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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K

|                                            |                                                                                          
|------------------------------------------- | -----------------------------------------------------------------------------------------
|(Mark one)                                 
|x                                           | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
 SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended February 27, 2010
|OR                                         
|o                                           | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
 THE SECURITIES EXCHANGE ACT OF 1934

|                                                       
|-------------------------------------------------------
|Commission file number 1-8546                          
|                                                       
|SYMS CORP                                              
|(Exact
 name of registrant as specified in its charter)

| |                                  |                                           |                                       |            
| | -------------------------------- | ----------------------------------------- | ------------------------------------- | -----------
| | NEW JERSEY                       |                                           | No. 22-2465228                       
| | (State or Other
 Jurisdiction of |                                           | (I.R.S.
 Employer Identification No.)
| | Incorporation or
 Organization)  |                                           |                                      
| |                                  |                                           |                                       |            
| |                                  | One Syms
 Way, Secaucus, New Jersey       |                                       | 07094      
| |                                  | (Address of Principal
 Executive Offices) |                                       | (Zip
 Code)

Registrants telephone number, including area code (201) 902-9600

Securities registered pursuant to Section 12(b) of the
Act:

|                                         |  |                                             
|---------------------------------------- |  | --------------------------------------------
|Title
 of Each class                     |  | Name
 of Each Exchange on 
 Which Registered
|                                         |  |                                             
|                                         |  |                                             
|Common Stock, $0.05 Par
 Value Per Share |  | NASDAQ                                      

|                                                                  
|------------------------------------------------------------------
|Securities registered pursuant to Section 12 (g) of the
 Act: None
|                                                                  

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act


Yes o                    No
þ


Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act.


Yes o                    No
þ


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 o                    No
þ


Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).


Yes o                    No
o
                    Not
Applicable þ


Indicate by check mark if
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 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. o

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act:


Large Accelerated Filer o
          Accelerated Filer þ
          Non-Accelerated
Filer o
          Smaller Reporting
Company o(Do not check if smaller
reporting company)


Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).


Yes o                    No
þ


As of August 29, 2009, the
aggregate market value of the registrants common stock held by non-affiliates
of the registrant was approximately $110,005,000 based on the closing sale
price as reported on the NASDAQ Global Select Market.

As of April 15, 2010,
14,448,188 shares of Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants
Proxy Statement for the 2010 Annual Meeting of Shareholders are incorporated by
reference into Part III of this Annual Report.

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Form 10-K Index

|           |                                                                                                                   |     
|---------- | ----------------------------------------------------------------------------------------------------------------- | ----
|           |                                                                                                                   | PAGE
|           |                                                                                                                   |     
|PART I    
|           |                                                                                                                   |     
|Item
 1.   | Business                                                                                                          | 2   
|Item
 1A.  | Risk
 Factors                                                                                                     | 4   
|Item
 1B.  | Unresolved
 Staff Comments                                                                                        | 7   
|Item
 2.   | Properties                                                                                                        | 8   
|Item
 3.   | Legal
 Proceedings                                                                                                | 9   
|Item
 4.   | Reserved                                                                                                          | 9   
|           |                                                                                                                   |     
|PART II   
|           |                                                                                                                   |     
|Item
 5.   | Market for the Registrants Common Equity,
 Related Shareholder Matters and Issuer Purchases of Equity Securities | 10  
|Item
 6.   | Selected Financial Data                                                                                           | 11  
|Item
 7.   | Managements Discussion and Analysis of
 Financial Condition and Results of Operations                            | 11  
|Item
 7A.  | Quantitative and Qualitative Disclosures
 About Market Risk                                                       | 17  
|Item
 8.   | Financial Statements and Supplementary Data                                                                       | 17  
|Item
 9.   | Changes in and Disagreements with Accountants
 on Accounting and Financial Disclosure                             | 17  
|Item
 9A.  | Controls and Procedures                                                                                           | 17  
|Item
 9B.  | Other Information                                                                                                 | 20  
|           |                                                                                                                   |     
|PART III  
|           |                                                                                                                   |     
|Item
 10.  | Directors,
 Executive Officers and Corporate Governance                                                           | 20  
|Item
 11.  | Executive Compensation                                                                                            | 20  
|Item
 12.  | Security Ownership of Certain Beneficial
 Owners and Management and Related Stockholder Matters                   | 20  
|Item
 13.  | Certain Relationships, Related Transactions,
 and Director Independence                                           | 20  
|Item
 14.  | Principal Accountant Fees and Services                                                                            | 20  
|           |                                                                                                                   |     
|PART IV   
|           |                                                                                                                   |     
|Item
 15.  | Exhibits
 and Financial Statement Schedules                                                                       | 21  
|Signatures |                                                                                                                   | 22  

1

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PART I

|        |         
|------- | --------
|Item 1. | BUSINESS

General

Syms
Corp (the Company) operates a chain of 27 off-price retail stores under the
name Syms. These stores are located in the United States throughout the
Northeastern and Middle Atlantic regions and in the Midwest, Southeast and
Southwest. Each Syms store offers a broad range of first quality, in-season
merchandise bearing nationally recognized designer or brand-name labels for men,
women and children at prices substantially lower than those generally found in
department and specialty stores. On June 18, 2009 the Company, through a
wholly-owned subsidiary, acquired certain real property leases, inventory,
other property, equipment and other assets of Filenes Basement (Filenes or
Filenes Basement), a retail clothing chain, pursuant to an auction conducted
in accordance with § 363 of the Federal Bankruptcy Code. As a result, in
addition to the 27 Syms stores, since June 19, 2009, the Company has also
operated 23 Filenes Basement stores that are located in the Northeastern,
Middle Atlantic, Midwest and Southeast regions. Filenes Basement also offers a
broad range of first quality brand name and designer clothing for men, women
and children. The Company operates in a single operating segment  the
operation of off-price retail stores.

The
Company was incorporated in New Jersey in 1983. The Company maintains a 311,000
square foot distribution center and executive headquarters at One Syms Way,
Secaucus, New Jersey 07094, telephone (201) 902-9600. Unless otherwise noted,
references to the Company, we, our, Syms or Syms/Filenes relate to
Syms Corp. Our fiscal year ends on the Saturday closest to the last day of
February each year. Fiscal 2009 ended on February 27, 2010; fiscal 2008 ended
on February 28, 2009, and fiscal 2007 ended on March 1, 2008.

Description of Business

The
Syms/Filenes chain of 50 apparel stores offers a broad range of off-price
first quality, in-season merchandise consisting primarily of mens tailored
clothing and haberdashery, womens dresses, suits and separates, childrens
apparel and mens, womens and childrens shoes. Syms stores emphasize better
quality, nationally recognized designer and brand name merchandise at prices
substantially below those generally charged by department and specialty stores.
Syms carries a wide selection of sizes and styles of mens, womens and
childrens wear. The Filenes Basement stores also provide a wide selection of
designer and famous brand name merchandise. In addition to mens and womens
apparel and shoes, the Filenes stores also carry a selection of jewelry and
home goods.

Syms
operates in a single industry segment and has no foreign operations. No
material part of the Companys revenues is received from a single customer or
group of customers. Please refer to Note 1 of the Financial Statements for
information on segment reporting.

Merchandise

For
fiscal 2009, net sales were generated by the following categories:

|                                                   |  |  |     |  
|-------------------------------------------------- |  |  | --- | -
|Womens dresses, suits,
 separates and accessories |  |  | 44  | %
|Mens tailored clothes and
 haberdashery           |  |  | 42  | %
|Childrens wear                                    |  |  | 5   | %
|Luggage, domestics and
 fragrances                 |  |  | 5   | %
|Shoes                                              |  |  | 4   | %
|                                                   |  |  |     |  
|                                                   |  |  | 100 | %

Most of the items sold by the
Company consist of nationally recognized fashions and brand-name merchandise.
Merchandise is displayed by department, class and size on conveniently arranged
racks or counters. No emphasis is placed on any particular label or brand.
The stores generally offer minor alterations for an additional charge.

Purchasing

The
Company purchases first quality, in-season, brand-name merchandise directly
from manufacturers on terms it believes are more favorable than those generally
obtained by department and specialty stores. Syms estimates that approximately
1,100

2

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brand-name manufacturers of
apparel are represented in its stores. The Company does not maintain large
out-of-season inventories. However, Syms occasionally buys certain basic
clothing which does not change in style from year to year at attractive prices
for storage until the following season. Purchasing is performed by a buying
staff in conjunction with Merchandise Managers.

Co-branding

The
Company converted one former Syms store (Fairfield, CT) to a Co-branded store
in fiscal 2009. This is a hybrid Filenes Basement/Syms store which is divided
into two areas, with the Syms side stocking menswear, childrens apparel and
mens and womens shoes, and the Filenes Basement side featuring womens
fashions and accessories, home goods and luggage. The Co-branded concept
combines the strengths of both brands. We are monitoring customer reaction and
if successful, we plan to identify two to four more locations to be converted
into Co-branded stores.

Distribution

The
Company owns a facility located at One Syms Way, Secaucus, New Jersey. The
facility contains approximately 277,000 square feet of warehouse and
distribution space, 34,000 square feet of office space and 29,000 square feet
of store space. The facility is located on an 18.6 acre parcel of land for
which the Company holds a ground lease for a remaining term of 267 years.
Filenes Basements merchandise is processed and distributed from a 457,000
square foot leased distribution facility situated on 32.8 acres in Auburn,
Massachusetts, outside of metropolitan Boston, Massachusetts. Most merchandise
is received from manufacturers at the distribution centers where it is
inspected, ticketed and allocated to particular stores.

Marketing

The
Companys pricing policy for its Syms stores is to affix a ticket to each item
displaying Syms selling price as well as the price the Company regards as the
traditional full retail price of that item at department or specialty stores.
All garments are sold with the brand-name as affixed by the manufacturer.
Because womens dresses are susceptible to considerable style fluctuation, Syms
has long utilized an automatic markdown pricing policy to promote movement of
merchandise. The date of placement on the selling floor of each womens dress
is stamped on the back of the price ticket. The front of each ticket contains
what the Company believes to be the nationally advertised price, the initial
Syms price and three reduced prices. Each reduced price becomes effective after
the passage of fourteen selling days. For fiscal 2009, womens dresses
represented approximately 2.1% of net sales. The Company also offers dividend
prices consisting of additional price reductions on various types of
merchandise at various times.

Syms
has as its tag line An Educated Consumer is Our Best Customer®,
one of the best known in retail advertising. The Company advertises principally
on radio and periodically on television. The Company also utilizes print and
billboard ads, as well as direct mail and electronic media including e-mail
communication to registered customers.

The
Filenes Basement stores, Where Bargains Were Born ®, similarly offer everyday low pricing in key fashion categories, along
with home goods and accessories. The Company believes that the Filenes
Basement customer base has a high fashion I.Q. and recognizes the value in what
is being offered and the need to purchase or risk losing unique items because
of the changing nature of the assortment.

The
Company has historically had excellent, longstanding relationships with its
suppliers. This made Syms/Filenes a preferred choice for vendors with designer
and famous brand overruns, department store cancellations and unmet volume
objectives. These vendors understand that goods will be sold in an environment
that supports the stature of their brands.

Trademarks

Various
trademarks including: Syms®, An Educated Consumer is Our Best Customer®,
Names You Must Know®, The More You Know About Clothing, the
Better it is for Syms® and Rediscover Syms. Off price - On style® have
been registered with the United States Patent and Trademark Office. Filenes
Basement has traditionally been known for its unique bridal dress promotions,
now hailed as the Running of the Brides ® and is also known as
the place Where Bargains Were Born ®.

3

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Competition

The
retail apparel business is highly competitive, and the Company accounts for
only a small fraction of the total market for mens, womens and childrens
apparel. The Companys stores compete with discount stores, specialty apparel
stores, department stores, manufacturer-owned factory outlet stores and others.
Many of the stores with which the Company competes are units of large national
or regional chains that have substantially greater resources than the Company.
Retailers having substantially greater resources than the Company have entered
or have indicated their intention to enter the off-price apparel business,
and the off-price apparel business itself has become increasingly
competitive, especially with respect to the increased use by manufacturers of
their own factory outlets and the use of on-line sites by other retailers. At
various times of the year, department store chains and specialty shops offer
brand-name merchandise at substantial markdowns.

Operations and Control Systems

The
Company has a merchandise control system which tracks a product from its
purchase to its ultimate sale in the Companys stores. The system tracks the
product by store in approximately 350 categories. All the information regarding
the product is transmitted daily to the Companys database at its executive
headquarters. Each week the Companys executives receive detailed reports
regarding sales and inventory levels in units and retail dollars on a
store-by-store basis.

Management
of the Company visit stores on a regular basis to, among other things,
coordinate with the store managers and train employees in loss prevention
methods. Stores have some combination of on-premises security personnel and
various theft prevention systems during normal hours and security systems after
hours.

Employees

At
February 27, 2010, the Company had approximately 3,000 employees, of which
approximately 1,600 work on a part time basis. Approximately 30 to 100 persons,
consisting mostly of sales personnel, are employed at each Syms/Filenes retail
location. The Company has collective bargaining agreements with Local 1102 and
Local 108, both of the Retail, Wholesale Department Store Workers Union, whose
agreements expired on March 31, 2009 and May 31, 2009, respectively. The
Company signed extensions to the aforementioned agreements which expire on July
1, 2010 and September 1, 2010, respectively. The Company also has a collective
bargaining agreement with Local 400 of the United Food and Commercial Workers
Union which expired April 30, 2009. The Company and Local 400 agreed to extend
this agreement on a day-to-day basis. Negotiations have been scheduled for the
first quarter of fiscal 2010. Combined, the three local unions represent approximately
1,100 hourly employees at the Syms locations. For the Filenes locations, the
Company and Local 1102 have been working on a collective bargaining agreement
that would cover approximately 900 additional employees, pending the approval
by a majority of the employees. The Company believes its relationships with its
unions are good. The Company is actively involved in negotiations of all three
of its collective bargaining agreements and believes that there will be no
disruptions to the Companys operations and that the outcome of such
negotiations will be at mutually acceptable terms.

Available Information

The
Company makes available on its web site at www.syms.com under Investor Info -
Press Releases/Financial Reports, free of charge, its annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports as soon as reasonably practicable after the Company
electronically files such material with, or furnishes such material to, the Securities
and Exchange Commission (SEC). On the website, the Company also offers a link
to all of the Companys Securities and Exchange Commission filings and to all
beneficial ownership reports filed by the Companys directors and executive
officers, via the SECs EDGAR filing system.

|         |             
|-------- | ------------
|Item 1A. | RISK FACTORS

The following risk factors and other
information included in this Annual Report on Form 10-K should be carefully
considered. The risks and uncertainties described below are not the only ones
we face. Additional risk and uncertainties not presently known to us or that we
currently deem immaterial also may impair our business operations. If any of
the following risks materialize, our business, financial condition, operating
results and cash flows could be materially adversely affected.

4

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We have incurred
losses in many fiscal periods and may not be profitable in the future

We have had a
net profit in some fiscal quarters and net losses in other fiscal quarters. We
have also had a history of both profits and losses in recent fiscal years and
cannot assure you that we will be profitable in the future. Even if we are able
to generate profits in the future, we may not be able to maintain or increase
profitability on a quarterly or annual basis.

The recent
deterioration in general economic conditions and the impact on consumer
confidence and consumer spending could materially and adversely impact our
results of operations in future periods.

Consumer
spending habits, including spending for our merchandise, are affected by, among
other things, prevailing market conditions, levels of employment, salary and
wage rates, prevailing interest rates, income tax rates and policies, consumer
confidence and consumer perception of general economic conditions. Recently, as
a result of the significant deterioration in economic conditions worldwide,
consumer confidence and consumer spending have been negatively impacted and
could remain depressed for an extended period of time. Consumer purchases of
discretionary items, including our merchandise, can be expected to decline
during periods when disposable income is adversely affected or there is
economic uncertainty.

We may be unable to
compete favorably in our highly competitive markets

The
retail apparel business is highly competitive and we only account for a small
fraction of the total market for mens, womens and childrens apparel. We
compete against discount stores, specialty apparel stores, department stores,
manufacturer-owned factory outlet stores and others. Our success depends on our
ability to remain competitive with respect to style, price, brand availability
and customer service. The performance of our competitors, as well as changes in
their pricing policies, marketing activities and other business strategies,
could have a material effect on our business, financial condition, results of
operations and our market share.

If we are unable to
meet certain financial covenants in our credit facility, our ability to borrow
could be constrained

We
had $8.4 million in borrowings as of the end of the current fiscal year under
our existing credit agreement. The facility contains financial covenants with
respect to consolidated tangible net worth, as well as other financial ratios.
If in the future we continue to borrow monies under the facility and fail to
meet these covenants or obtain appropriate waivers, our lender may terminate
the credit facility or accelerate any then-existing debt.

Our sales and
operating results depend on consumer preferences and fashion trends

Our
sales and operating results depend in part upon our ability to anticipate and
respond to product and fashion trends as well as to anticipate, gauge and react
to changing consumer demands in a timely manner. There can be no assurance that
the merchandise on hand or on order will correspond to changes in taste and
demand or that we will be able to successfully secure and market merchandise
that is responsive to such trends. Consumer demand requires us to anticipate
and respond to numerous and fluctuating variables in fashion trends and other
conditions in the markets in which our stores are situated. A variety of
factors may affect our ability to maintain the proper mix of products in each
store, including without limitation: variations in local, regional or national
economic conditions which could affect our customers discretionary spending,
unanticipated fashion trends, our success in distributing merchandise to our
stores in an efficient manner and changes in weather patterns, which in turn
may affect consumer demand and preferences. If we misjudge the market for our
products, or if we are unable to anticipate and fulfill the merchandise needs
of each region, we may experience decreases in our sales, we may realize
significant excess inventories for some products and we may be forced to
increase markdowns in relation to slow-moving merchandise, which could have a
material adverse effect on our business, financial condition and results of
operations.

If we are unable to
renew or enter into new leases on favorable terms, our revenue growth may
decline

34
of our 53 locations are located in leased premises. The leases for twelve of
these 34 locations expire by 2011 and are subject to extension or renewal. If
the cost of leasing existing stores increases, we cannot assure you that we
will be able to maintain our existing store locations as leases expire. In
addition, we may not be able to enter into new leases on favorable terms or at
all, or we may not be able to locate suitable alternative sites or additional
new sites for new stores in a timely manner. Our revenues and earnings may
decline if we fail to maintain existing store locations, enter into more costly
new leases, locate alternative sites on more expensive terms or fail to find
suitable additional sites for new stores.

5

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Our results of
operations depend on keeping our expenses at an appropriate level

Our
performance depends on appropriate management of our expense structure,
including our selling, general and administrative costs. If we fail to meet our
expense goals or appropriately reduce expenses during a weak sales season or
period, our results of operations could be materially adversely affected.

Our relationships
with vendors can change

We
currently purchase first-quality, in-season designer and brand name merchandise
from more than 200 vendors at prices believed to be below those generally
available to major department and specialty stores. Although we have maintained
long-term business relationships with many of these vendors, there can be no
assurance that we will be able to continue to purchase first-quality, in-season
merchandise from these vendors in the same breadth of styles and sizes, in the
same or greater volumes and at prices as favorable as those currently available
to us. If we fail to maintain our relations with our existing vendors, or to
enhance the quality of merchandise they supply us or if we cannot maintain
existing sources of supply or attract new vendors of in-season brand name and
designer merchandise, our ability to obtain a sufficient amount and variety of
merchandise at favorable prices may be limited, which could have a significant
negative impact on our competitive position and our results of operations could
be materially and adversely affected.

Our ability to
manage inventory can affect our business

The
fashion-oriented nature of our products and the rapid changes in customer
preferences leave us vulnerable to an increased risk of inventory obsolescence.
Our ability to manage inventories properly is an important factor in our
operations. Inherent in our management and valuation of inventories are certain
significant judgments and estimates, including, among others, initial merchandise
markup and subsequent markups and markdowns which significantly impact the
ending inventory valuation at retail as well as the resulting cost complement.
While management believes that these methods provide an inventory valuation
which reasonably approximates cost, if market conditions are less favorable
than those projected, additional markdowns may be required. If we are unable to
effectively manage inventory, our business, financial condition and results of
operations could be materially adversely affected.

Our failure to
retain our existing senior management and to continue to attract qualified new
personnel could adversely affect our business

Our
success will depend on our ability to retain our key personnel and attract and
retain talented, highly qualified executives. If we were to lose the benefit of
the experience, efforts and abilities of any of our key executive and buying
personnel, our business could be adversely affected. Furthermore, our success
is also dependent on our ability to hire and train qualified retail management
and associates. We are also subject to risks associated with any significant
disruptions in our relationship with our employees, including union employees
and any work stoppages by our employees, including union employees.

We are subject to
potential uninsured losses and/or claims

We
are subject to the possibility of uninsured losses from risks such as
terrorism, earthquakes or floods, for which no, or limited, insurance coverage
is maintained. We are also subject to risk of losses which may arise from
adverse litigation results or other claims.

We may be required
to recognize additional impairment charges

Pursuant
to accounting principles generally accepted in the United States, we are required
to periodically assess our long-lived assets to determine if they are impaired.
Business disruptions, protracted economic weakness, declines in operating
results and other factors may result in asset impairments. During the annual
impairment testing for the fiscal year ended February 27, 2010, the carrying
amount of certain real estate holdings exceeded the implied fair values and as
a result the Company recognized an impairment charge of $80,000. In fiscal 2008
we recorded an impairment charge of $530,000. In light of current economic
conditions, additional impairments could occur in future periods whether or not
connected to the current impairment analysis. Future impairment charges could
materially and adversely affect our reported

6

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earnings in
the periods of such charges and could materially and adversely affect our
financial condition and results of operations.

Changes in
governmental regulation could adversely affect our operations

Laws
and regulations at both state and federal levels frequently change and the
ultimate cost of compliance cannot be precisely estimated. In addition, we
cannot predict the impact that may result from the changes in governmental
regulation under different political administrations. Changes in regulations, the
imposition of additional regulations, or the enactment of new legislation that
impacts employment, labor, trade, transportation or logistics, health care, tax
or environmental issues could have a material adverse impact on our financial
condition or results of operations.

A privacy breach
could adversely affect or business

The
protection of customer, employee and company data is critical. The regulatory
environment surrounding information security and privacy is demanding, with the
frequent imposition of new and changing requirements. In addition, customers
have a high expectation that we will adequately protect their personal
information. A significant breach of customer, employee or company data could
damage our reputation, result in lost sales, fines or lawsuits or have a
material adverse impact on our financial condition or results of operations.

Other factors could
affect our results of operations and our ability to grow

Other
factors that could cause actual results to differ materially from those
predicted and that may adversely affect our ability to grow include: possible
disruptions in our computer or telephone systems, increases in labor costs,
higher than anticipated store closings or relocation costs, increases in energy
costs, higher interest rates, potential disruptions in the supply of or
restrictions on imported merchandise, unanticipated difficulties associated
with integrating Filenes Basement and Syms and unanticipated increases in
merchandise or occupancy costs.

|         |                          
|-------- | -------------------------
|Item 1B. | UNRESOLVED STAFF COMMENTS

None.

7

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|        |           
|------- | ----------
|Item 2. | PROPERTIES

At February
27, 2010 the Company had 53 operating locations. These locations include both
owned and leased properties and include retail stores and ancillary operations
(consisting of receiving, inspection and administrative functions), warehouse
and offices, plus additional space incidental to core operations which is,
whenever practicable, leased to third parties. The following table is a listing
of operating locations and square footage usage:

|                     |  |               |         |                |  |                     |  |                     |           |                   |  |         |  |  |         |    
|-------------------- |  | ------------- | ------- | -------------- |  | ------------------- |  | ------------------- | --------- | ----------------- |  | ------- |  |  | ------- | ---
|Location             |  | Lease
 or Own |         | Total
 Sq Feet |  | Retail &
 Ancillary |  | Warehouse
 & Office |           | Additional
 Space | 
|                     |  |               |         |                |  |                     |  |                     |           |                   |  |        
|                     |  |               |         |                |  |                     |  |                     |           |                   |  |         |  |  |         |    
|Fairfield,
 CT       |  |               | Own (1) |                |  | 43,000              |  |                     | 43,000    |                   |  |        |  |  |        |    
|Hartford, CT         |  |               | Lease   |                |  | 38,000              |  |                     | 38,000    |                   |  |        |  |  |        |    
|Ft
 Lauderdale, FL   |  |               | Own     |                |  | 55,000              |  |                     | 55,000    |                   |  |        |  |  |        |    
|Kendall, FL          |  |               | Lease   |                |  | 40,000              |  |                     | 40,000    |                   |  |        |  |  |        |    
|Miami, FL            |  |               | Own     |                |  | 53,000              |  |                     | 53,000    |                   |  |        |  |  |        |    
|Tampa, FL            |  |               | Own     |                |  | 77,000              |  |                     | 48,000    |                   |  |        |  |  | 29,000  | (a)
|West Palm
 Beach, FL |  |               | Own     |                |  | 112,000             |  |                     | 54,000    |                   |  |        |  |  | 58,000  | (b)
|Atlanta, GA          |  |               | Own     |                |  | 69,000              |  |                     | 69,000    |                   |  |        |  |  |        |    
|Marietta, GA         |  |               | Own     |                |  | 77,000              |  |                     | 48,000    |                   |  |        |  |  | 29,000  | (b)
|Addison, IL          |  |               | Own     |                |  | 68,000              |  |                     | 68,000    |                   |  |        |  |  |        |    
|Niles, IL            |  |               | Lease   |                |  | 37,000              |  |                     | 37,000    |                   |  |        |  |  |        |    
|Rockville,
 MD       |  |               | Own     |                |  | 71,000              |  |                     | 71,000    |                   |  |        |  |  |        |    
|Norwood, MA          |  |               | Lease   |                |  | 43,000              |  |                     | 43,000    |                   |  |        |  |  |        |    
|Southfield,
 MI      |  |               | Own     |                |  | 60,000              |  |                     | 50,000    |                   |  |        |  |  | 10,000  | (c)
|Cherry Hill,
 NJ     |  |               | Own     |                |  | 150,000             |  |                     | 66,000    |                   |  | 39,000  |  |  | 45,000  | (c)
|Paramus, NJ          |  |               | Own     |                |  | 77,000              |  |                     | 73,000    |                   |  |        |  |  | 4,000   | (d)
|Secaucus, NJ         |  |               | Own (2) |                |  | 340,000             |  |                     | 29,000    |                   |  | 311,000 |  |  |        |    
|Woodbridge,
 NJ      |  |               | Lease   |                |  | 36,000              |  |                     | 36,000    |                   |  |        |  |  |        |    
|Buffalo, NY          |  |               | Own     |                |  | 102,000             |  |                     | 46,000    |                   |  |        |  |  | 56,000  | (a)
|Elmsford, NY         |  |               | Own (3) |                |  | 143,000             |  |                     | 59,000    |                   |  |        |  |  | 84,000  | (d)
|New York, NY         |  |               | Lease   |                |  | 64,000              |  |                     | 64,000    |                   |  |        |  |  |        |    
|New York, NY         |  |               | Own     |                |  | 57,000              |  |                     | 57,000    |                   |  |        |  |  |        |    
|Westbury, NY         |  |               | Own     |                |  | 92,000              |  |                     | 92,000    |                   |  |        |  |  |        |    
|King of
 Prussia, PA |  |               | Own     |                |  | 69,000              |  |                     | 55,000    |                   |  |        |  |  | 14,000  | (a)
|Houston, TX          |  |               | Own     |                |  | 42,000              |  |                     | 42,000    |                   |  |        |  |  |        |    
|Plano, TX            |  |               | Lease   |                |  | 40,000              |  |                     | 40,000    |                   |  |        |  |  |        |    
|Falls
 Church, VA    |  |               | Lease   |                |  | 49,000              |  |                     | 49,000    |                   |  |        |  |  |        |    
|Aventura, FL         |  |               | Lease   |                |  | 42,000              |  |                     | 42,000    |                   |  |        |  |  |        |    
|Chicago, IL          |  |               | Lease   |                |  | 61,000              |  |                     | 61,000    |                   |  |        |  |  |        |    
|Chicago, IL          |  |               | Lease   |                |  | 63,000              |  |                     | 63,000    |                   |  |        |  |  |        |    
|Boston, MA           |  |               | Lease   |                |  | 38,000              |  |                     | 38,000    |                   |  |        |  |  |        |    
|Newton, MA           |  |               | Lease   |                |  | 48,000              |  |                     | 48,000    |                   |  |        |  |  |        |    
|Watertown,
 MA       |  |               | Lease   |                |  | 33,000              |  |                     | 33,000    |                   |  |        |  |  |        |    
|Peabody, MA          |  |               | Lease   |                |  | 44,000              |  |                     | 44,000    |                   |  |        |  |  |        |    
|Braintree,
 MA       |  |               | Lease   |                |  | 38,000              |  |                     | 38,000    |                   |  |        |  |  |        |    
|Saugus, MA           |  |               | Lease   |                |  | 31,000              |  |                     | 31,000    |                   |  |        |  |  |        |    
|Rockville,
 MD       |  |               | Lease   |                |  | 38,000              |  |                     | 38,000    |                   |  |        |  |  |        |    
|Lockwood, MD         |  |               | Lease   |                |  | 31,000              |  |                     | 31,000    |                   |  |        |  |  |        |    
|Paramus, NJ          |  |               | Lease   |                |  | 51,000              |  |                     | 51,000    |                   |  |        |  |  |        |    
|Manhasset,
 NY       |  |               | Lease   |                |  | 48,000              |  |                     | 48,000    |                   |  |        |  |  |        |    
|Flushing, NY         |  |               | Lease   |                |  | 29,000              |  |                     | 29,000    |                   |  |        |  |  |        |    
|New York, NY         |  |               | Lease   |                |  | 42,000              |  |                     | 42,000    |                   |  |        |  |  |        |    
|New York, NY         |  |               | Lease   |                |  | 90,000              |  |                     | 90,000    |                   |  |        |  |  |        |    
|New York, NY         |  |               | Lease   |                |  | 55,000              |  |                     | 55,000    |                   |  |        |  |  |        |    
|Columbus, OH         |  |               | Lease   |                |  | 71,000              |  |                     | 71,000    |                   |  |        |  |  |        |    
|Warrensville,
 OH    |  |               | Lease   |                |  | 38,000              |  |                     | 38,000    |                   |  |        |  |  |        |    
|Washington,
 DC      |  |               | Lease   |                |  | 38,000              |  |                     | 38,000    |                   |  |        |  |  |        |    
|Washington,
 DC      |  |               | Lease   |                |  | 45,000              |  |                     | 45,000    |                   |  |        |  |  |        |    
|Washington,
 DC      |  |               | Lease   |                |  | 43,000              |  |                     | 43,000    |                   |  |        |  |  |        |    
|Atlanta, GA          |  |               | Lease   |                |  | 49,000              |  |                     | 49,000    |                   |  |        |  |  |        |    
|Burlington,
 MA      |  |               | Lease   |                |  | 36,000              |  |                     |          |                   |  | 36,000  |  |  |        |    
|Auburn, MA           |  |               | Lease   |                |  | 457,000             |  |                     |          |                   |  | 457,000 |  |  |        |    
|Landover, MD         |  |               | Lease   |                |  | 22,000              |  |                     |          |                   |  | 22,000  |  |  |        |    
|                     |  |               |         |                |  |                     |  |                     |           |                   |  |         |  |  |         |    
|                     |  |               |         |                |  | 3,685,000           |  |                     | 2,491,000 |                   |  | 865,000 |  |  | 329,000 |    
|                     |  |               |         |                |  |                     |  |                     |           |                   |  |         |  |  |         |    

|    |                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Ground lease dated June 2,
 2003 expiring November 3, 2036.                                                                                                                     
|    |                                                                                                                                                                                 
|(2) | Ground lease dated June 1,
 1977 expiring May 31, 2276.                                                                                                                         
|    |                                                                                                                                                                                 
|(3) | Ground lease dated January
 1, 1969 and 1970 expiring May 31, 2068 & December 31, 2068.                                                                                         
|    |                                                                                                                                                                                 
|(a) | Additional space within
 building currently leased to third parties.                                                                                                            
|    |                                                                                                                                                                                 
|(b) | Additional space consists
 of a retail strip mall with various tenants in various stages of lease life,
 including vacant space which is actively marketed by property managers.
|    |                                                                                                                                                                                 
|(c) | Additional space currently
 vacant and available for rent.                                                                                                                      
|    |                                                                                                                                                                                 
|(d) | Additional space consists
 of third party building on company land pursuant to ground lease.                                                                                    

Syms
stores are typically free-standing or located in shopping centers and have
available adequate free parking. Certain stores in New York, Boston, Chicago,
Atlanta and Washington, D.C. are located in key urban areas and are convenient
to mass transit. Syms suburban locations are usually near major highways or
thoroughfares in localities of at least 1,000,000 people. In some higher
population densities, Syms has more than one store in the same vicinity.

8

---



Lease Terms

Thirty-four
of the Companys 53 locations are leased from unrelated third parties on
varying remaining terms with varying option periods. Certain option periods may
be based on formulas contained in existing leases or may be based on
negotiations between the parties. The following table summarizes the number of
leases expiring in each calendar period; the number of such leases with renewal
options; and the number of years of each option period.

|                 |                    |                |   |                              |   |                                   |          | 
|---------------- | ------------------ | -------------- | - | ---------------------------- | - | --------------------------------- | -------- | 
|Calendar
 Period |                    | Expiring
 Year |   | Leases with
 Renewal Options |   | Range in Years
 of Option Periods |         
|                 |                    |                |   |                              |   |                                   |         
|                 |                    |                |   |                              |   |                                   |          | 
|                 | 2010               |                | 5 |                              | 0 |                                   |         | 
|                 | 2011               |                | 4 |                              | 3 |                                   | 5 years  | 
|                 | 2012               |                | 3 |                              | 3 |                                   | 5 years  | 
|                 | 2013               |                | 1 |                              | 1 |                                   | 10 years | 
|                 | 2014               |                | 1 |                              | 0 |                                   |         | 
|                 | 2015 &
 thereafter | 20             |   | 10                           |   | 5-10 years                        |         

Store
leases provide for a base rental of between $3.88 and $103.52 per square foot.
In addition, under the net terms of all leases, the Company pays maintenance
expenses, real estate taxes and other charges. Five leases provide for rent
payments based on a percentage of sales above certain thresholds. Minimum
rental payments for leased locations aggregated approximately $27,060,000 and
$6,581,000 for fiscal 2009 and 2008, respectively.

Whenever
practicable, space not necessary for Company operations is offered for rent by
the Company. Of the ten operating locations with available rental space, five
are fully rented, two (which are multi-tenant strip malls) are partially rented
and three are currently vacant. Rental income for tenanted locations, net of
administrative and operating expenses of $419,000 and $512,000 in fiscal 2009
and 2008, respectively, was $2,373,000 and $2,026,000 for fiscal 2009 and 2008
respectively. Tennant leases expire at various dates during 2011 through 2047
with various option terms and periods extending to 2097.

Store Openings/Closings

In
fiscal 2009, the Company closed Syms stores in Towson, MD, Hurst, TX, Commack,
NY, Cranston, RI, and Peabody, MA. No new stores were opened during fiscal
2009. A new lease, replacing our space in Falls Church, Virginia was executed
with an inception date of June, 2009. Another new lease, for new space to
expand the size of the Filenes Broadway (New York) store, was executed with an
inception date of January, 2010.

|        |                  
|------- | -----------------
|Item 3. | LEGAL PROCEEDINGS

The
Company is a party to routine litigation incident to its business. Some of the
actions to which the Company is a party are covered by insurance and are being
defended or reimbursed by the Companys insurance carriers.

|        |         
|------- | --------
|Item 4. | Reserved

9

---



PART II

|        |                                                                                                              
|------- | -------------------------------------------------------------------------------------------------------------
|Item 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS
 AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

| |                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the
 period since February 28, 2008, the Companys Common Stock (the Common
 Stock) has been listed on NASDAQ under the symbol SYMS. The following
 table sets forth the high and low sales prices for the Common Stock as
 reported by NASDAQ for each quarter of the past two fiscal years.

|                |  |                              |       |                              |   |      |  |     |       |  |   |       | 
|--------------- |  | ---------------------------- | ----- | ---------------------------- | - | ---- |  | --- | ----- |  | - | ----- | 
|                |  | Year ended February 27, 2010 |       | Year ended February 28, 2009 |  
|                |  |                              |       |                              |  
|                |  | High                         |       | Low                          |   | High |  | Low |      
|                |  |                              |       |                              |   |      |  |     |      
|First
 Quarter  |  | $                            | 8.61  |                              | $ | 4.22 |  | $   | 16.48 |  | $ | 10.38 | 
|Second
 Quarter |  |                              | 8.57  |                              |   | 5.90 |  |     | 17.86 |  |   | 12.33 | 
|Third
 Quarter  |  |                              | 8.29  |                              |   | 6.57 |  |     | 17.24 |  |   | 7.30  | 
|Fourth
 Quarter |  |                              | 10.00 |                              |   | 7.00 |  |     | 10.80 |  |   | 5.38  | 

|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Holders                              
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                      | As of April
 14, 2010, there were 317 record holders of the Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Dividends                            
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                      | No dividends
 were paid in fiscal 2008 or fiscal 2009. Payment of dividends is within the
 discretion of the Companys Board of Directors and depends upon various
 factors including the earnings, capital requirements and financial condition
 of the Company (see Note 4 to Notes to Financial Statements regarding
 covenants in the Companys revolving credit agreement).                                                                                                                                                                                        
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Issuer Purchases of Equity Securities
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                      | There were
 no repurchases of the Companys equity securities during fiscal 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Performance Graph                    
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                      | Below is a
 graph comparing the cumulative total shareholders return on the Common Stock
 for the last five fiscal years (beginning February 26, 2005 and ending
 February 26, 2010, the last trading day for Fiscal 2009) with the cumulative
 total return of the Wilshire 5000 Index and the S&P Retail Composite
 Index over the same period (assuming (i) the investment of $100 on February
 28, 2005 in the Common Stock and in each of these two Indexes, (ii)
 reinvestment of all dividends and (iii) no payment of brokerage or other
 commissions or fees).

(LINE GRAPH)

10

---



|        |                         
|------- | ------------------------
|Item 6. | SELECTED
 FINANCIAL DATA

The
selected financial data presented below has been derived from the Companys
audited financial statements for the fiscal years ended February 27, 2010,
February 28, 2009, March 1, 2008, March 3, 2007 and February 25, 2006. The
selected financial data presented below should be read in conjunction with such
financial statements and notes thereto.

|                                       |  |                                          |         |                    |   |                |   |                |         |                   |   |         |  |   |         | 
|-------------------------------------- |  | ---------------------------------------- | ------- | ------------------ | - | -------------- | - | -------------- | ------- | ----------------- | - | ------- |  | - | ------- | 
|                                       |  | Fiscal Year Ended                        |        
|                                       |  |                                          |        
|                                       |  | February 27,
 2010 (1)                   |         | February 28,
 2009 |   | March 1,
 2008 |   | March 3,
 2007 |         | February 25
 2006 |  
|                                       |  |                                          |         |                    |   |                |   |                |         |                   |  
|                                       |  | (in thousands, except per share amounts) |        
|Income statement data:                 |  |                                          |         |                    |   |                |   |                |         |                   |   |         |  |   |         | 
|Net sales                              |  | $                                        | 377,309 |                    | $ | 242,000        |   | $              | 267,149 |                   | $ | 281,178 |  | $ | 280,389 | 
|Net income
 (loss) from operations (2) |  |                                          | (4,842  | )                  |   | (3,993         | ) |                | 2,225   |                   |   | 14,064  |  |   | 5,275   | 
|Net income
 (loss)                     |  |                                          | 8,308   |                    |   | (3,423         | ) |                | 807     |                   |   | 9,548   |  |   | 3,436   | 
|Net income (loss)
 per share  basic   |  |                                          | 0.57    |                    |   | (0.23          | ) |                | 0.06    |                   |   | 0.66    |  |   | 0.23    | 
|Dividends
 paid                        |  |                                          |        |                    |   |               |   |                | 8,820   |                   |   |        |  |   | 15,028  | 
|Net income
 (loss) per share  diluted |  |                                          | 0.57    |                    |   | (0.23          | ) |                | 0.05    |                   |   | 0.65    |  |   | 0.23    | 
|Balance sheet data:                    |  |                                          |         |                    |   |                |   |                |         |                   |   |         |  |   |         | 
|Working
 capital                       |  | $                                        | 52,798  |                    | $ | 43,215         |   | $              | 57,090  |                   | $ | 67,431  |  | $ | 81,832  | 
|Total assets                           |  |                                          | 269,079 |                    |   | 215,123        |   |                | 229,629 |                   |   | 239,559 |  |   | 239,119 | 
|Long-term
 liabilities                 |  |                                          | 11,418  |                    |   | 840            |   |                | 1,178   |                   |   | 1,548   |  |   | 1,520   | 
|Shareholders
 equity                  |  |                                          | 195,032 |                    |   | 186,043        |   |                | 192,135 |                   |   | 202,069 |  |   | 210,534 | 

(1)          Reflects
the acquisition by the Company on June 19, 2009 of certain real property
leases, inventory, other property, equipment and other assets of Filenes
pursuant to an auction conducted in accordance with § 363 of the Federal
Bankruptcy Code. The acquisition has been accounted for as a purchase. See Note
6 of the Notes to the Companys Consolidated Financial Statements.

(2)          Fiscal
2009 includes a gain of $24.8 million from the receipt of insurance proceeds
from officers life insurance policies on the life of the Companys founder who
died on November 17, 2009 and a bargain purchase gain of $9.7 million
attributable to the acquisition of Filenes.

|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | MANAGEMENTS
 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking
Statements

This
Annual Report (including but not limited to factors discussed below, in the
Managements Discussion and Analysis of Financial Condition and Results of
Operations, as well as those discussed elsewhere in this Annual Report on Form
10-K) may include certain forward-looking statements (within the meaning of
Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange
Act of 1934) and information relating to the Company that are based on the
beliefs of the management of the Company as well as assumptions made by and
information currently available to the management of the Company. When used in
this Annual Report, the words anticipate, believe, estimate, expect,
intend, plan, and similar expressions, as they relate to the Company or the
management of the Company, identify forward-looking statements. Such statements
reflect the current views of the Company with respect to future events, the
outcome of which is subject to certain risks, including among others; general
economic and market conditions, decreased consumer demand for the Companys
products, possible disruptions in the Companys computer or telephone systems,
possible work stoppages, or increases in labor costs, effects of competition,
possible disruptions or delays in the opening of new stores or inability to
obtain suitable sites for new stores, higher than anticipated store closings or
relocation costs, higher interest rates, unanticipated increases in merchandise
or occupancy costs and other factors which may be outside the Companys
control, including the risk factors disclosed in Item 1A of this Annual Report
on Form 10-K. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those described herein as anticipated, believed,
estimated, expected, intended or planned. Subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their

11

---



entirety by
the cautionary statements in this paragraph and described elsewhere in this
Annual Report and other reports filed with the Securities and Exchange
Commission.

The
Company does not assume the obligation to update any forward-looking statement.
Shareholders should carefully evaluate such statements in light of factors,
including risk factors, described in the Companys filings with the SEC,
especially on Forms 10-K, 10-Q and 8-K. In Item 1A., Risk Factors of this
Annual Report on Form 10-K, the Company discusses in more detail various
important risk factors that could cause actual results to differ from expected
or historic results. The Company notes these factors for readers as permitted
by the Private Securities Litigation Reform Act of 1995. Shareholders should
understand that it is not possible to predict or identify all such factors.
Consequently, shareholders should not consider any such list to be a complete
statement of all potential risks or uncertainties.

Critical Accounting Policies and Estimates

The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the appropriate application
of certain accounting policies, many of which require us to make estimates and
assumptions about future events and their impact on amounts reported in the
financial statements and related notes. Since future events and their impact
cannot be determined with certainty, the actual results will inevitably differ
from the Companys estimates. Such differences could be material to the
financial statements.

The
Company believes that its application of accounting policies, and the estimates
inherently required by the policies, are reasonable. These accounting policies
and estimates are constantly reevaluated, and adjustments are made when facts
and circumstances dictate a change. Historically, the Company has found the
application of accounting policies to be appropriate, and actual results have
not differed materially from those determined using necessary estimates.

The
Companys accounting policies are more fully described in Note 1 to the
Financial Statements presented elsewhere in this Annual Report. The Company has
identified certain critical accounting policies that are described below.

Merchandise
Inventory  Inventory is stated at the lower of
cost or market, moving weighted average cost method for Syms and the lower of
cost or market, first in, first out (FIFO) retail method for Filenes. Under
the moving weighted average cost method, inventory cost and the resulting gross
margins are calculated by applying an average cost based on the cost of goods
available for sale divided by the number of units available for sale. Under the
FIFO retail method, inventory cost and the resulting gross margins are
calculated by applying a cost to retail ratio between the costs of goods
available for sale and the retail value of inventories. The significant
estimates used are for markdowns and shrinkage. Prior to October 4, 2009, all
of the Companys inventories were stated at first in, first out as determined
by the retail inventory method. The change in the method of recording Syms
inventory in the current fiscal year did not have a material impact on reported
results of operations.

Factors
considered in the determination of permanent markdowns include current and
anticipated demand, customer preferences and age of the merchandise, fashion
trends and weather conditions. In addition, inventory is also evaluated against
corporate pre-determined historical markdown trends. When a decision is made to
permanently markdown merchandise, the resulting gross margin reduction is
recognized in the period the markdown is recorded. The timing of the decision,
particularly surrounding the balance sheet date, can have a significant effect
on the results of operations.

Shrinkage
is estimated as a percentage of sales for the period from the date of the last
physical inventory to the end of the fiscal year. Physical inventories are
taken at least annually for all stores and inventory records are adjusted
accordingly. The shrinkage rate from the most recent physical inventory, in
combination with historical experience, is used as the standard for the
shrinkage accrual following the physical inventory.

The
Company has found the use of these estimates to be appropriate and actual
results have not differed materially. However, the Company is subject to
certain risks and uncertainties that could cause its future estimates to differ
materially from past experience.

Long-Lived Assets- In the evaluation of the fair value and
future benefits and any potential impairment of long-lived assets, the Company
performs analyses of the anticipated undiscounted future net cash flows of the
related long-lived assets. If the carrying value of the related asset exceeds
the undiscounted cash flows, the Company reduces the carrying value to its fair
value, which is generally calculated using discounted cash flows. Various
factors, including future sales

12

---



growth and
profit margins, are included in this analysis. To the extent these future
projections or the Companys strategies change, the conclusion regarding
impairment may differ from the Companys current estimates.

Deferred Tax
Valuation Allowance  The Company has considered
future taxable income and ongoing prudent and feasible tax planning strategies
that could produce additional future taxable income in assessing the need for a
valuation allowance. Should the Company determine that it will not be able to
realize all or part of our net deferred tax asset in the future, an adjustment
to the deferred tax asset will be charged to income in the period such
determination is made.

Results of Operations

The
following discussion compares the fiscal years ended February 27, 2010,
February 28, 2009 and March 1, 2008. All of the fiscal years were comprised of
52 weeks.

Fiscal
Year Ended February 27, 2010 (Fiscal 2009) Compared to Fiscal Year Ended
February 28, 2009 (Fiscal 2008)

Net
sales for fiscal 2009 were $377,309,000, an increase of $135,309,000 (55.9%) as
compared to net sales of $242,000,000 or fiscal 2008. Net sales for fiscal 2009
included sales from Filenes from June 19, 2009 (first date of operating
ownership) of $177,483,000. Comparable store sales, which are for Syms stores
only, decreased 14.9% or approximately $32.4 million, reflective of the
continued economic recession in the U.S. which resulted in lower retail sales
across most markets. In our comparable store computation, we only include
stores that have been opened for a period of at least 12 months and stores that
were open during both fiscal years. Syms closed a store in Virginia and opened
a new store in close proximity to the previous location. This location is
included in the comparable store comparisons. We opened no new locations in
fiscal 2009 and there was no expansion in square footage in existing stores.
The remaining $9.8 million decline in sales relates primarily to stores closed
in fiscal 2009.

Gross
profit for fiscal 2009 was $145,102,000 or 38.5% of net sales compared with
$100,525,000 or 41.5% of net sales for the prior year, an increase of
$44,577,000 or 44.3%. Gross profit for fiscal 2009 included gross profit from
Filenes from June 19, 2009 (first date of operating ownership) of $69,012,000.
Gross profit for Syms, exclusive of Filenes, decreased by $24.4 million which
is attributable to decreased sales from declines in store traffic commensurate
with the recessionary trend in the U.S. economy and a reduction in gross profit
percentage from 41.5% to 38.1%. This decline in gross profit percentage is
attributable to reduced margin on close-out sales at five stores -- Hurst, TX,
Towson, MD, Commack, NY, Providence, RI, and Peabody, MA -- that were closed in
fiscal 2009, reduced margin on selected merchandise at two stores in
preparation for co-branding of Syms and Filenes merchandise in the same
location (Fairfield, CT and Norwood, MA), and overall margin decline across all
stores due to a re-pricing strategy to reduce prices to 2001 retail levels. The
Companys gross profit may not be comparable to those of other entities, since
some retail entities may include all costs related to their distribution
network in cost of goods sold while others, like the Company, exclude a portion
of those costs from gross profit and, instead, include them in operating
expenses such as selling and administrative expenses and occupancy costs.

Selling,
general and administrative expense (SG&A) increased $39,218,000 to
$113,908,000 (30.2% as a percentage of net sales) for fiscal 2009 as compared
to $74,690,000 (30.9% as a percentage of net sales) for fiscal 2008. SG&A
for fiscal 2009 included SG&A from Filenes from June 19, 2009 (first date
of operating ownership) of $46,042,000. SG&A for Syms, exclusive of
Filenes, decreased by $6,824,000, predominately as a result of reductions in
personnel and other controllable expenses commensurate with the reduction in
sales previously discussed.

Advertising
expense for fiscal 2009 was $8,193,000 or 2.2% of net sales compared with
$6,339,000 or 2.6% of net sales for the prior year, an increase of $1,854,000
or 29.2%. Advertising expense for fiscal 2009 included advertising expense from
Filenes from June 19, 2009 (first date of operating ownership) of $3,127,000.
For fiscal 2009 vs. fiscal 2008, advertising expense for Syms, exclusive of
Filenes, decreased by $1,273,000, primarily due to shifts away from TV
advertising to a lower-cost and more geographically focused usage of radio,
e-mail and in-store promotional activities.

Occupancy
costs for fiscal 2009 were $45,087,000 or 12.0% of net sales compared with
$15,557,000 or 6.4% of net sales for the prior year, an increase of
$29,530,000. Occupancy costs for fiscal 2009 included occupancy costs from
Filenes from June 19, 2009 (first date of operating ownership) of $30,844,000.
Occupancy costs for Syms, exclusive of Filenes, decreased by $1,314,000,
primarily as a result of the closure of five store locations. In addition,
increased occupancy in

13

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certain rental
properties resulted in the Company offsetting occupancy costs with net rental
income of $2,372,000 in fiscal 2009 compared to $2,026,000 in fiscal 2008.

Depreciation
and amortization expense for fiscal 2009 was $11,414,000 or 3.0% of net sales
compared with $8,003,000 or 3.3% of net sales for the prior year, an increase
of $3,250,000. Depreciation and amortization expense for fiscal 2009 included
depreciation and amortization expense from Filenes from June 19, 2009 (first
date of operating ownership) of $3,767,000. For fiscal 2009, depreciation and
amortization expense for Syms, exclusive of Filenes, decreased by $356,000 due
primarily to assets reaching fully depreciated status.

In
conjunction with the acquisition of Filenes, the Company determined that the
fair values of assets acquired exceeded the purchase price by approximately
$9.7 million, resulting in a bargain purchase gain, based upon valuations of
inventory, fixed assets, equipment and intangible assets, net of deferred
taxes, customer obligations and other adjustments. Acquisition costs inclusive
of investment banking, legal, professional and other costs aggregating $4.9
million were expensed in the periods incurred.

During
Fiscal 2009 the Company recorded an impairment charge of $80,000 related to
estimated impairments in carrying value of one retail location and a loss of
$1,168,000 from the disposition of assets related to the closure of five store
locations. During Fiscal 2008 the Company recorded an impairment charge of
$530,000 and a gain from the sale of assets of $503,000.

Other
income was $25,049,000 for fiscal 2009 as compared to $53,000 for fiscal 2008.
This increase is due to the receipt of life insurance proceeds from officers
life insurance policies on the life of the Companys founder (Sy Syms), who
died on November 17, 2009.

Interest
expense was $1,538,000 for fiscal 2009 as compared to $38,000 for fiscal 2008.
This increase is due to interest incurred on a cash surrender value advance and
interest incurred on borrowings under a revolving credit facility with Bank of
America and an unused credit line with IDB.

Net
loss before the recovery of income taxes for fiscal 2009 was $6,380,000 or
(1.7%) of net sales compared with net loss before income taxes of $4,031,000 or
(1.7%) of net sales for fiscal 2008, a decrease of $2,349,000. The decrease in
operating results before income taxes resulted from the factors discussed
above.

For
Fiscal 2009 the effective income tax rate was 230.2% as compared to 15.1% for
Fiscal 2008. The increase in the effective tax rate for Fiscal 2009 reflects
the impact of permanent differences of certain income items not taxable.

Fiscal
Year Ended February 28, 2009 (Fiscal 2008) Compared to Fiscal Year Ended March
1, 2008 (Fiscal 2007)

Net
sales for Fiscal 2008 were $242,000,000, a decrease of $25,149,000 (9.4%) as
compared to net sales of $267,149,000 for Fiscal 2007. The decrease in sales is
largely attributable to reductions in store traffic, especially in the latter
half of Fiscal 2008, as general economic conditions resulted in lower retail
sales across most markets. Comparable store sales in Fiscal 2008 decreased 7.9%
or approximately $20.5 million. In our comparable store computation, we only
include locations that were open for a period of at least twelve months and
stores that were open during both fiscal years. We opened no new locations in
Fiscal 2008 and there was no expansion in square footage in existing stores.

Gross
profit for Fiscal 2008 was $100,525,000 or 41.5% of net sales compared with
$109,981,000 or 41.2% of net sales for the prior year, a decrease of $9,456,000
or 8.6%. The gross profit percentage increased 0.3% in Fiscal 2008 primarily
reflective of improved physical controls over inventory coupled with reductions
in mark-downs reflective of changes in inventory mix. The Companys gross
profit may not be comparable to those of other entities that include all of the
costs related to their distribution network in cost of goods sold because the
Company excludes a portion of those costs from gross profit. Instead, the
Company includes such costs in other items such as SG&A costs and/or
occupancy costs.

SG&A
expense for Fiscal 2008 was $74,690,000 or 30.9% of net sales compared with
$76,959,000 or 28.8% of net sales for the prior year, a decrease of $2,269,000
or 2.9%. SG&A expenses decreased primarily as a result of costs cut in the
face of declining sales, with the greatest reductions in costs realized in
payroll related expenses offset by increases in health insurance, union and
certain other insurance costs.

14

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Advertising
expense for Fiscal 2008 was $6,339,000 or 2.6% of net sales compared with
$8,561,000 or 3.2% of net sales for the prior year, a decrease of $2,222,000 or
25.9% due primarily to general reductions in advertising across all lines of
media coupled with higher concentration in electronic and direct to consumer
promotions which tend to be lower cost.

Occupancy
costs for Fiscal 2008 were $15,557,000 or 6.4% of net sales compared with
$14,323,000 or 5.4% of net sales for the prior year, an increase of $1,234,000
or 8.6%. The increase in occupancy costs is largely attributable to higher
common area charges at leased locations and higher utility costs. In addition,
increased vacancy from tenancy in owned buildings resulted in the Company
offsetting occupancy costs with net rental income of $2,026,000 in fiscal 2008
compared to $3,006,000 in fiscal 2007.

Depreciation
and amortization expense for Fiscal 2008 was $8,003,000 or 3.3% of net sales
compared with $7,659,000 or 2.9% of net sales for the prior year. Depreciation
and amortization expense increased $344,000 or 4.5% largely as a result of
capital improvements, such as roofing and HVAC upgrades at various retail
locations, as well as in Syms our distribution center.

During
Fiscal 2008 the Company recorded an impairment charge of $530,000 related to
estimated impairments in carrying values of two retail locations and a gain of
$548,000 from the sale of a small parcel of realty. During Fiscal 2007 the
Company recorded an impairment charge of $745,000 relating to the closure of a
store in Cleveland, Ohio in July 2007. No sales of Company properties occurred
in Fiscal 2007.

Net
loss before the recovery of income taxes for Fiscal 2008 was $4,031,000 or
(1.7%) of net sales compared with net income before income taxes of $3,136,000
or 1.2% of net sales for the prior year, a decrease of $7,167,000. The decline
in operating results before income taxes resulted from the factors discussed
above.

For
Fiscal 2008 the effective income tax rate was 15.1% as compared to 74.3% for
Fiscal 2007. The decrease in the effective tax rate for Fiscal 2008 reflects
the impact of permanent differences of certain expense items not deductible for
tax purposes.

Liquidity and Capital Resources

Working
capital at February 27, 2010 was $52,798,000, an increase of $9,583,000 from
February 28, 2009, and the ratio of current assets to current liabilities was
1.84 to 1 as compared to 2.53 to 1 at February 28, 2009. The Companys
merchandise inventory was $29,754,000 higher at fiscal year-end primarily due
to the acquisition of Filenes partially offset by the Companys efforts to
reduce inventory in the face of reduced store traffic in the current economic
environment. Accounts payable increased $32,420,000 from February 28, 2009
primarily due to the acquisition of Filenes. Assets Held For Sale increased
$7,190,000 from February 28, 2009 as a result of the closing of the Hurst, TX
and Commack, NY stores in fiscal 2009 and actively pursuing the sale of these
properties.

Net
cash provided by operating activities totaled $26,877,000 for Fiscal 2009 as
compared to $3,215,000 for Fiscal 2008. This increase is primarily due to
receipt of life insurance proceeds from officers life insurance policies on
the Companys founder, who died during fiscal 2009.

Net
cash used in investing activities was $51,097,000 for fiscal 2009 as compared
to net cash used of $12,778,000 for fiscal 2008. The acquisition of the assets
of Filenes largely accounts for this increase.

Net
cash provided by financing activities was $24,447,000 for fiscal 2009 as
compared to net cash used of $519,000 for fiscal 2008. For fiscal 2009, this
reflects an advance of $16,000,000 of cash value of officers life insurance
and proceeds from credit borrowings of $8,402,000 to cover operating expenses.
For fiscal 2008, this reflects the purchase of treasury shares of $2,817,000
offset in substantial part by proceeds from options exercises of $2,298,000.

The
Company had an unsecured $40 million, revolving credit facility with Israel
Discount Bank (IDB) through June 4, 2009, the agreement for which contained
various financial covenants and ratio requirements. There were no borrowings
under this facility during its term and the Company was in compliance with its
covenants during the period in which this facility was available. Effective
June 5, 2009 the Company revised this facility to a secured $40 million,
revolving credit facility with the same bank and in connection with the
acquisition of Filenes, borrowed $24.0 million under this facility. On August
27, 2009 the Company entered into a $75 million, secured, revolving credit
facility with Bank of America which replaced the IDB facility. The Company is
in compliance in all respects with this facility at February 27, 2010. As of
February 27, 2010, $8 million is outstanding under this facility. Each of the
Companys loan

15

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facilities
have had sub-limits for letters of credit which, when utilized, reduce
availability under the facility. At February 27, 2010 and February 28, 2009 the
Company had outstanding letters of credit of $6,552,000 and $741,000
respectively.

The
Company had budgeted capital expenditures of approximately $8 million for the
fiscal year ending February 27, 2010. For the year, the Company incurred $12
million of capital expenditures. Capital expenditures exceeded budget due
primarily to unforeseen expenditures for a new roof at the Secaucus, NJ facility
of $1.5 million, additional IT costs related to the Epicor conversion of $1.5
million and expenditures to refurbish Co-branded stores and Filenes stores
which were not known at the time the budget was prepared. Capital expenditures
are expected to range from $15 million to $17 million for Fiscal 2010. Although
some of the anticipated expenditures are discretionary, we believe that they
are necessary to maintain efficient, orderly and safe operating environments.
We expect to fund these expenditures from cash generated by operations and the
Companys existing credit facilities.

The
Companys acquisition of Filenes was effected pursuant to an order of the
United States Bankruptcy Court for the District of Delaware entered under
Sections 105, 363 and 365 of the United States Bankruptcy Code and a purchase
agreement (the Purchase Agreement) entered into by a wholly-owned subsidiary
of the Company and other parties. Pursuant to the Purchase Agreement, the
Company acquired real property leases relating to 23 Filenes store locations
and a distribution center, fixed assets and equipment at such locations,
inventory at all Filenes locations (regardless of whether the Company assumed
the real property lease for the subject location), certain of Filenes
contracts, certain intellectual property and certain other related assets. The
Company also assumed certain obligations under such contracts and the real
property leases relating to the acquired locations. The purchase price (the
Purchase Price) paid at closing for the assets acquired by the Company,
Vornado Realty Trust and its fifty percent owned joint venture (unrelated to
the Company) was $64,392,120, of which the Company paid $38,926,800 and, as
more fully described below, Vornado and its joint venture paid $25,050,000. The
Company funded its portion of the Purchase Price, as well as other amounts it
paid at closing, with borrowings under the Companys secured credit facility
with Israel Discount Bank, and from a withdrawal of $16.0 million of accumulated
cash value from a life insurance policy. Vornados $25,050,000 payment was
comprised of the following: (i) a joint venture (unrelated to the Company)
fifty percent owned by Vornado paying approximately $16,800,000 of the Purchase
Price to acquire from the seller a termination of the ventures existing lease
in Boston, Massachusetts with the seller; and (ii) Vornados funding $8,250,000
in connection with the Companys agreeing to amend Vornados lease assumed by
the Company at 4 Union Square South in New York, New York, to provide, among
other things, for a minimum $1,500,000 increase in annual rent. The lease
between Vornado and Filenes at Vornados Bergen Town Center in Paramus, New
Jersey was also assumed by the Company.

The
U.S. economy is continuing to experience weakness across virtually every
sector. Such continued weakness could negatively affect the Companys cash,
sales and/or operating performance and, further, could limit additional capital
if needed and increase concomitant costs. Management believes that existing
cash, internally generated funds, trade credit and funds available from the
revolving credit facility will be sufficient for working capital and capital
expenditure requirements for the fiscal year ending February 28, 2011.

Impact of Inflation and Changing Prices

Although
the Company cannot accurately determine the precise effect of inflation on its
operations, it does not believe inflation has had a material effect on sales or
results of operations for its last three fiscal years.

Contractual Obligations and Commercial
Commitments

To
facilitate an understanding of our contractual obligations and commercial
commitments, the following data is provided:

|                                    |  |                         |             |                 |   |            |  |           |            |                  |   |            |  |   |             | 
|----------------------------------- |  | ----------------------- | ----------- | --------------- | - | ---------- |  | --------- | ---------- | ---------------- | - | ---------- |  | - | ----------- | 
|                                    |  | Payments
 Due by Period |             |                 |   |           
|                                    |  |                         |             |                 |   |            |  |           |            |                  |   |           
|                                    |  | Total                   |             | Less than1 year |   | 2-3 years  |  | 4-5 years |            | More than5 years |  
|                                    |  |                         |             |                 |   |            |  |           |            |                  |  
|Contractual
 Obligations            |  |                         |             |                 |   |            |  |           |            |                  |   |            |  |   |             | 
|Operating
 Leases                   |  | $                       | 318,061,000 |                 | $ | 35,526,000 |  | $         | 65,285,000 |                  | $ | 60,832,000 |  | $ | 156,418,000 | 
|Revolving
 Credit Facility          |  |                         | 8,402,000   |                 |   |            |  |           | 8,402,000  |                  |   |            |  |   |             | 
|                                    |  |                         |             |                 |   |            |  |           |            |                  |   |            |  |   |             | 
|Total
 Contractual Cash Obligations |  | $                       | 326,463,000 |                 | $ | 35,526,000 |  | $         | 73,687,000 |                  | $ | 60,832,000 |  | $ | 156,418,000 | 
|                                    |  |                         |             |                 |   |            |  |           |            |                  |   |            |  |   |             | 

16

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|                              |  |                                            |           |                |   |           |  |           |   |                |  |   |  |  |   | 
|----------------------------- |  | ------------------------------------------ | --------- | -------------- | - | --------- |  | --------- | - | -------------- |  | - |  |  | - | 
|                              |  | Amount of Commitment Expiration Per Period |          
|                              |  |                                            |          
|                              |  | Total Amounts
 Committed                   |           | Within
 1 year |   | 2-3 years |  | 4-5 years |   | After 5
 Years | 
|                              |  |                                            |           |                |   |           |  |           |   |                | 
|Other
 Commercial Commitments |  |                                            |           |                |   |           |  |           |   |                |  |   |  |  |   | 
|Lines of
 Credit              |  | $                                          |          |                | $ |          |  |           |  |                |  |  |  |  |  | 
|Letters of
 Credit            |  |                                            | 6,552,000 |                |   | 6,552,000 |  |           |  |                |  |  |  |  |  | 
|                              |  |                                            |           |                |   |           |  |           |   |                |  |   |  |  |   | 
|                             
|Total
 Commercial Commitments |  | $                                          | 6,552,000 |                | $ | 6,552,000 |  |           |  |                |  |  |  |  |  | 
|                              |  |                                            |           |                |   |           |  |           |   |                |  |   |  |  |   | 

We
took into account the material nature of operating agreements and lines of
credit for merchandise in determining whether to include these items in
contractual obligations and commercial commitments.

Off Balance Sheet Arrangements

The
Company has no off-balance sheet arrangements (as defined in Item 303 of Regulation
S-K).

Recent Accounting Pronouncements

See
Note 1 of the Financial Statements for a full description of the Recent
Accounting Pronouncements, including the respective dates of adoption and the
effects on our results of operations and financial condition.

|         |                                                            
|-------- | -----------------------------------------------------------
|Item 7A. | QUANTITATIVE
 AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The
Companys operations are not currently subject to material market risks for
interest rates, foreign currency rates or other market price risks.

|        |                                             
|------- | --------------------------------------------
|Item 8. | FINANCIAL
 STATEMENTS AND SUPPLEMENTARY DATA

The
information required by this Item is incorporated herein by reference to the
financial statements and supplementary data set forth in Item 15  Exhibits
and Financial Statement Schedules of this Annual Report on Form 10-K.

|        |                                                                                            
|------- | -------------------------------------------------------------------------------------------
|Item 9. | CHANGES
 IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE- None

|         |                         
|-------- | ------------------------
|Item 9A. | CONTROLS
 AND PROCEDURES

Under
the supervision and with the participation of our management, including Marcy
Syms, the Chief Executive Officer of the Company, and Raymond Siconolfi, the
Controller and Chief Accounting Officer of the Company, we have evaluated the
effectiveness of our disclosure controls and procedures as required by Rule 13a-15(b)
of the Securities Exchange Act of 1934, as amended (the Exchange Act), as of
the end of the period covered by this report. Based on that evaluation, the
Chief Executive Officer and the Chief Accounting Officer have concluded that
these disclosure controls and procedures are effective at a reasonable
assurance level. Notwithstanding the foregoing, a control system, no matter how
well designed and operated, can provide only reasonable, not absolute,
assurance that it will detect or uncover failures within the Company to
disclose information otherwise required to be set forth in the Companys
periodic reports.

17

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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING

May 13, 2010

To the Shareholders of Syms
Corp.

The
management of Syms Corp. is responsible for the preparation, integrity,
objectivity and fair presentation of the financial statements and other
financial information presented in this report. The financial statements have
been prepared in conformity with accounting principles generally accepted in
the United States of America and reflect the effects of certain judgments and
estimates made by management.

In
order to ensure that our internal control over financial reporting is
effective, management regularly assesses such controls and did so most recently
for our financial reporting as of February 27, 2010. This assessment was based
on criteria for effective internal control over financial reporting described
in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission, referred to as COSO. Our
assessment included the documentation and understanding of our internal control
over financial reporting. We have evaluated the design effectiveness and tested
the operating effectiveness of internal controls to form our conclusion.

Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that pertain to maintaining
records that, in reasonable detail, accurately and fairly reflect transactions
and dispositions of assets, providing reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, assuring that
receipts and expenditures are being made in accordance with authorizations of
our management and directors and providing reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of assets that could have a material effect on our financial statements.

Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Based
on this assessment, the undersigned officers concluded that our internal
controls and procedures are effective in timely alerting them to material
information required to be included in our periodic SEC filings and that
information required to be disclosed by us in these periodic filings is
recorded, processed, summarized and reported within the time periods specified
in the SECs rules and forms and that our internal controls are effective to
provide reasonable assurance that our financial statements are fairly presented
in conformity with generally accepted accounting principles. The Company has
excluded Filenes Basement from its Report on Internal Control over Financial
Reporting for fiscal 2009 due to the timing of closing date of the acquisition
on June 18, 2009 and the expectation that internal control over financial
reporting related to Filenes Basement will be changed to conform with our
internal control over financial reporting in 2010. Activity related to Filenes
Basement will be included in managements 2010 internal control assessment.
Filenes Basement constituted approximately 13% of consolidated assets as of
February 27, 2010. Filenes Basement net sales and net loss constituted 47% and
26% of net sales and net income (before inclusion of Filenes net loss),
respectively, for the year then ended.

There
have been no significant changes in the Companys internal controls or in other
factors which could materially affect internal controls subsequent to the date
the Companys management carried out its evaluation.

The
Audit Committee of our Board of Directors, which consists of independent,
non-executive directors, meets regularly with management, the internal auditors
and the independent registered public accountants to review accounting,
reporting, auditing and internal control matters. The Committee has direct and
private access to both internal and external auditors.

BDO
Seidman, LLP, the independent registered public accounting firm which audits
our financial statements, has audited internal control over financial reporting
as of February 27, 2010 and has expressed an unqualified opinion thereon.

|                                      |                                         
|------------------------------------- | ----------------------------------------
|/s/ Marcy Syms                        | /s/ Raymond Siconolfi                   
|Marcy Syms                            | Raymond Siconolfi                       
|Chairman and Chief
 Executive Officer | Controller and Chief
 Accounting Officer

18

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and
Stockholders 
Syms Corp 
Secaucus, NJ

We have audited the Syms
Corps internal control over financial reporting as of February 27, 2010, based
on criteria established in Internal Control
 Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Syms Corps
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Item 9A,
Managements Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the companys internal control over
financial reporting based on our audit.

We conducted our audit in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on the
assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.

A companys internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the companys assets that could have a material effect on the financial
statements.

Because of its inherent
limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

As indicated in the
accompanying Item 9A, Managements Report on Internal Control over Financial
Reporting, managements assessment of and conclusion on the effectiveness of
internal control over financial reporting did not include the internal controls
of Filenes Basement, which was acquired on June 18, 2009, and the accounts of
which are included in the consolidated balance sheet of Syms Corp as of
February 27, 2010, and the related consolidated statements of operations,
shareholders equity, and cash flows for the year then ended. Filenes Basement
assets and net liabilities constituted 13% and 2% of total assets and net
assets, respectively, as of February 27, 2010. Filenes Basement net sales and
net loss constituted 47% and 26% of net sales and net income (before inclusion
of Filenes net loss), respectively, for the year then ended. Management did
not assess the effectiveness of internal control over financial reporting of
Filenes Basement because of the timing of the acquisition which was completed
on June 18, 2009. Our audit of internal control over financial reporting of
Syms Corp also did not include an evaluation of the internal control over
financial reporting of Filenes Basement.

In our opinion, Syms Corp
maintained, in all material respects, effective internal control over financial
reporting as of February 27, 2010, based on the COSO criteria.

We also have audited, in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Syms Corp as of February
27, 2010, and the related consolidated statements of operations, shareholders
equity, and cash flows for the year then ended and our report dated May 13,
2010 expressed an unqualified opinion thereon.

BDO Seidman, LLP

New York, New York 
May 13, 2010

19

---



|         |                          
|-------- | -------------------------
|Item 9B. | OTHER INFORMATION - None.

PART III

|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The
Company maintains a code of ethics applicable to the Companys chief executive
officer and senior financial and professional personnel (including the
Companys chief financial officer, principal accounting officer or controller
and persons performing similar functions). The Company has posted a copy of
such code of ethics on its website. The internet address for such code of ethics
is http://www.syms.com/pressreleases/corp_gov.asp.

In
accordance with General Instruction G (3) of the General Instructions to Form
10-K, the other information called for by Item 10 is omitted from this Annual
Report and is incorporated by reference to the definitive Proxy Statement to be
filed by the Company pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, which the
Company will file not later than 120 days after the end of the fiscal year
covered by this Annual Report.

|         |                       
|-------- | ----------------------
|Item 11. | EXECUTIVE COMPENSATION

In
accordance with General Instruction G (3) of the General Instructions to Form
10-K, the information called for by Item 11 is omitted from this Annual Report
and is incorporated by reference to the definitive Proxy Statement to be filed
by the Company pursuant to Regulation 14A of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended, which the Company will
file not later than 120 days after the end of the fiscal year covered by this
report.

|         |                                                                                                
|-------- | -----------------------------------------------------------------------------------------------
|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
 RELATED SHAREHOLDER MATTERS

In
accordance with General Instruction G(3) of the General Instructions to Form
10-K, the other information called for by Item 12 is omitted from this Annual
Report and is incorporated by reference to the definitive Proxy Statement to be
filed by the Company pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, which the
Company will file not later than 120 days after the end of the fiscal year
covered by this Annual Report.

Equity Plan Compensation Information

The
following table provides information as of February 27, 2010, about the shares
of our common stock that may be issued upon exercise of options granted to
employees or members of our Board under all of our existing equity compensation
plans, including our 2005 stock option plan.

|                                                            |  |                                                                |        |                                                         |   |                                                                                                                                       |  |  |   | 
|----------------------------------------------------------- |  | -------------------------------------------------------------- | ------ | ------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------------------------------------------- |  |  | - | 
|                                                            |  | COLUMN (A)                                                     |        | COLUMN (B)                                              |   | COLUMN (C)                                                                                                                            | 
|                                                            |  |                                                                |        |                                                         |   |                                                                                                                                       | 
|                                                            |  | Securities to be issued upon
 exercise of outstanding
 Options |        | Weighted average exercise
 price of outstanding options |   | Securities remaining available
 for future issuances under
 equity compensation plans
 (excluding securities reflected
 in Column (A) | 
|                                                            |  |                                                                |        |                                                         |   |                                                                                                                                       | 
|Plan
 Category:                                             |  |                                                                |        |                                                         |   |                                                                                                                                       |  |  |   | 
|Equity
 compensation plans approved by security holders     |  |                                                                | 97,500 |                                                         | $ | 15.01                                                                                                                                 |  |  |  | 
|Equity
 compensation plans not approved by security holders |  |                                                                |       |                                                         |   |                                                                                                                                      |  |  |  | 
|                                                            |  |                                                                |        |                                                         |   |                                                                                                                                       | 
|Total                                                       |  |                                                                | 97,500 |                                                         | $ | 15.01                                                                                                                                 |  |  |  | 
|                                                            |  |                                                                |        |                                                         |   |                                                                                                                                       | 

|         |                                                                      
|-------- | ---------------------------------------------------------------------
|Item 13. | CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

In
accordance with General Instruction G(3) of the General Instructions to Form
10-K, the information called for by Item 13 is omitted from this Annual Report
and is incorporated by reference to the definitive Proxy Statement to be filed
by the Company pursuant to Regulation 14A of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended, which the Company will
file not later than 120 days after the end of the fiscal year covered by this
Annual Report.

|         |                                       
|-------- | --------------------------------------
|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES

In accordance with General
Instruction G(3) of the General Instructions to Form 10-K, the information
called for by Item 14 is omitted from this Annual Report and is incorporated by
reference to the definitive Proxy Statement to be filed by the Company pursuant
to Regulation 14A of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, which the Company will file not later than
120 days after the end of the fiscal year covered by this Annual Report.

20

---



PART IV

|         |                                           
|-------- | ------------------------------------------
|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

|       |                                                                                                                                                                                                          |            
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------
|       |                                                                                                                                                                                                          | PAGE NUMBER
|(a)(1) | Financial Statements filed
 as part of this Annual Report:                                                                                                                                               |            
|       |                                                                                                                                                                                                          |            
|       | Report
 of Independent Registered Public Accounting Firm                                                                                                                                                 | F-1        
|       | Balance
 Sheets                                                                                                                                                                                          | F-2        
|       | Statements
 of Operations                                                                                                                                                                                | F-3        
|       | Statements
 of Shareholders Equity                                                                                                                                                                      | F-4        
|       | Statements
 of Cash Flows                                                                                                                                                                                | F-5        
|       | Notes
 to Financial Statements                                                                                                                                                                           | F-6        
|       |                                                                                                                                                                                                          |            
|(a)(2) | List of Financial Statement
 Schedules filed as part of this Annual Report:                                                                                                                              |            
|       |                                                                                                                                                                                                          |            
|       | Report of Independent
 Registered Public Accounting Firm on Schedule II.                                                                                                                                 |            
|       |                                                                                                                                                                                                          |            
|       | Schedule II: Valuation and
 qualifying accounts                                                                                                                                                          |            
|       |                                                                                                                                                                                                          |            
|       | Schedules, other than those
 listed above, are omitted because they are not applicable, or not required,
 or because the required information is included in the financial statements
 or notes thereto.
|       |                                                                                                                                                                                                         
|(a)(3) | List of Exhibits:                                                                                                                                                                                       

The
following exhibits which are marked with an asterisk are filed as part of this
Annual Report and the other exhibits set forth below are incorporated by
reference from (i) the Companys Registration Statement on Form S-1 under the
Securities Act of 1933 (Registration No. 2-85554) filed August 2, 1983 and
declared effective September 23, 1983 (the Registration Statement) or (ii)
where indicated, the Companys reports on Form 8-K, Form 10-Q or Form 10-K or
the Companys Proxy Statement (Commission File No. 1-8564).

|       |                                                                                                                                                                                                                                                                                                                                                    
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1    | Purchase Agreement, dated
 as of June 18, 2009, by and among SYL, LLC, a wholly owned subsidiary of Syms
 Corp Filenes Basement, Inc. and FB Leasing Services (exhibit 10.1 to Current
 Report dated June 24, 2009).                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                    
|3.1    | Certificate of
 Incorporation of Syms Corp, as filed in the Registration Statement.                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                    
|3.2    | Amended and Restated
 By-laws of Syms Corp (exhibit 3.1 to Current Report on Form 8-K dated January
 12, 2009).                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                    
|4.1    | Specimen Certificate of
 Common Stock as filed in the Registration Statement.                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                    
|10.1   | Ground Lease at One Emerson
 Lane, Township of Secaucus, Hudson County, New Jersey Assignment and
 Assumption of Ground Lease, dated May 8, 1986, to Registrant (exhibit 28.1 to
 Current Report on Form 8-K dated May 1986)                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                    
|10.4   | Syms Corp 2005 Stock Option
 Plan, as amended (exhibit 10.4 to Current Report on Form 8-K dated August 5, 2005)                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                    
|10.4.1 | Form of Nonqualified Stock
 Option Award Agreement for 2005 Stock Option Plan (exhibit 10.1 to Current
 Report on Form 8-K dated August 5, 2005)                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                    
|10.4.2 | Form of Incentive Option
 Award for 2005 Stock Option Plan (exhibit 10.2 to Current Report on Form 8-K
 dated August 5, 2005)                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                    
|10.4.3 | Form of Restricted Stock
 Award for 2005 Stock Option Plan (exhibit 10.3 to Current Report on Form 8-K
 dated August 5, 2005)                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                    
|10.5   | Credit Agreement, dated as
 of August 27, 2009, by and among Syms Corp, SYL LLC, the guarantors party
 thereto from time to time, (iii) the lenders party thereto from time to time
 and (iv) Bank of America, N.A., as administrative agent, collateral agent and
 letter of credit issuer to Current Report on Form 8-K dated September 1,
 2009)
|       |                                                                                                                                                                                                                                                                                                                                                    
|21.1*  | List of Subsidiaries                                                                                                                                                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                    
|23.1*  | Consent of BDO Seidman, LLP                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                    
|31.1*  | Certification of Chief
 Executive Officer pursuant to Rule 13a-14(a) under the Securities and
 Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
 Act of 2002                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                    
|31.2*  | Certification of Chief
 Accounting Officer pursuant to Rule 13a-14(a) under the Securities and
 Exchange Act of 1934, as adopted pursuant to Section 302 of the
 Sarbanes-Oxley Act of 2002                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                    
|32.1*  | Certification of Chief
 Executive Officer pursuant to Rule 13a-14(b) under the Securities and
 Exchange Act of 1934 and 18.U.S.C. Section 1350, as adopted pursuant to
 Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                    
|32.2*  | Certification of Chief
 Accounting Officer pursuant to Rule 13a-14(b) under the Securities and
 Exchange Act of 1934 and 18.U.S.C. Section 1350, as adopted pursuant to
 Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                             

21

---



SIGNATURES

Pursuant to the requirements
of Section 13 or 15(d) 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.

|          |                                       | 
|--------- | ------------------------------------- | 
|SYMS CORP |                                      
|          |                                      
|By:       | /s/ Marcy Syms                        | 
|          |                                       | 
|          | Marcy Syms                            | 
|          | Chairman and Chief
 Executive Officer

Date: May 13, 2010

Pursuant
to the requirements of the Securities Exchange Act of 1934, this Annual Report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

|                         |  |                                                                                           |       |               |  |  |  |      |  | 
|------------------------ |  | ----------------------------------------------------------------------------------------- | ----- | ------------- |  |  |  | ---- |  | 
|Signature                |  |                                                                                           | Title |               |  |  |  | Date | 
|                         |  |                                                                                           |       |               |  |  |  |      | 
|                         |  |                                                                                           |       |              
|/s/ Marcy Syms           |  | Chairman of the Board/
 Chief Executive Officer and Director(Principal executive officer) |       | May
 13, 2010
|                         |  |                                                                                           |      
|Marcy Syms               |  |                                                                                           |      
|                         |  |                                                                                           |       |              
|/s/ Raymond Siconolfi    |  | Controller and Chief
 Accounting Officer                                                  |       | May
 13, 2010
|                         |  | (Principal financial and
 accounting officer)                                             |       |              
|                         |  |                                                                                           |       |              
|/s/ Bernard H. Tenenbaum |  | Director                                                                                  |       | May
 13, 2010
|                         |  |                                                                                           |       |              
|Bernard H. Tenenbaum     |  |                                                                                           |       |              
|                         |  |                                                                                           |       |              
|/s/ Thomas E. Zanecchia  |  | Director                                                                                  |       | May
 13, 2010
|                         |  |                                                                                           |       |              
|Thomas E. Zanecchia      |  |                                                                                           |       |              
|                         |  |                                                                                           |       |              
|/s/ Henry M. Chidgey     |  | Director                                                                                  |       | May
 13, 2010
|                         |  |                                                                                           |       |              
|Henry M. Chidgey         |  |                                                                                           |       |              

22

---



Report of Independent Registered Public
Accounting Firm

Board of
Directors and Shareholders 
Syms Corp 
Secaucus, New Jersey

The audits
referred to in our report dated May 13, 2010 relating to the financial
statements of Syms Corp, which is contained in Item 15 of this Form 10-K also
included the audit of the financial statement schedule listed in the
accompanying index. This financial statement schedule is the responsibility of
the Companys management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.

In our opinion
such 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.

/s/ BDO
Seidman, LLP

BDO Seidman,
LLP 
New York, New York 
May 13, 2010

SCHEDULE II

|                                                                          
|--------------------------------------------------------------------------
|SYMS CORP                                                                 
|Valuation and qualifying accounts                                         
|Fiscal years ended February 27, 2010, February 28, 2009 and March 1,
 2008
|                                                                          

|                                   |  |                                  |           |                                                   |           |                            |  |            |         |                           |  |            |   |  |           | 
|---------------------------------- |  | -------------------------------- | --------- | ------------------------------------------------- | --------- | -------------------------- |  | ---------- | ------- | ------------------------- |  | ---------- | - |  | --------- | 
|                                   |  |                                  |           |                                                   | Additions |                            |  |            |         |                           |  |           
|                                   |  |                                  |           |                                                   |           |                            |  |            |         |                           |  |           
|                                   |  | Balance at
 beginning of
 period |           | Charged against
 revenues or to
 costs & expenses |           | Charged to
 other accounts |  | Deductions |         | Balance at end
 of period | 
|                                   |  |                                  |           |                                                   |           |                            |  |            |         |                           | 
|                                  
|Reserve for inventory obsolescence |  |                                  |           |                                                   |           |                            |  |            |         |                           |  |            |   |  |           | 
|                                   |  |                                  |           |                                                   |           |                            |  |            |         |                           |  |            |   |  |           | 
|Fiscal 2007                        |  |                                  | 4,201,000 |                                                   |           |                           |  |            |        |                           |  | (1,381,000 | ) |  | 2,820,000 | 
|Fiscal 2008                        |  |                                  | 2,820,000 |                                                   |           |                           |  |            |        |                           |  | (624,000   | ) |  | 2,196,000 | 
|Fiscal 2009                        |  |                                  | 2,196,000 |                                                   |           | 2,603,313                  |  |            |         |                           |  | (398,000   | ) |  | 4,401,313 | 
|                                   |  |                                  |           |                                                   |           |                            |  |            |         |                           |  |            |   |  |           | 
|Deferred tax valuation allowance   |  |                                  |           |                                                   |           |                            |  |            |         |                           |  |            |   |  |           | 
|                                   |  |                                  |           |                                                   |           |                            |  |            |         |                           |  |            |   |  |           | 
|Fiscal 2007                        |  |                                  |          |                                                   |           |                           |  |            |        |                           |  |           |   |  |          | 
|Fiscal 2008                        |  |                                  |          |                                                   |           |                           |  |            |        |                           |  |           |   |  |          | 
|Fiscal 2009                        |  |                                  |          |                                                   |           |                           |  |            | 346,000 |                           |  |            |   |  | 346,000   | 

23

---



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24

---



Report of
Independent Registered Public Accounting Firm

Board of
Directors and Shareholders 
SYMS Corp 
Secaucus, New Jersey

We have
audited the accompanying consolidated balance sheets of Syms Corp as of
February 27, 2010 and February 28, 2009 and the related consolidated statements
of operations, shareholders equity and cash flows for each of the three fiscal
years in the period ended February 27, 2010. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted
our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 financial position of Syms Corp at
February 27, 2010 and February 28, 2009, and the results of its operations and
its cash flows for each of the three fiscal years in the period ended February
27, 2010, in conformity with accounting principles generally accepted in the
United States of America.

We have also
audited, in accordance with the standards of the Public Accounting Oversight
Board (United States), Syms Corps internal control over financial reporting as
of February 27, 2010, based on criteria established in Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO), and our report dated May 13, 2010 expressed an unqualified opinion
thereon.

/s/ BDO
Seidman, LLP

BDO Seidman,
LLP 
New York, New York 
May 13, 2010

F-1

---



|                                        
|----------------------------------------
|Consolidated Balance Sheets             
|                                        
|(In
 thousands except per share amounts)

|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ------------------ | - | ------- | -
|                                                                                                                                                                                                                                              |  | February 27,
 2010 |         | February 28,
 2009 |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |  
|ASSETS                                                                                                                                                                                                                                        |  |                    |         |                    |   |         |  
|CURRENT ASSETS:                                                                                                                                                                                                                               |  |                    |         |                    |   |         |  
|Cash and cash equivalents                                                                                                                                                                                                                     |  | $                  | 2,049   |                    | $ | 1,822   |  
|Receivables                                                                                                                                                                                                                                   |  |                    | 3,195   |                    |   | 1,589   |  
|Merchandise inventories - net                                                                                                                                                                                                                 |  |                    | 82,234  |                    |   | 52,480  |  
|Deferred income taxes                                                                                                                                                                                                                         |  |                    | 5,912   |                    |   | 3,045   |  
|Assets held for sale                                                                                                                                                                                                                          |  |                    | 14,392  |                    |   | 7,202   |  
|Prepaid expenses and other current assets                                                                                                                                                                                                     |  |                    | 7,645   |                    |   | 5,317   |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|TOTAL CURRENT ASSETS                                                                                                                                                                                                                          |  |                    | 115,427 |                    |   | 71,455  |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|PROPERTY AND EQUIPMENT -
 Net                                                                                                                                                                                                                 |  |                    | 118,539 |                    |   | 95,956  |  
|DEFERRED INCOME TAXES                                                                                                                                                                                                                         |  |                    | 18,113  |                    |   | 15,209  |  
|BUILDING AND AIR RIGHTS                                                                                                                                                                                                                       |  |                    | 9,134   |                    |   | 9,134   |  
|OTHER ASSETS                                                                                                                                                                                                                                  |  |                    | 7,866   |                    |   | 23,369  |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|TOTAL ASSETS                                                                                                                                                                                                                                  |  | $                  | 269,079 |                    | $ | 215,123 |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|LIABILITIES AND
 SHAREHOLDERS EQUITY                                                                                                                                                                                                         |  |                    |         |                    |   |         |  
|CURRENT LIABILITIES:                                                                                                                                                                                                                          |  |                    |         |                    |   |         |  
|Accounts payable                                                                                                                                                                                                                              |  | $                  | 47,356  |                    | $ | 14,936  |  
|Accrued expenses                                                                                                                                                                                                                              |  |                    | 9,945   |                    |   | 9,012   |  
|Obligations to customers                                                                                                                                                                                                                      |  |                    | 5,328   |                    |   | 4,292   |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|TOTAL CURRENT LIABILITIES                                                                                                                                                                                                                     |  |                    | 62,629  |                    |   | 28,240  |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|                                                                                                                                                                                                                                             
|OTHER LONG TERM LIABILITIES                                                                                                                                                                                                                   |  |                    | 3,016   |                    |   | 840     |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|LONG TERM DEBT                                                                                                                                                                                                                                |  |                    | 8,402   |                    |   |        |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|SHAREHOLDERS EQUITY                                                                                                                                                                                                                          |  |                    |         |                    |   |         |  
|Preferred stock, par value $100 per share. Authorized 1,000 shares;
 none outstanding                                                                                                                                                         |  |                    |        |                    |   |        |  
|Common stock, par value $0.05 per share. Authorized 30,000 shares;
 14,598 shares outstanding (net of 4,298 treasury shares) as of February 27,
 2010, and 14,590 shares outstanding (net of 4,298 treasury shares) as of
 February 28, 2009. |  |                    | 800     |                    |   | 800     |  
|Additional paid-in capital                                                                                                                                                                                                                    |  |                    | 21,605  |                    |   | 21,560  |  
|Treasury stock                                                                                                                                                                                                                                |  |                    | (45,903 | )                  |   | (45,903 | )
|Accumulated Other Comprehensive Income                                                                                                                                                                                                        |  |                    | (1,491  | )                  |   | (2,127  | )
|Retained earnings                                                                                                                                                                                                                             |  |                    | 220,021 |                    |   | 211,713 |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|TOTAL SHAREHOLDERS EQUITY                                                                                                                                                                                                                    |  |                    | 195,032 |                    |   | 186,043 |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                                                                    |  | $                  | 269,079 |                    | $ | 215,123 |  
|                                                                                                                                                                                                                                              |  |                    |         |                    |   |         |  

See Notes to Consolidated
Financial Statements

F-2

---



|                                         
|-----------------------------------------
|Consolidated Statements of Operations    
|                                         
|(In
 thousands, except per share amounts)

|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|--------------------------------------------------- |  | ------------------- | ------- | ------------------- | - | --------------- | - | - | ------- | -
|                                                    |  | Fiscal
 Year Ended  |        
|                                                    |  |                     |        
|                                                    |  | February
 27,
 2010 |         | February
 28,
 2009 |   | March
 1,
 2008 |  
|                                                    |  |                     |         |                     |   |                 |  
|                                                   
|Net sales                                           |  | $                   | 377,309 |                     | $ | 242,000         |   | $ | 267,149 |  
|Cost of goods sold                                  |  |                     | 232,207 |                     |   | 141,475         |   |   | 157,168 |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Gross profit                                        |  |                     | 145,102 |                     |   | 100,525         |   |   | 109,981 |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Expenses:                                           |  |                     |         |                     |   |                 |   |   |         |  
|Selling, general and
 administrative                |  |                     | 113,908 |                     |   | 74,690          |   |   | 76,959  |  
|Advertising                                         |  |                     | 8,193   |                     |   | 6,339           |   |   | 8,561   |  
|Occupancy, net                                      |  |                     | 45,087  |                     |   | 15,557          |   |   | 14,323  |  
|Depreciation and
 amortization                      |  |                     | 11,414  |                     |   | 8,003           |   |   | 7,659   |  
|Asset impairment charge                             |  |                     | 80      |                     |   | 530             |   |   | 745     |  
|Bargain purchase gain                               |  |                     | (9,714  | )                   |   |                |   |   |        |  
|Acquisition costs                                   |  |                     | 4,857   |                     |   |                |   |   |        |  
|Gain from life insurance
 proceeds and other income |  |                     | (25,049 | )                   |   | (53             | ) |   | (491    | )
|(Gain) loss on disposition
 of assets               |  |                     | 1,168   |                     |   | (548            | ) |   |        |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Total expenses                                      |  |                     | 149,944 |                     |   | 104,518         |   |   | 107,756 |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Net income (loss) from
 operations                  |  |                     | (4,842  | )                   |   | (3,993          | ) |   | 2,225   |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Interest (expense) income                           |  |                     | (1,538  | )                   |   | (38             | ) |   | 911     |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Net income (loss) before
 income taxes              |  |                     | (6,380  | )                   |   | (4,031          | ) |   | 3,136   |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Income tax provision
 (benefit)                     |  |                     | (14,688 | )                   |   | (608            | ) |   | 2,329   |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Net income (loss)                                   |  | $                   | 8,308   |                     | $ | (3,423          | ) | $ | 807     |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Net income (loss) per share
 - basic                |  | $                   | 0.57    |                     | $ | (0.23           | ) | $ | 0.06    |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Weighted average shares
 outstanding - basic        |  |                     | 14,593  |                     |   | 14,589          |   |   | 14,659  |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Net income (loss) per share
 - diluted              |  | $                   | 0.57    |                     | $ | (0.23           | ) | $ | 0.05    |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  
|Weighted average shares
 outstanding - diluted      |  |                     | 14,593  |                     |   | 14,589          |   |   | 14,760  |  
|                                                    |  |                     |         |                     |   |                 |   |   |         |  

See Notes to
Consolidated Financial Statements

F-3

---



|                                               
|-----------------------------------------------
|SYMS CORP                                      
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
|                                               
|(In
 thousands)                                

|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|-------------------------------------------- |  | ------------ |  | ---------------------------- | -------------- |  | ------------------ | ------ | ------ | -------------------------------------------------- | - | - | ------- | - | - | ------- | - | - | ------ | - | - | ------- | -
|                                             |  |              |  | Additional
 Paid-in
 Capital |                |  |                    |        |        | Accumulated
 Other Com-
 prehensive
 Income (Loss) |   |   |        
|                                             |  | Common Stock |  |                              | Treasury Stock |  |                    |        |        |                                                    |  
|                                             |  |              |  |                              |                |  | Retained
 Earnings |        |        |                                                    |  
|                                             |  | Shares       |  | Amount                       |                |  | Shares             |        | Amount |                                                    |   |   | Total   |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|BALANCE AS OF March 3, 2007                  |  | 18,669       |  | $                            | 789            |  | $                  | 19,264 |        | (3,968                                             | ) | $ | (41,383 | ) | $ | 223,399 |   | $ |       |   | $ | 202,069 |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Exercise of options                          |  | 1            |  |                              |                |  |                    | 4      |        |                                                   |   |   |        |   |   |        |   |   |       |   |   | 4       |  
|Tax benefit derived from exercise of options |  |             |  |                              |               |  |                    | 5      |        |                                                   |   |   |        |   |   |        |   |   |       |   |   | 5       |  
|Stock buyback                                |  |             |  |                              |               |  |                    |       |        | (114                                               | ) |   | (1,703  | ) |   |        |   |   |       |   |   | (1,703  | )
|Payment of dividends                         |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   | (8,820  | ) |   |       |   |   | (8,820  | )
|FIN 48 reserve                               |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   | (250    | ) |   |       |   |   | (250    | )
|Comprehensive income:                        |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Net income                                   |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   | 807     |   |   |       |   |   | 807     |  
|Deferred pension gain, net of tax            |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   |        |   |   | 23     |   |   | 23      |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Total comprehensive income                   |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   |        |   |   |       |   |   | 830     |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|BALANCE AS OF March 1, 2008                  |  | 18,670       |  | $                            | 789            |  | $                  | 19,273 |        | (4,082                                             | ) | $ | (43,086 | ) | $ | 215,136 |   | $ | 23     |   | $ | 192,135 |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Exercise of options                          |  | 218          |  |                              | 11             |  |                    | 2,137  |        |                                                   |   |   |        |   |   |        |   |   |       |   |   | 2,148   |  
|Tax benefit derived from exercise of options |  |             |  |                              |               |  |                    | 150    |        |                                                   |   |   |        |   |   |        |   |   |       |   |   | 150     |  
|Stock buyback                                |  |             |  |                              |               |  |                    |       |        | (216                                               | ) |   | (2,817  | ) |   |        |   |   |       |   |   | (2,817  | )
|Comprehensive income:                        |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Net (loss)                                   |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   | (3,423  | ) |   |       |   |   | (3,423  | )
|Deferred pension (loss), net of tax          |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   |        |   |   | (2,150 | ) |   | (2,150  | )
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Total comprehensive (loss)                   |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   |        |   |   |       |   |   | (5,682  | )
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|BALANCE AS OF February 28, 2009              |  | 18,888       |  | $                            | 800            |  | $                  | 21,560 |        | (4,298                                             | ) | $ | (45,903 | ) | $ | 211,713 |   | $ | (2,127 | ) | $ | 186,043 |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Exercise of options                          |  | 9            |  |                              |                |  |                    | 45     |        |                                                    |   |   |         |   |   |         |   |   |        |   |   | 45      |  
|Comprehensive income:                        |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Net income                                   |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   | 8,308   |   |   |       |   |   | 8,308   |  
|Deferred pension gain, net of tax            |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   |        |   |   | 636    |   |   | 636     |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|Total comprehensive income                   |  |             |  |                              |               |  |                    |       |        |                                                   |   |   |        |   |   |        |   |   |       |   |   | 8,944   |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  
|BALANCE AS OF February 27, 2010              |  | 18,896       |  | $                            | 800            |  | $                  | 21,605 |        | (4,298                                             | ) | $ | (45,903 | ) | $ | 220,021 |   | $ | (1,491 | ) | $ | 195,032 |  
|                                             |  |              |  |                              |                |  |                    |        |        |                                                    |   |   |         |   |   |         |   |   |        |   |   |         |  

See Notes to Consolidated
Financial Statements

F-4

---



|                                     
|-------------------------------------
|Consolidated Statements of Cash Flows
|                                     
|(In thousands)                       

|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------------ | ------- | ------------------ | - | -------------- | - | - | ------- | -
|                                                                                          |  | Fiscal Year Ended  |        
|                                                                                          |  |                    |        
|                                                                                          |  | February 27,
 2010 |         | February 28,
 2009 |   | March 1,
 2008 |  
|                                                                                          |  |                    |         |                    |   |                |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                     |  |                    |         |                    |   |                |   |   |         |  
|Net income (loss)                                                                         |  | $                  | 8,308   |                    | $ | (3,423         | ) | $ | 807     |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|Adjustments to reconcile net income (loss) to net cash provided by
 operating activities: |  |                    |         |                    |   |                |   |   |         |  
|Depreciation and amortization                                                             |  |                    | 11,414  |                    |   | 8,003          |   |   | 7,659   |  
|Asset impairment                                                                          |  |                    | 80      |                    |   | 530            |   |   | 745     |  
|Bargain purchase gain                                                                     |  |                    | (9,714  | )                  |   |               |   |   |        |  
|Deferred income taxes                                                                     |  |                    | (9,316  | )                  |   | (615           | ) |   | (497    | )
|(Gain) loss on disposition of assets                                                      |  |                    | 1,168   |                    |   | (503           | ) |   | 10      |  
|(Increase) decrease in operating assets, net of Filenes acquisition:                     |  |                    |         |                    |   |                |   |   |         |  
|Receivables                                                                               |  |                    | (1,606  | )                  |   | 856            |   |   | (719    | )
|Merchandise inventories                                                                   |  |                    | (8,438  | )                  |   | 13,606         |   |   | (2,277  | )
|Prepaid expenses and other current assets                                                 |  |                    | (1,827  | )                  |   | (1,170         | ) |   | 907     |  
|Other assets                                                                              |  |                    | 1,078   |                    |   | (1,995         | ) |   | (2,152  | )
|Increase (decrease) in operating liabilities, net of Filenes
 acquisition:               |  |                    |         |                    |   |                |   |   |         |  
|Accounts payable                                                                          |  |                    | 32,420  |                    |   | (10,674        | ) |   | 3,932   |  
|Accrued expenses                                                                          |  |                    | 5,703   |                    |   | (262           | ) |   | (2,522  | )
|Obligations to customers                                                                  |  |                    | (160    | )                  |   | (151           | ) |   | 485     |  
|Other long term liabilities                                                               |  |                    | 2,176   |                    |   | (338           | ) |   | (370    | )
|Income taxes                                                                              |  |                    | (4,409  | )                  |   | (940           | ) |   | (1,732  | )
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|Net cash provided by operating activities                                                 |  |                    | 26,877  |                    |   | 3,215          |   |   | 4,276   |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|CASH FLOWS FROM INVESTING
 ACTIVITIES:                                                    |  |                    |         |                    |   |                |   |   |         |  
|Investment in building and air rights                                                     |  |                    |        |                    |   | (6,034         | ) |   | (3,100  | )
|Purchase of Filenes Basement                                                             |  |                    | (38,927 | )                  |   |               |   |   |        |  
|Expenditures for property and equipment                                                   |  |                    | (12,224 | )                  |   | (7,667         | ) |   | (6,687  | )
|Proceeds from sale of land and other assets                                               |  |                    | 54      |                    |   | 923            |   |   | 17      |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|Net cash used in investing activities                                                     |  |                    | (51,097 | )                  |   | (12,778        | ) |   | (9,770  | )
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|                                                                                         
|CASH FLOWS FROM FINANCING
 ACTIVITIES:                                                    |  |                    |         |                    |   |                |   |   |         |  
|Cash surrender value advance                                                              |  |                    | 16,000  |                    |   |               |   |   |        |  
|Payment of dividend                                                                       |  |                    |        |                    |   |               |   |   | (8,820  | )
|Exercise of stock options                                                                 |  |                    | 45      |                    |   | 2,148          |   |   | 4       |  
|Stock repurchase                                                                          |  |                    |        |                    |   | (2,817         | ) |   | (1,703  | )
|Tax benefit of options                                                                    |  |                    |        |                    |   | 150            |   |   | 5       |  
|Borrowings on revolving credit facilities                                                 |  |                    | 51,494  |                    |   |                |   |   |         |  
|Repayments on revolving credit facilities                                                 |  |                    | (43,092 | )                  |   |               |   |   |        |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|Net cash provided by (used in) financing activities                                       |  |                    | 24,447  |                    |   | (519           | ) |   | (10,514 | )
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|                                                                                         
|NET INCREASE (DECREASE) IN
 CASH AND CASH EQUIVALENT                                      |  |                    | 227     |                    |   | (10,082        | ) |   | (16,008 | )
|CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                                           |  |                    | 1,822   |                    |   | 11,904         |   |   | 27,912  |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|CASH AND CASH EQUIVALENTS,
 END OF PERIOD                                                 |  | $                  | 2,049   |                    | $ | 1,822          |   | $ | 11,904  |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  
|SUPPLEMENTAL CASH FLOW
 INFORMATION:                                                      |  |                    |         |                    |   |                |   |   |         |  
|Cash paid during the period for:                                                          |  |                    |         |                    |   |                |   |   |         |  
|Interest                                                                                  |  | $                  | 975     |                    | $ | 170            |   | $ | 166     |  
|                                                                                          |  |                    |         |                    |   |                |   |   |         |  

See Notes to Consolidated
Financial Statements

F-5

---



|                                                                          
|--------------------------------------------------------------------------
|Notes to Consolidated Financial
 Statements                               
|                                                                          
|FISCAL
 YEARS ENDED FEBRUARY 27, 2010, FEBRUARY 28, 2009 AND MARCH 1, 2008
|                                                                          
|NOTE 1 -
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                      

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. | Principal Business - Syms Corp (the Company) operates a
 chain of 27 off-price retail clothing stores located in the Northeastern
 and Middle Atlantic regions and in the Midwest, Southeast and Southwest. Each
 Syms store offers a broad range of first quality, in season merchandise
 bearing nationally recognized designer or brand-name labels for men, women
 and children. On June 18, 2009 the Company, through a wholly-owned
 subsidiary, acquired certain real property leases, inventory, other property,
 equipment and other assets of Filenes Basement (Filenes), a retail clothing
 chain, pursuant to an auction conducted in accordance with § 363 of the
 Federal Bankruptcy Code (see Note 6). As a result, in addition to the 27 Syms
 stores, since June 19, 2009, the Company has also operated 23 Filenes
 Basement stores that are located in the Northeastern, Middle Atlantic,
 Midwest and Southeast regions. Filenes Basement also offers a broad range of
 first quality brand name and designer clothing for men, women and children.
 The Company operates in a single operating segment  the operation of
 off-price retail stores.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|b. | Principles of Consolidation - The financial statements include the
 accounts of the Company and its wholly-owned subsidiary. All intercompany
 accounts and transactions have been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|c. | Accounting Period -Fiscal 2009 ended on February 27, 2010;
 fiscal 2008 ended on February 28, 2009, and fiscal 2007 ended on March 1,
 2008. The fiscal years ended February 27, 2010, February 28, 2009 and March
 1, 2008 were comprised of 52 weeks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|d. | Occupancy Costs Occupancy expenses for fiscal 2009, 2008 and
 2007 have been reduced by net rental income of $2,373,000, $2,026,000 and
 $3,006,000, respectively from real estate holdings incidental to the
 Companys retail operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|e. | Cash and Cash Equivalents- Cash and cash equivalents include
 securities with original maturities of three months or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|f. | Concentrations of Credit Risk  The Companys financial instruments that
 are exposed to concentrations of credit risk consist primarily of cash. The
 Company has substantially all of its cash in banks. Such cash balances at
 times exceed federally-insured limits. The Company has not experienced any
 losses in such accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|g. | Receivables  Receivables represent third party credit card receivables.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|h. | Merchandise Inventories - Merchandise inventories are stated at the
 lower of cost (first in, first out) or market, as determined by the moving
 average cost method for Syms and by the retail inventory method for Filenes.
 Prior to October 4, 2009, all of the Companys inventories were stated at
 first in, first out as determined by the retail inventory method. The change
 in the method of recording Syms inventory in the current fiscal year did not
 have a material impact on reported results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|i. | Property and Equipment- Property and equipment are stated at cost.
 Depreciation and amortization are principally determined by the straight-line
 method over the following estimated useful lives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                           |                                              
|-------------------------- | ---------------------------------------------
|Buildings and improvements | 15 - 39 years                                
|Machinery and equipment    | 4 - 7 years                                  
|Furniture and fixtures     | 7-10 years                                   
|Leasehold improvements     | Lesser of life of the asset
 or life of lease
|Computer software          | 3 years                                      

| |                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                     
| | The Companys policy is to
amortize leasehold improvements over the original lease term and not include
any renewal terms. The Companys policy is to capitalize costs incurred during
the application-development stage for software acquired and further customized
by outside vendors for the Companys use. Computer software is included in property,
plant and equipment on the balance sheet.

F-6

---



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|j. | Impairment
 of Long-Lived Assets
  The Company periodically reviews long-lived assets for impairment whenever
 changes in circumstances indicate that the carrying amount of the assets may
 not be fully recoverable. The Company considers relevant cash flow,
 managements strategic plans, significant decreases in the market value of
 the asset and other available information in assessing whether the carrying
 value of the assets can be recovered. When such events occur, the Company
 compares the carrying amount of the assets to the undiscounted expected
 future cash flows from the use and eventual disposition of the asset. If this
 comparison indicates an impairment, the carrying amount would then be compared
 to the estimated fair value of the long-lived asset. An impairment loss would
 be measured as the amount by which the carrying value of the long-lived asset
 exceeds its estimated fair value.                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|k. | Deferred
 Income Taxes -Deferred
 income taxes reflect the future tax consequences of differences between the
 tax bases of assets and liabilities and their financial reporting amounts at
 year end.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|l. | Other
 Assets The Company
 has historically recorded the cash surrender value of officers life
 insurance policies on the balance sheet as a non-current asset. Such amounts
 were $1.9 million and $22.0 million at February 27, 2010 and February 28,
 2009, respectively. In March 2009, as a result of uncertainties surrounding
 the financial viability of the life insurance company underwriting two of
 these policies, the Company withdrew $16.0 million of accumulated cash value
 which was ultimately used in connection with the Companys acquisition of
 Filenes, more fully discussed in Note 6 below. The Company continued to be a
 beneficiary of life insurance policies insuring Mr. Sy Syms, the Companys
 founder and Chairman, who died on November 17, 2009. Pursuant to those
 policies, in December 2009, the Company received cash proceeds of
 approximately $29.9 million, which was net of the aforementioned, previously
 received $16.0 million in cash values. Net of the cash surrender value of
 officers life insurance of $5.1 million recorded as of August 29, 2009 in
 other assets, the Company realized a net gain of $24.8 million. Upon receipt,
 the aforementioned cash proceeds were used for working capital purposes and
 to repay a portion of the Companys senior debt facility.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|m. | Accrued
 Expenses Accrued
 expenses include accrued payroll of $2.7 million and $1.5 million in fiscal 2009
 and fiscal 2008, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|n. | Obligation
 to Customers -
 Obligations to customers represent credits issued for returned merchandise as
 well as gift certificates. When the Company sells a gift certificate to a
 customer, it is recorded as a liability in the period the sale occurred. When
 the customer redeems the gift certificate for the purchase of merchandise, a
 sale is recorded and the liability reduced. The Companys policy is that
 these credits do not expire.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|o. | Use of
 Estimates - The preparation
 of financial statements in conformity with accounting principles generally
 accepted in the United States of America 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. Significant estimates include inventory
 provisions, sales returns, self-insurance accruals, deferred tax valuation
 allowances, any estimated impairment and the useful lives of long-lived
 assets. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|p. | Revenue
 Recognition The
 Company recognizes revenue at the point of sale. Allowance for sales
 returns is recorded as a component of net sales in the period in which the
 related sales are recorded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|q. | Comprehensive
 Income (Loss) 
 Comprehensive income (loss) was $8.9 million, ($5.7) million and $0.8 million
 for fiscal years 2009, 2008 and 2007, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|r. | Segment
 Reporting -
 Statement of Financial Accounting Standards (SFAS) No. 131 Disclosures about
 Segments of an Enterprise and Related Information (now ASC 280) establishes
 standards for reporting information about a companys operating segments. It
 also establishes standards for related disclosures about products and
 services,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-7

---



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | geographic areas and major
 customers. The Company operates in a single reporting segment - the operation
 of off-price retail stores. Revenues from external customers are derived from
 merchandise sales. The Companys merchandise sales mix by product category
 for the last three fiscal years was as follows:

|                                                   |  |             |     |      |  |      |   |  |     |  
|-------------------------------------------------- |  | ----------- | --- | ---- |  | ---- | - |  | --- | -
|                                                   |  | Fiscal Year |    
|                                                   |  |             |    
|                                                   |  | 2009        |     | 2008 |  | 2007 |  
|                                                   |  |             |     |      |  |      |  
|Womens dresses, suits,
 separates and accessories |  |             | 44  | %    |  | 29   | % |  | 29  | %
|Mens tailored clothes and
 haberdashery           |  |             | 42  | %    |  | 53   | % |  | 53  | %
|Luggage, domestics and
 fragrances                 |  |             | 5   | %    |  | 3    | % |  | 3   | %
|Childrens wear                                    |  |             | 5   | %    |  | 7    | % |  | 7   | %
|Shoes                                              |  |             | 4   | %    |  | 8    | % |  | 8   | %
|                                                   |  |             |     |      |  |      |   |  |     |  
|                                                   |  |             | 100 | %    |  | 100  | % |  | 100 | %

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | The Company does not rely
 on any major customers as a source of revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|s. | Gross
 Profit - The
 Companys gross profit may not be comparable to those of other entities,
 since other entities may include all of the costs related to their
 distribution network in cost of goods sold and others, like the Company,
 exclude a portion of those costs from gross profit and instead, include them
 in other items, such as selling, general and administrative expenses and
 occupancy costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|t. | Computer
 Software Costs  The
 Company capitalizes the cost of software developed or purchased for internal
 use.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|u. | Advertising
 Costs  Advertising
 and sales promotion costs are expensed at the time the advertising occurs.
 Advertising and sales promotion costs were $8,193,000, $6,339,000 and
 $8,561,000 in fiscal 2009, 2008 and 2007, respectively. The Company does not
 receive any allowances or credits from vendors in connection with the
 purchase or promotion of the vendors product, such as co-operative
 advertising and other considerations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|v. | Accounting
 for Stock-Based Compensation The Company accounts for stock-based compensation costs in
 accordance with Statement of Financial Accounting Standards No. 123(R),
 Share-Based Payments (FAS123(R)) (now ASC 718). Consistent with ASC 718
 Share-Based Payments, share-based compensation cost is measured at grant
 date, based on the estimated fair value of the award, and is recognized as
 expense over the requisite service period. The fair value of each option
 award is estimated on the date of grant using a Black-Scholes option
 valuation model. Expected volatility is based on the historical volatility of
 the price of the Companys stock. The risk-free interest rate is based on
 U.S. Treasury issues with a term equal to the expected life of the option.
 The Company uses historical data to estimate expected dividend yield,
 expected life and forfeiture rates. There were no options granted during
 fiscal 2009, and all options previously issued are fully vested.                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|w. | New
 Accounting Pronouncements In April 2009, the FASB issued FASB Staff Position No. FAS 115-2 and
 FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments
 (now ASC Subtopic 320-10-65), which amends the other-than-temporary
 impairment guidance in U.S. GAAP for debt securities to make the guidance
 more operational and to improve the presentation and disclosure of
 other-than-temporary impairments on debt and equity securities in the
 financial statements. This Staff Position is effective for interim and annual
 reporting periods ending after June 15, 2009, with early adoption permitted
 for periods ending after March 15, 2009. The adoption of this Staff Position
 did not have an effect on our operations.                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In May 2009, the FASB
 issued SFAS No. 165, Subsequent Events (now ASC Subtopic 855-10). This
 standard establishes principles and requirements for subsequent events, which
 are events or transactions that occur after the balance sheet date but before
 financial statements are issued or are available to be issued. In particular,
 this standard sets forth (a) the period after the balance sheet date during
 which management of a reporting entity shall evaluate events or transactions
 that may occur for potential recognition or disclosure in the financial
 statements, (b) the circumstances under which an entity shall recognize
 events or transactions occurring after the balance sheet date in its
 financial statements, and (c) the disclosures that an entity shall make about
 events or transactions that occurred after the balance sheet date. This
 standard is effective for interim or annual financial periods ending after
 June 15, 2009 and is to be applied prospectively. The adoption of this
 standard did not have a material impact on our results of operations or our
 financial position.

F-8

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 2009, the FASB
 issued SFAS No. 166, Accounting for Transfers of Financial Assets - an
 amendment of FASB Statement No. 140 (now part of ASC Topic 860, also issued
 as ASU No. 2009-16). The objective of this standard is to improve the
 relevance, representational faithfulness, and comparability of the
 information that a reporting entity provides in its financial reports about a
 transfer of financial assets; the effects of a transfer on its financial
 position, financial performance, and cash flows; and a transferors
 continuing involvement in transferred financial assets. Additionally, on and
 after the effective date, the concept of a qualifying special-purpose entity
 is no longer relevant for accounting purposes. This standard is effective as
 of the beginning of each reporting entitys first annual reporting period
 that begins after November 15, 2009, for interim periods within that first
 annual reporting period, and for interim and annual reporting periods
 thereafter. Earlier application is prohibited. The recognition and
 measurement provisions of this standard are to be applied to transfers that
 occur on or after the effective date. The adoption of this standard is not
 expected to have a material impact on our results of operations or our
 financial position.                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In June 2009, the FASB
 issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (now part
 of ASC Subtopic 810, also issued as ASU No. 2009-17). This standard amends
 FASB Interpretation 46(R) to require an enterprise to perform an analysis to
 determine whether an enterprises variable interest or interests give it a
 controlling financial interest in a variable interest entity by replacing the
 quantitative-based risks and rewards calculation for determining which enterprise,
 if any, has a controlling financial interest in a variable interest entity
 with an approach focused on identifying which enterprise has the power to
 direct the activities of a variable interest entity that most significantly
 impact the entitys economic performance and has the obligation to absorb
 losses of or the right to receive benefits from the entity. This standard
 also requires ongoing reassessments of whether an enterprise is the primary
 beneficiary of a variable interest entity. This standard is effective as of
 the beginning of each reporting entitys first annual reporting period that
 begins after November 15, 2009, for interim periods within that first annual
 reporting period, and for interim and annual reporting periods thereafter.
 Earlier application is prohibited. The adoption of this standard is not
 expected to have a material impact on our results of operations or our
 financial position.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In June 2009, the FASB
 issued SFAS No. 168, The FASB Accounting Standards CodificationTM
 and the Hierarchy of Generally Accepted Accounting Principles - a replacement
 of FASB Statement No. 162 (now ASC Subtopic 105-10, also issued as ASU No.
 2009-01). This standard establishes the ASC as the source of authoritative
 accounting principles recognized by the FASB to be applied by nongovernmental
 entities in the preparation of financial statements in conformity with
 generally accepted accounting principles. This standard is effective for
 financial statements issued for interim and annual periods ending after
 September 15, 2009. The adoption of this standard did not have an impact on
 our results of operations or our financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In August 2009, the FASB
 issued ASU No. 2009-5, Fair Value Measurements and Disclosures (Topic 820) -
 Measuring Liabilities at Fair Value. ASU No. 2009-5 provides clarification
 that in circumstances in which a quoted price in an active market for the
 identical liability is not available, a reporting entity is required to
 measure fair value using a valuation technique that uses the quoted price of
 the identical liability when traded as an asset, quoted prices for similar
 liabilities or similar liabilities when traded as assets, or another
 valuation technique that is consistent with the principles of ASC Topic 820. ASU
 No. 2009-5 is effective for the first reporting period (including interim
 periods) beginning after issuance. The adoption of ASU No. 2009-5 did not
 have a material impact on our results of operations or our financial
 position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In October 2009, the FASB
 issued ASU No. 2009-13, Revenue Recognition (Topic 605) - Multiple
 Deliverable Revenue Arrangements. ASU No. 2009-13 eliminates the residual
 method of allocation and requires that arrangement consideration be allocated
 at the inception of the arrangement to all deliverables using the relative
 selling price method and expands the disclosures related to
 multiple-deliverable revenue arrangements. ASU No. 2009-13 is effective
 prospectively for revenue arrangements entered into or materially modified in
 fiscal years beginning on or after June 15, 2010, with earlier adoption
 permitted. The adoption of ASU No. 2009-13 will not have a material impact on
 our results of operations or our financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In January 2010, the FASB
 issued ASU No. 2010-02, Consolidation (Topic 810) - Accounting and Reporting
 for Decreases in Ownership of a Subsidiary - a Scope Clarification. ASU No.
 2010-02 clarifies that the scope of the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-9

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | decrease in ownership
 provisions of Topic 810 applies to a subsidiary or group of assets that is a
 business, a subsidiary that is a business that is transferred to an equity
 method investee or a joint venture or an exchange of a group of assets that
 constitutes a business for a noncontrolling interest in an entity and does not
 apply to sales in substance of real estate. ASU No. 2010-02 is effective as
 of the beginning of the period in which an entity adopts Topic 810 or, if
 Topic 810 has been previously adopted, the first interim or annual period
 ending on or after December 15, 2009, applied retrospectively to the first
 period that the entity adopted Topic 810. The adoption of ASU No. 2010-02 did
 not have an impact on our results of operations or our financial position.                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | In January 2010, the FASB
 issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820)
 - Improving Disclosures about Fair Value Measurements. ASU 2010-06 requires
 new disclosures regarding transfers in and out of the Level 1 and 2 and
 activity within Level 3 fair value measurements and clarifies existing
 disclosures of inputs and valuation techniques for Level 2 and 3 fair value
 measurements. ASU 2010-06 also includes conforming amendments to employers
 disclosures about postretirement benefit plan assets. The new disclosures and
 clarifications of existing disclosures are effective for interim and annual
 reporting periods beginning after December 15, 2009, except for the
 disclosure of activity within Level 3 fair value measurements, which is
 effective for fiscal years beginning after December 15, 2010, and for interim
 periods within those years. The adoption of ASU No. 2010-06 will not have a
 material effect on our results of operations or our financial position.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | In February 2010, the FASB
 issued ASU 2010-09, Subsequent Events (Topic 855) - Amendments to Certain
 Recognition and Disclosure Requirements. ASU 2010-09 requires an entity that
 is an SEC filer to evaluate subsequent events through the date that the
 financial statements are issued and removes the requirement that an SEC filer
 disclose the date through which subsequent events have been evaluated. ASC
 2010-09 was effective upon issuance. The adoption of this standard had no
 effect on our results of operation or our financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

NOTE 2 - PROPERTY AND EQUIPMENT

Property and equipment
consists of:

|                                                 |  |                    |         |                    |   |         | 
|------------------------------------------------ |  | ------------------ | ------- | ------------------ | - | ------- | 
|                                                 |  | February 27,
 2010 |         | February 28,
 2009 |  
|                                                 |  |                    |         |                    |  
|                                                 |  | (in
thousands)     |        
|Land                                             |  | $                  | 37,615  |                    | $ | 42,125  | 
|Buildings and building
 improvements             |  |                    | 109,919 |                    |   | 112,011 | 
|Leasehold and leasehold
 improvements            |  |                    | 39,037  |                    |   | 28,531  | 
|Machinery and equipment                          |  |                    | 22,233  |                    |   | 23,212  | 
|Furniture and fixtures                           |  |                    | 28,303  |                    |   | 19,721  | 
|Construction in progress                         |  |                    | 1,685   |                    |   | 1,933   | 
|Computer software                                |  |                    | 16,002  |                    |   | 14,521  | 
|                                                 |  |                    |         |                    |   |         | 
|                                                 |  |                    | 254,794 |                    |   | 242,054 | 
|Less: accumulated
 depreciation and amortization |  |                    | 136,255 |                    |   | 146,098 | 
|                                                 |  |                    |         |                    |   |         | 
|                                                 |  | $                  | 118,539 |                    | $ | 95,956  | 
|                                                 |  |                    |         |                    |   |         | 

In addition to
the properties reflected in the above amounts, the Company has four properties,
in Ohio, Pennsylvania, Texas and New York that are held for sale. In
conjunction with the above, the Company recorded impairment charges in fiscal
2009 of $80,000 and in fiscal 2008 of $530,000. The New York property was sold
subsequent to year end for an amount greater than the value recorded at
February 27, 2010.

F-10

---



NOTE 3 - INCOME TAXES

The provision
(benefit) for income taxes is as follows:

|                                     |  |                    |         |                    |   |                |   |   |        |  
|------------------------------------ |  | ------------------ | ------- | ------------------ | - | -------------- | - | - | ------ | -
|                                     |  | Fiscal Year Ended  |        
|                                     |  |                    |        
|                                     |  | February 27,
 2010 |         | February 28,
 2009 |   | March 1,
 2008 |  
|                                     |  |                    |         |                    |   |                |  
|                                     |  | (in thousands)     |        
|Current:                             |  |                    |         |                    |   |                |   |   |        |  
|Federal                              |  | $                  | (5,954  | )                  | $ | (437           | ) | $ | 3,154  |  
|State                                |  |                    | 582     |                    |   | 197            |   |   | (328   | )
|                                     |  |                    |         |                    |   |                |   |   |        |  
|                                     |  |                    | (5,372  | )                  |   | (240           | ) |   | 2,826  |  
|                                     |  |                    |         |                    |   |                |   |   |        |  
|                                     |  |                    |         |                    |   |                |   |   |        |  
|Deferred:                            |  |                    |         |                    |   |                |   |   |        |  
|Federal                              |  | $                  | (7,321  | )                  | $ | (55            | ) | $ | (1,790 | )
|State                                |  |                    | (1,995  | )                  |   | (313           | ) |   | 1,293  |  
|                                     |  |                    |         |                    |   |                |   |   |        |  
|                                     |  |                    | (9,316  | )                  |   | (368           | ) |   | (497   | )
|                                     |  |                    |         |                    |   |                |   |   |        |  
|(Benefit)/provision for income taxes |  | $                  | (14,688 | )                  | $ | (608           | ) | $ | 2,329  |  
|                                     |  |                    |         |                    |   |                |   |   |        |  

The following
is a reconciliation of income taxes computed at the U.S. Federal statutory rate
to the (recovery)/provision for income taxes:

|                                   |  |                    |       |                    |  |                |   |  |      |  
|---------------------------------- |  | ------------------ | ----- | ------------------ |  | -------------- | - |  | ---- | -
|                                   |  | Fiscal Year Ended  |      
|                                   |  |                    |      
|                                   |  | February 27,
 2010 |       | February 28,
 2009 |  | March 1,
 2008 |  
|                                   |  |                    |       |                    |  |                |  
|                                   |  | (in thousands)     |      
|Statutory Federal income tax rate  |  |                    | 35.0  | %                  |  | 35.0           | % |  | 35.0 | %
|State taxes1                       |  |                    | 25.1  |                    |  | 3.8            |   |  | 13.3 |  
|Non-deductible
 insurance premiums |  |                    | (10.9 | )                  |  | (18.6          | ) |  | 23.2 |  
|Non-taxable
 insurance proceeds    |  |                    | 135.8 |                    |  |               |   |  |     |  
|Non-taxable
 bargain purchase gain |  |                    | 53.4  |                    |  |               |   |  |     |  
|Change of
 valuation allowance     |  |                    | (5.4  | )                  |  |               |   |  |     |  
|Other                              |  |                    | (2.8  | )                  |  | (5.1           | ) |  | 2.8  |  
|                                   |  |                    |       |                    |  |                |   |  |      |  
|Effective income tax rate          |  |                    | 230.2 | %                  |  | 15.1           | % |  | 74.3 | %
|                                   |  |                    |       |                    |  |                |   |  |      |  

1 Includes
adjustment in fiscal 2007 of prior year accrual and true-up of state net
operating losses.

F-11

---



The
composition of the Companys deferred tax assets and liabilities is as follows:

|                                                    |  |                    |        |                    |   |        | 
|--------------------------------------------------- |  | ------------------ | ------ | ------------------ | - | ------ | 
|                                                    |  | Fiscal Year Ended  |       
|                                                    |  |                    |       
|                                                    |  | February 27,
 2010 |        | February 28,
 2009 |  
|                                                    |  |                    |        |                    |  
|                                                    |  | (in thousands)     |       
|Deferred tax assets:                                |  |                    |        |                    |   |        | 
|Capitalization of inventory costs                   |  | $                  | 1,783  |                    | $ | 979    | 
|Pension cost                                        |  |                    | 28     |                    |   | 16     | 
|                                                    |  |                    |        |                    |   |        | 
|Reserves not currently deductible for tax
 purposes |  |                    | 4,431  |                    |   | 2,450  | 
|Net operating loss carry forwards                   |  |                    | 6,889  |                    |   | 390    | 
|Depreciation                                        |  |                    | 12,183 |                    |   | 12,877 | 
|Step rent                                           |  |                    | 936    |                    |   | 78     | 
|Pension Plan Obligation adjustment                  |  |                    | 995    |                    |   | 1,464  | 
|                                                    |  |                    |        |                    |   |        | 
|Total
 deferred tax assets                          |  | $                  | 27,245 |                    | $ | 18,254 | 
|Valuation Allowance                                 |  |                    | (346   | )                  |   |       | 
|                                                    |  |                    |        |                    |   |        | 
|Deferred tax
 assets after valuation allowance      |  |                    | 26,899 |                    |   | 18,254 | 
|Deferred tax
 liabilities:                          |  |                    |        |                    |   |        | 
|Depreciation                                        |  |                    | (2,074 | )                  |   |       | 
|Intangibles                                         |  |                    | (778   | )                  |   |       | 
|Other                                               |  |                    | (22    | )                  |   |       | 
|                                                    |  |                    |        |                    |   |        | 
|Total
 deferred tax liabilities                     |  |                    | (2,874 | )                  |   |       | 
|                                                    |  |                    |        |                    |   |        | 
|Net deferred
 tax assets                            |  | $                  | 24,025 |                    | $ | 18,254 | 
|                                                    |  |                    |        |                    |   |        | 
|                                                    |  |                    |        |                    |   |        | 
|Current
 deferred tax assets                        |  | $                  | 5,912  |                    | $ | 3,045  | 
|Long term
 deferred tax assets                      |  |                    | 18,113 |                    |   | 15,209 | 
|                                                    |  |                    |        |                    |   |        | 
|Total
 deferred tax assets                          |  | $                  | 24,025 |                    | $ | 18,254 | 
|                                                    |  |                    |        |                    |   |        | 

At February
27, 2010, the Company had state net operating loss carry forwards of
approximately $37,634,000. These net
operating losses expire in years through fiscal 2029. The Company also had federal net operating loss carry forwards of
approximately $13,080,000. These net
operating losses will expire in the year 2029.

Based on
managements assessment it is more likely than not that, for federal purposes,
deferred tax assets will be realized by future taxable income or tax planning
strategies. A valuation allowance of
approximately $346,000 was recorded in fiscal 2009 for certain state net
operating losses not expected to be fully utilized.

Effective
March 4, 2007, the Company adopted FIN 48 (now ASC Subtopic 740-10), Accounting for Uncertainty in Income Taxes,
which clarifies the accounting and disclosure for uncertainty in income
taxes. As a result of the adoption, the
Company recorded as a cumulative effect adjustment, a decrease to retained
earnings at the beginning of fiscal 2007 of approximately $250,000 and
increased accruals for uncertain tax positions and related interest and
penalties by a corresponding amount.
The Company has continued to recognize interest and, if applicable,
penalties, which could be assessed, related to uncertain tax positions in
income tax expense. For fiscal 2009,
the Company recorded approximately $14,000 in interest before federal and state
tax effect. The aggregate tax liability
as related to uncertain tax positions, plus related interest and penalties, as
of February 27, 2010 is approximately $308,000.

Examinations
by federal tax authorities have been completed through fiscal 2006. State examinations occur at various dates
covering various periods; one of the larger such examinations, the State of New
Jersey, has concluded its examination through fiscal 2005.

NOTE 4 - BANK CREDIT FACILITIES

The Company
had an unsecured $40 million, revolving credit facility with Israel Discount
Bank (IDB) through June 4, 2009, the agreement for which contained various
financial covenants and ratio requirements. There were no borrowings under this
facility during its term and the Company was in compliance with its covenants
during the period in which this facility was available. Effective June 5, 2009
the Company revised this facility to a secured $40 million, revolving credit
facility with the same bank and in connection with the acquisition of Filenes,
borrowed $24.0 million under this facility.
On August 27, 2009 the Company entered into a $75 million, secured,
revolving credit facility with Bank of America which replaced the IDB facility,
and expires on August 27, 2012. In
connection with the new Bank of America facility, the company recognized
approximately $1.1 million of deferred financing costs, which are being
amortized over the term of the agreement. This facility calculates availability
to borrow utilizing a formula which considers accounts receivable, inventory
and certain real estate and bears interest at various rates depending on
availability under formula, currently LIBOR +3%. The Company is in compliance
in all respects with the Bank of America facility at February 27, 2010. As of
February 27, 2010, $8.4 million is outstanding under this facility. Each of the
Companys loan facilities have had sub-limits for letters of credit which when
utilized, reduce availability under the facility. At February 27, 2010 and February 28, 2009 the Company had
outstanding letters of credit of $6,552,000 and $741,000, respectively. Total interest charges incurred for

F-12

---



fiscal 2009,
fiscal 2008 and fiscal 2007 were $1,628,000, $170,000, and $171,000,
respectively. There was no capitalized interest for fiscal 2009, 2008 or 2007.

NOTE 5  FAIR VALUE MEASUREMENTS

Effective
March 1, 2009, the Company adopted the Financial Accounting Standards Board
(FASB) Statement No. 157 (now ASC Subtopic 820-10), Fair Value Measurements
(ASC 820-10), for financial assets and liabilities. This statement defines
fair value, establishes a framework for measuring fair value and expands the
related disclosure requirements. The statement indicates, among other things,
that a fair value measurement assumes a transaction to sell an asset or
transfer a liability occurs in the principal market for the asset or liability
or, in the absence of a principal market, the most advantageous market for the
asset or liability. The Company adopted the provisions of ASC 820-10 with
respect to its non-financial assets and liabilities during the first quarter of
fiscal 2009. However, there were no non-financial assets or liabilities
requiring initial measurement or subsequent re-measurement during fiscal 2009.

In order to
increase consistency and comparability in fair value measurements, ASC 820-10
establishes a hierarchy for observable and unobservable inputs used to measure
fair value into three broad levels, which are described below:

| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1:
 Quoted prices (unadjusted) in active markets that are accessible at the
 measurement date for assets or liabilities. The fair value hierarchy gives the
 highest priority to Level 1 inputs.
| |   |                                                                                                                                                                                                       
| |  | Level 2:
 Observable prices that are based on inputs not quoted on active markets, but
 corroborated by market data.                                                                                  
| |   |                                                                                                                                                                                                       
| |  | Level 3:
 Unobservable inputs are used when little or no market data is available. The
 fair value hierarchy gives the lowest priority to Level 3 inputs.                                             

In determining
fair value, the Company utilizes valuation techniques that maximize the use of
observable inputs and minimize the use of unobservable inputs to the extent
possible as well as considers counterparty credit risk in its assessment of
fair value.

Assets
measured at fair value on a recurring basis include the following as of
February 27, 2010 and February 28, 2009:

|                                                  |  |                                               |           |                                                   |   |                                              |  |                                               |   |  |   |            | 
|------------------------------------------------- |  | --------------------------------------------- | --------- | ------------------------------------------------- | - | -------------------------------------------- |  | --------------------------------------------- | - |  | - | ---------- | 
|Fair Value Measurement at February 27, 2010 Using | 
|                                                  | 
|                                                  |  | Quoted
 Prices in
 Active
 Markets
 (Level 1) |           | Significant
 Other
 Observable
 Inputs
 (Level 2) |   | Significant
 Unobservable
 Inputs
 (Level 3) |  | Total
 Carrying
 Value at
 February 27,
 2010 |  
|                                                  |  |                                               |           |                                                   |   |                                              |  |                                               |  
|                                                  |  |                                               |           |                                                   |   |                                              |  |                                               |   |  |   |            | 
|Cash and cash equivalents                         |  | $                                             | 2,049,000 |                                                   | $ |                                             |  | $                                             |  |  | $ | 2,049,000  | 
|                                                  |  |                                               |           |                                                   |   |                                              |  |                                               |   |  |   |            | 
|Cash
 surrender value  Officers Life Insurance  |  | $                                             |          |                                                   | $ | 1,905,000                                    |  | $                                             |  |  | $ | 1,905,000  | 
|                                                  |  |                                               |           |                                                   |   |                                              |  |                                               |   |  |   |            | 
|Fair Value Measurement at February 28, 2009 Using | 
|                                                  | 
|                                                  |  | Quoted
 Prices in
 Active
 Markets
 (Level 1) |           | Significant
 Other
 Observable
 Inputs
 (Level 2) |   | Significant
 Unobservable
 Inputs
 (Level 3) |  | Total
 Carrying
 Value at
 February 27,
 2010 |  
|                                                  |  |                                               |           |                                                   |   |                                              |  |                                               |  
|                                                 
|Cash and cash equivalents                         |  | $                                             | 1,822,000 |                                                   | $ |                                             |  | $                                             |  |  | $ | 1,822,000  | 
|                                                  |  |                                               |           |                                                   |   |                                              |  |                                               |   |  |   |            | 
|Cash
 surrender value  Officers Life Insurance  |  | $                                             |          |                                                   | $ | 22,033,000                                   |  | $                                             |  |  | $ | 22,033,000 | 

F-13

---



On an annual
recurring basis, the Company is required to use fair value measures when
measuring plan assets of the Companys pension plans. As the Company elected to
adopt the measurement date provisions of ASC 715, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans, as of March 4, 2007, the Company was required to
determine the fair value of the Companys pension plan assets as of February
27, 2010. The fair value of pension plan assets was $7.0 million at February
27, 2010. These assets are valued in
active liquid markets.

Additionally,
on a nonrecurring basis, the Company uses fair value measures when analyzing
asset impairment. Long-lived assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is
determined that such indicators are present and the review indicates that the
assets will not be fully recoverable, based on undiscounted estimated cash
flows over the remaining amortization periods, their carrying values are
reduced to estimated fair value. Measurements based on undiscounted cash flows
are considered to be level 3 inputs.

NOTE 6  ACQUISITION OF FILENES BASEMENT

On June 19,
2009 the Company, through its wholly-owned subsidiary, SYL, LLC, acquired
certain inventory, fixed assets, equipment, intellectual property and real
property leases and certain other net assets of Filenes Basement, Inc., an
off-price retail clothing chain, pursuant to an order of the United States
Bankruptcy Court for the District of Delaware in accordance with Sections 105,
363 and 365 of the United States Bankruptcy Code. Filenes was acquired for a
variety of reasons including the opportunity to capitalize on the strength of
brand awareness, leverage the utilization of combined infrastructure and
personnel, and to expand market share in the off-price retail clothing market.
The purchase price paid at closing was approximately $64.4 million in cash, of
which $38.9 million was paid for by the Company. Approximately $25.0 million
was paid for by Vornado Realty Trust and its joint venture partners to acquire
a termination of their lease in Boston, Massachusetts and to make changes to
their lease for a Filenes Basement location in New York, New York. The
Companys portion of the purchase price was paid for through $ 23.9 million in
borrowings under the Companys asset-based revolving credit facility (Note 4),
and the remainder from cash on hand.
The acquisition was accounted for as a business combination using the
purchase method of accounting under the provisions of SFAS 141(R) (now ASC
Topic 805), Business Combinations.

The
consolidated condensed financial statements presented herein include the
results of operations for Filenes from the period June 19, 2009 through
February 27, 2010.

The Company
determined that the fair values of assets acquired exceeded the purchase price
by approximately $9.7 million, which was recorded as a bargain purchase gain,
and is shown as a separate component of operating expenses in the consolidated
financial statements for fiscal 2009.
The gain of approximately $13,122,000, before netting of the related
deferred tax liabilities of $3,408,000, was recognized for book purposes
only. The gain is not recognized
currently for tax purposes and the bargain purchase resulted in a downward
adjustment of the tax basis of the assets acquired. In accordance with Reg. 1.1060-1(c)(2) and 1.338-6(b), the
residual method was used to allocate the purchase price among the assets
classes. This resulted in reduction of
basis for Class V assets (fixed assets and prepaid expenses) and elimination of
basis for Class VI (Trade name and customer list). The cost of acquisition, in the amount of approximately $4.9
million, is capitalized for tax and deducted as a current expense for book
purposes.

The following
table presents (in thousands) the estimated fair values of the net assets
acquired and the excess of such net assets over the purchase price at
acquisition date:

|                                         |  |   |        |  
|---------------------------------------- |  | - | ------ | -
|Inventory                                |  | $ | 21,316 |  
|Fixed assets
 and equipment              |  |   | 30,051 |  
|Intangible
 assets                       |  |   | 2,090  |  
|                                         |  |   |        |  
|Fair value                               |  |   | 53,457 |  
|Purchase
 Price                          |  |   | 38,927 |  
|                                         |  |   |        |  
|Excess of fair value over purchase price |  |   | 14,530 |  
|Less:
 Deferred taxes                    |  |   | (3,408 | )
|Obligations to customers                 |  |   | (1,197 | )
|Other adjustments                        |  |   | (211   | )
|                                         |  |   |        |  
|Bargain
 purchase gain                   |  | $ | 9,714  |  
|                                         |  |   |        |  

F-14

---



Intangible
assets are comprised primarily of trademarks with a 10 year life, while the
customer list acquired having a value of $40,000 has a useful life of 5 years.
In conjunction with the transaction, acquisition costs inclusive of investment
banking, legal, professional and other costs aggregating $4.9 million were
expensed in the periods incurred.

Included in
the accompanying consolidated financial statements are Filenes net sales of
$177.4 million and a net loss of $2.9 million since June 19, 2009 (first date
of operating ownership and consolidation) and is included in the consolidated
statement of operations. The following table summarizes, on a pro-forma basis,
the combined results of operations of the Company and Filenes as though the
acquisition had occurred as of March 2, 2008. The pro-forma amounts give effect
to adjustments to exclude Filenes store locations not acquired. The pro-forma
amounts presented are not necessarily indicative of either the actual
consolidated operating results had the acquisition occurred as of March 2, 2008
or of future consolidated operating results.

|                |  |                                  |         |               |   |         |  
|--------------- |  | -------------------------------- | ------- | ------------- | - | ------- | -
|                |  | Fiscal Year ended (in thousands) |        
|                |  |                                  |        
|                |  | Feb. 27, 2010                    |         | Feb. 28, 2009 |  
|                |  |                                  |         |               |  
|Revenues        |  | $                                | 441,925 |               | $ | 580,117 |  
|Net income
 (1) |  | $                                | (2,878  | )             | $ | (355    | )

|    |                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fiscal 2009
 includes a gain of $24,764,000 from the receipt of insurance proceeds from
 officers life insurance policies on the life of the Companys founder and
 fiscal 2008 includes a bargain purchase gain of $9,714,000 attributable to
 the acquisition of Filenes.

NOTE 7 - PENSION AND PROFIT SHARING PLANS

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. | Pension Plan - The Company has a defined benefit
 pension plan for all employees other than those covered under collective
 bargaining agreements through December 31, 2006. This Pension Plan was frozen
 effective December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The benefits
 are based on years of service and the employees highest average pay during
 any five consecutive years within the ten-year period prior to retirement.
 Pension plan costs are funded annually. Contributions are intended to provide
 not only for benefits attributed to service to date, but also for those
 expected to be earned in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The
 investment strategy objectives of the plan are continued growth and income.
 All plan assets are managed by outside investment managers. Asset allocations
 are reviewed on a regular basis by the investment management company.
 Equities are primarily S&P 500 securities which make up approximately 51%
 of plan assets. Fixed income securities make up the remaining approximate 49%
 and consist primarily of securities in the Barclays Capital Aggregate
 (formerly the Lehman Aggregate) and Merrill Lynch 1-3 year Government
 Corporate indexes. The measurement date used for fiscal 2009 is February 27,
 2010. For fiscal 2008, the measurement date was February 28, 2009. For fiscal
 2007and prior, the measurement date used was December 31 immediately prior to
 each fiscal year end.

Presented
below is financial information relating to this plan for the fiscal years
indicated:

|                                                 |  |                    |        |                    |   |        |  
|------------------------------------------------ |  | ------------------ | ------ | ------------------ | - | ------ | -
|                                                 |  | February 27,
 2010 |        | February 28,
 2009 |  
|                                                 |  |                    |        |                    |  
|                                                 |  | (in thousands)     |       
|CHANGE IN BENEFIT OBLIGATION:                    |  |                    |        |                    |   |        |  
|Net benefit obligation  beginning of
 period    |  | $                  | 10,034 |                    | $ | 9,736  |  
|Interest cost                                    |  |                    | 558    |                    |   | 682    |  
|Actuarial loss                                   |  |                    | 132    |                    |   | 153    |  
|Gross benefits paid                              |  |                    | (1,051 | )                  |   | (537   | )
|                                                 |  |                    |        |                    |   |        |  
|Net benefit obligation  end of period           |  | $                  | 9,673  |                    | $ | 10,034 |  
|                                                 |  |                    |        |                    |   |        |  
|                                                 |  |                    |        |                    |   |        |  
|CHANGE IN PLAN ASSETS:                           |  |                    |        |                    |   |        |  
|Fair value of plan assets  beginning of
 period |  | $                  | 6,338  |                    | $ | 9,723  |  
|Gross benefits paid                              |  |                    | (1,051 | )                  |   | (537   | )
|Actual (loss)/return on plan assets              |  |                    | 1,746  |                    |   | (2,848 | )
|                                                 |  |                    |        |                    |   |        |  
|Fair value of plan assets  end of period        |  | $                  | 7,033  |                    | $ | 6,338  |  
|                                                 |  |                    |        |                    |   |        |  
|                                                
|Funded status at year end                        |  | $                  | (2,640 | )                  | $ | (3,696 | )
|                                                 |  |                    |        |                    |   |        |  

F-15

---



Pension
expense (benefit) includes the following components:

|                                            |  |                    |        |                    |   |                |   |   |      |  
|------------------------------------------- |  | ------------------ | ------ | ------------------ | - | -------------- | - | - | ---- | -
|                                            |  | February 27,
 2010 |        | February 28,
 2009 |   | March 1,
 2008 |  
|                                            |  |                    |        |                    |   |                |  
|                                            |  | (in thousands)    
|COMPONENTS
 OF NET PERIODIC (BENEFIT) COST: |  |                    |        |                    |   |                |   |   |      |  
|Service cost                                |  | $                  |       |                    | $ |               |   | $ |     |  
|Interest
 cost                              |  |                    | 558    |                    |   | 682            |   |   | 544  |  
|(Return)
 loss on assets                    |  |                    | (1,746 | )                  |   | 2,848          |   |   | (756 | )
|Amortization
 of (gain) loss                |  |                    | 1,350  |                    |   | (3,577         | ) |   | 24   |  
|                                            |  |                    |        |                    |   |                |   |   |      |  
|Net periodic
 (benefit) cost                |  | $                  | 162    |                    | $ | (47            | ) | $ | (188 | )
|                                            |  |                    |        |                    |   |                |   |   |      |  
|                                            |  |                    |        |                    |   |                |   |   |      |  
|WEIGHTED-AVERAGE
 ASSUMPTIONS USED:         |  |                    |        |                    |   |                |   |   |      |  
|Discount
 rate                              |  |                    | 6.1    | %                  |   | 6.3            | % |   | 5.8  | %
|Rate of
 compensation increase              |  |                    |       |                    |   |               |   |   | 4.5  | %

The expected long-term rate of return on plan
assets was 8.0% for all years.

As of February 27, 2010 the benefits expected
to be paid in the next five fiscal years and in the aggregate for the five fiscal
years thereafter are as follows (in thousands):

|          |  |   |       | 
|--------- |  | - | ----- | 
|2010      |  | $ | 598   | 
|2011      |  |   | 602   | 
|2012      |  |   | 596   | 
|2013      |  |   | 610   | 
|2014      |  |   | 635   | 
|2015-2019 |  | $ | 3,426 | 

The fair
values and asset allocation of the Companys plan assets as of February 27,
2010 and the target allocation for fiscal 2010, by asset category, are
presented in the following table. All fair values are based on quoted prices in
active markets for identical assets (Level 1 in the fair value hierarchy).

|                         |                |  |            |                  |   |            |  |                   |     |   |  | 
|------------------------ | -------------- |  | ---------- | ---------------- | - | ---------- |  | ----------------- | --- | - |  | 
|                         | Asset Category |  |            | Asset Allocation |   | Fair Value |  | % of Plan
 Assets |    
|                         |                |  |            |                  |   |            |  |                   |    
|Cash and
 equivalents    |                |  | 0% to 5%   |                  | $ | 65         |  |                   | 1   | %
|Equity
 Securities       |                |  | 45% to 55% |                  |   | 3,652      |  |                   | 52  | %
|Fixed Income
 Securities |                |  | 45% to 55% |                  |   | 3,316      |  |                   | 47  | %
|                         |                |  |            |                  |   |            |  |                   |     |  
|Total                    |                |  |            |                  | $ | 7,033      |  |                   | 100 | %
|                         |                |  |            |                  |   |            |  |                   |     |  

The Company adopted
SFAS 158 (now ASC Topic 715) for fiscal 2006. Under the
provisions of ASC 715, the Company is required to recognize in its consolidated
balance sheet the unfunded status of a benefit plan. This is measured as the
difference between plan assets at fair value and the projected benefit
obligation. For the Pension Plan, this is equal to the accumulated benefit
obligation.

In addition,
ASC 715 requires the Company to recognize as a component of other comprehensive
income, net of tax, the gains or losses and prior service costs or credits that
arise during the period but are not recognized as components of net periodic
benefit cost. Gains or losses represent changes in the amount of either the
projected benefit obligations or plan assets resulting from changes in
assumptions, actuarial gains/losses and actual investment returns. ASC 715 did
not change the recognition of pension income or expense in the statement of
operations. Since the Company has recognized the funded status of its defined
benefit pension plans since its adoption of the Accelerated Method, the
adoption of ASC 715 did not have a material effect on the Companys reported
pension liability or pension expense in any period presented. Effective with
fiscal 2008, the measurement date for the plan coincides with the fiscal year
end date.

F-16

---



|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b.                   | Profit-Sharing and 401(k) Plan-
 The Company has a profit-sharing plan and 401(k) plan for all employees other
 than those covered under collective bargaining agreements. In 1995, the
 Company established a defined contribution savings plan 401(k) for
 substantially all of its eligible employees. Employees may contribute a
 percentage of their salary to the plan subject to statutory limits. The
 Company made contributions to this plan of $450,000 in fiscal 2007. No
 contributions were made in fiscal 2008 and fiscal 2009.  
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|NOTE 8 - COMMITMENTS
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|a.                   | Leases- The
 Company has various operating leases for its retail stores, with terms
 expiring between 2010 and 2031. Under most lease agreements, the Company pays
 real estate taxes, maintenance and other operating expenses. Certain store
 leases also provide for additional contingent rentals based upon a percentage
 of sales in excess of certain minimum amounts. Future minimum lease payments
 under operating leases as of February 27, 2010 for each of the next five
 years and in the aggregate are as follows (in thousands):

|            |  |   |         | 
|----------- |  | - | ------- | 
|Fiscal 2010 |  | $ | 35,526  | 
|Fiscal 2011 |  |   | 33,902  | 
|Fiscal 2012 |  |   | 31,383  | 
|Fiscal 2013 |  |   | 30,704  | 
|Fiscal 2014 |  |   | 30,128  | 
|Thereafter  |  |   | 156,418 | 
|            |  |   |         | 
|Total       |  | $ | 318,061 | 
|            |  |   |         | 

Rent expense
for operating leases (in thousands) is as follows:

|                            |  |                    |        |                    |   |                |   |   |       |  
|--------------------------- |  | ------------------ | ------ | ------------------ | - | -------------- | - | - | ----- | -
|                            |  | Fiscal Year Ended 
|                            |  |                   
|                            |  | February 27,
 2010 |        | February 28,
 2009 |   | March 1,
 2008 |  
|                            |  |                    |        |                    |   |                |  
|Minimum
 rentals due        |  | $                  | 27,060 |                    | $ | 6,581          |   | $ | 6,683 |  
|Escalation
 rentals accrued |  |                    | 2,167  |                    |   | (338           | ) |   | (369  | )
|Sublease
 rentals           |  |                    | (1,319 | )                  |   | (250           | ) |   | (250  | )
|                            |  |                    |        |                    |   |                |   |   |       |  
|Total                       |  | $                  | 27,908 |                    | $ | 5,993          |   | $ | 6,064 |  
|                            |  |                    |        |                    |   |                |   |   |       |  

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b. | Legal Proceedings -The
 Company is a party to routine litigation incidental to its business. Some of
 the actions to which the Company is a party are covered by insurance and are
 being defended or reimbursed by the Companys insurance carriers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In December
 2007, the Company announced its decision to voluntarily delist its common
 stock from trading on the New York Stock Exchange (NYSE) and, given that
 there were fewer than 300 holders of record of its common                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | shares,
 simultaneously deregister its common stock under federal securities laws. The
 Companys decision to deregister with the Securities and Exchange Commission
 (SEC) and delist from NYSE was principally motivated by the desire to
 minimize the financial and administrative burdens associated with being an
 SEC reporting company and further minimize or eliminate the compliance obligations
 incident to the Sarbanes-Oxley Act of 2002. In January 2008 certain
 institutional investors commenced a campaign to cause certain shareholders to
 register shares individually and simultaneously brought two actions seeking
 injunctive relief from the aforementioned deregistration and delisting,
 counsel fees and unspecified damages. Although the Company believes that its
 actions were appropriate, the Company determined that the costs and expenses
 associated with protracted litigation could not be justified and, in February
 2008, reregistered its common stock and listed its shares for trading on
 NASDAQ. The costs associated with this litigation were substantially covered
 by insurance. All litigation associated with these matters has either been
 dismissed in the Companys favor or settled within the limits of the
 Companys insurance policies, less a nominal deductible.

F-17

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NOTE 9 - PREFERRED STOCK

The Company is
authorized to issue up to 1,000,000 shares of preferred stock, in one or more
series of preferred stock. The Board of Directors is authorized to establish
the number of shares to be included in each such series, and to fix the
designation, relative rights, preferences, qualifications and limitations of
the shares of each such series. No such shares have been issued or are
outstanding.

NOTE 10 - STOCK OPTION PLAN

The Companys
Amended and Restated Stock Option and Appreciation Plan allows for the granting
of incentive stock options, as defined in Section 422A of the Internal Revenue
Code of 1986 (as amended), non-qualified stock options and stock appreciation
rights. The plan requires that incentive stock options be granted at an
exercise price not less than the fair market value of the Common Stock on the
date the option is granted. The exercise price of the option for holders of
more than 10% of the voting rights of the Company must be not less than 110% of
the fair market value of the Common Stock on the date of grant. Non-qualified
options and stock appreciation rights may be granted at any exercise price. The
Company has reserved 1,500,000 shares of common stock for issuance thereunder.
The Company is no longer issuing options under its Amended and Restated
Incentive Stock Option and Appreciation Plan.

No option or
stock appreciation rights may be granted under the Amended and Restated
Incentive Stock Option Plan after July 28, 2013. The maximum exercise period
for any option or stock appreciation right under the plan is ten years from the
date the option is granted (five years for any optionee who holds more than 10%
of the voting rights of the Company).

On July 14,
2005, at the annual meeting of shareholders of the Company, the shareholders of
the Company approved the 2005 Stock Option Plan (the 2005 Plan), which 2005
Plan was adopted by the Board of Directors of the Company on April 7, 2005
subject to shareholder approval. The 2005 Plan permits the grant of options,
share appreciation rights, restricted shares, restricted share units,
performance units, performance shares, cash-based awards and other share-based
awards. Key employees, non-employee directors, and third party service
providers of the Company who are selected by a committee designated by the
Board of Directors of the Company are eligible to participate in the 2005 Plan.
The maximum number of shares of Common Stock issuable under the Plan is
850,000, subject to certain adjustments in the event of changes to the
Companys capital structure.

The 2005 Plan requires that incentive stock
options be granted at an exercise price not less than the fair market value of
the Common Stock on the date the option is granted. The exercise price of such
options for holders of more than 10% of the voting stock of the Company must be
not less than 110% of the fair market value of the Common Stock on the date of
grant. The exercise price of non-qualified options and stock appreciation
rights must not be less than fair market value on the date such benefits are
granted.

The maximum
exercise period for any option or stock appreciation right under the 2005 Plan
is ten years from the date the option is granted (five years for any incentive
stock options issued to a person who holds more than 10% of the voting stock of
the Company).

The 2005 Plan
permits the Company to issue restricted shares, restricted share units,
performance units, cash-based awards and other share-based awards with such
terms and conditions (including applicable vesting conditions) as the Company
shall determine, subject to certain terms and conditions set forth in the 2005
Plan.

The fair value
of each option award is estimated on the date of grant using a Black-Scholes
option valuation model. Expected volatility is based on the historical
volatility of the price of the Companys stock. The risk-free interest rate is
based on U.S. Treasury issues with a term equal to the expected life of the
option. The Company uses historical data to estimate expected dividend yield,
expected life and forfeiture rates. The aggregate intrinsic value of the
outstanding and exercisable options during fiscal 2009 and fiscal 2008 was
approximately $0 and $932,000, respectively. The aggregate intrinsic values of
options exercised during fiscal 2009 and fiscal 2008 were approximately $17,000
and $706,000, respectively.

F-18

---



The following
table summarizes stock option activity for each of the past three fiscal years:

|                                 |  |                                         |     |                                    |   |                      |  |                                    |      |                      |   |                                    |  |  |      |   |   |       | 
|-------------------------------- |  | --------------------------------------- | --- | ---------------------------------- | - | -------------------- |  | ---------------------------------- | ---- | -------------------- | - | ---------------------------------- |  |  | ---- | - | - | ----- | 
|                                 |  | Fiscal Year Ended                      
|                                 |  |                                        
|                                 |  | (in thousands except per share amounts)
|                                 |  | February 27, 2010                       |     | February 28, 2009                  |   | March 1, 2008        | 
|                                 |  |                                         |     |                                    |   |                      | 
|                                 |  | Fiscal
 2005
 Shares                    |     | Weighted
 Average
 Exercise
 Price |   | Fiscal
 2005
 Shares |  | Weighted
 Average
 Exercise
 Price |      | Fiscal
 2005
 Shares |   | Weighted
 Average
 Exercise
 Price | 
|                                 |  |                                         |     |                                    |   |                      |  |                                    |      |                      |   |                                    | 
|FIXED
 OPTIONS                   |  |                                         |     |                                    |   |                      |  |                                    |      |                      |   |                                    |  |  |      |   |   |       | 
|Outstanding
  beginning of year |  |                                         | 111 |                                    | $ | 13.81                |  |                                    | 329  |                      | $ | 11.19                              |  |  | 330  |   | $ | 11.17 | 
|Exercised                        |  |                                         | (9  | )                                  |   | 7.18                 |  |                                    | (218 | )                    |   | 9.81                               |  |  | (0.8 | ) |   | 13.74 | 
|Cancelled                        |  |                                         | (4  | )                                  |   | 5.21                 |  |                                    |     |                      |   |                                   |  |  | (0.5 | ) |   | 5.21  | 
|                                 |  |                                         |     |                                    |   |                      |  |                                    |      |                      |   |                                    |  |  |      |   |   |       | 
|Outstanding
  end of year       |  |                                         | 98  |                                    | $ | 15.01                |  |                                    | 111  |                      | $ | 13.81                              |  |  | 329  |   | $ | 11.19 | 
|                                 |  |                                         |     |                                    |   |                      |  |                                    |      |                      |   |                                    |  |  |      |   |   |       | 
|                                 |  |                                         |     |                                    |   |                      |  |                                    |      |                      |   |                                    |  |  |      |   |   |       | 
|Options
 exercisable at year end |  |                                         | 98  |                                    | $ | 15.01                |  |                                    | 111  |                      | $ | 13.81                              |  |  | 329  |   | $ | 11.19 | 
|                                 |  |                                         |     |                                    |   |                      |  |                                    |      |                      |   |                                    |  |  |      |   |   |       | 

During 2009,
stock options for 8,822 shares were exercised and 4,790 shares were cancelled
by the Company. The remaining outstanding options expire in 2015.

NOTE 11 - NET INCOME (LOSS) PER SHARE

In accordance with SFAS 128 (now ASC Topic
260), basic net income (loss) per share has been computed based upon the
weighted average common shares outstanding. Diluted net income (loss) per share
gives effect to outstanding stock options, if they are dilutive.

Net income (loss) per share has been computed
as follows:

|                                               |  |                                         |        |             |   |             |   |   |        | 
|---------------------------------------------- |  | --------------------------------------- | ------ | ----------- | - | ----------- | - | - | ------ | 
|                                               |  | Fiscal 2009                             |        | Fiscal 2008 |   | Fiscal 2007 |  
|                                               |  |                                         |        |             |   |             |  
|                                               |  | (in thousands except per share amounts) |       
|Basic and diluted net income (loss) per share: |  |                                         |        |             |   |             |   |   |        | 
|                                              
|Net income
 (loss)                             |  | $                                       | 8,308  |             | $ | (3,423      | ) | $ | 807    | 
|Average
 shares outstanding - basic            |  |                                         | 14,593 |             |   | 14,589      |   |   | 14,659 | 
|                                              
|Net income
 (loss) per share  basic           |  | $                                       | 0.57   |             | $ | (0.23       | ) | $ | 0.06   | 
|                                              
|Average
 shares outstanding  diluted          |  |                                         | 14,593 | *           |   | 14,589      | * |   | 14,760 | 
|                                              
|Net income
 (loss) per share  diluted         |  | $                                       | 0.57   |             | $ | (0.23       | ) | $ | 0.05   | 

*All outstanding options were anti-dilutive
for fiscal 2009 and fiscal 2008

F-19

---



NOTE 12 - UNAUDITED SELECTED QUARTERLY
FINANCIAL DATA

|                                       |  |                                          |        |        |   |        |   |        |         |  |   |         |  
|-------------------------------------- |  | ---------------------------------------- | ------ | ------ | - | ------ | - | ------ | ------- |  | - | ------- | -
|                                       |  | Quarter                                 
|                                       |  | First                                    |        | Second |   | Third  |   | Fourth |        
|                                       |  |                                          |        |        |   |        |   |        |        
|                                       |  | (In thousands, except per share amounts)
|YEAR ENDED
FEBRUARY 27, 2010 (1)       |  |                                          |        |        |   |        |   |        |         |  |   |         |  
|Net sales                              |  | $                                        | 50,256 |        | $ | 76,437 |   | $      | 135,159 |  | $ | 115,457 |  
|Gross profit                           |  |                                          | 21,061 |        |   | 28,173 |   |        | 57,868  |  |   | 38,000  |  
|Net income
 (loss) (2) (3)             |  | $                                        | (2,035 | )      | $ | (7,889 | ) | $      | 25,646  |  | $ | (7,414  | )
|Net income
 (loss) per share  basic   |  | $                                        | (0.14  | )      | $ | (0.54  | ) | $      | 1.76    |  | $ | (0.51   | )
|Net income
 (loss) per share  diluted |  | $                                        | (0.14  | )      | $ | (0.54  | ) | $      | 1.76    |  | $ | (0.51   | )

|                                       |  |                                          |        |        |   |        |   |        |        |   |   |        |  
|-------------------------------------- |  | ---------------------------------------- | ------ | ------ | - | ------ | - | ------ | ------ | - | - | ------ | -
|                                       |  | Quarter                                 
|                                       |  | First                                    |        | Second |   | Third  |   | Fourth |       
|                                       |  |                                          |        |        |   |        |   |        |       
|                                       |  | (In thousands, except per share amounts)
|YEAR ENDED
FEBRUARY 28, 2009           |  |                                          |        |        |   |        |   |        |        |   |   |        |  
|Net sales                              |  | $                                        | 64,588 |        | $ | 59,030 |   | $      | 64,330 |   | $ | 54,052 |  
|Gross profit                           |  |                                          | 28,178 |        |   | 23,140 |   |        | 26,632 |   |   | 22,575 |  
|Net income
 (loss) (2) (4) (5)         |  | $                                        | 626    |        | $ | (1,271 | ) | $      | (891   | ) | $ | (1,887 | )
|Net income
 (loss) per share  basic   |  | $                                        | 0.04   |        | $ | (0.09  | ) | $      | (0.06  | ) | $ | (0.12  | )
|Net income
 (loss) per share  diluted |  | $                                        | 0.04   |        | $ | (0.09  | ) | $      | (0.06  | ) | $ | (0.12  | )

|    |                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Results for
 fiscal 2009 are materially impacted by the acquisition of Filenes Basement
 in the second quarter. (See Note 6).                                                                                                                             
|    |                                                                                                                                                                                                                                                            
|(2) | Includes
 impairment charges of $80 and $530 in the fourth quarter of Fiscal 2009 and
 Fiscal 2008 respectively, relating to certain leased properties or properties
 held for sale.                                                                       
|    |                                                                                                                                                                                                                                                            
|(3) | Includes
 income of $24.8 million from the receipt of life insurance proceeds from
 officers life insurance policies in the third quarter and a bargain purchase
 gain of $9.7 million attributable to the acquisition of Filenes in the
 second quarter.
|    |                                                                                                                                                                                                                                                            
|(4) | Includes
 adjustment for $209,000 in the fourth quarter reflecting accelerated
 depreciation for the anticipated closing of one store and the related tax
 effect of $109,000.                                                                             
|    |                                                                                                                                                                                                                                                            
|(5) | Includes a
 $290,000 fourth quarter adjustment to the income tax payable account related
 to prior year taxes.                                                                                                                                             

F-20

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