1319947--4/13/2006--DSW

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{customer, product, revenue}

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We rely on our good relationships with vendors to purchase brand name and designer merchandise at favorable prices. If these relationships were to be impaired, we may not be able to obtain a sufficient selection of merchandise at attractive prices, and we may not be able to respond promptly to changing fashion trends, either of which could have a material adverse affect on our competitive position, our business and financial performance. We may be unable to anticipate and respond to fashion trends and consumer preferences in the markets in which we operate, which could have a material adverse affect on our business, financial condition and results of operations. Our comparable store sales and quarterly financial performance may fluctuate for a variety of reasons, which could result in a decline in the price of our Class A Common Shares. We rely on a single distribution center. The loss or disruption of our centralized distribution center could have a material adverse effect on our business and operations. We are dependent on Retail Ventures to provide us with many key services for our business. Our failure to retain our existing senior management team and to continue to attract qualified new personnel could adversely affect our business. We may be unable to compete favorably in our highly competitive market. A decline in general economic conditions, or the outbreak or escalation of war or terrorist acts, could lead to reduced consumer demand for our footwear and accessories. We rely on foreign sources for our merchandise, and our business is therefore subject to risks associated with international trade. Our secured revolving credit facility could limit our operational flexibility. From the time of our acquisition by Value City in 1998 until the completion of our initial public offering in July 2005, DSW was not operated as an entity separate from Value City and Retail Ventures, and, as a result, our historical and pro forma financial information may not be indicative of DSW s historical financial results or future financial performance. We face security risks related to our electronic processing and transmission of confidential customer information. On March 8, 2005, Retail Ventures announced the theft of credit card and other purchase information relating to DSW customers. This security breach could materially adversely affect our reputation and business and subject us to liability. We are controlled directly by Retail Ventures and indirectly by SSC, whose interests may differ from other shareholders. SSC and Retail Ventures or its affiliates may compete directly against us. Some of our directors and officers also serve as directors and officers of Retail Ventures, and may have conflicts of interest because they may own Retail Ventures stock or options to purchase Retail Ventures stock, or they may receive cash- or equity-based awards based on the performance of Retail Ventures. We do not expect to pay dividends in the foreseeable future. If our existing shareholders or holders of rights to purchase our Common Shares sell the shares they own, or if Retail Ventures distributes its Common Shares to its shareholders, it could adversely affect the price of our Class A Common Shares. Our amended articles of incorporation, amended and restated code of regulations and Ohio state law contain provisions that may have the effect of delaying or preventing a change in control of DSW. This could adversely affect the value of your shares. Risks Relating to our Relationship with and Separation from Retail Ventures The agreements we entered into with Retail Ventures in connection with our initial public offering could restrict our operations and adversely affect our financial condition. We may be prevented from issuing stock to raise capital, to effectuate acquisitions or to provide equity incentives to members of our management and board of directors. Our prior and continuing relationship with Retail Ventures exposes us to risks attributable to Retail Ventures businesses. Possible future sales of Class A Common Shares by Retail Ventures, SSC, Cerberus and Millennium could adversely affect prevailing market prices for the Class A Common Shares.

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1319947--4/13/2006--DSW_Inc.