DSW Inc. and Town Shoes Limited announced today that they have entered into a definitive agreement whereby DSW Inc. will purchase for cash approximately 44 percent interest in Town Shoes, the largest footwear and accessories retailer in Canada, for Canadian $68 million (or approximately $62 million based on current exchange rates). The transaction has been approved by each company's Board of Directors and is expected to close in May 2014, subject to customary closing conditions.

Town Shoes is the market leader in branded footwear in Canada, with sales of CAD $291 million in its fiscal year ending January, 2014. Town operates 182 locations across Canada primarily under The Shoe Company, Shoe Warehouse and Town Shoes banners. The company is predominantly owned by Alberta Investment Management Corporation(“AIMCo”) on behalf of certain of its clients, and Callisto Capital (“Callisto”), a Canadian private equity firm.

DSW Inc. is purchasing its initial 44 percent stake from AIMCo and may acquire additional shares from certain other minority shareholders as part of its initial investment. Additionally, DSW Inc. will have the right to purchase the balance of Town Shoes from the remaining shareholders, including Callisto Capital, after four years at a pre-determined EBITDA multiple. Callisto, on behalf of itself and the remaining shareholders, has the right to put the balance of the company to DSW Inc. after three years at a pre-determined EBITDA multiple. DSW Inc.'s initial stake provides 50% voting control and board representation, both of which are equal to that of Callisto.

The transaction, which the company anticipates to record under the equity method, is expected to be slightly accretive to earnings in 2014, excluding one-time transaction expenses.

Mike MacDonald, President and CEO, DSW Inc. stated, “We're excited about our new relationship with Town Shoes. We have looked at Canadian entry options for some time and decided to acquire an existing operation with a long track record of success and to use this operation as a base from which we can establish the DSW brand in Canada.”

“Our partnership provides us a unique opportunity to bring DSW into Canada through Town Shoes' platform. We hope to share best practices in sourcing, operations, inventory management, and omni-channel integration to our mutual advantage,” Mr. MacDonald added.

Bruce Dinan, President and CEO, Town Shoes stated, “Our combined retail banners provide different avenues for serving unique customer lifestyles in Canada, ranging from Town's full priced, specialty retail model to The Shoe Company's and Shoe Warehouse's off price concepts. We are excited to partner with a company that shares our mission to offer our shoe loving customers compelling national brands at incredible value.”

Lawrence Stevenson, Chairman of Town Shoes and Managing Director of Callisto Capital said, “AIMCo was a great partner and together we were able to build Canada's leading branded footwear retailer from coast to coast. We are thrilled that DSW, who we consider to be the finest branded footwear retailer in the world, will be joining us as our strategic partner as we roll out DSW stores across the country.”

Peter J. Solomon Company is serving as financial advisor to DSW Inc. in connection with the transaction.

About DSW Inc.

DSW Inc. is a leading branded footwear and accessories retailer that offers a wide selection of brand name and designer dress, casual and athletic footwear and accessories for women, men and kids. As of April 15, 2014, DSW Inc. operates  407 DSW stores in 42 states, the District of Columbia and Puerto Rico, and operates an e-commerce site, http://www.dsw.com ,  and a mobile website, http://m.dsw.com . DSW Inc. also supplies footwear to 357 leased locations in the United States under the Affiliated Business Group.

About Town Shoes Limited

Town Shoes Limited is the largest specialty retailer focused on branded footwear products in Canada with 182 stores nationwide. Town Shoe stores are located in leading shopping centers and cater to fashionable customers who seek the latest styles from the world's leading footwear brands. Town Shoes was founded over sixty years ago on May 15, 1952 by Leonard Simpson, who opened the first Town Shoes stores in Sunnybrook Plaza, Canada's first shopping center. Town is based in Toronto, Ontario.