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Retail Ventures Q2 Net Falls

Sales and returns on investment activities weaken.

Retail Ventures Inc.’s second-quarter profits were down sharply as its retailing and investment activities proved less lucrative.

For the three months ended Aug. 2, net income fell 83.3 percent to $17.7 million, or 36 cents a diluted share, from $106.2 million, or $1.81 a share, in the year-ago quarter. Operating profit fell 83.2 percent to $22.1 million from $131 million as the largest component of both figures, increase in the fair value of derivative instruments, dropped to $16.7 million in the most recent quarter from $124.8 million in the 2007 period.

Excluding derivative instruments and discontinued operations, RVI lost 6 cents a diluted share.

Sales fell 1 percent to $459.8 million from $464.6 million as the 2.4 percent increase in revenues at DSW, to $357.2 million, couldn’t fully offset the 11.5 percent drop at Filene’s Basement, to $102.6 million. The same-store sales trend was reversed, as DSW was down 6.9 percent and Filene’s Basement up 1.4 percent for a corporate result of a 5.1 percent decrease.

Retail Ventures in January sold an 81 percent stake in its Value City Department Stores unit to VCHI Acquisition Co., which includes VCDS Acquisition Holdings LLC, Emerald Capital Management LLC and Crystal Value LLC. Last month, the company said it wouldn’t renew the contract of chief executive officer Heywood Wilansky, which expires at the end of January.

For the first six months of the year, net income dropped 57 percent to $46.9 million, or 93 cents a share, from $109 million, or $1.84, during the first half of fiscal 2007. The change in derivatives was $53.9 million in this year’s half, versus $137.3 million in the first six months of last year.

Sales dropped 0.5 percent to $926.1 million from $930.5 million a year ago. Same-store sales were off 4.7 percent, with Filene’s Basement up 0.6 percent and DSW down 6.2 percent.

At the conclusion of the second quarter, Retail Ventures operated 36 Filene’s Basement stores and 274 footwear stores and supplied footwear to 348 other retail locations.