which indicate that the Merchandise has been consigned to Filene’s or that Filene’s has not granted to any party a lien upon the Collateral, other than any liens which have been expressly subordinated to the interests of Supplier and Supplier’s Lender. Notwithstanding the foregoing, the security interests acknowledged under this Agreement and, to the extent permitted by the Bankruptcy Code, in any order of the Bankruptcy Court approving the agreement are to be deemed perfected without the necessity of filing any documents otherwise required under non-bankruptcy law for the perfection of security interests in real or personal property, with such perfection being binding upon any subsequently appointed trustee either under Chapter 11 or any other chapter of the Bankruptcy Code and upon all creditors of the debtor.

     13.1.3. It is the intent of Supplier and Filene’s to create a true consignment arrangement with regard to Supplier’s supply of Merchandise to Filene’s with Supplier as consignor and Filene’s as consignee. Supplier’s ownership of the Merchandise notwithstanding, as a precaution and without affecting the intention of the parties to create a true consignment arrangement, Filene’s, by this Agreement, grants to, and creates in favor of, Supplier a continuing security interest in the Consignment Property to secure the Consignment Obligations. It is the intention of the parties that the precautionary security interest granted by Filene’s to Supplier hereby is and will be a first priority security interest in the Consignment Property.

     13.2. Notice of Identity. Supplier will give written notice to Filene’s from time to time of the identity of the Supplier’s Lender, and Filene’s shall be under no obligation hereunder to any party unless and until Filene’s shall have received such notice, and then Filene’s sole obligation to Supplier’s Lender are only as expressly provided in Section 13 hereof and to follow such instructions as to remitting Supplier’s Proceeds. Upon receipt by Filene’s of such notice from the Supplier, Filene’s will acknowledge only the party specifically named by Supplier in such notice as Supplier’s Lender. Any notice subsequently given by Supplier and signed by the lender named in the preceding notice shall revoke any previous notice given by Supplier hereunder. Upon receipt by Filene’s of such subsequent notice, Filene’s shall have no obligation to any party previously named by Supplier as Supplier’s Lender.

     13.3. Collateral.

     13.3.1. Filene’s agrees that upon receipt of written notice from Supplier’s Lender referring to this Section 13, Filene’s will hold Supplier’s Proceeds from the Collateral for the account of Supplier’s Lender and subject to Supplier’s Lender’s instructions and shall release such proceeds only to Supplier’s Lender or as otherwise directed by a court. Any such payments shall be made free of any set-off, reduction, or counterclaim, (including, without limitation, any set-off, reduction or counterclaim based upon any alleged breach by Supplier of this Agreement). Supplier agrees to indemnify and hold harmless Filene’s for complying with any notice purporting to be the written notice of Supplier’s Lender.

     13.3.2. Upon receipt of Lender’s Default Notice (as defined below), Filene’s agrees to provide Supplier’s Lender with all reasonably requested reporting regarding the Collateral that it would otherwise provide to Supplier.

     13.3.3. Filene’s agrees that, in addition to its obligations under this Section 13, upon receipt of written notice from Supplier’s Lender (“Lender’s Default Notice”) referring to this Section 13.3 that represents to Filene’s that there is the occurrence and continuance of a default under the financing arrangements between Supplier and Supplier’s Lender and stating the intent of Supplier’s Lender to exercise its remedies as a result of the occurrence of such default, such

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Lender’s Default Notice shall constitute a termination of the Supply Right and Filene’s shall hold the Supplier’s Proceeds for the account of Supplier’s Lender and subject to the instructions of Supplier’s Lender. In that regard, Supplier’s Lender may elect to immediately remove the Collateral or it may sell the then existing inventory of Collateral Merchandise subject to Section 7.5 for a period of up to ninety (90) days after Filene’s receipt of Lender’s Default Notice (but in no event later than the then current termination date of this Agreement) and in connection with such sale, Filene’s shall comply with its obligations under this Agreement to the same extent as if Supplier’s Lender were the Supplier. At the end of such sale, and subject to the provisions of Section 5 hereof, the Supplier’s Lender may repossess and remove any remaining Collateral from the Filene’s locations, as Supplier’s Lender in its discretion may elect; provided, however, that Supplier’s Lender agrees to the removal of such Collateral only in accordance with such reasonable limitations on the time and manner of such removal as Filene’s shall require which limitations are intended to avoid disruption of Filene’s normal operations or any possible confusion in the mind of the public as to whether any of Filene’s assets are being removed. In connection with any sale of the Collateral Merchandise from Filene’s premises, all advertising with respect to such sale shall be subject to the prior approval of Filene’s (which approval shall not be unreasonably withheld and given promptly so as not to unreasonably delay the exercise of Supplier’s Lender’s rights). Filene’s shall not be deemed to have failed to have acted in good faith or unreasonably withheld approval by refusing to approve any advertising which refers to any “going out of business sale”, “liquidation” or similar terms or which could create any possible confusion in the mind of the public as to whether any of Filene’s assets are being liquidated. Upon any removal of the Collateral in accordance with this Agreement, Supplier’s Lender shall not be liable for any diminution in the value of Filene’s business which is caused by the termination of the Supply Right or the removal or absence of the Collateral; provided however, Supplier’s Lender does hereby agree to indemnify and hold harmless Filene’s from (i) all damages and costs of defense (including reasonable attorneys’’ fees) arising from the claims of any and all third parties, including, without limitation, Supplier, against Filene’s for complying with any directions of Supplier’s Lender, except to the extent Filene’s is finally determined by a court of competent jurisdiction to have committed willful misconduct or to have acted in a grossly negligent manner or in actual bad faith; and (ii) any costs, damages or expenses to Filene’s tangible property or third party claims for personal injury arising as a result of Supplier’s Lender exercising its rights hereunder.

          13.3.4. Nothing contained herein shall obligate Supplier’s Lender to undertake any such action, nor shall anything contained herein constitute the Supplier’s Lender’s assumption of any obligations of the Supplier under this Agreement. However, to the extent and during the period of Supplier’s Lender’s exercise of control over the Collateral while in Filene’s stores, Supplier’s Lender agrees to abide by the terms hereof as they relate to the Collateral and Filene’s right to its 20% split of the Net Sales.

          13.3.5. Filene’s will provide to the Supplier’s Lender, as and when forwarded or furnished to the Supplier, a copy of any formal notice of any breach by Supplier (with the same degree of particularity as Filene’s provides Supplier) of this Agreement given by Filene’s to the Supplier and any notice of termination of this Agreement. Filene’s acknowledges that Supplier’s Lender shall have the right but not the obligation to cure any such breach within the time frames and/or conditions set forth in this Agreement which are otherwise applicable to Supplier.

          13.3.6. Filene’s acknowledges and agrees that the Supplier’s Lender has no obligation to make any loan or advance to the Supplier for the purpose of assisting the Supplier in the performance of its obligations under this Agreement, including, without limitation, for paying any amounts due from the Supplier to Filene’s. Filene’s is not a beneficiary of the financing agreements and shall have no right to enforce the terms thereof or assert any claims thereunder.

14. MISCELLANEOUS.

14.1. Indulgences, Etc. Neither the failure nor any delay on the part of either party to exercise

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any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

     14.2. Confidentiality. The terms of this Agreement are confidential to the parties hereto and each party agrees not to make any public announcement related to this Agreement or the relationship of the parties without prior notice to the other party hereto except as may be required by law.

     14.3. Controlling Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the State of Ohio.

     14.4. Notices. All notices, requests, demands and other communications, required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received when delivered (personally, by courier service such as Federal Express, or by other messenger) against receipt or upon actual receipt of registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below:

To Filene’s:	Filene’s Basement Inc.
	12 Gill Street, Suite 1600
	Woburn, MA 01801
	Attn: Jim Rudd
	and
with a copy to:	General Counsel
	3241 Westerville Road
	Columbus, OH 43224
If to Supplier:	DSW Inc.
	4150 East Fifth Avenue
	Columbus, OH 43219
	Attn: Doug Probst
	and
	General Counsel
	3241 Westerville Road
	Columbus, OH 43224

Any party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.

     14.5. Arbitration.

     14.5.1. The parties agree that arbitration is the sole and exclusive remedy for each of them to resolve and redress any dispute, claim or controversy involving the interpretation of this Agreement or the terms, conditions or termination of this Agreement. The arbitrator will be mutually agreed upon by the parties, and the arbitration will be conducted in accordance with the

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Commercial Arbitration Rules of the American Arbitration Association. The parties will have the right to conduct discovery for such arbitration pursuant to the Federal Rules of Civil Procedure; provided, however, that the arbitrator will have the authority to establish an expedited discovery schedule and discovery cut-off point, and to resolve any discovery disputes. The arbitrator will have no jurisdiction or authority to change any provision of this Agreement by alterations of, additions to or subtractions from the terms of this Agreement. The arbitrator’s sole authority will be to interpret or apply any provision(s) of this Agreement or any public law alleged to have been violated. The arbitrator will be limited to awarding compensatory damages, but, to the extent allowed by law, will have no authority to award punitive, exemplary or similar-type damages. The parties intend that any arbitration award will be final and binding on them, and that a judgment on the award may be entered in any court of competent jurisdiction, and enforcement may be had according to the terms of that award. This Section will survive the termination or expiration of this Agreement.

     14.5.2. The parties shall share equally the arbitrator’s fee and other costs associated with any arbitration.

     14.5.3. The parties acknowledge that, because arbitration is the exclusive remedy for resolving issues arising under this Agreement, neither party may resort to any federal, state or local court or administrative agency concerning breaches of this Agreement or any other matter subject to arbitration under this Section, and that the decision of the arbitrator will be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative agency with respect to any arbitrable claim or controversy.

     14.5.4. The parties each waive the right to have a claim or dispute with one another decided in a judicial forum or by a jury.

     14.6. Binding Nature of Agreement. Subject to the provisions hereof relating to assignments, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assign.

     14.7. Execution of Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

     14.8. Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

     14.9. Entire Agreement. This Agreement contains the entire understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understanding, inducements or conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and /or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

     14.10. Paragraph Headings. The paragraph headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation.

14

     14.11. Gender, Etc. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

     14.12. Number of Days. In computing the number of days for purposes of any payments due under this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday on which federal banks are or may elect to be closed, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or such holiday.

     14.13. Assignment. Except as provided in Section 14.16, neither the Supplier nor Filene’s may assign or in any other manner transfer by voluntary act, operation of law or otherwise, its rights hereunder without the written consent of the other party hereto, provided, however, that Filene’s may assign this Agreement to an affiliate or any entity which acquires substantially all of its assets.

     14.14. No Conflict. Each party hereto represents to the other that the entering into of this Agreement and the carrying out of the terms hereof does not conflict with the terms of any other agreement by which the representing party is bound.

     14.15. Amendment/Waiver. This Agreement may be modified or amended only in writing signed by an officer of Filene’s and by Supplier. No failure by any party to enforce any provision of this Agreement or to exercise any right or remedy resulting from a breach thereof, no acceptance of full or partial payment or acceptance of performance with the knowledge of the breach of any provision of this Agreement, and no custom or practice of the parties at variance with the terms of this Agreement shall be construed as a waiver of such breach, any provision of this Agreement or other right of such party under this Agreement. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom such waiver is charged. Further, except to add or delete one or more Covered Stores to the coverage of this Agreement, this Agreement shall not be amended, revised, supplemented, or otherwise changed without prior written notice to Supplier’s Lender, and, if such modifications affect Supplier’s Lender’s rights under this Agreement, such modifications shall not be effective without the consent of the Supplier’s Lender, which consent shall not unreasonably be withheld or delayed.

     14.16. Third Party Beneficiaries. Filene’s acknowledges that Supplier’s Lender is an intended beneficiary of this Agreement, has been collaterally assigned and granted a security interest in all of Supplier’s rights hereunder and, upon the terms and conditions specified herein, shall have the right to directly enforce the provisions hereof as though Supplier’s Lender stood in Supplier’s shoes. By accepting any of the benefits of this Agreement, Supplier’s Lender agrees to be bound by the provisions hereof relating to Supplier’s Lender.

     14.17. Force Majeure. If an event of Force Majeure prevents Supplier from carrying out its responsibilities in any Covered Store, Supplier shall not be deemed in default under this Agreement.

     15. AMENDMENT AND RESTATEMENT. The parties agree that this Agreement amends and restates the Original Agreement and shall replace the Original Agreement for all Shoe Departments which equal or exceed 10,000 square feet. For all Shoe Departments which are less than 10,000 square feet, the Licensed Department Supply Agreement, executed contemporaneously herewith as between Supplier and Filene’s, shall control. Notwithstanding the foregoing, nothing herein shall be deemed to release or terminate any obligations of the parties which accrued under the Original Agreement with respect to the Covered Stores subject to this Agreement.

[remainder of page intentionally left blank]

15

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement by their duly authorized officers as of the date first above written.

DSW INC.
By:	/s/ Peter Z. Horvath
Printed Name: Peter Z. Horvath
Title: Executive Vice President
FILENE’S BASEMENT INC.
By:	/s/ James A. McGrady
Printed Name: James A. McGrady
Title: Executive Vice President

16

     Date: January 30, 2005
Amendment:                      

EXHIBIT A
Covered Store Schedule

Filene’s Basement
Covered Stores
Combo Stores

Unit	Name	Street Address	City	State	Zip		Sq. Feet
53800	SAWMILL	3700 W. Dublin-Granville Rd.	Columbus	OH		43235		22,201
56000	JERSEY GARDENS	651 Kapkowski Rd	Elizabeth	NJ		07021		13,652

Filene’s Basement Inc.		DSW Inc.
By:	/s/ James A. McGrady	By:	/s/ Peter Z. Horvath
Name: James A. McGrady		Name: Peter Z. Horvath
Title: Executive Vice President		Title: Executive Vice President

EX-10.92

Exhibit 10.92

ASSIGNMENT AND ASSUMPTION AGREEMENT

     THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this “Assignment”) is made effective the 15th day of January, 2008 (the “Effective Date”), by and between RETAIL VENTURES, INC., an Ohio corporation, having an address of 3241 Westerville Road, Columbus, Ohio 43224 (“Assignor”), AMERICAN SIGNATURE, INC., an Ohio corporation, having an address of 1800 Moler Road, Columbus, Ohio 43207 (“Assignee”), and SSC-ALUM CREEK, L.L.C., a Delaware limited liability company, having an address at 1800 Moler Road, Columbus, Ohio 43207 (“Landlord”).

WITNESSETH:

     WHEREAS, Assignor (by virtue of the Assignment and Assumption of Lease dated January 15, 2008 among Value City Department Stores LLC, successor by merger to Value City Department Stores, Inc., as assignor, and Assignor, as assignee, and Landlord) and Landlord are tenant and landlord, respectively, under that certain Lease Agreement dated September 2, 1997 (the “Lease”), for an approximately 50.617 acre parcel of real property described in Exhibit B to the Lease and generally known as 3080 and 3232 Alum Creek Drive, Columbus, Ohio (the “Leased Premises”); and

     WHEREAS, a Memorandum of Lease was executed by Landlord and Value City Department Stores, Inc. on June 11, 2002 and was recorded on June 28, 2002, as Instrument Number 200206280158561 in the Office of the Recorder, Franklin County, Ohio; and

     WHEREAS, Assignor desires to assign its interest as tenant in the Lease to Assignee as of the Effective Date, and Assignee desires to accept the assignment of tenant’s interest in the Lease from Assignor and to assume all of tenant’s right, title, estate, interest, duties and obligations under the Lease as of the Effective Date; and

     WHEREAS, Landlord is willing to consent to the assignment of the Lease, all as herein set forth.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor, Assignee and Landlord hereby agree as follows:

     1. Assignment. Assignor hereby gives, grants, bargains, sells, conveys, transfers, and sets over unto Assignee, its successors and assigns, as of the Effective Date, all of Assignor’s right, title, estate, interest, duties, and obligations as tenant in and to the Lease and the Leased Premises under the Lease.

     2. Assumption. Assignee hereby accepts the foregoing assignment and, in consideration thereof, Assignee hereby covenants and agrees that, from and after the Effective Date and for the remainder of the term of the Lease and all renewals and

extensions thereof exercised by Assignee, Assignee will assume, observe, perform, fulfill and be bound by all terms, covenants, conditions and obligations of Assignor under the Lease (including, without limitation, the payment of all rent and other sums required to be paid by Assignor under the Lease) which arise on and after the Effective Date and are to be observed, performed and fulfilled by Assignor on and after the Effective Date, in the same manner and to the same extent as if Assignee were the Assignor named therein.

     3. Landlord’s Consent. Landlord hereby consents to the assignment by Assignor to Assignee of Assignor’s interest under the Lease, as herein set forth. The foregoing consent shall not in any manner alter, amend or waive Landlord’s rights to approve subsequent assignments, nor shall the granting of such consent release Assignor from liability for the performance of the obligations of Assignor under the Lease, it being expressly agreed and understood that Assignor shall, as between Assignor and Landlord, remain fully liable to Landlord for the performance of all obligations of Assignor under the Lease.

     4. Indemnification.

          (a) Assignee hereby indemnifies and agrees to defend and hold harmless Assignor, its members, directors, officers, successors, and assigns from and against any and all claims, demands, causes of action, judgments, liabilities, losses, damages, costs or expenses (including without limitation, all reasonable attorneys’ fees and out-of-pocket expenses) which Assignor may or shall incur under the Lease by reason of any failure of Assignee to have complied with, or to have performed, the duties and obligations of Assignor under the Lease from and after the Effective Date.

          (b) Assignor hereby indemnifies and agrees to defend and hold harmless Assignee, its shareholders, directors, officers, successors and assigns from and against any and all claims, demands, causes of action, judgments, liabilities, losses, damages, costs or expenses (including without limitation, all reasonable attorneys’ fees and out-of-pocket expenses) which Assignee may or shall incur under the Lease by reason of any failure of Assignor to have complied with, or to have performed, the duties and obligations of Assignor under the Lease arising prior to the Effective Date.

     5. Successors and Assigns. The terms and conditions of this Assignment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

     6. Assignment of Warranties and Guaranties. To the extent assignable and to the extent any exist, Assignor hereby assigns to Assignee all guaranties and warranties it owns related to the Leased Premises. Assignor shall execute such further reasonable documents to evidence such transfer as are reasonably requested by Assignee either before or after the Effective Date. If there is a cost or fee for the transfer of any warranty or guaranty, that cost shall be borne by Assignee.

     7. Counterparts. This Assignment may be executed in counterparts, each of which shall be deemed an original, and all of which shall constitute one document.

2

     8. Third Parties. The agreements herein are for the sole benefit of Assignor, Assignee, and Landlord and no third party is intended to benefit hereby.

     9. Notices. Notices hereunder shall be given in the same manner as set forth in Section 21 of the Lease and to the following addresses:

(a)	If to Assignor:
	Retail Ventures, Inc.
	3241 Westerville Road
	Columbus, Ohio 43224
(b)	If to Assignee/Tenant:
	American Signature, Inc.
	1800 Moler Road
	Columbus, Ohio 43207
(c)	If to Landlord:
	SSC-Alum Creek, L.L.C.
	1800 Moler Road
	Columbus, Ohio 43207

     Addresses for service of notice may be changed by written notice to the other parties.

     10. Governing Law. The terms of this Assignment shall be governed by the laws of the State of Ohio.

     11. Entire Agreement. This Assignment shall be deemed to contain all of the terms and conditions agreed upon with respect to the assumption and assignment of the Lease, it being understood that there are no outside representations or oral agreements.

     12. Capitalized Terms. Any capitalized terms used in this Assignment and not defined shall have the same meaning set forth in the Lease.

3

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed on this 15th day of January, 2008.

ASSIGNOR:
RETAIL VENTURES, INC., an Ohio corporation
By:
	Name:
	Title:
ASSIGNEE:
AMERICAN SIGNATURE, INC., an Ohio corporation
By:
	Name:
	Title:
LANDLORD:
SSC ALUM CREEK, L.L.C., a Delaware limited liability company
By:	Schottenstein Stores Corporation, a Delaware corporation, its sole member
	By:
		Name:
		Title:

4

ACKNOWLEDGMENTS

STATE OF OHIO	)
	)	SS:
COUNTY OF FRANKLIN	)

          The foregoing instrument was acknowledged before me on this                      day of January, 2008, by                                         , the                                           of Retail Ventures, Inc., an Ohio corporation, on behalf of the corporation.

Notary Public

STATE OF OHIO	)
	)	SS:
COUNTY OF FRANKLIN	)

          The foregoing instrument was acknowledged before me on this                      day of January, 2008, by                                         , the                                           of American Signature, Inc., an Ohio corporation, on behalf of the company.

Notary Public

STATE OF OHIO	)
	)	SS:
COUNTY OF FRANKLIN	)

          The foregoing instrument was acknowledged before me on this                      day of January, 2008, by                                         , the                                           of Schottenstein Stores Corporation, a Delaware corporation, the sole member of SSC-Alum Creek, L.L.C., a Delaware limited liability company, on behalf of the corporation and the company.

Notary Public

i

EX-12

Exhibit 12

Retail Ventures, Inc.
Computation of Ratio of Earnings to Fixed Charges
(in thousands except ratios)

	Year Ended
	2/2/08		2/3/07			1/28/06			1/29/05		1/31/04
Earnings
Income (loss) before income taxes, minority interest, equity earnings and discontinued operations	$	308,590	$	(78,603	)	$	(96,356	)	$	24,572	$	6,258
Fixed charges (as below)		59,657		49,127			47,990			37,522		31,568
Total (loss) earnings	$	368,247	$	(29,476	)	$	(48,366	)	$	62,094	$	37,826
Fixed Charges
Interest expense	$	13,548	$	9,443		$	11,532		$	6,653	$	6,271
Estimated interest element in minimum rent expense (3)		46,109		39,684			36,458			30,869		25,297
Total fixed charges	$	59,657	$	49,127		$	47,990		$	37,522	$	31,568
Ratio of (loss) earnings to fixed charges		6.17		(0.60	) (1)		(1.01	) (2)		1.65		1.20

(1)	For the year ended February 3, 2007 the earnings to cover fixed charges were deficient by $78,603,000.
(2)	For the year ended January 28, 2006 the earnings to cover fixed charges were deficient by $96,356,000.
(3)	Interest component is estimated to be one-third of minimum rent expense.

EX-21

EXHIBIT 21

RETAIL VENTURES, INC.
List of Subsidiaries

Ref.		State of	Parent
No.	Name	Incorporation	Co. No.
1.	Retail Ventures, Inc.	Ohio	N/A
2.	Carlyn Advertising Agency, Inc.	Ohio	1.
3.	DSW Inc.1	Ohio	1.
4.	Filene’s Basement, Inc.2	Delaware	1.
5.	Retail Ventures Imports, Inc.3	Ohio	1.
6.	Retail Ventures Licensing, Inc.4	Delaware	1.
7.	Retail Ventures Services, Inc.	Ohio	1.
8.	DSW Shoe Warehouse, Inc.	Missouri	3.
9.	Brand Card Services LLC	Ohio	3.
10.	Brand Technology Services LLC	Ohio	3.
11.	eTailDirect LLC	Delaware	8.

1	Formerly known as Shonac Corporation. Following the completion of its initial public offering on July 5, 2005, DSW Inc. became a controlled subsidiary of Retail Ventures, Inc. As of February 2, 2008, Retail Ventures, Inc. owned approximately 63.0% of DSW’s outstanding common shares and approximately 93.2% of the combined voting power of such shares.
2	Formerly known as Base Acquisition Corp.
3	Formerly known as VC Acquisition, Inc.
4	Formerly known as Value City Acquisition Corp.

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements (Nos. 333-131604 and 333-129004 on Form S-3 and 333-100398, 333-70440, 333-45856, 333-45852, 333-66239, 333-15957, 33-92966, 33-80588, 33-50198, and 333-15961 on Form S-8) of our report dated April 24, 2008, relating to the consolidated financial statements and consolidated financial statement schedules of Retail Ventures, Inc., and subsidiaries (the “Company”), and the effectiveness of the Company’s internal control over financial reporting (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the presentation of the Company’s Value City segment as a discontinued operation), appearing in the Annual Report on Form 10-K of the Company for the year ended February 2, 2008.

/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
April 24, 2008

EX-24

Exhibit 24

POWER OF ATTORNEY

Each director and/or officer of Retail Ventures, Inc. (the “Corporation”) whose signature appears below hereby appoints Heywood Wilansky, James A. McGrady and Julia A. Davis as the undersigned’s attorney or any of them individually as the undersigned’s attorney, to sign, in the undersigned’s name and behalf and in any and all capacities stated below, and to cause to be filed with the Securities and Exchange Commission (the “Commission”), the Corporation’s Annual Report on Form 10-K (the “Form 10-K”) for the fiscal year ended February 2, 2008, and likewise to sign and file with the Commission any and all amendments to the Form 10-K, and the Corporation hereby appoints such persons as its attorneys-in-fact and each of them as its attorney-in-fact with like authority to sign and file the Form 10-K and any amendments thereto granting to each attorney-in-fact full power of substitution and revocation, and hereby ratifying all that any such attorney-in-fact or the undersigned’s substitute may do by virtue hereof.

IN WITNESS WHEREOF, we have hereunto set our hands effective as of the 24 day of April, 2008.

/s/ Jay L. SchottensteinJay L. Schottenstein	Chairman of the Board of Directors
/s/ Heywood Wilansky	President and Chief Executive Officer and
Heywood Wilansky	Director (Principal Executive Officer)
/s/ James A. McGradyJames A. McGrady	Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)
/s/ Henry L. Aaron	Director
Henry L. Aaron
/s/ Ari Deshe	Director
Ari Deshe
/s/ Jon P. Diamond	Director
Jon P. Diamond
/s/ Elizabeth M. Eveillard	Director
Elizabeth M. Eveillard
/s/ Lawrence J. Ring	Director
Lawrence J. Ring
/s/ Harvey L. Sonnenberg	Director
Harvey L. Sonnenberg
/s/ James L. Weisman	Director
James L. Weisman

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Heywood Wilansky, certify that:

1.	I have reviewed this Annual Report on Form 10-K for the fiscal year ended February 2, 2008 of Retail Ventures, Inc.;
2.	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;
3.	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;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	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;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’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
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	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’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 24, 2008	By:	/s/ Heywood Wilansky
		Heywood Wilansky, President,
		Chief Executive Officer and Director

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, James A. McGrady, certify that:

1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended February 2, 2008 of Retail Ventures, Inc.;

2. 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;

3. 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;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	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;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’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
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	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’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: April 24, 2008	By:	/s/ James A. McGrady
		James A. McGrady, Executive Vice President,
		Chief Financial Officer, Treasurer and Secretary

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION*

     In connection with the Annual Report of Retail Ventures, Inc. (the “Company”) on Form 10-K for the fiscal year ended February 2, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Heywood Wilansky, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: April 24, 2008	By:	/s/ Heywood Wilansky
		Heywood Wilansky, President,
		Chief Executive Officer and Director

*

This Certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

A signed original of this written statement required by 18 U.S.C. § 1350 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.

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION *

     In connection with the Annual Report of Retail Ventures, Inc. (the “Company”) on Form 10-K) for the fiscal year ended February 2, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James A. McGrady, Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated April 24 , 2008:	By:	/s/ James A. McGrady
		James A. McGrady, Executive Vice President, Chief Financial Officer, Treasurer and Secretary

*

This Certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

A signed original of this written statement required by 18 U.S.C. § 1350 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.