1319947--4/17/2008--DSW

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We have entered into Supply Agreements with Stein Mart, Gordmans and Filene s Basement. If any of the agreements were to be terminated, it would decrease sales and could have a material adverse affect on our business, financial condition and results of operations. We plan to launch an e-commerce business in the first half of fiscal 2008 which may not be successful and could adversely affect our results of operations or distract management from our core business. We rely on our good relationships with vendors to purchase better-branded 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 operations are affected by seasonal variability. 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 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. The loss or disruption of our distribution centers 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. Retail Ventures has disposed of an 81% ownership interest in its Value City operations, which will impact the shared service allocations between DSW and RVI and may have a material adverse effect on our future financial performance and financial position. 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. 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. Restrictions in our secured revolving credit facility could limit our operational flexibility. The liquidity of our investments could fluctuate based on adverse market conditions. From the time of our acquisition by Value City in 1998 until the completion of our initial public offering in July 2005, we were not operated as an entity separate from Value City and Retail Ventures, and, as a result, our historical financial information may be not indicative of our 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. The security breach could 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 our Common 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. The PIES (Premium Income Exchangeable Securities) issued by Retail Ventures may adversely affect the market price for DSW Class A Common Shares. 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.

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1319947--4/17/2008--DSW_Inc.