<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

           [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended February 1, 1997
                                       or
         [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
             For the transition period from _________ to _________

                         Commission File Number 1-1594

                          CROWLEY, MILNER AND COMPANY
             (Exact name of registrant as specified in its charter)

               Michigan                               38-0454910
     (State or other jurisdiction                         (I.R.S. Employer
 of incorporation or organization)                         Identification No.)
                                     

             2301 West Lafayette Boulevard, Detroit, Michigan 48216
             (Address of principal executive offices with zip code)

      Registrant's telephone number, including area code:  (313) 962-2400

   Securities registered pursuant to Section 12(b) of the Act:   Common Stock
                                                       (Title of each class)
      Name of each Exchange on which registered:   American Stock Exchange

     Securities registered pursuant to Section 12(g) of the Act:       NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:   Yes [X] No [  ]

Indicate by check mark whether the disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: [   ]

As of April 9, 1997, there were 1,511,054 shares of the registrant's Common
Stock outstanding and the aggregate market value of such Common Stock held by
non-affiliates (based on the closing price on the American Stock Exchange on
such date) was $4,890,635.

Portions of the registrant's Proxy Statement for its 1997 Annual Meeting of
Shareholders to be held May 22, 1997, to the extent expressly so stated herein,
are incorporated by reference into Part III of  this Report.
<PAGE>   2

                               TABLE OF CONTENTS

PART I                                                                    PAGE
Item 1       Business......................................................  3
             General.......................................................  3
             Marketing and Merchandising...................................  4
             Store Design, Expansion and Remodeling........................  5
             Information Systems...........................................  6
             Credit Policy.................................................  6
             Leased Departments............................................  7
             Competition...................................................  7
             Employees.....................................................  7
Item 2       Properties....................................................  8
             Corporate Headquarters and Crowley's Distribution Center......  8
             Steinbach Distribution Center.................................  9
             Retail Department Stores......................................  9
Item 3       Legal Proceedings ............................................ 10
Item 4       Submission of Matters to a Vote of Security Holders........... 10

PART II
Item 5       Market for the Registrant's Common Stock and Related Matters.. 11
Item 6       Selected Financial Data....................................... 12
Item 7       Management's Discussion and Analysis of Results
             of Operations and Financial Condition......................... 13
             Results of Operations......................................... 13
             Financial Condition........................................... 16
Item 8       Financial Statements and Supplementary Data................... 17
Item 9       Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosure........................ 17

PART III
Item 10      Directors and Executive Officers of the Registrant............ 18
Item 11      Executive Compensation........................................ 18
Item 12      Security Ownership of Certain Beneficial Owners and 
             Management.................................................... 18
Item 13      Certain Relationships and Related Transactions................ 18

PART IV
Item 14      Exhibits, Financial Statement Schedules and Reports 
             on Form 8-K................................................... 19

Report of Independent Auditors............................................. 22
Consolidated Balance Sheets at February 1, 1997 and February 3, 1996....... 23
Consolidated Statements of Operations for the fiscal years ended February 1,
    1997, February 3, 1996, and January 28, 1995........................... 24
Consolidated Statements of Shareholders' Equity for the fiscal years ended
    February 1, 1997, February 3, 1996, and January 28, 1995............... 25
Consolidated Statements of Cash Flows for the fiscal years ended February 1,
    1997, February 3, 1996, and January 28, 1995........................... 26
Notes to Consolidated Financial Statements................................. 27
Financial Statement Schedules:  Schedule II -- Valuation and Qualifying
    Accounts............................................................... 38
Signatures................................................................. 39

  The Company wishes to caution readers not to place undue reliance on any
  forward-looking statements, which speak only as of the date of this Report,
  and to advise readers that various factors, including national and regional
  economic conditions and competitive factors, could affect the Company's
  financial performance and could cause the Company's actual results for future
  periods to differ materially from those anticipated or projected.  The
  Company does not undertake, and specifically disclaims any obligation, to
  update any forward-looking statements to reflect occurrences or unanticipated
  events or circumstances after the date of this Report.


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<PAGE>   3

                                     PART I

ITEM 1.  BUSINESS

GENERAL

         Crowley, Milner and Company, a Michigan corporation, ("Crowley's") is
engaged in the operation of nine retail specialty department stores in the
Detroit-metropolitan and suburban Flint, Michigan areas.  Crowley's has
operated continuously for over 90 years since it was founded in 1914.
Crowley's also owns Steinbach Stores, Inc. ("Steinbach"), an Ohio corporation,
which operates 14 retail specialty department stores in the states of
Connecticut, New York, New Hampshire, New Jersey and Vermont.  Both Crowley's
and Steinbach (collectively referred to as the "Company") are quality fashion
department stores selling moderate-priced lines in women's, men's and
children's apparel, accessories and decorative home furnishings.  In addition
to its own merchandise, the Company offers shoes, fine jewelry, millinery, furs
and maternity goods, as well as beauty salon services, through leased
departments operated by independent lessees.  The Company uses a 52-53 week
fiscal year, with its fiscal year ending on the Saturday closest to January 31
for financial reporting purposes, a practice typical in the retail industry.

         Effective September 1, 1996, Crowley's acquired all of the issued and
outstanding stock of Steinbach, in exchange for 514,800 shares, representing
approximately 35% of the issued and outstanding shares, of newly-issued common
stock of Crowley's.    This transaction was accounted for as a purchase.
Crowley's had been operating Steinbach since January 1, 1996, under an Interim
Operating Agreement, and incurred a cumulative loss of approximately $120,000
during the period from January 1 to September 1, 1996, as a result of such
operations.  See Item 7, "Management's Discussion and Analysis of Results of
Operations and Financial Condition".

         To achieve greater economies of scale, the Company has centralized
many of the corporate operations of both the Crowley's and Steinbach stores at
its headquarters located in Detroit, Michigan, including the buying,
advertising and sales promotion, data processing and accounting functions.
Receiving, marking, and distribution for Crowley's and Steinbach are performed
through two separate distribution facilities, a Company-owned and operated
facility located in Detroit, Michigan, for the nine Crowley's stores, and a
contracted distribution operation located in Eatontown, New Jersey, for the 14
Steinbach stores.

         The Company has recently enlarged the Crowley's store located in the
New Center area north of downtown Detroit, Michigan, by approximately 12,000
square feet (25% of its previous size), is negotiating to expand the Steinbach
store in Brick, New Jersey by approximately 11,000 square feet (also 25% of its
previous size) and is finalizing arrangements to open a new Steinbach store in
Cortlandt, New York (Westchester County) which will have approximately 42,000
square feet of selling area.  In December 1996 the Company closed a Steinbach
store located in North Utica, New York, and in March 1997 the Company closed a
Crowley's store located in Birmingham, Michigan.  In both cases, the closure
resulted from the landlord's decision to find new commercial uses for the
property.  Both of these stores had been only marginally profitable in good
years and had generally incurred operating losses after taking into


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account allocated overhead expenses of the Company.

MARKETING AND MERCHANDISING

         Marketing Strategy.  The Company's merchandising strategy is directed
at offering and promoting nationally-advertised brand name merchandise
recognized for style and value, together with private-label merchandise
purchased through Frederick Atkins, Inc., a national association of major
retailers that provides its members with group purchasing opportunities.  The
Company's stores offer an extensive selection of fashion apparel, cosmetics and
accessories, home furnishings, luggage and other merchandise in a broad range
of styles, sizes and colors for all members of the family.  
Nationally-advertised brand names emphasized by the Company include Liz
Clairborne, Coach, Levi Strauss, London Fog, Alfred Dunner, Haggar, Bugle Boy,
Lee, Calvin Klein, Estee Lauder, Lancome, and Clinique.  The Company's overall
merchandising strategy includes the development of monthly, seasonal and annual
merchandising plans for each store and each department within its stores.
Management monitors sales, gross margin performance and inventory levels
against the operating plan on a daily basis.  The Company strives to maintain
flexibility in its overall merchandising plan in order to respond quickly to
changing consumer preferences, seasonal factors such as weather conditions and
other selling opportunities.  Management continually seeks to improve its
merchandise mix to increase overall margins and inventory turnover and reduce
the need for markdowns and promotional sales.  Both the Crowley's and Steinbach
stores carry substantially the same merchandise, but in different mixes
according to individual market demands.  The mix of merchandise in a particular
store may also vary depending on the size of the store.  Management believes
that well-stocked stores and frequent promotional sales contribute
significantly to sales volume.  The Company does not maintain a clearance
center, choosing rather to liquidate slow-moving merchandise through its
existing stores.

         The percentage contribution to sales by major class of merchandise for
the last three fiscal years for the Crowley's stores was as follows:

<TABLE>
<CAPTION>
                                                                    Fiscal Year Ended                           
                                                   -----------------------------------------------   

                                                     February 1,      February 3,      January 28,
                                                       1997             1996             1995
                                                       ----             ----             ----
<S>                                                <C>                <C>              <C>
Women's apparel and accessories . . . . . . . . .      46.8%            47.3%            49.0%
Men's apparel and accessories . . . . . . . . . .      19.5%            19.3%            19.4%
Children's apparel  . . . . . . . . . . . . . . .       8.9%             9.3%             9.4%
Cosmetics . . . . . . . . . . . . . . . . . . . .       4.5%             4.1%             3.0%
Shoes, jewelry, furs and other
   leased departments . . . . . . . . . . . . . .      11.5%            11.4%            11.7%
Housewares and luggage  . . . . . . . . . . . . .       8.8%             8.6%             7.5%
                                                     ------           ------           ------ 
         Totals . . . . . . . . . . . . . . . . .     100.0%           100.0%           100.0%
                                                     ======           ======           ====== 
</TABLE>

         Sales Promotion.  The Company primarily uses newspaper, radio and
direct mail advertising, as well as in-store events to stimulate the interests
of customers.  Its promotional strategy includes seasonal promotions directed
at selected items and frequent store-wide sales events to highlight brand-name
merchandise and promotional pricing.  The Company receives reimbursement for
certain of its promotional activities from certain of its vendors.  During the

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past three years, the Company has increased its advertising budget for direct
mail advertising as a result of more efficient use of its information database
of customers and customer preferences.  The Company's stores experience
seasonal sales and earnings patterns typical of the retail industry.  Peak
sales occur during the Christmas holiday season (Thanksgiving to January 1),
the Spring  season (generally Easter through Father's Day) and the Fall season
(generally from the middle of August to the middle of October).

         Purchasing.  The Company purchases merchandise from dozens of
suppliers, no one of which accounted for as much as 5% of the Company's net
purchases in the fiscal year ended February 1, 1997 ("Fiscal 1996").  The
Company employs 25 buyers.  In order to provide purchasing efficiencies and
consistency of product selection throughout all Company stores, all but two of
the Company's buyers are located at Company headquarters in Detroit, Michigan.
Given the special demands of the merchandise, the Company's dress buyer and the
Steinbach cosmetic buyer are located in New York.  In Fiscal 1996, the Company
purchased between 15% to 20% of its merchandise from Frederick Atkins.
Excluding Frederick Atkins, the ten largest suppliers of merchandise during
Fiscal 1996 were Liz Claiborne, Alfred Dunner, Haggar, Sag Harbor, Jockey, Lee,
Levi Strauss, Hanes, Coach, and Estee Lauder, and purchases from these
suppliers, as a group, accounted for approximately 30% of net purchases during
the year.  Management believes that alternative sources of supply are available
for each category of merchandise it purchases, and that its relationships with
suppliers are generally very good.

         Merchandise Distribution.  The Company's point-of-sale, in-store
technology captures daily information about sales and in-store inventory
levels, which provides management and buyers with data to analyze trends on a
daily basis, to identify fast and slow-selling merchandise, and to respond to
customer preferences when making buying and markdown decisions.  Merchandise is
shipped to the Company's 23 stores in two ways: either directly from certain
vendors, in pre-packaged, pre-priced condition, or through one of the Company's
two regional distribution centers.  At the distribution centers, merchandise is
sorted, inspected for quality, recorded into inventory, priced with a UPC
bar-coded label (if not already priced by the manufacturer) and loaded on truck
for delivery to stores.  Each distribution center has highly automated
conveyor, racking and sorting equipment and computerized inventory controls
systems.  The Company generally does not warehouse apparel merchandise, but
distributes it to stores promptly.

STORE DESIGN, EXPANSION AND REMODELING

         The Company's goal is to achieve continued growth in sales and margins
by maintaining and improving market share in its existing markets and by
expanding into markets populated by the type of customers attracted to the
Company's merchandise.  Management believes that the Company's existing
distribution facilities are capable of administering a retail organization of
substantially greater sales volume, and to this end the Company is continually
exploring ways of expanding its number of retail locations and per store sales
volume.  The Crowley's stores are generally located in secondary regional malls
surrounding the metropolitan Detroit area, with one store in the near-downtown
area and one in a regional mall in Flint, Michigan, about 50 miles northwest of
Detroit.  The Steinbach stores are located in suburban areas and in smaller
out-state communities and in many instances are the largest or best-known
retail apparel operation within the local market area.  During Fiscal 1996, the
Company began to implement


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<PAGE>   6


the expansion of two existing stores by approximately 25% in size each, and was
forced to close two marginally profitable stores due to action by the
respective landlord for each store.  The Company is presently negotiating to
lease a Steinbach store in Cortlandt, New York, and expects to occupy this
space in time for the Fall 1997 selling season.

         As the consolidation of retail apparel stores continues, the Company
is frequently presented with opportunities to consider store acquisition from
other retailers in the New England, Midwest and Midsouth regions of the
country.  Balanced against the Company's limited capital resources at present,
it is nonetheless management's intention to expand through store acquisition
where the opportunity is believed to be favorable.

INFORMATION SYSTEMS

         All of the Company's major information systems are computerized,
including its merchandise, inventory, payroll, and financial reporting systems.
Every store processes each sales transaction through point-of-sale (POS)
terminals that connect on-line with the Company's mainframe computer located at
its corporate offices located in Detroit, Michigan.  This system provides
detailed reports on a real-time basis of current sales, gross margin and
inventory levels by store, department, vendor, class, style, color and size.

         The Company continues its efforts to enhance a variety of programs
with its vendors, including an automated replenishment inventory system for
certain basic merchandise and an electronic data interchange ("EDI") system
providing for on-line purchase order and charge-back entry.  Such systems have
automated certain merchandise purchasing processes.

         Management expects to realize benefits in selling and general and
administrative costs as a result of refining the information systems which
currently are in place, and implementing new information systems.  The Company
continually upgrades its information systems to improve operations and support
future growth.  Currently, the Company is evaluating all of its information
systems in order to address the issues which may be created by the "Year 2000"
programming problem, a challenge currently faced by many users of computerized
information systems.

CREDIT POLICY

         Both Crowley's and Steinbach issue their own proprietary credit card,
which management believes enhances the Company's ability to generate sales and
retain customer loyalty.  The Crowley's credit card is financed with Beneficial
National Bank USA ("Beneficial"), and the Steinbach credit card is financed
with Alliance Data Systems ("Alliance"), the successor to National City Bank.
As is typical with third-party credit card administered programs, both
Beneficial and Alliance assume the credit risk inherent in this type of
financing program in exchange for a discount charged to the Company.  Credit
authorization decisions are made by Beneficial and Alliance in accordance with
their standard credit policies.

         Crowley's and Steinbach had 6,864 and 69,678 active credit accounts as
of February 1, 1997.  Sales of merchandise made using the Crowley's and
Steinbach credit cards were approximately 3.4% and 26.8% of net sales,
respectively, during Fiscal 1996.  A new credit card


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<PAGE>   7


solicitation program has been established at Crowley's to parallel the charge
activity at the Steinbach stores.  The typical credit program offered by both
Beneficial and Alliance to the Company's customers requires a minimum monthly
payment of the outstanding balance.  Finance charges are currently assessed on
unpaid balances of both the Crowley's and Steinbach cards at the rate of Prime
+ 13.15%.  A late charge fee on delinquent accounts for Crowley's and Steinbach
is currently assessed at a rate of $15.  The Company is presently evaluating
enhancements to both the Beneficial and Alliance programs in fiscal 1997.

         In addition, sales under third party credit card programs (VISA,
MasterCard, Discover and American Express) for Crowley's and Steinbach were
62.8% and 37.5% of net sales, respectively, during Fiscal 1996.  These credit
card programs enable the Company to capture data about its customers and their
buying preferences and habits, which enhances the Company's ability to
implement a more effective advertising and promotional strategy.

LEASED DEPARTMENTS

         The Company offers shoes, fine jewelry, millinery, furs and maternity
goods, as well as beauty salon services, through leased departments.  The
independent operators supply their own merchandise, sales personnel and
advertising and pay the Company a percentage of gross sales as rent.
Management believes that while the cost of sales attributable to leased
department sales is generally higher than other departments, the relative
contribution of leased department sales to earnings is comparable to that of
the Company's other departments inasmuch as the lessee assumes substantially
all operating expenses of the department.  This allows the Company to reduce
its level of selling, advertising, and other general and administrative
expenses associated with leased department sales.  For Crowley's, leased
department sales as a percent of total sales were 11.5%, 11.4%, and 11.7% in
Fiscal 1996, 1995 and 1994, respectively.  Gross margin applicable to the
leased departments was 13.7%, 13.5%, and 13.7% in Fiscal 1996, 1995, and 1994,
respectively.  For Steinbach, leased department sales as a percentage of sales
were 5.6% for the period from September 1, 1996, through February 1, 1997.
Gross margin applicable to the leased departments was 15.0% for this period.
Comparable sales and gross margin information for previous periods is not
available.

COMPETITION

         The retail department store and specialty apparel businesses are
highly competitive.  Given this, and the trend towards consolidation of
competitors within the retail industry, the competition facing the Company is
intense and is expected to remain so.  Both Crowley's and Steinbach compete
with a multitude of retail department stores in their market areas, including
branches of regional and local companies which are substantially larger in size
as well as smaller department stores.  Several national retailers have opened
stores in the Crowley's store market area within the last few years.  In
addition, competition from specialty stores and boutiques, as well as off-price
merchandisers, is an important factor.  Similar merchandise is generally
available to competitors at approximately the same cost. The principal methods
of competition are price, service, and quality of merchandise.  The Company is
unable to estimate the number of competitors or its competitive position. In
addition, the ongoing impact of the new competition on the Company's sales and
earnings cannot be quantified at this time.


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<PAGE>   8


EMPLOYEES

         General.  At February 1, 1997, the Company employed approximately 800
full-time and 1,200 part-time persons.  The Company's sales in its fourth
quarter traditionally have been materially greater than sales in the other
three quarters due to seasonal buying patterns of consumers.  As a result, the
number of employees increased during the fourth quarter to a maximum of
approximately 2,400 persons. An average of 1,900 employees were employed during
the remaining three fiscal quarters of the year.

         To attract and retain qualified employees, the Company offers a 20%
discount on most merchandise purchases, participation in a 401(k) Retirement
Savings Plan to which the Company may make an annual contribution (the Company
made a 25% match of employees' contributions during Fiscal 1996).  In addition,
vacation, sick and holiday pay benefits as well as contributory health care,
accident, death, disability and dental plans are made available to the employee
and eligible beneficiaries.  The Company also has a performance-based incentive
pay program for certain of its officers and key employees and sponsors a stock
option plan that provides for the grant of stock options and restricted stock
to certain officers and key employees of the Company.


ITEM 2.  PROPERTIES

         Crowley's currently operates one central corporate office and
distribution center, and nine department stores.  Steinbach currently operates
14 department stores.  Set forth below are brief descriptions of these
properties.

CORPORATE HEADQUARTERS AND CROWLEY'S DISTRIBUTION CENTER

         The Company's corporate headquarters and Crowley's distribution center
are located in a single building at 2301 West Lafayette Boulevard, Detroit,
Michigan, which is being acquired under a lease-purchase agreement with The
Economic Development Corporation of the City of Detroit.  The Company's
headquarters occupy approximately 42,000 square feet of this facility, and
within these offices are located the executive officers of the Company, its
buying, treasury, accounting, personnel/human resources, accounts payable and
management information systems operations.  Crowley's distribution facility was
designed and equipped to meet Crowley's long-term merchandise distribution
needs, and enhances Crowley's ability to quickly respond to changing customer
preferences.  Crowley's receives most of its merchandise at its 55,000 square
foot facility which is strategically located to service economically Crowley's
existing store locations in the Detroit and Flint metropolitan areas.
Currently, merchandise arriving at the distribution center is inspected,
recorded by computer into inventory and tagged with a bar-coded price label.
The Company generally does not warehouse apparel merchandise, but distributes
the merchandise to stores promptly.  Frequent distribution during the week
enables the Company to respond quickly to fashion and market trends and ensure
merchandise displays and store stockrooms are well stocked.

         Effective at the end of April 1995, the Company's sublease of
approximately 70,000 square feet of this facility and a portion of the adjacent
parking area to Greyhound Lines, Inc.


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expired.  The Company currently is attempting to sell or lease this entire
facility.  See Note D of the Notes to Consolidated Financial Statements.



STEINBACH DISTRIBUTION CENTER

         The Steinbach distribution facility is leased from a third party by a
Contractor who is engaged in the business of operating warehousing and
distribution centers.  Steinbach and the Contractor have entered into an
operating agreement which provides that the Contractor will process the
warehousing and distribution services of the Steinbach stores.  The Contractor
is compensated for these services on a per piece basis.  Management believes
that the retention of a contractor to provide warehousing and distribution
services for the Steinbach operations compares favorably to the alternative of
the Company operating a separate distribution center.  The operating agreement
extends through January 1998.

         Steinbach receives most of its merchandise at this 100,000 square foot
facility.  Currently, merchandise arriving at the distribution center is
inspected, recorded by computer into inventory and tagged with a bar-coded
price label.  The Company generally does not warehouse apparel merchandise, but
distributes the merchandise to stores promptly.  Frequent distribution during
the week enables the Company to respond quickly to fashion and market trends
and ensure merchandise displays and store stockrooms are well stocked.

RETAIL DEPARTMENT STORES

         The table below sets forth information about the 23 retail department
stores currently operated by the Company.  All store locations are leased
except for the Crowley's store located at Tel-Twelve Mall in Southfield,
Michigan, which was acquired with the proceeds of tax-exempt bonds issued by
The Economic Development Corporation of the City of Southfield in 1985.
Management believes that these properties, as well as its furniture, fixtures
and furnishings, and machinery and equipment, are well maintained, suitable and
adequate for their intended uses, and in general are fully utilized.

<TABLE>
<CAPTION>
                                                                             Expiration          Option
                                             Approximate       Owned or      of Current         Available
Store Location                             Square Footage      Leased        Lease Term          Through
--------------                             --------------    -----------     ----------          -------
<S>                                            <C>            <C>            <C>                 <C>
Crowley Division:
  Dearborn, Michigan (Westborn)   . . . . . .  106,000        Leased         February 2004          --
  Roseville, Michigan (Macomb Mall)   . . . .  127,000        Leased         November 2001          --
  Livonia, Michigan (Livonia Mall)  . . . . .  127,000        Leased         January 2000           --
  Detroit, Michigan (New Center)  . . . . . .   57,256        Leased         August 2006          2026
  Farmington Hills, Michigan  . . . . . . . .   81,900        Leased         August 1998            --
  Sterling Heights, Michigan
      (Lakeside Mall)   . . . . . . . . . . .  115,300        Leased         February 2006        2026
  Warren, Michigan (Universal Mall)   . . . .  102,400        Leased         September 2000       2020
  Southfield, Michigan (Tel-Twelve Mall)  . .   57,000        Owned          *                    
  Southfield, Michigan (Tel-Twelve Mall)  . .   12,665        Leased         October 2015         2035
  Burton, Michigan (Courtland Center)   . . .   61,000        Leased         August 2001          2011
                                                                                                      
</TABLE>

-------------
  *The land for this store is leased until February 2016.


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<TABLE>
<S>                                              <C>          <C>            <C>                    <C>
Steinbach Division:
  Plattsburgh, New York
      (Champlain Center Mall)   . . . . . . .    52,825       Leased         July 2012              2037
  Watertown, New York
       (Salmon Run Mall)  . . . . . . . . . .    52,825       Leased         November 2011          2021
  New Hartford, New York  . . . . . . . . . .    49,650       Leased         March 2011               --
  Glen Falls, New York  . . . . . . . . . . .    34,755       Leased         March 2003               --
  Clifton Park, New York
      (Clifton Country Mall)  . . . . . . . .    54,175       Leased         December 2010          2020
  Newburgh, New York (Newburgh Mall)  . . . .    24,820       Leased         January 2000           2010
  Tarrytown, New York   . . . . . . . . . . .    13,725       Leased         January 2001           2006
  Fairfield, Connecticut  . . . . . . . . . .    71,460       Leased         January 2002           2012
  Hamden, Connecticut   . . . . . . . . . . .    58,850       Leased         January 2002           2012
  Waterford, Connecticut
      (Waterford Shopping Center)   . . . . .    36,075       Leased         March 2005             2015
  Red Bank, New Jersey  . . . . . . . . . . .    33,330       Leased         January 1998           2003
  Brick, New Jersey (Brick Plaza)   . . . . .    43,000       Leased         July 1999              2009
  Concord, New Hampshire
       (Steeplegate Mall)   . . . . . . . . .    51,245       Leased         December 2014            --
  Burlington, Vermont (Universal Mall)  . . .    60,000       Leased         September 1998         2018
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

         From time to time, the Company is involved in various routine legal
proceedings and claims incidental to the normal conduct of its business, which
are not material to the financial condition or results of operations of the
Company, either individually or in the aggregate.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.


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                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS

         The principal market on which the Company's common stock is traded is
the American Stock Exchange, where the stock trades under the symbol COM.  As
of April 9, 1997, there were 148 record holders of the Company's Common Stock
according to the records maintained by the Company's stock transfer agent.  The
following table sets forth, for the periods indicated, the range of high and
low sales prices on such Exchange for each quarter in the two fiscal years
ended February 1, 1997:

<TABLE>
<CAPTION>
                                                         High             Low
                                                         ----             ---
         <S>                                            <C>              <C>
         Fiscal Year Ended February 1, 1997:
                 First Quarter  . . . . . . . . . . .   $ 6.00           $ 4.375
                 Second Quarter . . . . . . . . . . .     7.25             5.00
                 Third Quarter  . . . . . . . . . . .    11.75             6.875
                 Fourth Quarter . . . . . . . . . . .    11.75             6.00

         Fiscal Year Ended February 3, 1996:
                 First Quarter  . . . . . . . . . . .   $ 4.75           $ 3.50
                 Second Quarter . . . . . . . . . . .     5.00             3.875
                 Third Quarter  . . . . . . . . . . .     4.75             3.00
                 Fourth Quarter . . . . . . . . . . .     6.00             4.00
</TABLE>

         During the two fiscal years ended February 1, 1997, the Company has
not paid or declared cash dividends in respect of its Common Stock.  Under the
terms of the Company's three-year line of credit, the Company's ability to pay
dividends on its Common Stock is restricted.  See Item 7, "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and
Note D of the Notes to Financial Statements for a description of this line of
credit.  The Company's ability to pay cash dividends in the future will depend
upon its future earnings, results of operations, capital requirements and
financial condition, its ability to obtain modification of its debt covenants
and such other factors as the Company's Board of Directors deems relevant.


                                       11
<PAGE>   12


ITEM 6.  SELECTED FINANCIAL DATA

         The following table summarizes certain consolidated historical
financial data of the Company for each of the years in the five-year period
February 1, 1997.  All information is presented in accordance with generally
accepted accounting principles.  This information should be read in conjunction
with the audited consolidated financial statements of the Company appearing
elsewhere herein, and the report thereon of Ernst & Young LLP, independent
auditors for the Company.

<TABLE>
<CAPTION>
                                                                    FISCAL YEAR ENDED
                                                                    -----------------
                                             FEBRUARY    FEBRUARY 3,  JANUARY 28,   JANUARY 29,   JANUARY 30,
                                             1, 1997        1996          1995          1994          1993
                                                ----        ----          ----          ----          ----
                                                         (RESTATED)    (RESTATED)    (RESTATED)    (RESTATED)
                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIO)
 <S>                                          <C>           <C>           <C>           <C>          <C>
 OPERATIONS:                                                
   Net sales including leased departments     $153,003      $105,863      $109,927      $106,935     $106,349     
   Cost of merchandise and services sold       100,688        71,540        74,519        71,553       70,453
   Operating expenses (includes                 
     restructuring charge of  $1,900,000 
     for 1993)                                  48,868        33,446        33,784        34,389       39,391 
   Interest expense                              2,562         1,805         1,615         1,366        1,394
   Earnings (loss) before income taxes           2,082        (1,560)          286          (102)      (4,737)
   Federal income tax expense                      270           280          (250)         (210)        (270)
   Net earnings (loss)                           1,812        (1,840)          536           108       (4,467)
   Dividends paid                                   --            --            --            --           --
   Capital expenditures                          2,402           504           527            57          626
   Depreciation and amortization                 1,356         1,317         1,671         2,128        2,626
   Cash provided by (used in) operations        (6,750)       (1,758)        1,654        (4,933)       3,560
 PER SHARE:
   Net earnings (loss)                           $1.46       $ (1.87)        $0.44         $0.09      $ (4.39)
   Dividends paid                                   --            --            --            --           --
   Shareholders' equity                          11.71         13.61         15.53         15.34        15.34
   Market price -- high                          11.75          6.00         11.88         12.13         8.75
   Market price -- low                            4.37          3.00          3.75          3.07         4.50
 FINANCIAL POSITION:
   Working capital                             $12,930        $9,456       $11,974       $11,515       $6,677
   Ratio of current assets to current            1.32x         1.56x         1.90x         1.75x        1.38x
 liabilities
   Inventories                                 $46.556       $21,251       $21,824       $21,474      $17,838
   Properties -- net                            12,619         9,759        10,572        11,715       13,896
   Total assets                                 70,688        40,900        40,938        43,278       41,746
   Long-term debt (including capital
       lease obligations)                       11,058         9,076         9,766        10,442        7,013
   Shareholders' equity                         17,646        13,148        16,275        15,617       15,619
   Shareholders' return on equity                10.3%            --          3.3%          0.7%           --
</TABLE>

----------   
Note:    All per share calculations for years prior to fiscal 1994 have been
         adjusted to reflect the 2-for-1 stock split which occurred May 25,
         1994.

                                       12
<PAGE>   13


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION


RESULTS OF OPERATIONS

The following table sets forth operating data from the Company's Consolidated
Statements of Operations stated as a percentage of net sales for the fiscal
years indicated.


<TABLE>
<CAPTION>
                                                                             Fiscal Year Ended                       
                                                     ----------------------------------------------------------------
                                                             February 1,       February 3,      January 28,
                                                               1997               1996             1995
                                                               ----               ----             ----
         <S>                                                   <C>                <C>              <C>
         Net Sales  . . . . . . . . . . . . . . . . . . . . .  100.0%             100.0%           100.0%
         Cost of merchandise and services sold  . . . . . . .   65.8               67.6             67.8
         Gross Margin . . . . . . . . . . . . . . . . . . . .   34.2               32.4             32.2 
         Operating expense. . . . . . . . . . . . . . . . . .   31.9               31.6             30.7
         Interest expense . . . . . . . . . . . . . . . . . . .  1.7                1.7              1.5
         Other income (expense) net . . . . . . . . . . . . . .  0.8               (0.6)             0.3
         Earnings (loss) before income taxes  . . . . . . . . .  1.4               (1.5)             0.3
         Net earnings (loss)  . . . . . . . . . . . . . . . . .  1.2               (1.5)             0.5
</TABLE>

Fiscal 1996 compared with Fiscal 1995

         The Company reported net income of $1.8 million for Fiscal 1996 ($1.46
per share), compared with a restated net loss of $1.8 million for the fiscal
year ended February 3, 1996 ("Fiscal 1995")  ($1.87 per share) and restated net
income of $0.5 million for the fiscal year ended January 28, 1995 ("Fiscal
1994") ($0.44 per share).  Earnings for Fiscal 1995 were restated as a result
of a change from the last-in, first-out ("LIFO") inventory method to the
first-in, first-out ("FIFO") inventory method -- see Note A, Change in Method
of Accounting for Inventories, in Notes to Consolidated Financial Statements.
The Company's Fiscal 1996 earnings performance was the best in the past ten
years.  Crowley's same store sales of $106.7 million in Fiscal 1996 exceeded
Fiscal 1995 sales of $105.9 million.  Consolidated sales,  which include sales
from the Steinbach Stores since their acquisition by Crowley's at September 1,
1996, exceeded $153 million.  For the year, sales from the Steinbach Stores
exceeded $87 million.  Assuming the sales from the Steinbach Stores had been
consolidated for the entire year, total sales for the Company would have
exceeded $194 million.

         Crowley's gross profit percentage, exclusive of the operation of the
Steinbach Stores, increased to 33.1% in Fiscal 1996 compared to 32.4% last
year.  For the five months from September 1, 1996 through February 1, 1997,
Steinbach's gross profit percentage was 36.8%.  Consolidating Steinbach's
operating results for the five months beginning September 1 improved the
Company's gross profit percentage further to 34.2% for Fiscal 1996.  Impacting
the gross profit percentage were the following: positive adjustment for the
provision for merchandise and gift certificate redemptions of $250,000 (third
quarter); positive adjustment for the provision for merchandise returns of
$225,000 (third quarter); negative  adjustment related to a provision for loss
related to the closing of the Crowley's Birmingham store of $450,000 (fourth
quarter); negative adjustment related to the provision for certain additional
costs related


                                       13
<PAGE>   14


to the Steinbach inventory of $300,000 (fourth quarter); and lower of cost or
market ("LOCOM") inventory adjustments of $200,000 (fourth quarter).
Notwithstanding the significant negative adjustments which the Company booked
to its cost of merchandise, the Company's gross profit percentage improved from
34.2% in 1996 compared to 32.4% in Fiscal 1995.  Management attributes the
improvement in the gross profit percentage to year-long efforts to control
inventory shrinkage, with a particular focus in revising and implementing loss
prevention techniques and procedures.

         On a consolidated basis, the Company's Fiscal 1996 selling, general,
and administrative expenses were 31.9% of sales.  The negligible increase from
31.6% to 31.9% from last year is attributed to expenses incurred in absorbing
the Steinbach operations.  The continuing decrease in these expenses as a
percentage of sales is attributed to management's continued and diligent
efforts in managing these costs.  Exclusive of the operation of the Steinbach
stores, Crowley's Fiscal 1996 selling, general, and administrative expenses,
expressed as a percentage of sales, increased slightly to 32.0% from 31.6%.
Pursuant to the provisions of the Interim Operating Agreement (see Note B,
Steinbach Stores Acquisition, in Notes to Consolidated Financial Statements)
Crowley's operated the Steinbach stores from February 4, 1996, through August
31, 1996, and did not allocate any corporate overhead to the Steinbach stores
during this period.  Assuming corporate overhead expenses had been allocated,
Crowley's Fiscal 1996 selling, general, and administrative expenses would be
30.3% of sales.  For the five months from September 1, 1996, through February
1, 1997, Steinbach's selling, general, and administrative expenses, expressed
as a percentage of sales, were 32.9% of sales.

         Exclusive of the operation of the Steinbach stores, interest expense
declined slightly to 1.68% from 1.70%, as a percentage of sales.  This
improvement was generally attributable to the reduction in the nominal interest
rate charged on the Company's revolving loan.  The reduced interest rate (prime
plus .25% versus prime plus 1%) was effective as of September 5, 1996 (see Note
D, Financing Arrangements in Notes to Consolidated Financial Statements).  On a
consolidated basis, the Company's interest expense remained at 1.70% of sales
when comparing Fiscal 1996 interest expense to the interest expense in Fiscal
1995.  Notwithstanding the favorable interest rate reduction experienced during
Fiscal 1996, as a result of vendor prepayments and deposits that the Company
made during the first two quarters of Fiscal 1996, interest as a percent of
sales matched last year's performance.  See Note A, Change in Method of
Accounting for Inventories, in Notes to Consolidated Financial Statements, for
details related to the vendor prepayments.  In the third and fourth quarter of
1996, the Company experienced a dramatic decrease in requested prepayments from
vendors.

         As is more fully detailed in Note B, Steinbach Stores Acquisition, in
Notes to Consolidated Financial Statements, Crowley's acquired all of the stock
of Steinbach Stores, Inc., an Ohio corporation ("Steinbach") effective as of
August 31, 1996 (the "Acquisition").  From December 31, 1995, until the
consummation of the Acquisition, Crowley's operated the 15 department stores to
be acquired as part of the Acquisition (the "Acquired Stores"), with all of the
revenues and all of the costs and expenses related thereto accruing for the
account of Crowley's.  In this regard, other income in Fiscal 1996 includes
$0.8 million generated from operating these Steinbach stores from February 4,
1996, through August 31, 1996.  Last year, other expense was charged $957,000
for operating the Steinbach stores, and for costs associated with the
Acquisition.


                                       14
<PAGE>   15


Fiscal 1995 compared with Fiscal 1994

         Net sales for Fiscal 1995 declined 3.7% to $105,863,000 from the
$109,927,000 recorded in Fiscal 1994.  The sales decrease was primarily
attributable to the general sluggishness of the retail sales economy in 1995,
particularly in women's apparel.  Comparable store sales also decreased 3.7%
during Fiscal 1995.

         On a restated basis, gross margins as a percentage of sales in Fiscal
1995 were 32.4%, compared to 32.2% in Fiscal 1994.  Gross margin dollars were
also lower in Fiscal 1995 due to lower sales levels. Despite the highly
competitive promotional retail sales environment, the Company managed to
slightly decrease its markdowns as a percent of sales.  Gross margins represent
income derived from sales of the Company's owned inventory, as well as
commissions earned on sales by its licensed departments.  Licensed departments
income represented 4.9% of total gross margin dollars for both Fiscal 1995 and
Fiscal 1994.

         Operating expenses declined $338,000, or 1.0%, in Fiscal 1995 from the
Fiscal 1994 levels.  The sales decrease in Fiscal 1995 caused operating
expenses, as a percent of sales, to increase to 31.6% in Fiscal 1995 from 30.7%
in Fiscal 1994.  Depreciation charges, rental equipment and property tax costs
were the primary expenses that declined during Fiscal 1995.  Limited capital
expenditures and numerous fixed assets becoming fully depreciated in recent
years account for the $353,000, or 21.2%, lower depreciation charges.  The
Company's mainframe computer became owned property at the expiration of the
lease in February 1995, accounting for the majority of the $220,000, or 50.5%
decrease in rental equipment costs.  Refunds from property tax appeals were the
main contributor to a $238,000, or 23.2%, reduction in property taxes during
Fiscal 1995.

         Increased borrowings on the Company's short term line of credit during
Fiscal 1995 contributed to a $189,000, or 11.7%, increase in interest expense
charges when compared to Fiscal 1994.  The higher borrowings were used to fund
the loss incurred by the Company in Fiscal 1995 and to purchase the common
stock and option of a major shareholder.

         During Fiscal 1995, the Company also recorded a charge of $957,000
related to the integration of the Steinbach stores into the Crowley's
organization.  The charge includes a $727,000 loss on the operation of
Steinbach during January 1996 and $230,000 of travel, moving, and other
personnel related costs incurred in establishing the organization both on the
east coast and in Detroit to accommodate the Steinbach acquisition.  Included
in the January Steinbach loss is a $700,000 reserve for needed price reductions
to clear existing inventory assumed by the Company when it began operating the
stores on December 31, 1995.  For a more detailed discussion of the Steinbach
Stores acquisition, see Note B in Notes to Consolidated Financial Statements.

         A restated net loss of $1.8 million ($1.87 per share) was recorded in
Fiscal 1995 compared with restated net earnings of $0.5 million ($0.44 per
share) in Fiscal 1994.  The Fiscal 1995 loss included the above mentioned
$957,000 of integration costs related to the Steinbach acquisition.


                                       15
<PAGE>   16


FINANCIAL CONDITION

         At February 1, 1997, the Company's working capital was $12.9 million
with a current ratio of 1.32:1, compared with a restated working capital and
current ratio of $9.5 million and 1.56:1, respectively, at February 3, 1996.
The $3.4 million increase in the Company's working capital is generally
attributed to Crowley's change in its method of valuing inventories from the
LIFO to the FIFO method.  The decline in the current ratio is attributed to
higher than expected year-end inventory levels and the related short-term
borrowings associated with those inventory levels.

         As has been the case historically, the Company's primary sources of
liquidity are cash provided by operating activities and borrowings under the
Company's short-term line of credit.  In connection with the Steinbach
acquisition, the Company increased the  borrowing capacity on its short-term
line of credit to $24 million from $12 million.  For a more detailed discussion
of the change in terms with the Company's line of credit, see Note D in Notes
to Consolidated Financial Statements.  Cash used in operating activities in
Fiscal 1996 was $6.7 million compared with cash used (restated) of $1.8 million
in Fiscal 1995 and cash provided (restated) of $1.7 million in 1994.

         The significant change in cash used in operating activities in Fiscal
1996 generally was attributable to cash required to fund the expenses and
increased inventories associated with acquisition of the Steinbach stores.
Notwithstanding the fact that the acquisition was effected by an exchange of
stock, pursuant to the terms of the Interim Operating Agreement, Crowley's was
required to fund the inventory purchases which were completed during the course
of the Agreement.  In addition, the initial merchandise stocking of the
Steinbach stores utilized a significant outlay of capital by the Company.

         The change in cash used in investment activities also reflected the
impact of the Steinbach acquisition.  In addition, capital expenditures
amounted to $653,000 and $504,000 in Fiscal 1996 and 1995, respectively.  The
Fiscal 1996 capital expenditures included store fixturing and additional
computer equipment.

         Cash provided by financing activities totaled $8.8 million in Fiscal
1996 compared to $2.7 million in Fiscal 1995.  With the acquisition of the
Steinbach stores, the Company's borrowing needs increased in order to fund the
Steinbach store's merchandising requirements.  As a result, borrowings
outstanding under the Company's short-term line of credit increased
significantly from Fiscal 1995 to Fiscal 1996.

         When negotiated, the $24 million borrowing base was adequate to
satisfy the Company's working capital and capital expenditure needs of both
organizations.  However, inasmuch as the Company is planning to open new stores
and expand the capacity of two stores in 1997, the Company's liquidity needs
will change.  The Company currently has requested an increase to its borrowing
capacity from its current lender from $24 million to $32 million.  The Company
believes that a $32 million facility will meet all of the current funding needs
and satisfy the needs for expansion and renovation of its current stores.
Capital expenditures for both organizations, exclusive of the acquisition of
new stores, are planned at


                                       16
<PAGE>   17


$1,500,000 for Fiscal 1997.  These capital expenditures include store leasehold
improvements, store fixturing, and computer and office equipment.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The consolidated financial statements of the Company and its
subsidiary, together with the report thereon of Ernst & Young LLP, included in
this report under this Item are listed under Item 14 of this report, and can be
found beginning on page 22.  Schedule II, Valuation and Qualifying Accounts,
is included with this report on page 38, immediately following the financial
statements.  No other supplementary financial statement schedules are required
to be filed with this report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE 
        
         Not applicable.


                                       17
<PAGE>   18

                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this Item is included in the Proxy
Statement under the captions "Election of Directors", "Executive Officers" and
"Section 16(a) Beneficial Ownership and Reporting Compliance" and is hereby
incorporated herein by reference.

ITEM 11.         EXECUTIVE COMPENSATION

         The information required by this Item is included in the Proxy
Statement under the captions "Executive Compensation", "Employment Contracts,
Termination of Employment, and Change-in-Control Arrangement", "Compensation
Committee Interlocks and Insider Participation", "Compensation Committee Report
on Executive Compensation" and "Stock Performance Graph" and is hereby
incorporated herein by reference.

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this Item is included in the Proxy
Statement under the captions "Election of Directors" and "Principal
Shareholders" and is hereby incorporated herein by reference.

ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item is included in the Proxy
Statement under the captions "Certain Transactions" and "Indebtedness of
Management" and is hereby incorporated herein by reference.


                                       18
<PAGE>   19

                                    PART IV

ITEM 14.         EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)      The following financial statements and financial statement schedules
         are filed with this report:

         1.      Financial Statements

                                                                           Page
                                                                          Number
                                                                          ------
                 Report of Independent Auditors . . . . . . . . . . . .      22
                 Consolidated Balance Sheets at February 1, 1997 and
                          February 3, 1996  . . . . . . . . . . . . . .      23 
                 Consolidated Statements of Operations for the fiscal 
                          years ended February 1, 1997, February 3, 1996, 
                          and January 28, 1995  . . . . . . . . . . . .      24 
                 Consolidated Statements of Shareholders' Equity for the 
                          fiscal years ended February 1, 1997, February 3, 
                          1996, and January 28, 1995 .  . . . . . . . .      25 
                 Consolidated Statements of Cash Flows for the fiscal 
                          years ended February 1, 1997, February 3, 
                          1996, and January 28, 1995  . . . . . . . . .      26 
                 Notes to Consolidated Financial Statements . . . . . .      27

         2.       Financial Statement Schedules

                  Schedule II -- Valuation and Qualifying Accounts. . .      38

(b)      Reports on Form 8-K.

         No Current Reports on Form 8-K were filed during the fiscal quarter
ended February 1, 1997.

(c)      The Exhibits required to be filed as part of this Form 10-K are the
following:

Exhibit No.      Description
-----------      -----------
2.1              Agreement and Plan of Reorganization, dated November 17, 1995,
                 as amended by Amendment No. 1 thereto dated December 29, 1995,
                 Amendment No. 2 thereto dated May 14, 1996 and Amendment No. 3
                 thereto dated July 26, 1996, between the Registrant and the
                 shareholders of Steinbach Stores, Inc. (previously filed as an
                 exhibit to the Registrant's Quarterly Report on Form 10-Q for
                 the quarter ended October 28, 1995; Amendment No. 1 previously
                 filed as Exhibit No. 10.12 to the Registrant's Annual Report
                 on Form 10-K for the year ended February 3, 1996; Amendment 
                 No. 2 previously filed as Exhibit No. 10.14 to the 
                 Registrant's Quarterly Report on Form 10-Q for the quarter 
                 ended May 4, 1996; Amendment No. 3 thereto previously filed 
                 as Exhibit No. 10.12 to the Registrant's current report on 
                 Form 8-K filed on September 16, 1996, each of which is 
                 incorporated herein by reference)



                                       19
<PAGE>   20


3.1              Restated Articles of Incorporation, as amended to date
                 (previously filed as Exhibit 3.1 to the Registrant's Form 10-Q
                 Quarterly Report for the quarter ended October 29, 1994, and
                 incorporated herein by reference)

3.2              Bylaws, as amended to date (previously filed as Exhibit 3.2 to
                 the Registrant's Form 10-K/A Annual Report for the year ended
                 February 3, 1996, and incorporated herein by reference)
 .
10.1*            Amended and Restated Supplemental Executive Retirement Plan,
                 effective December 1, 1992 (previously filed as Exhibit 10(a)
                 to the Registrant's Form 10-K Annual Report for the year ended
                 January 30, 1993, and incorporated hereby by reference)

10.2*            Employment Agreement with Dennis P. Callahan, dated November
                 2, 1992 (previously filed as Exhibit 10(c) to the Registrant's
                 Form 10-K Annual Report for the year ended January 30, 1993,
                 and incorporated herein by  reference)

10.5             The Economic Development Corporation of the City of Detroit
                 Lease Purchase Agreement, dated December 1, 1979, as amended
                 to date (previously filed as an exhibit to the Registrant's
                 Form 10-K Annual Report for the year ended January 31, 1981
                 and incorporated herein by reference; Amendment No. 1
                 previously filed as Exhibit 10(f) to the Registrant's Form
                 10-K Annual Report for the year ended January 29, 1994, and
                 incorporated herein by reference)

10.6             Loan Agreement between The Economic Development Corporation of
                 the City of Southfield and the Registrant, dated January 15,
                 1985 (previously filed as an exhibit to the Registrant's Form
                 10-K Annual Report for the year ended January 29, 1985, and
                 incorporated herein by reference)

10.7*            Crowley, Milner & Company Profit Sharing Plan dated February 
                 1, 1984, as amended to date (previously filed as an exhibit 
                 to the Registrant's Form 10-K Annual  Report and Form 10-K/A 
                 Amendment 1 for the year ended January 30, 1993; Amendment 
                 No. 1 previously filed as Exhibit No. 10.7 to the Registrant's
                 Form 10-K Annual Report for the year ended February 3, 1996, 
                 and incorporated herein by reference)

10.8*            Savings and Profit Sharing Retirement Plan of Steinbach
                 Stores, Inc. and Participating Afffiliated Companies, as
                 amended and restated effective as of February 11, 1995 (filed
                 herewith)

10.9*            Crowley, Milner and Company 1992 Incentive Stock Plan,
                 effective as of March 25, 1992 (previously filed as Exhibit
                 10(k) to the Registrant's Form 10-K Annual Report for the year
                 ended January 30, 1993, and incorporated herein by reference;
                 Amendment No. 1 previously filed as Exhibit 10.8 to the
                 Registrant's Form 10-K Annual Report for the year ended
                 February 3, 1996, and incorporated herein by reference;
                 Amendment No. 2 previously filed as Exhibit No. 10.8 to the
                 Registrant's Form 10-Q Quarterly Report for the quarter ended
                 August 3, 1996,


                                       20
<PAGE>   21


                 and incorporated herein by reference)

10.10*           Crowley, Milner and Company 1995 Non-Employee Director Stock
                 Option Plan effective as of March 22, 1995 (previously filed
                 as Exhibit No. 10.9 to the Registrant's Form 10-K Annual
                 Report for the year ended February 3, 1996, and incorporated
                 herein by reference)

10.11            Amended and Restated Loan and Security Agreement, dated
                 September 5, 1996, among Congress Financial Corporation
                 (Central), Crowley, Milner and Company and Steinbach Stores,
                 Inc. (previously filed as Exhibit 10.10 to the Registrant's
                 Current Report on Form 8-K, filed September 16, 1996)

10.12            Restricted Stock Agreement, dated August 24, 1994, as amended,
                 between Dennis P. Callahan and the Registrant (previously
                 filed as an exhibit to the Registrant's Form 10-Q Quarterly
                 Report for the quarter ended October 29, 1994, and
                 incorporated herein by reference; amendment previously filed
                 as Exhibit 10.13 to the Registrant's Form 10-K Annual Report
                 for the year ended January 28, 1995, and incorporated herein
                 by reference)

10.13            Interim Operating Agreement, dated December 29, 1995, as
                 amended, among Crowley, Milner and Company, Steinbach Stores,
                 Inc.  and the several shareholders of Steinbach Stores, Inc.
                 (previously filed as Exhibit 10.13 to the Registrant's Annual
                 Report on Form 10-K for the year ended February 3, 1996 and
                 incorporated herein by reference; Amendment No. 1 thereto
                 previously filed as Exhibit No. 10.13 to the Registrant's
                 Current Report on Form 8-K filed on September 16, 1996, and
                 incorporated herein by reference).

11               Computation of Per Share Earnings (filed herewith)

23               Consent of Ernst & Young LLP (filed herewith)

27               Financial Data Schedule (EDGAR filing only)(filed herewith)

--------------
*        Management contract or compensatory plan or arrangement.


                                       21
<PAGE>   22



REPORT OF INDEPENDENT AUDITORS

Board of Directors
Crowley, Milner and Company

         We have audited the accompanying consolidated balance sheet of
Crowley, Milner and Company and subsidiary as of February 1, 1997 and February
3, 1996 and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three fiscal years in the period ended
February 1, 1997. Our audit also included the financial statement schedule
listed in the index at Item 14(a).  These financial statements and schedule are 
the responsibility of the Company's management. Our responsibility is to 
express an opinion on these financial statements and schedule based on our 
audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the consolidated financial statements referred to 
above present fairly, in all material respects, the consolidated
financial position of Crowley, Milner and Company and subsidiary at February 1,
1997 and February 3, 1996 and the consolidated results of its operations and
its cash flows for each of the three fiscal years in the period ended February
1, 1997 in conformity with generally accepted accounting principles.   Also, in
our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects, the information set forth therein.

         In 1996, the Company changed its method of accounting for inventories,
as discussed in Note A to the consolidated financial statements.

/S/ ERNST & YOUNG LLP

Ernst & Young LLP
Detroit, Michigan
April 3, 1997


                                       22
<PAGE>   23

BALANCE SHEET
CROWLEY MILNER AND COMPANY

<TABLE>
<CAPTION>
                                                                    FEBRUARY 1,               FEBRUARY 3,
                                                                         1997                       1996
                                                                         ----                       ----
<S>                                                                  <C>                      <C>
Assets--
Current Assets:
    Cash and cash equivalents (Cash equivalents of $176,728
      for 1996 and $241,047 for 1995)   . . . . . . . . . . . . . .  $  215,316               $  540,613
    Accounts receivable, less allowances ($66,258 for 1996 and
      $61,558 for 1995)   . . . . . . . . . . . . . . . . . . . . .   2,813,759                2,014,918
    Inventories at the lower of first-in, first-out cost or
      market (Note A)   . . . . . . . . . . . . . . . . . . . . . .  46,555,769               21,250,958
    Deferred property taxes   . . . . . . . . . . . . . . . . . . .   1,396,848                1,497,678
    Other current accounts  . . . . . . . . . . . . . . . . . . . .   1,950,510                1,070,276
                                                                    -----------              -----------
       Total Current Assets   . . . . . . . . . . . . . . . . . . .  52,932,202               26,374,443
                                                                    -----------              -----------
Other Assets
    Deposits under EDC financing arrangements -- Note D   . . . . .     634,308                  634,308
    Deferred tax asset -- Note F  . . . . . . . . . . . . . . . . .   1,580,000                1,580,000
    Miscellaneous   . . . . . . . . . . . . . . . . . . . . . . . .   2,922,660                2,551,698
                                                                    -----------              -----------
                                                                      5,136,968                4,766,006
                                                                    -----------              -----------
Properties -- Notes D and E
    Land  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     315,000                  315,000
    Buildings   . . . . . . . . . . . . . . . . . . . . . . . . . .  13,274,001               10,206,055
    Leasehold improvements  . . . . . . . . . . . . . . . . . . . .   6,757,605                6,008,455
    Furniture, fixtures and equipment   . . . . . . . . . . . . . .   7,359,066                7,065,000
                                                                    -----------              -----------
                                                                     27,705,672               23,594,510
    Less allowances for depreciation and amortization   . . . . . . (15,086,513)             (13,835,918)
                                                                    -----------              -----------
                                                                     12,619,159                9,758,592
                                                                    -----------              -----------
      Total Assets  . . . . . . . . . . . . . . . . . . . . . . .   $70,688,329              $40,899,041
                                                                    ===========              ===========

Liabilities and Shareholders' Equity--
Current Liabilities:
    Accounts payable  . . . . . . . . . . . . . . . . . . . . . .   $17,587,798              $ 5,279,188
    Notes payable short term  . . . . . . . . . . . . . . . . . .    18,092,794                8,499,392
    Compensation and amounts withheld therefrom   . . . . . . . .     1,424,667                  597,556
    Property taxes  . . . . . . . . . . . . . . . . . . . . . . .     1,353,131                1,391,173
    Income taxes  . . . . . . . . . . . . . . . . . . . . . . . .        34,972                   34,495
    Other taxes   . . . . . . . . . . . . . . . . . . . . . . . .       670,062                  406,025
    Current maturities of long-term debt  . . . . . . . . . . . .       575,000                  525,000
    Current maturities of capital lease obligations   . . . . . .       263,869                  185,402
                                                                    -----------              -----------
       Total Current Liabilities  . . . . . . . . . . . . . . . .    40,002,293               16,918,231
Long-Term Liabilities
    Long-term debt -- Note D  . . . . . . . . . . . . . . . . . .     4,750,000                5,325,000
    Capital lease obligations -- Note E   . . . . . . . . . . . .     6,307,565                3,750,868
    Other   . . . . . . . . . . . . . . . . . . . . . . . . . . .     1,982,053                1,757,278
                                                                    -----------              -----------
                                                                     13,039,618                10,833,46
Shareholders' Equity--
    Common stock, (authorized 4,000,000 shares, outstanding
        1,507,387 shares for 1996, outstanding 966,069 shares
        for 1995)   . . . . . . . . . . . . . . . . . . . . . . .     1,507,387                  969,069
    Other capital   . . . . . . . . . . . . . . . . . . . . . . .     3,283,560                1,178,621
    Retained earnings   . . . . . . . . . . . . . . . . . . . . .    12,855,471               11,002,974
                                                                    -----------              -----------
                                                                     17,646,418               13,147,664
                                                                    -----------              -----------
           Total Liabilities and Shareholders' Equity               $70,688,329              $40,899,041
                                                                    ===========              ===========
</TABLE>

See notes to consolidated financial statements.


                                       23
<PAGE>   24

STATEMENT OF OPERATIONS
CROWLEY MILNER AND COMPANY

<TABLE>
<CAPTION>
                                                                    FEBRUARY 1,               FEBRUARY 3,           JANUARY 28,
                                                                      1997                      1996                   1995
                                                                      ----                      ----                   ----
                                                                                            (AS RESTATED)          (AS RESTATED)
<S>                                                                 <C>                       <C>                   <C>
Revenues --
    Net sales -- owned departments  . . . . . . . . . . . .         $137,835,829              $ 93,771,396          $ 97,074,194
    Net sales -- leased departments   . . . . . . . . . . .           15,167,467                12,091,107            12,852,490
                                                                    ------------              ------------          ------------
    Total Net sales   . . . . . . . . . . . . . . . . . . .          153,003,296               105,862,503           109,926,684
    Investment income   . . . . . . . . . . . . . . . . . .              142,834                    96,696                68,726
    Other income  . . . . . . . . . . . . . . . . . . . . .              217,596                   228,075               209,331
                                                                    ------------              ------------          ------------
                                                                     153,363,726               106,187,274           110,204,741

Cost and Expenses --
    Cost of merchandise and services sold   . . . . . . . .          100,688,449                71,540,072            74,519,430
    Operating expenses  . . . . . . . . . . . . . . . . . .           48,868,301                33,446,093            33,784,441
    Interest  . . . . . . . . . . . . . . . . . . . . . . .            2,562,108                 1,804,572             1,615,248
    Operating (income) loss and costs related
       to integration of Steinbach Stores Inc. - Note B                 (837,213)                  957,276                     -
                                                                    ------------              ------------          ------------
                                                                     151,281,645               107,748,013           109,919,119
                                                                    ------------              ------------          ------------

Earnings (Loss) Before Income Taxes . . . . . . . . . . . .            2,082,081                (1,560,739)              285,622
    Federal income taxes -- Note F  . . . . . . . . . . . .              270,000                   280,000              (250,000)
                                                                    ------------              ------------          ------------
    Net Earnings (Loss)   . . . . . . . . . . . . . . . . .            1,812,081                (1,840,739)              535,622
                                                                    ============              ============          ============

Per Share Data:
    Net earnings (loss)   . . . . . . . . . . . . . . . .           $       1.46              $      (1.87)         $       0.44   
                                                                    ============              ============          ============ 
                                                                                         
                                                                                          
    Average number of common and common
      equivalent shares outstanding for earnings
      per share   . . . . . . . . . . . . . . . . . . . . .            1,239,164                   985,808             1,220,903   
                                                                    ============              ============          ============    
</TABLE>

See notes to consolidated financial statements.


                                       24
<PAGE>   25

STATEMENT OF SHAREHOLDERS' EQUITY
CROWLEY MILNER AND COMPANY

<TABLE>
<CAPTION>
                                                          COMMON STOCK         
                                                          ------------           OTHER       RETAINED                   
                                                         SHARES     AMOUNT      CAPITAL      EARNINGS
                                                         ------     ------      -------      --------
<S>                                                      <C>        <C>         <C>         <C>
Balance January 29, 1994 (as restated)  . . . . . . .      509,067  $  509,067  $ 2,240,558 $ 12,867,258
  Issuance of common stock pursuant
    to exercise of incentive stock
    options and restricted stock award  . . . . . . .       30,083      30,083      (29,108)          --
  Pension plan credit . . . . . . . . . . . . . . . .                                            121,447
  Issuance of common stock pursuant
    to stock split  . . . . . . . . . . . . . . . . .      509,150     509,150           --     (509,150)
  Net earnings, as restated . . . . . . . .                     --          --           --      535,622
                                                         ---------  ----------  ----------- ------------    
Balance January 28, 1995 (as restated . . . . . . . .    1,048,300   1,048,300    2,211,450   13,015,177
  Sale of common stock  . . . . . . . . . . . . . . .       14,705      14,705       39,262           --
  Purchase of common stock and stock
    options . . . . . . . . . . . . . . . . . . . . .      (96,936)    (96,936)  (1,131,276)          --
  Restricted stock awards . . . . . . . . . . . . . .           --          --       59,185           --
  Pension plan charge . . . . . . . . . . . . . . . .           --          --           --     (171,464)
  Net Loss, as restated . . . . . . . . . . . . . . .           --          --           --   (1,840,739)   
                                                         ---------  ----------  ----------- ------------
Balance February 3, 1996 (as restated)  . . . . . . .      966,069     966,069    1,178,621   11,002,974
  Sale of common stock  . . . . . . . . . . . . . . .       36,518      36,518      183,139           --
  Issuance of common stock to acquire
    Steinbach Stores, Inc.  . . . . . . . . . . . . .      514,800     514,800    1,801,800           --
  Cancellation and amortization of
    restricted stock awards . . . . . . . . . . . . .      (10,000)    (10,000)     120,000           --
  Pension plan credit . . . . . . . . . . . . . . . .           --          --           --       40,416
  Net earnings  . . . . . . . . . . . . . . . . . . .           --          --           --    1,812,081
                                                         ---------  ----------  ----------- ------------ 
Balance February 1, 1997  . . . . . . . . . . . . . .    1,507,387  $1,507,387  $ 3,283,560 $ 12,855,471
                                                         =========  ==========  =========== ============
</TABLE>


See notes to consolidated financial statements.


                                       25
<PAGE>   26

STATEMENT OF CASH FLOWS
CROWLEY MILNER AND COMPANY

<TABLE>
<CAPTION>
                                                                    FEBRUARY 1,      FEBRUARY 3,        JANUARY 28,
                                                                      1997             1996                1995
                                                                      ----             ----                ----
                                                                                   (AS RESTATED)      (AS RESTATED)
<S>                                                           <C>              <C>                <C>
OPERATING ACTIVITIES
Net earnings (loss) . . . . . . . . . . . . . . . . .         $ 1,812,081      $ (1,840,739)      $   535,622
Adjustments to reconcile net earnings (loss) to
  net cash provided by (used in) operating activities:
    Depreciation and amortization   . . . . . . . . .           1,355,624         1,317,119         1,670,615
    Amortization of restricted stock award  . . . . .             120,000            59,185                --
    Gain on termination of capital lease  . . . . . .            (377,000)               --                --
Changes in operating assets and liabilities:
  (Increase) decrease in net accounts receivable  . .           1,334,690          (972,258)        1,074,665
  (Increase) decrease in inventories  . . . . . . . .          (4,374,642)          573,184          (350,039)
  (Increase) decrease in prepaid expense and
    other assets  . . . . . . . . . . . . . . . . . .          (3,026,720)         (153,239)          184,893
  Increase (decrease) in accounts payable   . . . . .          (7,171,767)         (534,235)       (1,424,252)
  Increase (decrease) in accrued compensation
    and other liabilities   . . . . . . . . . . . . .           3,576,530          (206,695)          (37,228)
                                                              -----------      ------------       -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES            (6,751,204)       (1,757,678)        1,654,276

INVESTMENT ACTIVITIES
  Purchase of properties  . . . . . . . . . . . . . .            (653,089)         (503,687)         (527,385)
  Steinbach Acquisition   . . . . . . . . . . . . . .          (1,748,658)               --                --
                                                              -----------      ------------       -----------
NET CASH USED IN INVESTMENT ACTIVITIES  . . . . . . .          (2,401,747)         (503,687)         (527,385)

FINANCING ACTIVITIES
  Proceeds from revolving line of credit  . . . . . .         177,719,400       123,062,956       120,053,977
  Principal payments on revolving line of credit  . .        (168,125,998)     (118,470,081)     (120,921,076)
  Principal payments on long-term debt  . . . . . . .            (525,000)         (485,000)         (450,000)
  Principal payments on capital lease obligations   .            (460,405)         (170,376)         (346,585)
  Purchase of common stock and stock options  . . . .                  --        (1,228,212)               --
  Proceeds from sale of common stock  . . . . . . . .             219,657            53,967                -- 
                                                              -----------      ------------      ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES             8,827,654         2,763,254        (1,663,684)   
                                                              -----------      ------------      ------------    
                                                               
                                                           
Increase (Decrease) in Cash and Cash Equivalents  . .            (325,297)          501,889          (536,793)
Cash and cash equivalents at beginning of year  . . .             540,613            38,724           575,517   
                                                              -----------      ------------      ------------               
                                                                         
Cash and cash equivalents at end of year  . . . . . .         $   215,316      $    540,613      $     38,724
                                                              ===========      ============      =============
</TABLE>

See notes to consolidated financial statements.


                                       26
<PAGE>   27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY

February 1, 1997

NOTE A -- INDUSTRY DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

         INDUSTRY DESCRIPTION: Crowley, Milner and Company ("Crowley's") is
engaged in the operation of nine retail department stores in the Detroit-
metropolitan and suburban Flint, Michigan areas. Steinbach Stores, Inc.
("Steinbach") operates fourteen retail department stores in the states of
Connecticut, New York, New Hampshire, New Jersey and Vermont. In addition to
its own merchandise, both Crowley's and Steinbach (collectively referred to as
"the Company") offer certain goods and services through leased departments. The
Company reports on a 52/53 week fiscal year with the fiscal year ending on the
Saturday closest to January 31. Fiscal years 1996, 1995 and 1994 ended on
February 1, 1997, February 3, 1996, and January 28, 1995 respectively. Fiscal
years 1996 and 1994 were 52 week years, and 1995 had 53 weeks.

         BASIS OF PRESENTATION: The consolidated financial statements include
the accounts of Crowley's and its wholly owned subsidiary, Steinbach. (For
further information about the acquisition of Steinbach, see Note B below). All
significant intercompany accounts have been eliminated in consolidation.

         CHANGE IN METHOD OF ACCOUNTING FOR INVENTORIES: Effective February 4,
1996, Crowley's changed its method of valuing inventories from the last-in,
first-out retail method ("LIFO") to the first-in, first-out (FIFO) retail
method -- see rationale underlying this change more fully described below.
Pursuant to the provisions of Accounting Principles Board ("APB") Opinion No.
20, "Accounting Changes", the change from LIFO to FIFO has been applied
retroactively. The effect of this restatement was to increase Crowley's
retained earnings as of January 29, 1994 by $6,186,027. As a part of the
restatement from LIFO to FIFO, Crowley's recorded a deferred tax asset of
$1,760,000 at January 29, 1994. The deferred tax asset results from Crowley's
recognizing a portion of its net operating loss carryforward.

         A summary of the impact on earnings (loss) and related per share
amounts as a result of the restatement for the fiscal years ended February 3,
1996 and January 28, 1995 follows:

<TABLE>
<CAPTION>
                                                                         FISCAL YEAR ENDED           
                                                               --------------------------------------
                                                               FEBRUARY 3,          JANUARY 28,
                                                                 1996                  1995
                                                                 ----                  ----
      <S>                                                    <C>                    <C>
      Net earnings (loss) as previously reported  . . . . .  $ (2,344,487)          $ 1,030,977
      Net earnings (loss) as restated   . . . . . . . . . .    (1,840,739)              535,622
      Net earnings (loss) per share as previously reported          (2.38)                 0.84
      Net earnings (loss) per share as restated   . . . . .         (1.87)                 0.44
</TABLE>

         The rationale for the accounting change is described as follows.
Crowley's ability to obtain a steady flow of retail merchandise largely is
dependent on the short-term credit provided by its vendors that supply the
Company with its goods, and their factors. Historically, Crowley's vendors have
supplied Crowley's with goods on a "net 30-day" payment basis. However, in
light


                                       27
<PAGE>   28


of Crowley's net operating losses during fiscal 1995 and the first six months
of fiscal 1996, certain of Crowley's vendors and their factors had been
requiring Crowley's to maintain deposits with such vendors and/or pay for goods
prior to shipment.

         In addition, Crowley's has long-term indebtedness in connection with
bonds issued by the Economic Development Corporation of the City of Detroit
(for further explanation, see Note D). The covenants for these bonds require
(among other things) that Crowley's must maintain a net worth of not less than
$5,000,000. Without the increase in retained earnings that resulted from the
change from LIFO to FIFO, the minimum net worth requirement might have been
violated during the current fiscal year.

         Given the emphasis placed on Crowley's net worth by Crowley's vendors
and their factors, management believes that a change in accounting method for
inventory valuation from LIFO to FIFO was appropriate. Management also believes
that the FIFO method of valuing inventories is preferable because it provides a
better measure of the current value of the inventories and financial position
of the Company.  Steinbach values its inventories using the FIFO method.


INVENTORIES: Inventories are valued at the lower of cost (determined by FIFO
costing) or market.

         ACCOUNTING FOR STOCK-BASED COMPENSATION: In October 1995, the
Financial Accounting Standards Board ("FASB") issued SFAS No. 123, "Accounting
for Stock-Based Compensation." SFAS No. 123 establishes financial accounting
and reporting standards for stock-based employee compensation plans. SFAS No.
123 defines a fair value based method of accounting for an employee stock
option or similar equity instrument and encourages all entities to adopt that
method of accounting for all of their employee stock compensation plans.
However, it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting prescribed by
APB Opinion No. 25, "Accounting for Stock Issued to Employees."  Entities
electing to retain the accounting under APB Opinion No. 25 must make pro forma
disclosures of net income and earnings per share, as if the fair value based
method of accounting under SFAS No. 123 had been applied. The Company has
elected to retain the intrinsic value based method of accounting. See Note H
for additional information concerning SFAS No. 123.

         PROPERTIES, DEPRECIATION AND AMORTIZATION: Properties, including
amounts recorded under capital lease obligations, are stated on the basis of
cost. When assets become fully depreciated their cost and related accumulated
depreciation and amortization are removed from the property accounts.
Depreciation is computed by the straight-line method for financial reporting
purposes and by accelerated cost recovery methods, except for buildings and
assets purchased with tax exempt bond proceeds, for income tax purposes.

         CASH EQUIVALENTS: The Company considers cash on hand in stores,
deposits in banks,


                                       28
<PAGE>   29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY (CONTINUED)



and marketable securities with a maturity of three months or less when
purchased to be cash equivalents.

         INCOME TAXES: Income taxes are accounted for using the asset and
liability method. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

         NET EARNINGS (LOSS) PER SHARE: Net earnings (loss) per share is
computed on the basis of the weighted average number of common and common
equivalent shares outstanding, assuming dilutive stock options were exercised
at the beginning of each quarter or at the date of issuance, if later, with
applicable proceeds used to acquire additional shares at the average market
price.

         USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

NOTE B -- STEINBACH STORES ACQUISITION

         As previously reported, on November 17, 1995, the Company entered into
an Agreement and Plan of Reorganization, that was subsequently amended on
December 29, 1995 (the "Acquisition Agreement"), with the shareholders of
Steinbach Stores, Inc. ("Steinbach Shareholders"), an Ohio Corporation
("Steinbach"), to acquire fifteen retail department stores in Connecticut, New
Hampshire, New York, New Jersey and Vermont.

         Pursuant to the terms of the Acquisition Agreement, effective August
31, 1996, the Company acquired from the Steinbach Shareholders all of the
issued and outstanding shares of the capital stock of Steinbach, in exchange
for 514,800 shares (representing approximately 35% of the issued and
outstanding shares) of the Common Stock of the Company. The stock issued was
valued at $4.50 per share which was the closing price of the stock on November
17, 1995. As a result, Steinbach became a wholly-owned subsidiary of the
Company as of August 31, 1996. The acquisition was accounted for as a purchase
for financial reporting purposes. Under purchase accounting, the Company
allocated the total cost of acquiring the Steinbach Common Stock to the assets
and liabilities of Steinbach.

         In furtherance of the above, the Company entered into a separate
Interim Operating


                                       29
<PAGE>   30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY (CONTINUED)



Agreement with the Steinbach Shareholders, whereas, during the period of
December 31, 1995 through August 31, 1996, the fifteen acquired Steinbach
stores were operated under the management and supervision of the Company with
all revenues, as well as, all costs and expenses relating to the stores
becoming the responsibility of the Company.

         During the month of January 1996, the states in which Steinbach
operates experienced extreme and prolonged winter weather which severely
impacted their customer's ability to shop. The weather materially impacted
sales and profits at the stores. In addition, the Company found it necessary to
engage in extensive promotional efforts in order to eliminate inventory that it
believed to be not in keeping with the merchandising and marketing strategy it
implemented in these stores to be acquired.

         As such the Company experienced a loss of $727,000 on the operation of
Steinbach during January 1996. Included in the loss is an additional $700,000
reserve for price reductions that needed to be taken to clear the existing
inventory the Company assumed when it began operating the Steinbach stores on
December 31, 1995. Also in January, the Company recorded an additional charge
of $230,000 related to the integration of Steinbach into the Company's
organization. The charge consisted of travel, moving, and other personnel
related costs incurred in establishing the organization both on the east coast
and in Detroit to accommodate the Steinbach acquisition.

         Recognizing that the Company acquired only 15 of 24 stores, and did
not acquire the corporate office or distribution center of Steinbach, the
Company views the acquisition as an asset purchase. Sales information for the
15 stores acquired for the three fiscal years ended February 1, 1997 is as
follows:

<TABLE>
<CAPTION>
                                                                         FISCAL YEAR ENDED                                 
                                           --------------------------------------------------------------
                                                                                                                          
                                                                                                                          
                                           FEBRUARY 1,            FEBRUARY 3,                 JANUARY 28,
                                             1997                    1996                       1995
                                             ----                    ----                       ----
         <S>                               <C>                  <C>                          <C>                         
         Net Sales  . . . . . . . . . . .  $87,442,000          $99,790,000                  $108,839,000
</TABLE>

Based on the asset nature of the acquisition, the Company does not believe
additional pro forma information is meaningful.

NOTE C -- FAIR VALUES OF FINANCIAL INSTRUMENTS

         Generally accepted accounting principles currently require the Company
to disclose the estimated fair value of its financial instruments. Currently
the Company has an outstanding debt obligation related to its Executive Office
and Central Distribution Center, and an outstanding debt obligation related to
the company store located at Tel-Twelve Mall. (See Note D for a full
description of these two outstanding debt obligations). Given the absence of
quoted market prices, and the inability to estimate the fair value of the two
outstanding debt obligations without incurring excessive costs, it was not
practicable to estimate the fair value of these two


                                       30
<PAGE>   31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY (CONTINUED)



outstanding debt obligations. The $5.3 million carrying amount at February 1,
1997 represents the total amount of the two debt obligations outstanding as of
that date.

NOTE D -- FINANCING ARRANGEMENTS

In order to meet the liquidity needs created by the acquisition of the
Steinbach Stores, the Company and Congress Financial Corporation (Central)
("Congress") amended the Loan and Security Agreement dated November 4, 1994
("Original Agreement"), and replaced the Original Agreement with the Amended
and Restated Loan and Security Agreement dated September 5, 1996 ("Amended
Agreement").

The Amended Agreement provides for a revolving line of credit through November
4, 1999, secured by substantially all of the assets of the Company, of up to
$24,000,000 (based on certain lending formulas) and, included within such line
of credit, a facility for letters of credit of up to $5 million, with the
interest rate set at .25% above the prime rate. Interest on the line is payable
monthly. The Amended Agreement also provides for a .25% commitment fee, payable
on the date of the Amended Agreement, an unused line fee of 0.25% payable
monthly, and a monthly monitoring fee of $1,500. Borrowings are generally
limited to 30% of the retail value of eligible inventory as defined in the
Amended Agreement. The weighted average interest rates for outstandings as of
February 1, 1997, February 3, 1996, and January 28, 1995 were 8.95%, 9.50%, and
9.50% respectively. The weighted average interest rates during the fiscal years
ended February 1, 1997, February 3, 1996, and January 28, 1995, were 8.83%,
9.83%, and 9.41% respectively. In addition, the Amended Agreement prohibits the
payment of dividends without the prior consent of Congress.

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                   FEBRUARY 1                FEBRUARY 3
                                                      1997                      1996     
                                                   --------------            --------------
         <S>                                       <C>                      <C>            
         EDC Financing:
                 City of Detroit  . . . . . . . .  $ 3,430,000              $ 3,715,000
                  City of Southfield  . . . . . .    1,895,000                2,135,000
                                                   -----------              -----------
                                                     5,325,000                5,850,000
                 Less Current Maturities               575,000                  525,000
                                                   -----------              -----------
                                                   $ 4,750,000              $ 5,325,000
                                                   ===========              ===========
</TABLE>

The Company's executive offices and central distribution center (the "CDC") are
capitalized under a lease-purchase obligation represented by City of Detroit
Economic Development Corporation bonds.

         The CDC obligation is comprised of $3,430,000 in term bonds which are
required to be redeemed through annual sinking fund payments ranging from
$315,000 in 1997 to $565,000 at the December 1, 2004 maturity date. The Company
may redeem the bonds prior to maturity at par.  Interest on the bonds is
payable semi-annually at the current weighted average annual rate


                                       31
<PAGE>   32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY (CONTINUED)



of 9.23%. The Company has given a guaranty regarding the prompt payment of
principal and interest. The CDC mortgage and trust agreement provides for a
security interest in the real estate, and fixtures and equipment, with a
carrying amount of $2,780,705 at February 1, 1997. The Agreement also provides
for the Company to maintain a minimum net worth of $5,000,000.

         The Tel-Twelve Mall store was financed through City of Southfield
Economic Development Corporation bonds. The underlying obligations are
comprised of $1,895,000 in term bonds to be redeemed through annual sinking
fund payments ranging from $260,000 in 1997 to $380,000 at maturity on January
15, 2003. The Company may redeem the bonds prior to maturity at a redemption
premium of 1 1/2%. Interest on the bonds is payable semi-annually at the
current weighted average annual rate of 9.61%.

         The various financing agreements provide for real estate mortgages and
other security interests as collateral. Payments of long-term debt in the four
fiscal years subsequent to February 1, 1997 amount to $620,000 in 1998,
$670,000 in 1999, $730,000 in 2000, and $790,000 in 2001.

         At February 1, 1997, the Company had two outstanding irrevocable
letters of credit totalling $450,000.

         Interest paid aggregated $2,562,000, $1,805,000, and $1,615,000 for
the fiscal years ended February 1, 1997, February 3, 1996, and January 28,
1995, respectively.

NOTE E -- LEASE OBLIGATIONS

         The Company occupies retail stores under various capital and operating
lease agreements which contain varying renewal options for terms ranging to
2035, with no significant change in minimum annual payments.

         At February 1, 1997, the aggregate minimum annual commitments for all
noncancelable leases are as follows:

<TABLE>
<CAPTION>
         FOR FISCAL                                  CAPITAL         OPERATING
         YEARS ENDING IN                             LEASES            LEASES   
         ---------------                           ----------       ------------
         <S>                                       <C>
             1998                                $   879,395        $4,231,670
             1999                                    892,060         3,824,510
             2000                                    892,060         3,141,200
             2001                                    897,560         2,407,896
             2002                                    931,393         1,940,865
             Thereafter                            8,006,204        10,311,897
                                                 -----------        ----------
         Total minimum lease payments             12,498,672        25,858,038
                                                                    ==========
         Amounts representing interest             5,927,238
                                                 -----------
         Present value of net minimum lease
              payments                           $ 6,571,434
                                                 ===========
</TABLE>


                                       32
<PAGE>   33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY (CONTINUED)



         Capital leases for stores and equipment included in buildings, and
furniture, fixtures and equipment amounted to $7,960,095 and $5,560,390 at
February 1, 1997 and February 3, 1996, respectively, and accumulated
amortization amounted to $4,071,191 and $2,995,941, respectively. Amortization
of capital leases is included with depreciation and amortization expense.



         Required rental payments on stores are based on sales with certain
minimum annual payments. Rental expense amounted to:

<TABLE>
<CAPTION>
                                                                               FISCAL YEAR ENDED                                
                                                            ------------------------------------------------------
                                                              FEBRUARY 1,      FEBRUARY 3,          JANUARY 28,
                                                                1997              1996                 1995    
                                                            --------------   ---------------       --------------
         <S>                                                <C>               <C>                   <C>
         Minimum rentals for store operating leases         $  3,527,128        $  2,288,914          $ 2,251,413
         Contingent rentals:
             Capital leases . . . . . . . . . . . . . .            4,850               1,240                8,099
             Operating leases . . . . . . . . . . . . .        1,017,374             642,022              655,119
         Other rentals  . . . . . . . . . . . . . . . .          216,056             215,016              434,939
                                                            ------------        ------------          -----------
                                                            $  4,765,408        $  3,147,192          $ 3,349,570
                                                            ============        ============          ===========
</TABLE>

NOTE F -- FEDERAL INCOME TAXES

         A reconciliation of the total income taxes and the amount computed by
applying the statutory federal income tax rate of 34 percent to earnings or
loss before income taxes is as follows:

<TABLE>
<CAPTION>
                                                                                     FISCAL YEAR ENDED                             
                                                   -------------------------------------------------------
                                                            FEBRUARY 1,         FEBRUARY 3,    JANUARY 28,
                                                               1997                1996           1995
                                                               ----                ----           ----
         <S>                                             <C>                  <C>             <C>
         Computed Amounts . . . . . . . . . . . . . . .  $    708,000         $ (531,000)     $   97,000
         Impact of net operating loss carryforward  . .  $   (708,000)        $  531,000      $ (97,000)
         Change in valuation allowance  . . . . . . . .            --            280,000       (250,000)
         Tax charge resulting from net operating loss
             limitation on inventory accounting changes       270,000                 --             --   
                                                         ------------         ----------      --------- 
                                                         $    270,000         $ 280,000       $(250,000)
                                                         ============         =========       =========
</TABLE>

         Notwithstanding the Company's tax net operating loss carryforward of
approximately $7,168,000 from 1995, the Company incurred a current federal
income tax expense of $270,000 in 1996. This federal income tax expense
resulted from the limitations imposed by the Internal Revenue Code related to
the Company's ability to offset net operating losses against federal taxable
income generated as a result of changing from the LIFO and FIFO inventory
method in the year of change.

         Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and 


                                       33
<PAGE>   34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
CROWLEY MILNER AND COMPANY (CONTINUED)

assets as of February 1, 1997 and February 3, 1996 are as follows:

<TABLE>
<CAPTION>
                                                                               FISCAL YEAR ENDED             
                                                            -------------------------------------------------
                                                            FEBRUARY 1,              FEBRUARY 3,
                                                               1997                     1996
                                                               ----                     ----
<S>                                                       <C>                       <C>
Deferred tax liability:
  Tax over book depreciation  . . . . . . . . . . . . . .   $ (804,000)               $ (876,000)
Deferred tax assets:
  Employee benefits . . . . . . . . . . . . . . . . . . .      450,000                   480,000
  Inventory costs . . . . . . . . . . . . . . . . . . . .      270,000                   (70,000)
  Other . . . . . . . . . . . . . . . . . . . . . . . . .      116,000                     1,000
Net Operating loss carryforward . . . . . . . . . . . . .    1,940,000                 2,437,000
                                                            ----------                ----------
Net deferred tax assets . . . . . . . . . . . . . . . . .    1,972,000                 1,972,000
Valuation allowance for net deferred tax asset  . . . . .     (392,000)                 (392,000)
                                                           -----------                ----------
    Net deferred taxes  . . . . . . . . . . . . . . . . .  $ 1,580,000                $1,580,000
                                                           ===========                ==========
</TABLE>

         Income taxes  paid amount to $270,000, $2,548 and $0 in 1996, 1995 and
1994, respectively.

         The Company's net operating loss carryforward of approximately
$3,760,000 for federal tax purposes expires as follows:

<TABLE>
                 <S>                                      <C>
                 2008 . . . . . . . . . . . . . . . . . . $    690,000
                 2009 . . . . . . . . . . . . . . . . . . $  1,100,000
                 2011 . . . . . . . . . . . . . . . . . . $  1,970,000
</TABLE>

NOTE G -- RETIREMENT PLANS

         Crowley's and the Steinbach Stores, Inc. each have a defined
contribution retirement plan covering substantially all full-time employees. It
is the Company's intent to merge the two plans in 1997. Contributions to the
plans are made at the discretion of the Board of Directors.

         Crowley's also sponsors an unfunded Supplemental Executive Retirement
Program (SERP), which is a non-qualified plan that provides certain former
officers additional retirement benefits.

         The unfunded status for this plan was as follows:

<TABLE>
<CAPTION>
                                                                         FISCAL YEAR ENDED                 
                                                            ---------------------------------------
                                                            FEBRUARY 1,              FEBRUARY 3,
                                                                 1997                    1996
                                                            --------------           --------------
                                                                                     
                                                                                     
         <S>                                                <C>                      <C>
         Projected benefit Obligation . . . . . . . . . .   $ 1,602,865              $ 1,711,620
         Unrecognized Net Loss on Assets  . . . . . . . .      (375,769)                (415,881)
         Unrecognized Net Obligation at February 1, 1987       (132,933)                (159,520)
         Unrecognized Prior Service Cost  . . . . . . . .      (233,610)                (258,669
                                                            -----------              -----------
         Accrued Liability  . . . . . . . . . . . . . .     $   860,553              $   877,550
         Minimum Liability Adjustments  . . . . . . . .         375,769                  415,881
                                                            -----------              -----------
</TABLE>


                                       34
<PAGE>   35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY (CONTINUED)



<TABLE>
         <S>                                               <C>                       <C>
         Net Recorded Liability . . . . . . . . . . . . .  $1,236,322                $1,293,431
                                                           ==========                ==========
</TABLE>


         The cost of the retirement plans, including the SERP plan expense of
$181,000, $186,000, and $189,000, for the fiscal years ended in 1997, 1996, and
1995, respectively, consisted of the following components:

                                        FISCAL YEAR ENDED
<TABLE>
<CAPTION>
                                                   FEBRUARY 1,           FEBRUARY 3,          JANUARY 28,
                                                       1997                  1996                 1995    
                                                   -------------         --------------       --------------
<S>                                                 <C>                 <C>                   <C>
Service Cost:
  Interest Cost on Projected Benefit Obligation .   $ 112,950           $ 128,918             $ 124,672
Net Amortization and Deferral:
    Amoritization of Initial Unrecognized Transition
      Obligation  . . . . . . . . . . . . . . . . . .  26,587              26,587                26,587
    Amoritization of Net Loss . . . . . . . . . . . .  16,304               5,336                12,582
    Amoritization of Prior Service Costs  . . . . . .  25,159              25,159                25,159
Defined Contribution Plan . . . . . . . . . . . . .   309,000             105,000               109,000
                                                      -------             -------               -------
Net Periodic Retirement Cost  . . . . . . . . . . .  $490,000            $291,000              $298,000
                                                     ========            ========              ========
</TABLE>

         The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation was 7-3/4% and 0% at February 1, 1997, 7% and 0%
at February 3, 1996, and 8-1/2% and 0% at January 28, 1995.

NOTE H -- STOCK OPTIONS AND RESTRICTED STOCK PLAN

         Effective March 25, 1992, the Company adopted an Incentive Stock Plan
("Plan") for its eligible officers and employees under which the Company may
grant stock options (consisting of incentive stock options (ISOs) and
non-qualified stock options (NQSOs)) and may make awards of restricted stock
for up to 300,000 shares of common stock. Options may be exercised for such
prices and at such times as the Compensation Committee of the Board determines,
provided the ISOs may not be exercised at a price less than the fair market
value at the date of grant.  Options become exercisable on a cumulative basis
in equal installments at a rate of 33-1/3% per year, commencing one year after
grant. On February 1, 1997, ISOs for 170,667 shares were outstanding, and
20,000 shares had been issued as an award of restricted stock. The ISOs carried
exercise prices ranging from $4.125 to $10.500 per share (weighted average of
$5.96 per share), of which ISOs to acquire 26,467 shares were exercisable, and
86,001 shares were available for future grants or awards under the Plan.

         Shares of restricted stock awarded under the Plan generally may not be
sold or otherwise transferred until the termination of applicable restriction
periods established by the Committee. The shares also vest at a rate of 33 1/3%
per year subject to certain performance objectives being satisfied.



         INCENTIVE                      FEBRUARY 1,               FEBRUARY 3,
         STOCK PLAN                          1997                      1996   
         ----------                     -----------                -----------


                                       35
<PAGE>   36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY (CONTINUED)



<TABLE>
         <S>                                          <C>                        <C>
         Outstanding at beginning of fiscal year       96,000                     56,000
         Granted  . . . . . . . . . . . . . . . . . . 128,000                     40,000
         Exercised  . . . . . . . . . . . . . . . .   (23,166)                        --
         Cancelled or expired . . . . . . . . . . .   (30,167)                        --
                                                      -------                    -------
         Outstanding at end of fiscal year  . . . . .  170,667                    96,000
                                                       =======                   =======
</TABLE>

         In 1995 the Company also established the 1995 Non-Employee Director
Stock Option Plan for its Directors ("Director Plan") under which the Company
may grant non-qualified stock options (director stock options (DSOs)) for up to
100,000 shares of common stock. Under the Director Plan, on the business day
immediately prior to each Annual Meeting of Shareholders, eligible Directors
then serving on the Board shall be granted an option to purchase 2,000 shares
of the Company's common stock at the fair market value of the common stock on
the grant date. The grant shall be automatic and nondiscretionary. Each option
granted becomes exercisable in full three months following the date of grant.
On February 1, 1997, DSOs for 34,000 shares were outstanding. The DSOs carried
exercise prices ranging from $4.75 to $8.75 per share (weighted average of
$6.87 per share), of which DSOs to acquire 34,000 shares were exercisable, and
62,000 shares were available for future grants or awards under the Director
Plan.

         As disclosed in Note 1, the Company has elected to follow APB Opinion
No. 25 "Accounting for Stock Issued To Employees" and related interpretations
in accounting for its stock option and restricted stock grants. Accordingly, no
compensation expense has been recognized for the Company's stock option grants.
Compensation expense for restricted stock under APB Opinion No. 25 is recorded
over the vesting periods, and totaled $120,000 and $59,185 in 1996 and 1995,
respectively. Had compensation expense been determined based on the fair value
at the grant dates for awards under the Plan consistent with the method of SFAS
123, "Accounting for Stock-Based Compensation," net income and earnings per
share would not differ materially from amounts reported under APB Opinion No.
25. Since the pro forma disclosures of results under SFAS No. 123 are only
required to consider grants awarded in 1995 and 1996, the pro forma effects of
applying SFAS No. 123 during this initial phase-in period may not be
representative of the effects on the reported results for future years.

NOTE I -- LITIGATION AND CONTINGENT LIABILITIES

         The Company is involved in certain lawsuits in the course of
conducting its retail business. Management is of the opinion that the ultimate
disposition of its litigation will not have a material adverse effect on the
Company's financial position.

NOTE J -- STORE CLOSINGS

         As a result of the Company's acquisition of Steinbach, effective
September 1, 1996, the Company operated 10 Crowley's stores in the Detroit
Metropolitan area, and fifteen Steinbach stores in the states of Connecticut,
New Hampshire, New York, New Jersey, and Vermont. Since the acquisition,
landlords for two store locations exercised their right to terminate the

                                       36
<PAGE>   37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CROWLEY MILNER AND COMPANY (CONTINUED)



respective lease. In light of the lease termination, the Steinbach store
located in North Utica, New York, conducted a going-out-of-business sale, and
ceased operations in December 1996. This lease termination resulted in a
$377,000 gain from the elimination of the related capital lease obligation.

         In light of its lease termination, the Crowley's store located in
Birmingham, Michigan, also conducted a going-out-of-business sale, and ceased
operations in March 1997. Crowley's recorded a charge of $450,000 which was
included in cost of merchandise and services sold for anticipated store closing
markdowns to be incurred during the going-out-of-business period.

         At the present time, management has no intention or plans to close any
other store location.


                                       37
<PAGE>   38

                                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS


<TABLE>
<CAPTION> 
                                                                         Additions                    
                                                            -------------------------------------
                                                            Charged
                                              Balance at   Charged to     to Other
                                              Beginning    Costs and      Accounts     Deductions  Balance at
                                              of Period     Expenses        (a)           (b)         End  
                                              ---------     --------      --------     ----------     ---
<S>                                           <C>          <C>            <C>          <C>         <C>
Valuation Reserves --
Year ended February 1, 1997:
    Doubtful accounts receivable  . . . . . . $  61,558    $  35,894      $  (31,194)   $     --   $  66,258
Year ended February 3, 1996:
    Doubtful accounts receivable  . . . . . . $  63,887    $  24,140      $  (26,349) . $   (120)  $  61,558
Year ended January 28, 1995:
    Doubtful accounts receivable  . . . . . . $ 216,000    $  44,545      $   10,441    $(207,099) $  63,887
</TABLE>

------------   
(a)      Recoveries on accounts charged off
(b)      Accounts charged off


                                       38
<PAGE>   39


                                   SIGNATURES

         Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on April 30, 1997.

                                        CROWLEY, MILNER AND COMPANY


                                        By: /S/ DENNIS P. CALLAHAN
                                            --------------------------- 
                                        Dennis P. Callahan, President

         Pursuant to the requirements of the Security Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on April 30, 1997.

<TABLE>
<CAPTION>
Signature                                          Capacity
---------                                          --------
<S>                                                <C>
/S/ DENNIS P. CALLAHAN                             Chairman, President and Director (principal
------------------------------------                                                          
Dennis P. Callahan                                 executive officer)

/S/ JOHN R. DALLACQUA                              Vice President-Finance, Treasurer and Secretary
-----------------------------------                                                               
John R. Dallacqua                                  (principal financial and accounting officer)

/S/ JO ANN STANDART COUSINO                        Director
---------------------------                        
Jo Ann Standart Cousino

/S/ CARROLL E. EBERT                               Director
----------------------------                    
Carroll E. Ebert

/S/ ALFRED M. ENTENMAN, JR.                        Director
----------------------------                    
Alfred M. Entenman, Jr.

/S/ JOSEPH C. KEYS                                 Director
----------------------------                   
Joseph C. Keys

                                                   Director
----------------------------                   
Richard S. Keys

/S/ JULIUS L. PALLONE                              Director
----------------------------                     
Julius L. Pallone

/S/ PAUL R. RENTENBACH                             Director
----------------------------                          
Paul R. Rentenbach

/S/ JAMES L. SCHAYE, JR.                           Director
----------------------------                        
James L. Schaye, Jr.

/S/ JEROME L. SCHOSTAK                             Director
---------------------------                          
Jerome L. Schostak
                  
</TABLE>


                                       39
<PAGE>   40


<TABLE>
<S>                                                <C>            
/S/ ANDREW J. SOFFEL                               Director
------------------------------------                       
Andrew J. Soffel

                                                   Director
------------------------------------                     
Benton Kraner
                                                                               
</TABLE>


                                       40
<PAGE>   41

                                 EXHIBIT INDEX

Exhibit No.      Description

10.8             Savings and Profit Sharing Retirement Plan of Steinbach
                 Stores, Inc. and Participating Afffiliated Companies, as
                 amended and restated effective as of February 11, 1995

11               Computation of Per Share Earnings

23               Consent of Ernst & Young LLP

27               Financial Data Schedule (EDGAR filing only)