DSW, Designer Shoe Warehouse, Inc., wholly-owned subsidiary of Retail Ventures, Inc., will pursue an initial public offering, which it expects to complete in the first half of 2005. DSW filed its initial registration statement with the U.S. Securities and Exchange Commission with Lehman Brothers acting as book-running manager of the offering and CIBC World Markets and Johnson Rice acting as co-managers.

According to the filing, DSW will use a portion of the proceeds from the IPO to repay a $165,000 inter-company debt owed to RVI. RVI will use these funds to pay down its $100 million term loan facility and a portion of its revolving credit facility, which it will refinance at the time of the IPO. As a result of reduced debt service costs, RVI will be in a better position to implement its new business plan after the IPO.

After the IPO, RVI will hold all Class B stock, with an eight votes to one advantage over the Class A stock, which will be sold during the IPO. Prior to the IPO, RVI will enter into agreements with DSW related to the separation of its business from DSW, including a master separation agreement, a shared services agreement and a tax separation agreement. RVI's current intent is to continue to hold its DSW common shares following the offering, though they will have no contractual obligation not to sell.

Despite DSW being strong enough to warrant an IPO, the subsidiary was not enough to keep RVI from having to alert investors to the bad news soon to come their way. In a release, RVI discussed preliminary figures for the fourth quarter ended January 31, 2004 and the fiscal year ended January 29, 2004.

Net sales for the quarter increased 5.8% to $761.9 million from $720.4 million in the year-ago quarter. The company's comparable store sales for the thirteen-week period decreased 1.7% when compared to the same period last year. Total sales for the fiscal year were $2.7 billion compared to $2.6 billion for the 2003 fiscal year, a 5.6% increase. The company's same store sales decreased 1.0% for the fiscal year.

The company's net loss for the quarter was $19.4 million, or 57 cents per share on a diluted basis, compared to net income of $11.5 million, or 25 cents per share on a diluted basis, for the same period in fiscal 2003. For the full year, the company's net loss was $20.7 million, or 61 cents per diluted share, compared to a net loss of $4.4 million, or 13 cents per diluted share, for the prior year.

As a means of softening the blow, RVI, together with its principal subsidiaries, announced that it has increased the ceiling under its revolving credit facility to $425 million, an increase of $75 million.