DSW Comps Jump 11.3% During Fourth Quarter

DSW Inc. posted net sales of $238.8 million for the fourth quarter ended January 28, 2006, up 3.1% from sales of $231.7 million during the year-ago period. Net income was $10.0 million for the quarter, a 13.6% increase from $8.8 million last year.

Diluted earnings per share were 23 cents for the fiscal fourth quarter of 2005 compared with 32 cents for last year's fourth quarter. After adjusting for the significant increase in shares as a result of DSW's initial public offering on June 29, 2005, pro forma diluted earnings per share for the fourth quarter of last year were 20 cents.

Comparable store sales for the fourth quarter of 2005 increased 11.3% compared with an increase of 5.8% for the same period last year.

Fiscal Year Results

In an initial public offering on June 29, 2005, the company issued 16.2 million shares of Class A common stock, which included the underwriters' over- allotment option of 2.1 million shares, at a price of $19.00 per share. The company received net proceeds of $277.9 million and used $196.6 million of the net proceeds to repay in full $190.0 million in dividend notes and accrued interest to the company's controlling shareholder, Retail Ventures Inc.

For the fiscal year ended January 28, 2006, net income was $37.2 million on net sales of $1.14 billion, compared with net income of $35.0 million on net sales of $961.1 million for the same period last year. The fiscal year 2005 results include $6.6 million of interest expense on the dividend notes to RVI, and $6.5 million for the accrual for losses associated with the data theft announced in March 2005.

Diluted earnings per share for the fiscal year were $1.00 compared with $1.26 last year.

After adjusting for the dividend interest, the data theft accrual, and the significant increase in shares as a result of the initial public offering, pro forma net income for the fiscal year was $45.0 million, or $1.02 per share, compared with $35.0 million, or $0.79 per share, for last year.

Comparable store sales for the fiscal year ended January 28, 2006 increased 5.4% compared with an increase of 5.0% for the same period last year.

Store Totals

DSW opened two stores and added two leased shoe departments during the fourth quarter of 2005. As of January 28, 2006, the Company operated 199 DSW stores and 238 leased shoe departments. Since that date, the company has opened four additional stores and added three leased shoe departments.

2006 Outlook

The company currently expects 2006 diluted earnings per share of $1.22 to $1.25. Comparable store sales are projected to increase in the range of 3-5%. The company also plans to open 30 stores during the year.

                                   DSW INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
               (Dollars in thousands, except per share amounts)
                                 (Unaudited)

                                Three Months Ended     Twelve Months Ended
                                 Jan. 28,  Jan. 29,     Jan. 28,   Jan. 29,
                                    2006      2005         2006       2005

     Net sales                  $283,804  $231,683   $1,144,061   $961,089
     Cost of sales              (210,265) (173,451)    (828,342)  (690,878)
     Gross profit                 73,539    58,232      315,719    270,211
     Operating expenses          (56,895)  (48,351)    (245,607)  (214,102)
     Operating profit             16,644     9,881       70,112     56,109
     Interest income (expense),
      net                            879      (274)      (7,505)    (2,734)
     Earnings before income taxes 17,523     9,607       62,607     53,375
     Income tax provision         (7,484)     (807)     (25,426)   (18,420)
     Net income                  $10,039   $ 8,800      $37,181   $ 34,955

     Basic and diluted earnings
      per share:
       Basic                       $0.23     $0.32        $1.00      $1.26
       Diluted                     $0.23     $0.32        $1.00      $1.26