CROWLEY MILNER & CO, 10-K405, 1996-05-03

CROWLEY MILNER & CO
10-K405, 1996-05-03
DEPARTMENT STORES

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 3, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ------- to ---------

Commission File Number 1-1594

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

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

2301 West Lafayette Boulevard, Detroit, MI 48216
(Address of principal executive offices with Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Common Stock
Name of each Exchange on which registered: American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE

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

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

As of April 30, 1996, there were 956,069 shares of the registrant's Common
Stock outstanding and the aggregate market value of such Common Stock held
by non-affiliates (based on the closing price on the American Stock Exchange
on such date) was $2,882,228.

Portions of the registrant's Proxy Statement for its 1996 Annual Meeting of
Shareholders to be held June 26, 1996 ("Proxy Statement"), only to the
extent expressly so stated herein, are incorporated by reference into Part
III of this Report.

<PAGE>
PART I

Item 1. BUSINESS.

Crowley, Milner and Company (the "Company") was organized under
Michigan law as a corporation in 1914 and is presently engaged in the
operation of retail specialty department stores in the metropolitan Detroit,
Michigan and suburban Flint, Michigan areas. In addition to its own
merchandise, the Company offers certain goods and services through licensed
(or so-called leased) departments. The Company uses a 52/53 week fiscal
year, with the fiscal year ending on the Saturday closest to January 31 for
financial reporting purposes, a practice typical in the retail industry. The
Company is a quality fashion department store selling moderate priced lines
in men's, women's and children's apparel, accessories and decorative home
furnishings. Retail operations are presently conducted in ten store
locations (seven are located in shopping malls or shopping centers in
suburban areas north and west of Detroit; one is located in a downtown
shopping district of a northern Detroit suburb; one is located in a shopping
mall in suburban Flint, Michigan; and one is located within the city limits
of Detroit in an office/retail center).

In addition to its own merchandise, the Company offers certain goods
and services (principally shoes, fine jewelry, millinery, furs and
maternity) through licensed or so-called leased departments which are
operated by independent lessees. The Company participates in several
well-recognized national credit card programs and, in October, 1992, the
Company, in conjunction with Beneficial National Bank USA, introduced a
private label credit card for use by its customers in its stores.

On November 17, 1995, the Company entered into an Agreement and Plan
of Reorganization (the "Reorganization Agreement") with the owners of
Steinbach Stores, Inc. ("Steinbach"), an Ohio corporation which at that time
operated 24 stores in the states of New York, New Jersey, New Hampshire,
Vermont and Connecticut. The Reorganization Agreement contemplates that the
Company will acquire all of the outstanding stock of Steinbach in exchange
for 514,800 shares of common stock of the Company, which will represent
approximately 35% of the shares of common stock of the Company which will be
outstanding after the acquisition. The Reorganization Agreement also
contemplates that Steinbach will discontinue operations at nine of its
stores, with the result that 15 stores will be operated by Steinbach at the
time the acquisition is consummated. All of these 15 Steinbach stores are
leased pursuant to leases with terms (disregarding available extensions or
renewals) ranging from 1998 to 2015, and they had total combined sales
revenues of approximately $95,751,000 during the eleven month period ended
December 30, 1995. Since signing the Reorganization Agreement, Steinbach
has closed or sold seven stores and two more are in the process of being
closed. Since December 30, 1995, the Company has been operating the
Steinbach stores for its own benefit and at its own risk, including the two
stores that are in the process of being closed. Management of the Company
believes that Steinbach has a similar customer base to the Company's
Michigan stores and that its operations can be integrated into those of the
Company with minimal additional overhead and corporate expense at the
Company's corporate headquarters in Detroit with respect to corporate
management (i.e., accounting, administration, marketing and buying
functions). (The information in the foregoing sentence contains forward
looking statements within the meaning of the Securities Exchange Act of 1934
and is subject to the safe harbor created by that statute. Actual results
could differ materially from those projected in the forward looking
statements and there can be no assurance that the Company will be successful
in its efforts to integrate Steinbach into the Company's operations with
minimal additional overhead or corporate expense.) The Company and
Steinbach have filed the required pre-merger notifications with the United
States Federal Trade Commission and United States Department of Justice, and
the waiting period prescribed by applicable law has expired. Consummation
of the acquisition of the Steinbach stores is subject to approval by the
shareholders of the Company, and such approval will be sought at the 1996
annual meeting of shareholders. The Company is in the process of preparing
proxy materials for this annual meeting, which it expects to hold during
late June 1996. If approved by shareholders at the annual meeting, the
acquisition of Steinbach will be completed as soon thereafter as
practicable.

Except as described below in "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" which is
incorporated herein by reference, there have been no material changes or
developments in the sources and availability of raw materials or supplies
essential to the Company's business since January 28, 1995.

During the fiscal year ended February 3, 1996, the Company did not
spend any amounts for material research activities relating to the
development of new products or services.

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

At February 3, 1996, the Company employed approximately 1,123 full-time
and part-time persons. The Company's sales in its fourth quarter
traditionally have been materially greater than sales in the other three
quarters due to seasonal buying patterns of consumers. As a result, the
number of employees increased during the fourth quarter to a maximum of
approximately 1,322 persons. An average of 1,128 employees were employed
during the remaining three quarters of the year.

The Company's business involves only one industry segment, as described
above, and no identifiable class of similar products or services contributes
10% or more of the Company's total sales or revenues.

Item 2. PROPERTIES.

The Company currently operates one central corporate office and
distribution center and ten department stores. Set forth below are brief
descriptions of these properties.

Corporate Offices and Central Distribution Center

Located at 2301 West Lafayette Boulevard, Detroit, Michigan, the
Company's central corporate office and distribution center is being acquired
under a lease-purchase agreement with The Economic Development Corporation
of the City of Detroit. The Company began occupying the facility in March
1980 after refurbishing was substantially completed. The facility houses
the Company's executive offices and a retail distribution center. Effective
at the end of April, 1995, the Company's agreement to sublease a portion of
the facility (approximately 70,000 square feet) and a portion of the
adjacent parking area to Greyhound Lines, Inc. expired. The Company is
attempting to sublet this portion of its facility.

Retail Department Stores

Set forth below are brief descriptions of the ten retail department
stores currently operated by the Company:

(a) Westborn Store, 23303 Michigan Avenue, Dearborn, Michigan.
This facility was opened by the Company in February 1959, is
leased until February 2004, and contains approximately
106,000 square feet of floor space.

(b) Macomb Store, 32385 Gratiot Avenue, Roseville, Michigan.
This facility was opened by the Company in 1964, is leased
until November 2001, and contains approximately 127,000
square feet of floor space.

(c) Livonia Store, 29650 Seven Mile Road, Livonia, Michigan.
This facility was opened by the Company in 1964, is leased
until January 2000, and contains approximately 127,000
square feet of floor space.

(d) New Center Store, 3031 West Grand Boulevard, Detroit,
Michigan. This facility was opened by the Company in August
1986, is leased until August 2006, and contains
approximately 49,400 square feet of floor space.

(e) Birmingham Store, 200 North Woodward Avenue, Birmingham,
Michigan. This facility was opened by the Company in August
1972, is leased until January 1997, and contains
approximately 68,700 square feet of floor space.

(f) Farmington Hills Store, 33250 Twelve Mile Road, Farmington
Hills, Michigan. This facility was opened by the Company in
July 1972, is leased until August 1998, and contains
approximately 81,900 square feet of floor space.

(g) Lakeside Store, 14150 Lakeside Circle, Sterling Heights,
Michigan. This facility was opened by the Company in
September 1975, is leased until February 2006, and contains
approximately 115,300 square feet of floor space.

(h) Universal Store, 28300 Dequindre Road, Warren, Michigan.
This facility was opened by the Company in September 1980,
is leased until September 2000, and contains approximately
102,400 square feet of floor space.

(i) Tel-Twelve Store, 29694 Telegraph Road, Southfield,
Michigan. This facility was opened by the Company in
September 1985, the land on which the building stands is
leased until February 2016, and the building contains
approximately 57,000 square feet of floor space.
Construction of the building and store equipment were
financed through City of Southfield Economic Development
Corporation bonds. In addition, a 12,665 square foot
Crowley's Men's Store was opened in November 1990 adjacent
to the existing Tel-Twelve Store and is leased until October
2015.

(j) Flint Store, 4224 East Court Street, Burton, Michigan. This
facility was opened by the Company in August 1986, is leased
until August 2001, and contains approximately 61,000 square
feet of floor space.

Steinbach Stores

For a discussion of the several Steinbach stores operated by the
Company since December 30, 1995, see above "Item 1. Business".

Item 3. LEGAL PROCEEDINGS.

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

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

Not applicable.

<PAGE>
PART II

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

The principal market on which the Company's common stock is traded is the
American Stock Exchange, where the stock trades under the symbol COM. As of
May 1, 1996, there were 143 record holders of the Company's Common Stock
according to the records maintained by the Company's stock transfer agent.
The following table sets forth, for the periods indicated, the range of high
and low sales prices on such Exchange for each quarter in the two fiscal
years ended February 3, 1996:

High Low
Fiscal Year Ended February 3, 1996: ------ -------
First Quarter . . . . . . . . . . . . $ 4-3/4 $ 3-1/2
Second Quarter . . . . . . . . . . . 5 3-7/8
Third Quarter . . . . . . . . . . . . 4-3/4 3
Fourth Quarter . . . . . . . . . . . 6 4

Fiscal Year Ended January 28, 1995:
First Quarter . . . . . . . . . . . . $ 11-7/8 $ 7-15/16
Second Quarter . . . . . . . . . . . 8-5/8 6-1/2
Third Quarter . . . . . . . . . . . . 8-1/8 4-1/2
Fourth Quarter . . . . . . . . . . . 6-1/8 3-3/4

During the two fiscal years ended February 3, 1996, the Company has
not paid or declared cash dividends in respect of its Common Stock. Under
the terms of the Company's three-year line of credit, the Company's ability
to pay dividends on its Common Stock is restricted. See Item 7,
"Management's Discussion and Analyis of Results of Operations and Financial
Condition" and Note D of the Notes to Financial Statements for a description
of this line of credit. The Company's ability to pay cash dividends in the
future will depend upon its future earnings, results of operations, capital
requirements and financial condition, its ability to obtain modification of
its debt covenants and such other factors as the Company's Board of
Directors deems relevant.

<PAGE>
Item 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
Fiscal Year
1995 1994 1993 1992 1991
(In Thousands Except Per Share and Statistical Data)
<S> <C> <C> <C> <C> <C>
Operations:

Net sales, including leased departments .... $105,863 $109,927 $106,935 $106,349 $103,906
Cost of merchandise and services sold ...... 72,324 73,774 70,937 69,663 65,562
Operating expenses (includes
restructuring charge of $1,900,000
for 1993) ................................ 33,446 33,784 34,389 39,391 40,112
Interest expense ........................... 1,805 1,615 1,366 1,394 1,369
Earnings (loss) before income taxes ........ (2,344) 1,031 514 (3,947) (2,960)
Income tax credits ......................... -- -- -- -- (345)
Net earnings (loss) ........................ (2,344) 1,031 514 (3,947) (2,615)

Capital expenditures ....................... 504 527 57 626 452
Depreciation and amortization .............. 1,317 1,671 2,128 2,626 2,869
Cash provided by (used in) operations ...... (1,758) 1,654 (4,933) 3,560 (746)

Per Share:

Net earnings (loss) ........................ $ (2.38) $ 0.84 $ .45 $(3.88) $(2.57)
Shareholders' equity at fiscal year end..... 7.20 10.09 9.26 8.87 13.00
Market price -- High ....................... 6.00 11.88 12.13 8.75 8.13
Market price -- Low ........................ 3.00 3.75 3.07 4.50 5.00

Financial Position:

Working capital ............................ $ 4,842 $ 8,143 $ 6,939 $ 1,485 $ 7,999
Ratio of current assets to
current liabilities ...................... 1.29x 1.61x 1.45x 1.09x 1.74x
Inventories ................................ $ 16,637 $17,993 $ 16,898 $12,646 $ 14,674
Properties -- net .......................... 9,759 10,572 11,715 13,896 16,511
Total assets ............................... 34,704 35,248 37,092 35,154 37,948
Long-term debt (including capital
lease obligations)........................ 9,076 9,766 10,442 7,013 12,762
Shareholders' equity at fiscal year end..... 6,953 10,584 9,431 9,027 13,230
Shareholders' return on equity ............. N/A 9.7% 5.4% N/A N/A

</TABLE>

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

<PAGE>

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

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

1995 1994 1993
------ ------ ------
Net Sales 100.0% 100.0% 100.0%
Cost of merchandise and
services sold 68.3 67.1 66.3
Gross Margin 31.7 32.9 33.7
Operating expense 31.6 30.7 32.2
Interest expense 1.7 1.5 1.3
Other income (expense) net (.6) .3 .3
Earnings (loss) before
income taxes (2.2) 1.0 .5
Net earnings (loss) (2.2) 1.0 .5

Fiscal 1995 compared with fiscal 1994
- -------------------------------------

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

Gross margins as a percent of sales in fiscal 1995 were 31.7% compared with
32.9% last year. An unfavorable swing in LIFO inventory charges was the
contributing factor to the decreased gross margin percent. In fiscal 1995 a
LIFO charge of $745,000 was incurred compared with a LIFO credit of $697,000
in fiscal 1994. Gross margin dollars were also lower in fiscal 1995 due to
the above mentioned LIFO charges and the lower sales level. Despite the
highly competitive promotional retail environment the Company managed to
slightly decrease its markdowns as a percent of sales. Gross margins
represent income derived from the sales of the Company's owned inventory, as
well as, commissions earned on the sales of the licensed departments.
Licensed departments income represented 4.9% of total gross margin dollars
for both fiscal 1994 and 1993.

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

Increased borrowings on the Company's short term line of credit during
fiscal 1995 contributed to a $189,000, or 11.7%, increase in interest
expense charges when compared with fiscal 1994. The higher borrowings were
used to fund the loss incurred by the Company in fiscal 1995 and to purchase
the common stock and option of a major shareholder. For a more detailed
discussion of the stock transactions refer to Note H of the Notes to the
Financial Statements.

During fiscal 1995, the Company also recorded a charge of $957,000 related
to the integration of the Steinbach stores into the Crowley's organization.
The charge includes a $727,000 loss on the operation of Steinbach during
January 1996 and $230,000 of travel, moving, and other personnel related
costs incurred in establishing the organization both on the east coast and
in Detroit to accommodate the Steinbach acquisition. Included in the
January Steinbach loss is a $700,000 reserve for needed price reductions to
clear existing inventory assumed by the Company when it began operating the
stores on December 31, 1995. Management of the Company believes that the
customer base for Steinbach is very similar to its Michigan stores. The
vendor structure of Steinbach is also very similar to that of the Company's.
Management also believes that the Steinbach stores are in good physical
condition and not in need of major remodeling or renovation. Management
intends to coordinate its marketing and advertising programs between the two
companies to eliminate redundant efforts and reduce expenses. Management
expects that all buying operations, as well as accounting, finance,
administrative and computer systems will be managed from the Company's
Detroit headquarters. A small staff has been established on the east coast
to oversee the daily operations of the Steinbach stores. The Company has
also leased out the receiving, marking, and distribution of Steinbach
inventory to a third party on the east coast. Management believes that
Steinbach can be integrated into the Company's operations with minimal
additions to the staff. For a more detailed discussion of the Steinbach
Stores acquisition refer to Note B of the Notes to the Financial Statements.

A net loss of $2,344,000, or $2.38 per share, was recorded in fiscal 1995
compared with net earnings of $1,031,000, or $0.84 per share, in fiscal
1994. The fiscal 1995 loss included the above mentioned $957,000 of
integration costs related to the Steinbach acquisition. Also the previously
mentioned LIFO swing of $1,442,000 had a significant impact on the
comparison of fiscal 1995 with fiscal 1994.

Fiscal 1994 compared with fiscal 1993
- -------------------------------------

Net sales fiscal 1994 were $109,927,000, an increase of 2.8% from the
$106,935,000 recorded in fiscal 1993. Comparable store sales for fiscal
1994 increased 4.0% from fiscal 1993. The Company's competitive pricing
policy and new merchandise offerings were the primary reasons for the
increase in sales. The Company had been very promotional in an effort to
maintain a pricing advantage on the competition. In addition, new
merchandise lines, such as more casual attire, maternity apparel, large and
petite size apparel, plush animals, and home furnishings including small
appliances, luggage, and gift items, had recently been introduced and
contributed to the improvement in sales. The increased use of direct mail
as a promotional vehicle had helped the Company improve the efficiency of
its advertising expenditures and also contributed to the sales increase.

Gross margin dollars increased $155,000, or less than one percent, in fiscal
1994 from fiscal 1993. Gross margins as a percent of sales were 32.9% in
fiscal 1994, and 33.7% in fiscal 1993. The highly promotional retail
environment resulted in additional markdowns that were needed to achieve the
increased sales, which contributed to the decline in margins as a percent of
sales. Gross margins represent income derived from the sales of the
Company's owned inventory, as well as, commissions earned on the sales of
the licensed departments. Licensed departments income represented 4.9% of
the total gross margin dollars for fiscal 1994, and 4.8% of fiscal 1993.
LIFO inventory credits during each of the two fiscal years positively
impacted gross margins. The LIFO inventory credits amounted to $697,000 in
fiscal 1994, and $582,000 in fiscal 1993. The Company also had a frequent
buyer program that awarded savings certificates to customers based on their
previous months purchases. The cost of this program was charged against
gross margins. The Company discontinued the frequent buyer program in
September 1993. The frequent buyer certificate charges were $1,283,000 for
fiscal 1993.

Operating expenses for fiscal 1994 declined $604,000, or 1.8% from the
fiscal 1993 levels. Operating expenses as a percent of sales were 30.7%,
and 32.2% for fiscal 1994 and 1993 respectively. The Company's expense
reduction program had reduced costs in all areas and expense categories.
Payroll costs for fiscal 1994 increased $375,000, or 2.9% when compared with
fiscal 1993.

Expense categories, other than payroll, that had significant reductions in
fiscal 1994, when compared with fiscal 1993 included supplies, insurance,
depreciation, and real estate costs. Supply costs declined $175,000, or
15.6%, in fiscal 1994 from fiscal 1993. The decrease was attributable to a
more competitive bidding process and a constant monitoring of all supply
usage. Insurance costs for fiscal 1994 were $375,000, or 31.6% lower than
fiscal 1993. The insurance costs savings were achieved by obtaining premium
reductions on the Company's property, liability and workers compensation
policies. Also more of the cost of health insurance premiums were shifted
to the employees. Prior to fiscal 1992, the Company had been self-funded
for workers compensation, and during fiscal 1994 favorable settlements on
previously reserved claims also contributed to the lower insurance costs.
The Company was able to achieve the insurance reductions without increasing
its risk exposure. Depreciation charges decreased $457,000, or 21.5% in
fiscal 1994 from fiscal 1993. A significant number of fixed assets had
become fully depreciated and combined with limited capital expenditures
resulted in the lower depreciation charges. Real estate costs in fiscal
1994 were $151,000, or 2.7% lower than fiscal 1993. A new property tax
reduction law in Michigan that went into effect in fiscal 1994, was the
primary factor contributing to the lower real estate costs.

Interest expense charges increased $250,000, or 18.3% in fiscal 1994
compared to fiscal 1993. Increased borrowings on the Company's short term
line of credit, and higher interest rates contributed to the increased
interest expense charges. The increased borrowings were used to finance the
higher inventory levels carried during fiscal 1994.

For fiscal 1994, the Company recorded net earnings of $1,031,000 or $0.84
per share, more than doubling the $514,000, or $0.45 per share recorded in
fiscal 1993. The per share data for fiscal 1993 has been adjusted to
reflect the 2-for-1 stock split which occurred May 25, 1994.

Inflation
- ---------

The Company has experienced price increases in its purchase of merchandise
and other operating expenses, but has generally been able to offset the
increases through adjusting retail prices and controlling expenses. Except
for the increased LIFO expense in fiscal 1995 the Company believes that the
impact of inflation on its operations has been minimal during the past three
fiscal years. The Company uses the Department Store Inventory Price
Indexes, published by the Bureau of Labor Statistics to measure the impact
of inflation on its inventories under the LIFO valuation method. The
fluctuation in the LIFO inventory charges and credits during each period
occur due to the change in these indices, the dollar value of the Company's
retail inventory, and gross margin changes.

Taxes on income
- ---------------

Since the Company has fully exhausted all tax loss carrybacks and is in a
net operating loss carryforward position it was unable to tax effect the
losses recorded in fiscal 1995 and did not record any income tax expense in
fiscal 1994 and 1993. See Note F of the Notes to the Financial Statements
for a detailed analysis of the Company's tax position.

Liquidity and Capital Resources
- -------------------------------

At February 3, 1996, the Company's working capital was $4,842,000 with a
current ratio of 1.29:1. Working capital was $8,143,000 with a current
ratio of 1.61:1 at January 28, 1995 and $6,939,000 with a current ratio of
1.45:1 at January 29, 1994. The decrease for fiscal 1995 was due to lower
inventory levels and higher outstandings on the Company's short term line of
credit. As mentioned above the increased short term line borrowings was due
to funding the loss incurred by the Company in fiscal 1995 and the purchase
of the common stock and option from a major shareholder. Additionally the
outstandings at February 3, 1996 included accounts receivable of $727,000
for Steinbach related expenditures, that were subsequently reimbursed by
Steinbach in February 1996.

The Company's primary sources of liquidity are cash provided by operating
activities, and borrowings under the Company's short term line of credit.
The company maintains a $12,000,000 secured line of credit to support its
short term borrowing needs. For a more detailed discussion of the line of
credit refer to Note D of the Notes to the Financial Statements. Cash used
in operating activities in fiscal 1995 was $1,758,000 compared with cash
provided of $1,654,000 in fiscal 1994 and cash used of $4,933,000 in fiscal
1993. The decrease in fiscal 1995 was the result of the loss incurred,
lower depreciation and amortization charges, and an increase in accounts
receivables partially offset by lower inventory and accounts payable levels.
The increased accounts receivable balances relates to the above mentioned
amounts that were due from Steinbach at the fiscal year end.

Cash used in investment activities consisted of capital expenditures only
for all three fiscal years. Capital expenditures amounted to $504,000 in
fiscal 1995, $527,000 and $57,000 in fiscal 1994 and 1993, respectively.
The fiscal 1995 capital expenditures included, heating system updates for
two stores, additional computer equipment, and store fixturing.

Cash provided by financing activities amounted to $2,763,000 in fiscal 1995
compared with cash used of $1,664,000 in fiscal 1994 and cash provided of
$3,249,000 in fiscal 1993. The increased borrowings outstanding under the
Company's short term line of credit was the primary factor contributing to
the cash provided by financing activities in fiscal 1995. In fiscal 1995
Company stock was added as an investment option to the Company's 401(k)
plan, which accounts for the $54,000 of proceeds from sale of common stock.
The previously mentioned $1,228,000 purchase of common stock and stock
option reduced the cash provided by financing activities.

Looking forward to fiscal 1996 the Company's liquidity needs will change
dramatically with the acquisition of the fifteen stores from Steinbach
Stores, Inc. The Company's current $12,000,000 short term line of credit
will not be adequate to fund the working capital and capital expenditure
needs of both organizations. The Company is currently negotiating with its
current lender, and others, to expand its credit facility to $24 million.
The Company believes that a $24 million facility will meet all of the
current funding needs of both Crowley's and Steinbach. Capital expenditures
for both organizations are planned at $1,500,000 for fiscal 1996. They are
expected to be funded from internal sources and the expanded line of credit
and include store leasehold improvements, store fixturing, and computer and
office equipment.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements (together with the report thereon of Ernst &
Young LLP) included in this report under this Item are listed under Item 14
of this report, and can be found beginning on page F-1. Schedule II,
Valuation and Qualifying Accounts, is included with this report on page S-1,
immediately following the financial statements. No other supplementary
financial statement schedules are required to be filed with this report.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.
<PAGE>
PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this Item shall be included in the Proxy
Statement under the captions "Election of Directors", "Executive Officers"
and "Certain Reporting Requirements" and is hereby incorporated herein by
reference.

Item 11. EXECUTIVE COMPENSATION.

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

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

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

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item shall be included in the Proxy
Statement under the caption "Certain Transactions" and is hereby
incorporated herein by reference.
<PAGE>
PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.

(a) Documents filed as part of this report:

1. Financial Statements and Supplementary Information. The following
financial statements and supplementary data are included in this report:

Page
Description Number
- ----------- ------
Report of Independent Auditors ................................. F-1

Balance Sheets at February 3, 1996 and January 28, 1995 ........ F-2

Statements of Operations for the fiscal years
ended February 3, 1996, January 28, 1995
and January 29, 1994.......................................... F-4

Statements of Shareholders' Equity for the fiscal
years ended February 3, 1996,
January 28, 1995 and January 29, 1994 ........................ F-5

Statements of Cash Flows for the fiscal years ended
February 3, 1996, January 28, 1995 and January 29, 1994 ...... F-6

Notes to Financial Statements .................................. F-7

2. Financial Statement Schedules. The following financial statement
schedule is included with this report: Schedule II -- Valuation and
Qualifying Accounts, appears on Page S-1 immediately following the
Registrant's Financial Statements.

3. Exhibits. The following exhibits are included in this report:

Exhibit
No. Description
- ------- -----------
3.1 Restated Articles of Incorporation, as amended to date (previously
filed as an exhibit to the Company's Form 10-K Annual Report for
the year ended January 30, 1988 and the Company's Form 10-Q
Quarterly Report for the quarter ended August 1, 1992 and the
Company's Form 10-Q Quarterly Report for the quarter ended October
29, 1994 and incorporated herein by reference).

*3.2 Bylaws, as amended to date.

10.1 Amended and Restated Supplemental Executive Retirement Plan
effective December 1, 1992 (previously filed as an exhibit to the
Company's Form 10-K Annual Report and Form 10-K/A Amendment No. 1
for the year ended January 30, 1993 and incorporated hereby by
reference).

10.2 Employment Agreement with Mr. Callahan dated November 2, 1992
(previously filed as an exhibit to the Company's Form 10-K Annual
Report and Form 10-K/A Amendment 1 for the year ended January 30,
1993 and incorporated herein by reference).

10.3 Severance Compensation Agreement with Mr. VandenBerg dated May 7,
1991 (previously filed as an exhibit to the Company's Form 10-K
Annual Report for the year ended February 1, 1992 and incorporated
herein by reference).

10.4 Severance Compensation Agreement with Mr. Toloff dated May 20, 1992
(previously filed as an exhibit to the Company's Form 10-Q Quarterly
Report for the quarter ended May 2, 1992 and incorporated herein by
reference).

10.5 The Economic Development Corporation of the City of Detroit Lease
Purchase Agreement dated December 1, 1979, as amended to date
(previously filed as an exhibit to the Company's Form 10-K Annual
Report for the year ended January 31, 1981 and the Company's Form
10-K Annual Report for the year ended January 29, 1994 and
incorporated herein by reference).

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

*10.7 Profit Sharing Plan dated February 1, 1984, as amended to date
(previously filed as an exhibit to the Company's Form 10-K Annual
Report and Form 10-K/A Amendment 1 for the year ended January 30,
1993 and incorporated herein by reference, except for Amendment No.
1 effective July 1, 1995 filed herewith).

*10.8 Crowley, Milner and Company 1992 Incentive Stock Plan effective as
of March 25, 1992 (previously filed as an exhibit to the Company's
Form 10-K Annual Report and Form 10-K/A Amendment 1 for the year
ended January 30, 1993 and incorporated herein by reference, except
for Amendment No. 1 effective March 22, 1995 filed herewith).

*10.9 Crowley, Milner and Company 1995 Non-Employee Director Stock Option
Plan effective as of March 22, 1995.

10.10 Loan and Security Agreement, dated November 4, 1994, between
Congress Financial Corporation (Central) and the Company
(previously filed as an exhibit to the Company's Form 10-Q
Quarterly Report for the quarter ended October 31, 1994 and
incorporated herein by reference).

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

*10.12 Agreement and Plan of Reorganization, dated November 17, 1995,
between the Shareholders of Steinbach Stores Inc., and the Company
(previously filed as an exhibit to the Company's Form 10-Q Quarterly
Report for the quarter ended October 28, 1995 and incorporated
herein by reference, except for Amendment No. 1 thereto dated
December 29, 1995 filed herewith).

*10.13 Interim Operating Agreement, dated December 29, 1995, between
Steinbach Stores, Inc., the Shareholders of Steinbach Stores, Inc.
and the Company.

*11 Computation of Per Share Earnings.

*23 Consent of Ernst & Young LLP.

*27 Financial Data Schedule (EDGAR filing only).
- ---------------
* Filed herewith

(b) Reports on Form 8-K.

No reports on Form 8-K were filed by the Company during the last
quarter of the fiscal year covered by this report.
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors
Crowley, Milner and Company

We have audited the balance sheets of Crowley, Milner and Company as of
February 3, 1996 and January 28, 1995 and the related statements of
operations, shareholders' equity and cash flows for each of the three fiscal
years in the period ended February 3, 1996. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Crowley, Milner and
Company at February 3, 1996 and January 28, 1995 and the results of its
operations and its cash flows for each of the three years in the period
ended February 3, 1996 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as
whole, presents fairly in all material respects the information set forth
therein.

/S/ ERNST & YOUNG LLP

Detroit, Michigan,
April 5, 1996

F-1

<PAGE>
CROWLEY, MILNER AND COMPANY
BALANCE SHEETS

ASSETS February 3 January 28
Current Assets: 1996 1995
Cash and cash equivalents ---------- ----------
(cash equivalents of $241,047 for
1995 and $213,678 for 1994).............. $ 540,613 $ 38,724
Accounts receivable, less
allowances ($61,558 for 1995 and
$63,887 for 1994)--Note B................ 2,014,918 1,042,660
Inventories--at the lower of first-in,
first-out cost or market ................ 21,250,958 21,824,142
Reduction to LIFO cost .................... (4,614,420) (3,830,672)
----------- ----------
Inventories at the lower of last-in,
first-out cost or market................. 16,636,538 17,993,470
Deferred property taxes ................... 1,497,678 1,536,886
Other current accounts .................... 1,070,276 793,561
---------- ----------
TOTAL CURRENT ASSETS ................. 21,760,023 21,405,301
Other Assets:
Deposits under EDC financing arrange-
ments-Note D 634,308 634,308
Miscellaneous ............................. 2,551,698 2,635,966
---------- ----------
3,186,006 3,270,274
Properties--Notes D and E:
Land ...................................... 315,000 315,000
Buildings ................................. 10,206,055 10,226,181
Leasehold improvements .................... 6,008,455 6,414,925
Furniture, fixtures and equipment ......... 7,065,000 7,918,847
---------- ----------
23,594,510 24,874,953
Less allowances for depreciation and
amortization ............................ 13,835,918 14,302,929
---------- ----------
9,758,592 10,572,024
---------- ----------
TOTAL ASSETS .......................... $34,704,621 $35,247,599
========== ==========

F-2
<PAGE>

BALANCE SHEETS (Cont'd.)

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ............................. $5,279,188 $ 5,813,423
Notes payable short term ..................... 8,499,392 3,906,517
Compensation and amounts withheld therefrom .. 597,556 717,015
Property taxes ............................... 1,391,173 1,714,649
Income taxes ................................. 34,495 37,043
Other taxes .................................. 406,025 398,404
Current maturities of long-term debt.......... 525,000 485,000
Current maturities of capital
lease obligations .......................... 185,402 190,509
--------- ----------
TOTAL CURRENT LIABILITIES ................ 16,918,231 13,262,560
Long-Term Liabilities:
Long-term debt--Note D........................ 5,325,000 5,850,000
Capital lease obligations--Note E ............ 3,750,868 3,916,137
Other ........................................ 1,757,278 1,634,647
---------- ----------
10,833,146 11,400,784
Shareholders' Equity--Note D:
Common stock (authorized 4,000,000 shares,
outstanding 966,069 shares for 1995,
outstanding 1,048,300 shares for 1994).... 966,069 1 048,300
Other capital ............................... 1,178,621 2,211,450
Retained earnings ........................... 4,808,554 7,324,505
---------- ----------
6,953,244 10,584,255
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $34,704,621 $ 35,247,599
========== ==========

See notes to financial statements

F-3
<PAGE>
CROWLEY, MILNER AND COMPANY
STATEMENTS OF OPERATIONS

Fiscal Year Ended
February 3 January 28 January 29
1996 1995 1994
----------- ----------- -----------
REVENUES
Net sales--owned departments ..... $ 93,771,396 $ 97,074,194 $ 94,192,329
Net sales--leased departments .... 12,091,107 12,852,490 12,742,270
------------ ------------ ------------
Total net sales ............... 105,862,503 109,929,684 106,934,599
Investment income ................ 96,696 68,726 63,439
Other income ..................... 228,075 209,331 370,257
----------- ----------- -----------
106,187,274 110,204,741 107,368,295
COSTS AND EXPENSES:
Cost of merchandise and services
sold .......................... 72,323,820 73,774,075 70,936,606
Operating expenses ............... 33,446,093 33,784,441 34,388,520
Interest ......................... 1,804,572 1,615,248 1,365,692
Operating loss and costs related
to integration of Steinbach
Stores Inc.--Note B............. 957,276 -- --
Other ............................ -- -- 163,760
------------ ------------ ------------
108,531,761 109,173,764 106,854,578
------------ ------------ ------------

Earnings (Loss) Before Income
Taxes ...................... (2,344,487) 1,030,977 513,717

Federal income taxes - Note F ...... -- -- --
----------- ----------- -----------
Net Earnings (Loss) ........... $(2,344,487) $ 1,030,977 $ 513,717
=========== =========== ===========

PER SHARE DATA:

Net earnings (loss) ................ $(2.38) $0.84 $ 0.45
====== ===== ======
Average number of common and common
equivalent shares outstanding
for earnings per share .......... 985,808 1,220,903 1,148,058
======= ========= =========
See notes to financial statements

F-4
<PAGE>
CROWLEY, MILNER AND COMPANY
STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
Common Stock Other Retained
Shares Amount Capital Earnings
------- ------ ------- --------
<S> <C> <C> <C> <C>
Balance January 30, 1993 .... 509,067 $ 509,067 $2,240,558 $6,277,257
Pension plan charge ........ -- -- -- (109,743)
Net earnings................ -- -- -- 513,717
-------- ------- --------- ---------
Balance January 29, 1994 .... 509,067 509,067 2,240,558 6,681,231
Issuance of common stock
pursuant to exercise of
incentive stock options
and restricted stock
award..................... 30,083 30,083 (29,108)
Pension plan credit.......... 121,447
Issuance of common stock
pursuant of stock split.... 509,150 509,150 (509,150)

Net earnings ............... -- -- -- 1,030,977
------- -------- --------- ---------

Balance January 28, 1995 ....1,048,300 1,048,300 2,211,450 7,324,505
Sale of common stock ....... 14,705 14,705 39,262
Purchase of common stock and
options.................... (96,936) (96,936) (1,131,276)
Restricted stock awards..... 59,185
Pension Plan charge......... -- -- -- (171,464)
Net loss.................... -- -- -- (2,344,487)
--------- --------- --------- ---------
Balance February 3, 1996 ... 966,069 $ 966,069 $1,178,621 $4,808,554
========= ========= ========= =========

See notes to financial statements
</TABLE>

F-5

<PAGE>
CROWLEY, MILNER AND COMPANY
STATEMENTS OF CASH FLOWS

Fiscal Year Ended
February 3 January 28 January 29
1996 1995 1994
---------- ---------- ----------

OPERATING ACTIVITIES:
Net earnings (loss) ............ $(2,344,487) $ 1,030,977 $ 513,717
Adjustments to reconcile net
earnings (loss) to net cash
provided by (used in) operating
activities:
Depreciation and amortization. 1,317,119 1,670,615 2,127,882
Amortization of restricted
stock award.................. 59,185
Loss on sale of equipment .... -- -- 150,872
Restructuring charge ......... -- -- (1,300,000)
Changes in operating assets
and liabilities:
(Increase) decrease in net
accounts receivable ....... (972,258) 1,074,665 (980,353)
(Increase) decrease in
inventories............... 1,356,932 (1,095,394) (4,251,984)
(Increase) decrease in prepaid
expense and other assets .. (153,239) 184,893 (667,722)
Increase (decrease) in accounts
payable ................... (534,235) (1,424,252) 386
Increase (decrease) in accrued
compensation and other
liabilities ............... (486,695) 212,772 (525,820)
NET CASH PROVIDED BY (USED IN) ---------- ---------- ---------
OPERATING ACTIVITIES ........... (1,757,678) 1,654,276 (4,933,022)

INVESTMENT ACTIVITIES
Purchase of properties .......... (503,687) (527,385) (56,532)
--------- --------- ---------
NET CASH USED IN INVESTMENT ACTIVITIES (503,687) (527,385) (56,532)

FINANCING ACTIVITIES
Proceeds from revolving line of
credit......................... 123,062,956 120,053,977 87,455,862
Principal payments on revolving
line of credit .................(118,470,081) (120,921,076) (82,682,246)
Principal payments on long-term
debt .......................... (485,000) (450,000) (1,210,000)
Principal payments on capital
lease obligations .............. (170,376) (346,585) (314,173)
Purchase of common stock and
stock options................... (1,228,212) -- --
Proceeds from sale of common
stock........................... 53,967 -- --
NET CASH PROVIDED BY (USED IN) ----------- ---------- ---------
FINANCING ACTIVITIES ........... 2,763,254 (1,663,684) 3,249,443
INCREASE (DECREASE) IN CASH AND ----------- ---------- ---------
CASH EQUIVALENTS ............... 501,889 (536,793) (1,740,111)
Cash and cash equivalents at
beginning of year ............. 38,724 575,517 2,315,628
CASH AND CASH EQUIVALENTS AT END ---------- --------- --------
OF YEAR ........................ 540,613 38,724 575,517
======== ======== =========
See notes to financial statements

F-6
<PAGE>
CROWLEY, MILNER AND COMPANY
NOTES TO FINANCIAL STATEMENTS
February 3, 1996

NOTE A: INDUSTRY DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

Industry Description: The Company is engaged in the operation of ten retail
department stores in the Detroit-metropolitan and suburban Flint, Michigan
areas. In addition to its own merchandise, it offers certain goods and
services through leased departments. The Company reports on a 52/53 week
fiscal year with the fiscal year ending on the Saturday closest to January
31. Fiscal years 1995, 1994 and 1993 ended on February 3, 1996, January 28,
1995 and January 29, 1994, respectively. Fiscal year 1995 was a 53 week
year and 1994 and 1993 had 52 weeks.

Inventories: Merchandise in stores is priced at last-in, first-out (LIFO)
cost determined by the retail inventory method, and the first-in first-out
(FIFO) method is used to determine the cost of in-transit merchandise and
other inventories, which represent approximately 3% and 4% of total
inventories at February 3, 1996 and January 28, 1995, respectively.

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

Cash Equivalents: The Company considers cash on hand in stores, deposits in
banks, and marketable securities with a maturity of three months or less
when purchased to be cash equivalents.

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

Frequent Buyer Program: In fiscal 1991 the Company introduced a frequent
buyer program that awarded savings certificates to customers based on their
previous months purchases. The certificates had varying expiration dates
throughout the program. The cost of the certificates was charged directly
against the cost of merchandise and services sold at the time of issuance
with the value of the unused certificates recorded as income at the time of
expiration. The Company discontinued the program in September, 1993.

Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

F-7
NOTE B: Steinbach Stores Acquisition

On November 17, 1995, the Company entered into an Agreement and Plan of
Reorganization, that was subsequently amended on December 29, 1995 (the
"Acquisition Agreement"), with the shareholders of Steinbach Stores, Inc.
("Steinbach"), an Ohio Corporation, to acquire fifteen department stores in
five eastern states. Steinbach operated twenty-four department stores in
the states of Connecticut, New Hampshire, New Jersey, New York, and Vermont.
The nine stores not acquired by the Company along with Steinbach's executive
offices in White Plains, New York, its central accounting offices in
Bridgeport, Connecticut, and its distribution center in Eatontown, New
Jersey will be disposed of by Steinbach prior to the closing of the
acquisition. The costs to dispose of the above properties, and the related
employee termination costs, will be borne by the Steinbach shareholders.
Pursuant to the Acquisition Agreement the Company will acquire from the
Steinbach shareholders (affiliates of Schottenstein Stores Corporation) all
of the issued and outstanding shares of common stock of Steinbach in
exchange for 514,800 shares of common stock of the Company, which represents
approximately 35.0% of the issued and outstanding shares of common stock of
the Company. Steinbach will then become a wholly owned subsidiary of the
Company. The acquisition will be accounted for as a purchase for financial
reporting purposes. Under purchase accounting, the Company will allocate
the total cost of acquiring the Steinbach Common Stock to the assets and
liabilities of Steinbach.

Additionally, the Company entered into a separate Interim Operating
Agreement with the shareholders of Steinbach, whereas, during the period of
December 31, 1995 through the closing date of the acquisition, the fifteen
acquired Steinbach stores will be operated under the management and
supervision of the Company with all revenues, as well as, all costs and
expenses relating to the stores becoming the responsibility of the Company.
The Company bears the risk of any operating losses and will realize the
benefits of any operating profits for this interim period.

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

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

As a result of the Steinbach acquisition, the Company's liquidity needs will
change. The Company's current $12 million short-term line of credit will
not be adequate to fund the working capital and capital expenditures needs
of both organizations. The Company is currently negotiating with its
current lender, and others, to expand its credit facility to $24 million.
The Company believes that a $24 million credit facility will meet all of the
current funding needs of both organizations. The Company expects to have
the expanded credit facility in place by the closing date of the
acquisition.

F-8
<PAGE>
NOTE C: FAIR VALUE OF FINANCIAL INSTRUMENTS

Generally accepted accounting principles currently requires disclosure of
estimated fair value of financial instruments. The Company has outstanding
long term debt related to its Executive Offices, Central Distribution Center
and Tel-Twelve Mall store location (See Note D for a full description of
the debt). It was not practicable to estimate the fair value of the
Company's debt because of the lack of quoted market prices and the inability
to estimate fair value without incurring excessive costs. The $5.3 million
carrying amount at February 3, 1996 represents the total amount outstanding
as of that date.

NOTE D: FINANCING ARRANGEMENTS

On November 4, 1994 the Company and Congress Financial Corporation (Central)
entered into a Loan and Security Agreement, replacing the Credit and
Security Agreement, dated May 20, 1993 between the Company and Schottenstein
Stores Corporation ("Schottenstein"). The Agreement provides for a three-
year line of credit, secured by substantially all of the assets of the
Company, of up to $12,000,000 (based on certain lending formulas) and,
included within such line of credit, a facility for letters of credit of up
to $2 million, with the interest rate at 1.0% above prime rate or, at the
Company's option (and subject to certain terms and conditions), at 3.5%
above the adjusted London Interbank Offered Rate ("LIBOR"). Interest on the
line is payable monthly. The Agreement also provides for a 1.0% commitment
fee, payable in annual installments over the three-year term, an unused line
fee of 0.25% payable monthly, and a monthly monitoring fee of $1,500.
Borrowings are generally limited to 30% of the retail value of eligible
inventory as defined in the Agreement. The weighted average interest rates
for outstandings as of February 3, 1996, January 28, 1995, and January 29,
1994 were 9.50 %, 9.50%, and 7.50% respectively. The weighted average
interest rates during the fiscal years ended February 3, 1996, January 28,
1995, and January 29, 1994 were 9.83%, 9.41%, and 7.77% respectively. In
addition, the Agreement prohibits the payment of dividends. The termination
of the Schottenstein Loan Agreement, in the fourth quarter of fiscal 1994,
resulted in a $60,000 charge for the write-off of the unamortized portion of
the loan origination fee paid to Schottenstein. Refer to Note B of the
Notes to the Financial Statements for a discussion of negotiations to expand
the Company's credit facility to accommodate the acquisition of Steinbach.

Long-term debt consists of the following:

FEBRUARY 3 JANUARY 28
1996 1995
---------- ----------
EDC Financing
City of Detroit............. $ 3,715,000 $ 3,980,000
City of Southfield.......... 2,135,000 2,355,000
----------- -----------
5,850,000 6,335,000
LESS: Current Maturities....... 525,000 485,000
----------- -----------
$ 5,325,000 $ 5,850,000
=========== ===========

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

The CDC obligation is comprised of $3,715,000 in term bonds which are
required to be redeemed through annual sinking fund payments ranging from
$285,000 in 1996 to $565,000 at the December 1, 2004 maturity date. The
Company may redeem the bonds prior to maturity at par. Interest on the
bonds is payable semi-annually at the current weighted average annual rate
of 9.00%. The Company has given a guaranty regarding the prompt payment of
principal and interest. The CDC mortgage and trust agreement provides for a
security interest in the real estate, and fixtures and equipment, with a
carrying amount of $2,739,000 at February 3, 1996. The Agreement also
provides for the Company to maintain a minimum net worth of $5,000,000.

F-9
<PAGE>
The Tel-Twelve Mall store was financed through City of Southfield Economic
Development Corporation bonds. The underlying obligations are comprised of
$2,135,000 in term bonds to be redeemed through annual sinking fund payments
ranging from $240,000 in 1996 to $380,000 at maturity on January 15, 2003.
The Company may redeem the bonds prior to maturity at a reducing premium
(currently 1 1/2%). Interest on the bonds is payable semi-annually at the
current weighted average annual rate of 9.62%.

The various financing agreements provide for real estate mortgages and other
security interests as collateral. Payments of long-term debt in the four
fiscal years subsequent to February 3, 1996 amount to $575,000 in 1997,
$620,000 in 1998, $670,000 in 1999, and $730,000 in 2000.

At February 3, 1996, the Company had an outstanding irrevocable letter of
credit of $250,000 for the purchase of insurance.

Interest paid aggregated $1,805,000, $1,615,000, and $1,366,000 for the
fiscal years ended February 3, 1996, January 28, 1995, and January 29, 1994,
respectively.

NOTE E: LEASE OBLIGATIONS

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

At February 3, 1996, the aggregate minimum annual commitments for all
noncancelable leases are as follows:

FOR FISCAL CAPITAL OPERATING
YEARS ENDING IN LEASES LEASES
- --------------- ------- ---------
1996.............................. $ 524,645 $ 2,309,746
1997.............................. 524,645 1,909,746
1998.............................. 537,310 1,638,936
1999.............................. 537,310 1,368,126
2000.............................. 537,310 855,592
Thereafter........................ 4,744,620 2,073,228
--------- ----------
TOTAL MINIMUM LEASE PAYMENTS...... 7,405,840 $ 10,155,374
AMOUNTS REPRESENTING INTEREST..... 3,469,570 ==========
---------
PRESENT VALUE OF NET MINIMUM
LEASE PAYMENTS.................... $3,936,270
==========

Capital leases for stores and equipment included in buildings, and
furniture, fixtures and equipment amounted to $5,560,390 at February 3, 1996
and January 28, 1995 and accumulated amortization amounted to $2,995,941
and $2,801,985 respectively. Amortization of capital leases is included
with depreciation and amortization expense.

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

FISCAL YEAR ENDED
--------------------------------------------
FEBRUARY 3 JANUARY 28 JANUARY 29
1996 1995 1994
---------- ---------- ----------
MINIMUM RENTALS FOR STORE
OPERATING LEASES............ $ 2,288,914 $ 2,251,413 $ 2,299,958
CONTINGENT RENTALS:
CAPITAL LEASES....... 1,240 8,099 -
OPERATING LEASES..... 642,022 655,119 601,475
OTHER RENTALS................. 215,016 434,939 411,978
---------- ---------- ----------
$ 3,147,192 $ 3,359,570 $ 3,313,411
========== ========== ==========

F-10
<PAGE>
A store lease provides for a security interest in fixtures and equipment
having a carrying amount of $74,000 at February 3, 1996.

NOTE F: FEDERAL INCOME TAXES

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

FISCAL YEAR ENDED
---------------------------------------------
FEBRUARY 3 JANUARY 28 JANUARY 29
1996 1995 1994
----------- ----------- -----------
COMPUTED AMOUNTS $ (797,000) $ 351,000 $ 175,000
IMPACT OF NET OPERATING
LOSS CARRYFORWARD 797,000 (351,000) (175,000)
----------- ----------- -----------
$ - $ - $ -
=========== =========== ===========

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets
as of February 3, 1996 and January 28, 1995 and are as follows:

FISCAL YEAR ENDED
---------------------------
FEBRUARY 3 JANUARY 28
1996 1995
----------- ----------
Deferred tax liability:
Tax over book depreciation.... $ (876,000) $(1,089,000)
Deferred tax assets:
Employee benefits........... 480,000 503,000
Inventory costs............. (70,000) 39,000
Other....................... 1,000 7,000
Net operating loss carry-
forward................... 2,437,000 1,957,000
--------- ---------
Total deferred tax assets... 2,811,000 2,506,000
--------- ---------
Net deferred tax assets....... 1,972,000 1,417,000
Valuation allowance for net
deferred tax assets......... (1,972,000) (1,417,000)
----------- -----------
Net deferred taxes $ - -
=========== ===========

Income taxes paid amount to $2,548 for 1995 and no taxes paid for 1994 and
1993.

The Company's net operating loss carryforward of approximately $7,168,000
for federal tax purposes expires as follows:

2006.................. $ 698,000
2007.................. 1,863,000
2008.................. 1,537,000
2009.................. 1,100,000
2011.................. 1,970,000

NOTE G: RETIREMENT PLANS

The Company has a defined contribution retirement plan covering
substantially all full-time employees. Contributions to the plan are made
at the discretion of the Board of Directors.

F-11
<PAGE>
The Company also sponsors an unfunded Supplemental Executive Retirement
Program (SERP), which is a non-qualified plan that provides certain former
officers additional retirement benefits.

The unfunded status for this plan was as follows:

FISCAL YEAR ENDED
--------------------------
FEBRUARY 3 JANUARY 28
1996 1995
---------- ----------
PROJECTED BENEFIT OBLIGATION.................... $ 1,711,620 $ 1,622,151
UNRECOGNIZED NET LOSS ON ASSETS................. (415,881) (244,417)
UNRECOGNIZED NET OBLIGATION
AT FEBRUARY 1, 1987........................... (159,520) (186,107)
UNRECOGNIZED PRIOR SERVICE COST................. (258,669) (283,828)
---------- ----------
ACCRUED LIABILITY............................... $ 877,550 $ 907,799

MINIMUM LIABILITY ADJUSTMENTS:
PLAN AMENDMENT................................. 465,898 256,120
CHANGE IN DISCOUNT RATE........................ (50,017) (11,704)
--------- ----------
NET RECORDED LIABILITY.......................... $ 1,293,431 $ 1,152,215
========== ==========

The cost of the retirement plans, including the SERP plan expense of
$186,000, $189,000, and $192,000, for the fiscal years ended in 1996, 1995,
and 1994, respectively, consisted of the following components:

FISCAL YEAR ENDED
--------------------------------------------
FEBRUARY 3 JANUARY 28 JANUARY 29
1996 1995 1994
---------- ---------- ----------
SERVICE COST:
INTEREST COST ON PROJECTED
BENEFIT OBLIGATION........... 128,918 124,672 135,506
NET AMORTIZATION AND DEFERRAL:
AMORTIZATION OF INITIAL
UNRECOGNIZED TRANSITION
OBLIGATION.................. 26,587 26,587 26,587
AMORTIZATION OF NET LOSS.... 5,336 12,582 4,748
AMORTIZATION OF PRIOR SERVICE
COST....................... 25,159 25,159 25,159
DEFINED CONTRIBUTION PLAN... 105,000 109,000 123,000
--------- --------- ---------
NET PERIODIC RETIREMENT COST..$ 291,000 $ 298,000 $ 315,000
========= ========= =========

The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation was 7% and 0% at February 3, 1996, 8 1/2% and
0% at January 28, 1995 7 1/4% and 0% at January 29, 1994.

NOTE H: STOCK OPTIONS AND RESTRICTED STOCK PLAN

The Company has a 1992 Incentive Stock Plan for its eligible officers and
employees under which the Company may grant stock options (consisting of
incentive stock options (ISOs) and non-qualified stock options (NQSOs) and
may make awards of restricted stock for up to 200,000 shares of common
stock. Options may be exercised for such prices and at such times as the
Compensation Committee of the Board determines, provided the ISOs may not be
exercised at a price less than the fair market value at the date of grant.
Options become exercisable on a cumulative basis in equal installments at a
rate of 33-1/3 % per year, commencing one year after grant. On February 3,
1996 ISOs for 96,000 shares were outstanding, and 20,000 shares had been

F-12
<PAGE>
issued as an award of restricted stock. The ISOs carried exercise prices
ranging from $4.125 to $10.375 per share (weighted average of $6.95 per
share), of which ISOs to acquire 36,000 shares were exercisable, and 84,000
shares were available for future grants or awards under the plan.

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

FEBRUARY 3 JANUARY
Incentive Stock Plan 1996 1995
---------- ----------
Outstanding at beginning of fiscal year 56,000 26,166
Granted 40,000 30,000
Exercised - 166
Cancelled or expired - -
------ ------
Outstanding at end of fiscal year 96,000 56,000
====== ======

In 1995 the Company also established the 1995 Non-Employee Director Stock
Option Plan for its Directors under which the Company may grant non-
qualified stock options up to 100,000 shares of common stock. Under the
plan, on the business day immediately prior to each Annual Meeting of
Shareholders, eligible Directors then serving on the Board shall be granted
an option to purchase 2,000 shares of the Company's common stock at the fair
market value of the common stock on the grant date. The grant shall be
automatic and non-discretionary. Each option granted becomes exercisable in
full three months following the date of grant. On February 3, 1996 options
for 20,000 shares were outstanding, with an exercise price of $4.25, all of
which were exercisable. Options for 80,000 shares were available for future
grants under the plan.

As part of the consideration for its 1993 $8,000,000 revolving loan
agreement with Schottenstein, the Company granted Schottenstein an
irrevocable option to purchase up to 198,000 shares of the Company's common
stock at a purchase price of $.50 per share. The option could have been
exercised in whole or in part at any time until its expiration on May 18,
1997. On June 15, 1995 Schottenstein cancelled and surrendered its option
to purchase the 198,000 shares of the Company's common stock in exchange for
an aggregate purchase price of $4.00 per share ($4.50 less the exercise
price under the option of $0.50 per share) or $792,000. As such the Option
Agreement was terminated by Schottenstein and the Company.

Additionally the Company purchased from Schottenstein Professional Asset
Management Corporation the 96,936 shares of the Company's common stock it
held for $4.50 per share, or an aggregate purchase price of $436,212. The
Company funded the aggregate payments of $1,228,212 for both transactions
under its short term line of credit.

F-13
<PAGE>
<TABLE>
<CAPTION>

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Additions
-------------------------
Charged
Balance at Charged to to Other
Beginning Costs and Accounts Deductions Balance at
Description of Period Expenses (A) (B) End of Period
- -------------- ---------- --------- -------- ---------- -------------
VALUATION RESERVES

Year ended February 3, 1996
<S> <C> <C> <C> <C> <C>
Allowance for:
Doubtful accounts receivable... $ 63,887 $ 24,140 $(26,349) $ (120) $ 61,558
Purchase discounts in
inventories.................. 556,000 (19,980) -- -- 536,020

Year ended January 28, 1995

Allowance for:
Doubtful accounts receivable... 216,000 44,545 10,441 (207,308) 63,887
Purchase discounts in
inventories.................. 494,845 61,155 -- -- 556,000

Year ended January 29, 1994

Allowance for:
Doubtful accounts receivable... 171,000 216,542 47,164 (218,497) 216,209
Purchase discounts in
inventories.................. 452,000 42,845 -- -- 494,845
- ------------
(A) Recoveries on accounts charged off
(B) Accounts charged off
</TABLE>
S-1
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on April 24, 1996.

CROWLEY, MILNER AND COMPANY (Registrant)

By: /S/ DENNIS P. CALLAHAN
Dennis P. Callahan, President and Chief Executive
Officer (principal executive officer)

By: /S/ MARK A. VANDENBERG
Mark A. VandenBerg, Vice President-Finance and Chief
Financial Officer (principal financial and
accounting officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on April 24, 1996.

Signature Capacity
--------- --------
/S/ DENNIS P. CALLAHAN Director
Dennis P. Callahan

/S/ JOANN S. COUSINO Director
JoAnn S. Cousino

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

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

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

/S/ RICHARD S. KEYS Director
Richard S. Keys

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

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

Director
James L. Schaye, Jr.

/S/ JEROME L. SCHOSTAK Director
Jerome L. Schostak

/S/ ANDREW J. SOFFEL Director
Andrew J. Soffel

<PAGE>

*3.2 Bylaws, as amended to date.

*10.9 Crowley, Milner and Company 1995 Non-Employee Director Stock Option
Plan effective as of March 22, 1995.

*10.13 Interim Operating Agreement, dated December 29, 1995, between
Steinbach Stores, Inc., the Shareholders of Steinbach Stores, Inc.
and the Company.

*11 Computation of Per Share Earnings.

*23 Consent of Ernst & Young LLP.

*27 Financial Data Schedule (EDGAR filing only).
- ---------------
* Filed herewith

BYLAWS

CROWLEY, MILNER AND COMPANY
(With all amendments through April 24, 1996)

ARTICLE I
STOCK

Section 1. CAPITAL STOCK. The capital stock of this corporation shall be
divided into shares and shall consist of the several classes of stock in the
amounts and of the par and/or no par value, with voting powers, preferences
and rights and with the qualifications, limitations or restrictions, as set
forth in the Articles of Incorporation of this corporation, as amended, from
time to time.

Section 2. CERTIFICATES OF SHARES. The Certificates for shares of the
Capital Stock of this company shall be in such form, not inconsistent with
the Articles of Incorporation of the company, as amended, as shall be
prepared or be approved by the Board of Directors. The Certificates shall
be signed by the President or Vice-President, and also by the Secretary.

Section 3. TRANSFER OF SHARES. The interest of each shareholder of the
corporation shall be evidenced by a certificate or certificates for shares
of stock in such form as the Board of Directors may from time to time
prescribe. The shares of stock of the corporation shall be transferable on
the books of the corporation by the holder thereof in person or by his
attorney, upon surrender for cancellation of a certificate or certificates
for the same number of shares, with an assignment and power of transfer
endorsed thereon or attached thereto, duly executed, and with such proof of
the authenticity of the signature as the corporation or its agents may
reasonably require.

Section 4. REGULATIONS. The Board of Directors shall have power and
authority to make all such rules and regulations, as they may deem expedient
concerning the issue, transfer and registration of certificates for shares
of the capital stock of the company. The Board of Directors may appoint
transfer agents and registrars of transfers, and may require all stock
certificates to bear the signature of a transfer agent and of a registrar of
transfers.

Section 5. CLOSING OF TRANSFER BOOKS. The Board of Directors shall have the
power to close the stock transfer books of the corporation for a period not
exceeding forty days preceding the date of any meeting of shareholders or
the date for payment of any dividend or the date for the allotment or rights
or the date when any change or conversion or exchange of capital stock shall
go into effect; provided, that in lieu of closing the stock transfer books
as aforesaid, the Board of Directors may fix in advance a date, not
exceeding forty days preceding the date of any meeting of shareholders, or
the date for the payment of any dividend, or the date for the allotment of
rights or the date when any change or conversion or exchange of capital
stock shall go into effect, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such meeting, or to
receive payment of such dividend, or to receive such allotment or rights, or
to exercise such rights, as the case may be, notwithstanding any transfer of
any stock on the books of the corporation or otherwise after any such record
date fixed as aforesaid.

Section 6. LOST CERTIFICATES. In case of the loss, theft or destruction of
any certificate or shares of stock, upon due proof by the registered holder
or his representatives, by affidavit of such loss, theft or destruction, the
Secretary shall cause such certificates to be replaced, upon the corporation
or its agents being duly indemnified therefor.

Section 7. FISCAL YEAR. The Board of Directors may adopt a date from time
to time for the ending of the fiscal year of the company.

Section 8. CORPORATE SEAL. The Board of Directors shall provide a suitable
seal, which seal shall be in charge of the Secretary, and shall be used by
him.

ARTICLE II
SHAREHOLDERS' MEETINGS

Section 1. ANNUAL MEETING, TIME, PLACE AND PURPOSE. Meetings of the
shareholders of this corporation shall be held on such day and at such time
as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, for the purpose of electing Directors
and for the transaction of such other business as may be brought before the
meeting.

Section 2. SPECIAL MEETINGS, NOTICE. Special meetings of the shareholders
may be called by the President or Vice-President or upon order of a majority
of the Board of Directors or upon request of shareholders owning of record a
majority of the stock entitled to vote at such meeting at any time.

Section 3. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Notice of each annual
and special meeting shall be given by mail, directed to the last known
address of each shareholder entitled to vote at such annual or special
meeting. The notice shall be posted at least ten (10) days prior to the
date of such meeting. Notice of special meetings shall indicate briefly the
general object or objects of such meeting.

Section 4. QUORUM. At any corporate meeting of shareholders, the holders
of a majority of shares outstanding and entitled to vote, present in person
or by proxy, shall constitute a quorum. Meetings at which less than a
quorum is represented may, however, be adjourned from time to time to a
further date by those who attend, without further notice other than the
announcement at such meeting, and when a quorum shall be present upon any
such adjourned day, any business may be transacted which might have been
transacted at the meeting as originally called.

Section 5. VOTING. Each shareholder entitled to vote at any meeting shall
have one vote in person or by proxy for each share of stock held by him
which has voting power upon the matter in question at the time; but no proxy
shall be voted on after three years from its date, unless said proxy
provides for a longer period.

Section 6. ORGANIZATION. The President shall call meetings of the
shareholders to order and shall act as Chairman of such meeting, unless
otherwise determined by the holders of a majority of all the shares of the
capital stock issued and outstanding and entitled to vote at the meeting,
present in person or by proxy. The Secretary of the Company shall act as
Secretary of all meetings of the Company, but in the absence of the
Secretary at any meeting of the shareholders or his inability to act as
Secretary, the presiding officer may appoint any person to act as Secretary
of the meeting.

Section 7. INSPECTORS AND TELLERS. At each annual meeting of the
shareholders all questions touching the qualifications of voters and the
validity of proxies and the acceptance or rejection of votes, shall be
decided by two Inspectors and Tellers; such Inspectors and Tellers may be
appointed by the Board of Directors before the meeting, or if no such
appointment shall have been made, then they shall be appointed by the
Presiding Officer at the meeting, or appointment may be made as provided by
statute. If, for any reason, any of the Inspectors and Tellers previously
appointed shall fail to attend, or be unable to serve, substitutes for those
so failing to attend or to serve, shall be appointed in like manner.

ARTICLE III
DIRECTORS

Section 1. NUMBER, CLASSIFICATION AND TERM; ELECTIONS. The business and
property of the company shall be managed and controlled by a board of not
less than nine directors nor more than twelve directors as shall be fixed
from time to time by the Board of Directors. Each director shall hold
office for the term for which he is elected and thereafter until his
successor is elected and qualifies.

The Board of Directors shall be classified into three classes with staggered
terms of office. Each class shall be as nearly equal in number as possible.
Each class of directors shall be elected for a term of three years. At each
annual meeting of the shareholders, successors to the directors whose terms
expire in that year shall be elected to hold office for a term of three
years.

At any election of directors, nominations for the office of director may be
made by any shareholder present at the meeting. No person shall be eligible
for election to the office of director at any meeting of shareholders unless
he has been so nominated prior to the commencement of balloting. At each
election of directors the entire number of directors to be elected at such
meeting shall be balloted for at one and the same time and not separately.

Section 2. PLACE OF MEETING. The Directors shall hold their meetings at
the offices of the company except as otherwise specifically directed by a
majority of the Directors.

Section 3. MEETINGS. Meetings of the Board of Directors may be called at
any time by the President or Secretary, or by a majority of the Board of
Directors. Directors shall be notified in writing of the time and place of
all meetings of the Board, except the regular annual meeting held
immediately after the annual meeting of shareholders, at least two days
prior thereto. Meetings may be held at any time without notice if all the
Directors are present or if notice is waived by telegram, radiogram,
cablegram or other writing, either before or after the meeting, by those not
present.

Annual meetings of which no notice need be given shall be held each year
immediately following the annual meetings of shareholders in addition to
meetings called as aforesaid. Officers of the corporation shall be elected
at each annual meeting.

Section 4. QUORUM. A majority of the Board of Directors shall constitute a
quorum for the transaction of business, and if at any meeting of the Board
of Directors there be less than a quorum present, a majority of those
present may adjourn the meeting from time to time. Provided, that if the
Directors shall severally and/or collectively consent in writing to any
action to be taken by the corporation such action shall be as valid
corporate action as though it had been authorized as a meeting of the
Directors.

Section 5. VACANCIES. Vacancies in the Board of Directors may be filled by
election by the remaining members of the Board, though less than a quorum,
at any regular or special meeting, provided that at any special meeting of
the shareholders such election by the Directors may be set aside and such
vacancies filled by the shareholders. In case of any increase in the number
of Directors, the additional Directors may be elected by a majority of the
Board as constituted prior to such increase.

Section 6. COMPENSATION. No Director shall receive any salary or
compensation for his services as a Director, unless otherwise specially
ordered by the Board of Directors.

ARTICLE IV
OFFICERS

Section 1. OFFICERS. The Board of Directors shall elect or appoint a
President, a Secretary and a Treasurer, and may select a Chairman of the
Board, and one or more Vice Presidents, Assistant Secretaries or Assistant
Treasurers. The President and Chairman of the Board, if any, shall be
members of the Board of Directors. Any two or more of the above offices,
except those of President and Vice President, may be held by the same
person. No officer shall execute, acknowledge or verify an instrument in
more than one capacity if the instrument is required by law, the Articles of
Incorporation or these Bylaws to be executed, acknowledged, or verified by
one or more officers.

ARTICLE V
DUTIES OF OFFICERS

Section 1. CHAIRMAN. The Chairman of the Board, if such office is filled,
shall preside at all meetings of the shareholders and of the Board of
Directors at which the Chairman is present. The Chairman shall serve at the
pleasure of the Board, and the Board may leave such office vacant for any
length of time.

Section 2. PRESIDENT. The President shall act as the chief executive
officer of the corporation, and shall see that all orders and resolutions of
the Board are carried into effect. He shall have the general powers of
supervision and management usually vested in the chief executive officer of
a corporation, including the authority to vote all securities of other
corporations and business organizations which are held by the corporation,
and shall have the general powers of supervision and management over the
day-to-day operations of the corporation. In the absence or disability of
the Chairman of the Board, or if that office has not been filled, the
President also shall perform the duties and execute the powers of the
Chairman of the Board as set forth in these Bylaws.

Section 3. VICE PRESIDENTS. The Vice Presidents, in order of their
seniority, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and shall perform such other
duties as the Board of Directors or the President may from time to time
prescribe.

Section 4. SECRETARY. The Secretary shall attend all meetings of the Board
of Directors and of shareholders and shall record all votes and minutes of
all proceedings in a book to be kept for that purpose, shall give or cause
to be given notice of all meetings of the shareholders and of the Board of
Directors, and shall keep in safe custody the seal of the corporation and,
when authorized by the Board, affix the same to any instrument requiring it,
and when so affixed it shall be attested by the signature of the Secretary,
or by the signature of the Treasurer or an Assistant Secretary. The
Secretary may delegate any of the duties, powers and authorities of the
Secretary to one or more Assistant Secretaries, unless such delegation is
disapproved by the Board.

Section 5. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities; shall keep full and accurate accounts of
receipts and disbursements in books of the corporation; and shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall render to the President and directors,
whenever they may require it, an account of his or her transactions as
Treasurer and of the financial condition of the corporation. The Treasurer
may delegate any of his or her duties, powers and authorities to one or more
Assistant Treasurers unless such delegation is disapproved by the Board of
Directors.

Section 6. EXECUTIVE COMMITTEE. The Board of Directors shall appoint an
Executive Committee of the Board which shall have and exercise the authority
of the Board of Directors in the management of the business of the
corporation between the meetings of the Board. The Executive Committee
shall consist of not less than three nor more than five members, as the
Board shall from time to time determine. All members of the Committee shall
be members of the Board and shall hold office at the pleasure of the Board,
except that the President shall be a member of the Committee. The Committee
shall have the power to fix the time of its meetings. Special meetings may
be called by any member of the Committee on one day's notice.

ARTICLE VI
CONTRACTS

Section 1. Formal contracts may be executed on behalf of this corporation
by the President or Vice-President and attested and the corporation seal
affixed by the Secretary or Assistant Secretary or executed in such other
manner as may be authorized by the Board of Directors.

ARTICLE VII
NOTICES TO SHAREHOLDERS, DIRECTORS AND OFFICERS

Section 1. GIVING NOTICE. Any notice required by statute or by these
Bylaws to be given, or which the company desired for any purpose or reason
to serve on, the shareholders or directors or any officer of the company
shall be deemed to be sufficient when given by depositing the same in a post
office box, in sealed postpaid wrapper addressed to such shareholder,
director or office at his last known address, and such notice shall be
deemed to have been given at the time of such mailing.

ARTICLE VIII
AMENDMENTS

Section 1. These Bylaws, or any of them, may be altered, amended, added to
or repealed by a majority of the stock at any regular annual meeting of the
shareholders or at any special meeting, when the notice of such special
meeting shall contain a notice of such proposed change, or by a majority of
the Board of Directors, provided, that the Board of Directors shall not make
or alter any Bylaws fixing the qualifications, classifications or terms of
office of Directors.

Section 2. Every person becoming a shareholder in this company shall be
deemed to assent to these Bylaws and shall designate to the Secretary the
address to which he desires that the notice herein required to be given may
be sent, and all notices mailed to such addresses, with postage prepaid,
shall be considered as duly given at the date of mailing, and any person
failing to so designate his address shall be deemed to have waived notice of
such meeting.

ARTICLE IX
INDEMNIFICATION

Section 1. NON-DERIVATIVE ACTIONS. Subject to all of the other provisions
of this Article, the corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal, other than
an action by or in the right of the corporation, by reason of the fact that
he is or was a director or officer of the corporation, or is or was serving
at the request of the corporation as a director, officer, partner, trustee,
employee or agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise, whether for profit or not, against
expenses, including attorneys' fees, judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the corporation or its shareholders, and with respect to any criminal
action or proceeding, if the person had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation or
its shareholders, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.

Section 2. DERIVATIVE ACTIONS. Subject to all of the provisions of this
Article, the corporation shall indemnify any person who was or is a party to
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director or officer
of the corporation, or is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise, whether for profit or not, against expenses incurred, including
actual and reasonable attorney's fees, and amounts paid in settlement, by
him in connection with the action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the corporation or its shareholders. However, indemnification shall not
be made in respect of any claim, issue or matter in which such person shall
have been found liable to the corporation unless and only to the extent that
the court in which such action or suit was brought has determined upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which such court considers proper.

Section 3. EXPENSES OF SUCCESSFUL DEFENSE. To the extent that a person has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section l or 2 of this Article, or in defense of
any claim, issue or matter in the action, suit or proceeding, he shall be
indemnified against expenses, including actual and reasonable attorneys'
fees, incurred by him in connection with the action, suit or proceeding and
any action, suit or proceeding brought to enforce the mandatory
indemnification provided by this Article IX.

Section 4. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification under Section l or 2 of this Article, unless ordered by a
court, shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the person is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Section l or 2, whichever is applicable. Such determination shall
be made in any of the following ways:

(a) By a majority vote of a quorum of the Board consisting of
directors who were not parties to such action, suit or proceeding.

(b) If the quorum described in clause (a) above is not obtainable,
then by a majority vote of a committee of directors who are not
parties to the action. The committee shall consist of not less than
two disinterested directors.

(d) By the shareholders.

Section 5. PROPORTIONATE INDEMNITY. If a person is entitled to
indemnification under Section 1 or 2 of this Article for a portion of
expenses, including attorneys' fees, judgments, penalties, fines, and
amounts paid in settlement, but not for the total amount thereof, the
corporation may indemnify the person for the portion of the expenses,
judgments, penalties, fines, or amounts paid in settlement for which the
person is entitled to be indemnified.

Section 6. EXPENSE ADVANCE. Expenses incurred in defending a civil or
criminal action, suit or proceeding described in Section l or 2 of this
Article may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the person involved to repay the expenses if it is ultimately
determined that he is not entitled to be indemnified by the corporation.
The undertaking shall be by unlimited general obligation of the person on
whose behalf advances are made but need not be secured.

Section 7. FORMER DIRECTORS AND OFFICERS. The indemnification provided in
the foregoing Sections continues as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.

Section 8. INSURANCE; OTHER INDEMNIFICATION. (a) The corporation may
purchase and maintain insurance on behalf of any person who is or was a
director or officer of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such capacity
or arising out of his status as such, whether or not the corporation would
have power to indemnify him against such liability under these Bylaws or the
laws of the State of Michigan.

(b) The indemnification or advancement of expenses provided under
this Article IX is not exclusive of other rights to which a person seeking
indemnification or advancement of expenses may be entitled under a
contractual arrangement with the corporation. However, the total amount of
expenses advanced or indemnified from all sources combined shall not exceed
the amount of actual expenses incurred by the person seeking indemnification
or advancement of expenses.

Section 9. CHANGES IN MICHIGAN LAW. In the event of any change of the
Michigan statutory provisions applicable to the corporation relating to the
subject matter of Article IX of these Bylaws, then the indemnification to
which any person shall be entitled hereunder shall be determined by such
changed provisions. The Board of Directors is authorized to amend these
Bylaws to conform to any such changed statutory provisions.

ARTICLE X
CONTROL SHARES AND
CONTROL SHARE ACQUISITIONS

Section 1. CONTROL SHARE ACQUISITIONS. The corporation is subject to
Chapter 7B, "Control Share Acquisitions", of the Michigan Business
Corporation Act. The corporation became subject to Chapter 7B effective as
of October 3, 1988, pursuant to the adoption of a resolution by the Board of
Directors that was filed with the Michigan Department of Commerce. Under
Chapter 7B, shares of capital stock of the corporation constituting "control
shares" acquired in "control share acquisitions" (as defined in Chapter 7B)
have the same voting rights as were accorded the shares before the "control
share acquisition" only to the extent granted by resolution approved by the
shareholders of the corporation in accordance with Chapter 7B.

FIRST AMENDMENT
OF THE
SECOND AMENDED AND RESTATED
CROWLEY, MILNER & COMPANY PROFIT SHARING PLAN

Pursuant to Section 10.01 of the Second Amended and Restated
Crowley, Milner & Company Profit Sharing Plan, as effective February 1, 1990
(the "Plan") and in accordance with authority granted by the Board of
Directors, Crowley, Milner and Company hereby adopts this First Amendment of
the Plan effective July 1, 1995.

1. Section 4.01(a) is amended in its entirety to read as
follows:

(a) Investment Options. A Participant who is in active
employment of the Employer, or who ceases to be so employed but elects a
deferred distribution of his Account, shall invest his Account among
Employer Stock (as provided in Section 4.02) and such investment funds as
are made available from time to time by the Trustee at the direction of the
Plan Administrator. The Plan Administrator from time to time may change the
available investment funds. In such event, the Plan Administrator shall
give reasonable notification to Participants of such change. A Participant
may invest all or part of his Account in Employer Stock and/or in any one or
more of the funds so established, but only in whole increments of five
percent of the value of such Account.

2. Section 4.01(c) is amended in its entirety to read as
follows:

(1) Future Contributions. With respect to future
contributions, a Participant who is actively employed by the Employer may
change his investment election at such times (not less frequently than once
per calendar quarter) as shall be determined and communicated to
Participants by the Plan Administrator. Except with respect to investments
in Employer Stock, the new election shall become effective with respect to
contributions received by the Trustee after receipt of the Participant's new
election. Elections to increase or decrease investments in Employer Stock
shall be effective only in the third month of each calendar quarter on a
date determined by the Plan Administrator and the Trustee and communicated
to Participants. In the absence of a new election, future contributions
shall be invested in Employer Stock and the available funds in the same
proportions as specified in the Participant's most recent election.

(2) Existing Accounts -- Interfund Transfers. With
respect to his existing Account balance, a Participant who is actively
employed by the Employer, or who ceases to be so employed but elects a
deferred distribution of his Account, may change his election and request a
transfer of monies among Employer Stock and the available funds at least
once each calendar quarter and, except with respect to Employer Stock, at
such additional times as shall be determined by the Plan Administrator. The
procedures for transferring monies among Employer Stock and the available
investment funds shall be determined by the Trustee and the Plan
Administrator and shall be communicated to Participants. Such transfers
generally shall become effective on the date specified by the Participant,
subject to such limitations as may be imposed by the various investment
funds and to the notice requirements of the Trustee; provided, that
transfers into or out of Employer Stock shall be effective only in the third
month of each calendar quarter on a date determined by the Plan
Administrator and the Trustee and communicated to Participants. In the sole
discretion of the Plan Administrator any transfer may be made effective at
such later date as is appropriate to effectuate the Participant's new
election without incurring significant losses or transaction costs. The
Plan Administrator shall direct the Trustee to transfer monies or other
property as may be necessary to appropriately reflect the aggregate transfer
transactions after the Plan Administrator has caused the necessary entries
to be made in the Participants' Accounts and has reconciled offsetting
transfer elections, in accordance with uniform rules established by the Plan
Administrator.

3. Section 4.01(e) is amended in its entirety to read as
follows:

(e) Effect of Distributions. Subject to Section 6.04(d)(7), a
loan, hardship withdrawal or in-service distribution shall be disbursed
pro-rata from the investment fund or funds in which the Participant's
Account is invested. However, no amount shall be disbursed from that
portion, if any, of the Participant's Account which is invested in
guaranteed investments contracts issued by Maccabees Life Insurance Company
until all amounts in the other investment funds in which the Participant's
Account is invested have been disbursed. Loan repayments shall be allocated
to the investment funds in the same manner as the current contributions
being made to the Participant's Account.

4. Sections 4.02 and 4.03 are hereby renumbered 4.03 and 4.04,
and a new Section 4.02 is added to the Plan to read as follows:

Section 4.02 Investment in Employer Stock.

(a) Authorization to Invest. Each Participant who is actively
employed by the Employer, or who ceases to be so employed but elects a
deferred distribution of his Account, may, subject to the percentage
limitation in Section 4.01(a), direct the investment of all or any portion
of his Account in shares of Employer Stock. Pursuant to Participant
direction, the Trustee may invest up to 100% of the Fund in Employer Stock.

(b) Securities Transactions. The Trustee may acquire or sell
shares of Employer Stock in the open market, in transactions with the
Employer, and in any private transaction, including transactions between
Participant Accounts. The value of shares of Employer Stock which are the
subject of trans- actions between Participant Accounts or transactions with
the Employer shall be the average of the closing price of Employer Stock on
the American Stock Exchange for the three trading days immediately preceding
the transaction. The value of shares of Employer Stock which are purchased
or sold by the Trustee outside of the Plan and in transactions not involving
the Employer shall be the net price actually paid or received for such
shares.

(c) Voting and Other Rights. Participants will be given the
opportunity to direct the Trustee to vote all shares of Employer Stock
(including fractional shares) held in their Accounts on all matters
presented to the Employer's shareholders for a vote. The Employer shall
notify Participants when voting rights may be exercised and shall furnish
the Trustee and Participants with information similar to that furnished to
other shareholders of the Employer, and within the time periods required by
law or by the Articles of Incorporation or Bylaws of the Employer.
Management of the Employer and others may solicit the vote of Participants
under the same proxy rules that are applicable to other shareholders of the
Employer. The Trustee shall vote allocated shares for which it has not
received directions and any shares which have not yet been allocated to the
Accounts of Participants in the same proportion as shares for which voting
directions have been received. Information regarding the purchase, holding
and sale of Employer Stock for the benefit of any Participant's Account and
information regarding the exercise of voting rights with respect to such
stock shall be kept confidential except to the extent necessary to comply
with applicable federal and state law.

(d) Reinvestment of Dividends. Cash dividends paid on Employer
Stock shall be allocated to Participant's Accounts as of the record date for
the dividend and shall be reinvested by the Trustee in additional shares of
Employer Stock.

(e) Rights, Warrants, or Options. Stock rights, including
warrants and options, issued with respect to Employer Stock held in the Plan
shall be exercised by the Trustee on behalf of Participants to the extent
that cash is available, otherwise they shall be sold and the proceeds shall
be invested in Employer Stock.

(f) Commissions. Commissions incurred in connection with the
purchase or sale of shares of Employer Stock shall be charged to Participant
Accounts or shall be paid by the Employer, as determined by the Employer;
provided that no commissions shall be paid with respect to any transaction
involving a "party-in-interest" as defined in ERISA Section 3(14).

(g) Distributions. A Participant who is entitled to a
distribution under Article 6 may elect to receive shares of Employer Stock
held in his Account in the form of cash or in kind.

(h) Special Rules. The Employer and the Trustee shall have the
power to adopt and implement such uniform administrative rules regarding the
investment of plan assets in Employer Stock as they shall deem necessary or
appropriate.

5. Section 6.04(d) is amended by adding the following paragraph
(7) thereto:

(7) Loans shall not be available with respect to that
portion of a Participant's Account consisting of Employer Stock.

6. A new Section 12.31 is added to Article 12 to read as
follows:

Section 12.31 "Employer Stock" means Crowley, Milner and Company
Common Stock, provided that such stock constitutes "qualifying employer
securities" as defined in ERISA Section 407(d)(5).

IN WITNESS WHEREOF, Crowley, Milner and Company has caused this
First Amendment to be executed this ---- day of ----------, 1995.

CROWLEY, MILNER AND COMPANY

By:
--------------------------
Its:
--------------------------

CROWLEY, MILNER AND COMPANY

AMENDMENT NO. 1
TO
1992 INCENTIVE STOCK PLAN

Subject to shareholder approval, effective March 22, 1995, Section 5 of the
Crowley, Milner and Company 1992 Incentive Stock Plan is amended and
restated to read in its entirety as follows:

"5. Stock. Subject to adjustment as provided in Section 10, the
total number of shares of Common Stock available for grants of Options and
awards of Restricted Stock under this Plan shall be two hundred thousand
(200,000). Shares subject to any unexercised portion of a terminated,
cancelled or expired Option granted hereunder, or Restricted Stock awarded
hereunder but subsequently forfeited and returned to the Corporation
pursuant to Section 8(b)(ii) hereof, may again be subjected to grants under
this Plan."

Capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the plan documents relative to the Crowley,
Milner and Company 1992 Incentive Stock Plan, effective March 25, 1992.

Except as set forth above with respect to Section 5 of the Plan, all
of the terms and conditions of the Plan shall continue and remain in full
force and effect.

The amendment to the Plan described herein shall be subject to the
approval of the holders of at least a majority of the Common Stock of the
Corporation present and entitled to vote at a meeting of shareholders of the
Corporation held within twelve (12) months after adoption of this Plan by
the Board. No Option granted or Restricted Stock awarded with respect to
the amendment to the Plan described herein may be exercised in whole or in
part until this Plan has been approved by the shareholders as provided
herein. If not approved by shareholders within such twelve (12) month
period, the amendment to the Plan described herein and any Options granted
or Restricted Stock awarded hereunder shall be rescinded.

* * *

This AMENDMENT NO. 1 TO 1992 INCENTIVE STOCK PLAN is hereby executed
as of the 22nd day of March, 1995.

CROWLEY, MILNER AND COMPANY

By: /s/ MARK A. VANDENBERG
---------------------------
Its: Vice President-
Finance, Secretary
and Treasurer

BOARD APPROVAL: March 22, 1995

SHAREHOLDER APPROVAL: May 17, 1995

CROWLEY, MILNER AND COMPANY

1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

Subject to shareholder approval, effective March 22, 1995, the plan
described herein is hereby adopted as the Crowley, Milner and Company 1995
Non-Employee Director Stock Option Plan (the "Plan").

I. GENERAL PROVISIONS

1.1 Purpose. The purpose of the Plan is to promote the best interests of
the Corporation and its shareholders by attracting and motivating highly
qualified individuals to serve as Directors and to encourage such Directors
to acquire an ownership interest in the Corporation, thus identifying their
interests with those of shareholders.

1.2 Definitions. As used in this Plan, the following terms have the
meaning described below:

(a) "Agreement" means the written agreement that sets forth the terms of a
Participant's Option.

(b) "Board" means the Board of Directors of the Corporation.

(i) If any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), or group of persons acting in concert, other
than the Corporation, a Subsidiary or an employee benefit plan or employee
benefit plan trust maintained by the Corporation or a Subsidiary, becomes
the "beneficial owner" (as such term is defined in Rule 13d-3 of the
Exchange Act, except that a person also shall be deemed the beneficial owner
of all securities which such person may have a right to acquire, whether or
not such right is presently exercisable), directly or indirectly, of
securities of the Corporation representing fifty (50%) or more of the
combined voting power of the Corporation's then outstanding securities
ordinarily having the right to vote in the election of directors; or

(ii) A liquidation or dissolution of the Corporation, sale of
substantially all of the assets of the Corporation, or a merger,
consolidation or combination in which the Corporation is not the survivor;
or

(iii) The addition of new members to the Board within any
consecutive twenty-four (24) month period, which members constitute a
majority of the Board, unless a majority of the Board consists of incumbent
members of the Board in office prior to the commencement of such twenty-four
(24) month period, plus new members who were recommended or appointed by a
majority of the incumbent directors in office immediately prior to the
addition of such new members to the Board.

(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.

(e) "Committee" means the Compensation Committee of the Corporation, which
shall be comprised of two or more disinterested members of the Board, as
defined in Rule 16b-3.

(f) "Common Stock" means shares of the Corporation's authorized Common
Stock.

(g) "Corporation" means Crowley, Milner and Company, a Michigan
corporation.

(h) "Director" means a member of the Corporation's Board of Directors.

(i) "Disability" means total and permanent disability, as defined in
Section 22(e) of the Code.

(j) "Effective Date" means March 22, 1995.

(k) "Eligible Director" means a Director who is not an Employee of the
Corporation.

(l) "Employee" means an employee of the Corporation or its Subsidiaries,
who has an "employment relationship" with the Corporation or its
Subsidiaries, as defined in Treasury Regulation 1.421-7(h), and the term
"employment" means employment with the Corporation or its subsidiaries.

(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.

(n) "Expiration Date" means the date set forth in the Agreement relating
to an Option on which the right to exercise such Option shall expire, except
as otherwise provided in Article III below. Unless otherwise provided in
the Agreement, the Expiration Date for an Option shall be the fifth (5th)
anniversary of its Grant Date.

(o) "Fair Market Value" means, for purposes of determining the value of
Common Stock, the closing price of the Common Stock on the American Stock
Exchange, Inc., any national securities exchange on which such Common Stock
is listed for trading or, if it is not listed on any exchange, the average
of the closing bid and asked prices quoted in The Nasdaq Stock Market, as
reported in The Wall Street Journal. In the event that there were no Common
Stock transactions or no reported bid and asked quotations on such date, the
Fair Market Value shall be determined as of the immediately preceding date
on which there were Common Stock transactions or price quotations, as the
case may be, on which there was such a reported sale.

(p) "Grant Date" means the date on which the Option was automatically
awarded pursuant to Section 2.1.

(q) "Non-Employee Director" means a Director who is not an Employee of the
Company.

(r) "Nonqualified Stock Option" means an Option that is not intended to
meet the requirements of Section 422 of the Code.

(s) "Option" means a Nonqualified Stock Option to purchase Common Stock
granted under this Plan.

(t) "Participant" means each of the Directors of the Corporation
participating in the Plan from time to time.

(u) "Plan" means the Crowley, Milner and Company 1995 Non-Employee
Director Stock Option Plan, the terms of which are set forth herein, and any
amendments hereto.

(v) "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as in effect
from time to time.

(w) "Subsidiary" means a corporation of which at least fifty-one percent
(51%) of the outstanding voting stock is owned by the Corporation, either
directly or indirectly through one or more other Subsidiaries.

(x) "1992 Incentive Stock Plan" means the Crowley, Milner and Company 1992
Incentive Stock Plan, as amended from time to time.

1.3 Administration. To the extent permitted by Rule 16b-3, the Plan shall
be administered by the Committee. The Committee shall interpret the Plan,
prescribe, amend, and rescind rules and regulations relating to the Plan,
and make all other determinations necessary or advisable for its
administration. The decision of the Committee on any question concerning
the interpretation of the Plan or its administration with respect to any
Option granted under the Plan shall be final and binding upon all
Participants.

1.4 Stock. The total number of shares of Common Stock available for grants
under the Plan shall not, in the aggregate, exceed 100,000 shares of Common
Stock, as adjusted from time to time in accordance with Article IV. Shares
subject to any unexercised portion of a terminated, forfeited, cancelled or
expired Option granted hereunder shall be available for subsequent grants
under the Plan. In the event that an option granted under the Plan is
exercised by the delivery of shares of Common Stock previously acquired upon
the exercise of Options issued under the Plan or through the retention of
options procedure as described in Section 2.6 below, the shares of Common
Stock so delivered to the Corporation or underlying such retained options
shall be available for subsequent grants under this Plan.

II. STOCK OPTIONS FOR ELIGIBLE DIRECTORS

2.1 Automatic Grants of Options to Non-Employee Directors.

(a) Eligibility. All Non-Employee Directors of the Corporation, who have
been elected by the shareholders at an Annual Meeting or who have been
appointed to fill a vacancy on the Board and are serving on the Board at the
time an Option is granted hereunder shall automatically participate
hereunder, provided that a Non-Employee Director shall not be eligible to
participate under this Plan unless he shall have served on the Board of
Directors for at least one (1) year prior to the grant of any options, and
provided further that a Non-Employee Director shall not be eligible to
participate under this Plan during such period as he is participating in the
1992 Incentive Stock Plan.

(b) Annual Grants. On the business day immediately prior to the date of
each Annual Meeting of Shareholders, the Non-Employee Directors who meet the
eligibility requirements in Section 2.1(a) above shall be granted an Option
to purchase 2,000 shares of the Corporation's Common Stock, to be exercised
within five (5) years from the Grant Date. The grant shall be automatic and
nondiscretionary.

(c) No Discretion. Notwithstanding any provision in the Plan to the
contrary, the Committee shall have no discretion with respect to the terms
of grants made to a Non-Employee Director pursuant to this Article II,
except to the extent such discretion would not result in the grant or the
Plan failing to qualify for the disinterested Director exemption provided
under Rule 16b-3.

2.2 Option Agreement. Each Option granted pursuant to this Article II
shall be evidenced by an Agreement for Non-Employee Directors in accordance
with the terms of the Plan and shall specify, among other things, the
exercise price, the term of the Option, the date or dates on which the
Option becomes exercisable, the number of shares to which the Option
relates, and other such provisions as the Committee shall determine.

2.3 Option Price. The purchase price per share of Common Stock for an
Option granted pursuant to this Article II shall be equal to the Fair Market
Value per share of Common Stock on the Grant Date.

2.4 Duration of Options. The Expiration Date of each Option granted
pursuant to this Article II shall be the fifth (5th) anniversary of its
Grant Date.

2.5 Exercise of Shares Subject to Option. Options granted under this
Article II shall become exercisable in full three (3) months following the
Grant Date of each Option. Once exercisable, such Options may be exercised
in whole or in part and at any time and from time to time until the
Expiration Date of such Options, unless earlier terminated pursuant to this
Plan (including Article III hereof), provided that, if such Options are not
exercised by a Participant under this Plan in the sequential orders granted
hereunder, those Options granted to such Participant prior to the Option so
exercised shall automatically terminate.

2.6 Payment for Option Shares. The purchase price for shares of Common
Stock to be acquired upon exercise of an Option granted hereunder shall be
paid in full at the time of exercise in any of the following ways: (a) in
cash; (b) by certified check, bank draft or money order; (c) by delivery to
the Corporation of previously-acquired shares of the Corporation's Common
Stock with a Fair Market Value (determined on the last trading date
immediately preceding the date of exercise) equal to the exercise price; or
(d) by any combination of the foregoing.

III. TERMINATION

3.1. General. If a Participant's term of office as a Non-Employee Director
is terminated for any reason, (a) the Expiration Date of each Option granted
pursuant to this Plan during the calendar year ending December 31, 1995
shall be the third (3rd) anniversary of such Option's Grant Date, and (ii)
the Expiration Date of each Option granted pursuant to this Plan after
December 31, 1995 shall be the first (1st) anniversary of the effective date
of the Participant's termination as a Non-Employee Directors.

3.2 Post-Termination Exercise. During the period from the Participant's
termination of services as a Non-Employee Director until the termination of
the Option, the Participant, or the person or persons to whom the Option
shall have been transferred by will or by the laws of descent and
distribution, may exercise the Option only to the extent that such Option
was exercisable on the date of the Participant's termination.

IV. ADJUSTMENTS AND CHANGE IN CONTROL

4.1 Adjustments. The total amount of Common Stock for which Options may be
granted under the Plan, and the number of shares subject to any such grants
(both as to the number of shares of Common Stock and the Option price),
shall be appropriately adjusted for any increase or decrease in the number
of outstanding shares of Common Stock resulting from payment of a stock
dividend on Common Stock, a subdivision or combination of shares of Common
Stock, a stock split, or a reclassification of Common Stock. The foregoing
adjustments and the manner of application of the foregoing provisions shall
be determined and made by the Committee. Any such adjustment may provide
for the elimination of any fractional share which might otherwise become
subject to an Option.

4.2 Change in Control. Notwithstanding anything contained herein to the
contrary, upon a Change in Control, any outstanding Option granted hereunder
immediately shall become exercisable in full.

V. MISCELLANEOUS

5.1 Partial Exercise. The Committee shall permit, and shall establish
procedures for, the partial exercise of Options under the Plan.

5.2 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on the exercise of an Option
as may be required to satisfy the requirements of Rule 16b-3 and any
successor thereto.

5.3 Rights Prior to Issuance of Shares. No Participant shall have any
rights as a shareholder with respect to shares covered by an Option until
and only to the extent that the Option is exercised.

5.4 Non-Assignability. Except as set forth below, no Option shall be
transferable by a Participant except by will or the laws of descent and
distribution, and during the lifetime of a Participant, an Option shall be
exercised only by the Participant. Notwithstanding the foregoing, to the
extent permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as
amended from time to time, an Option may be transferred by a Participant to
a living trust of which the Participant is the grantor and beneficiary
during his lifetime, if such transfer shall not be deemed to constitute a
change in beneficial ownership. No transfer of an Option by will or the
laws of descent and distribution (or to a living trust as applicable) shall
be effective to bind the Corporation unless the Corporation shall have been
furnished with written notice thereof and a copy of the will (or trust) or
such evidence as the Corporation may deem necessary to establish the
validity of the transfer and the acceptance by the transferee of the terms
and conditions of the Option.

5.5. Securities Laws.

(a) Anything to the contrary herein notwithstanding, the Corporation's
obligation to sell and deliver Common Stock pursuant to the exercise of an
Option is subject to such compliance with federal and state laws, rules and
regulations applying to the authorization, issuance or sale of securities as
the Corporation deems necessary or advisable. The Corporation shall not be
required to sell and deliver Common Stock unless and until it receives
satisfactory assurance that the issuance or transfer of such shares shall
not violate any of the provisions of the Securities Act of 1933, as amended,
or the Exchange Act, or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder or those of the American Stock
Exchange, Inc., the National Association of Securities Dealers, Inc. or any
stock exchange on which the Common Stock may be listed, the provisions of
any state laws governing the sale of securities, or that there has been
compliance with the provisions of such acts, rules, regulations and laws.

(b) The Committee may impose such restrictions on any shares of Common
Stock acquired pursuant to the exercise of an Option as it may deem
advisable, including, without limitation, restrictions (i) under applicable
federal securities laws, (ii) required by the American Stock Exchange, Inc.,
the NASDAQ Stock Market or any stock exchange or other recognized trading
market upon which such shares of Common Stock are then listed or traded, and
(iii) under any blue sky or state securities laws applicable to such shares.
No shares shall be issued until counsel for the Corporation has determined
that the Corporation has complied with all requirements under appropriate
securities laws.

5.6 Termination and Amendment.

(a) The Board may terminate the Plan, or the granting of Options under the
Plan, at any time. No new grants shall be made under the Plan after March
21, 2005.

(b) The Board may amend or modify the Plan at any time and from time to
time, but, unless otherwise permitted under Rule 16b-3 without shareholder
approval, no amendment or modification, without the approval of the
shareholders of the Corporation, shall (i) materially increase the benefits
accruing to Participants under the Plan, (ii) increase the amount of Common
Stock for which grants may be made under the Plan, except as permitted under
Sections 1.4 and 4.1, or (iii) change the provisions relating to the
eligibility of individuals to whom grants may be made under the Plan.
Unless otherwise permitted under Rule 16b-3, this Plan shall not be amended
more than once in any six (6) month period other than to comply with changes
in the Code or the Exchange Act.

(c) No amendment, modification or termination of the Plan shall adversely
affect any Option granted under the Plan without the consent of the
Participant holding the Option.

5.7 Effect on Services. Neither the adoption of the Plan nor the granting
of any Option pursuant to the Plan shall be deemed to create any right in
any individual to be retained as a Non-Employee Director.

5.8 Use of Proceeds. The proceeds received from the sale of Common Stock
pursuant to the Plan shall be used for general corporate purposes of the
Corporation.

5.9 Approval of Plan. The Plan shall be subject to the approval of the
holders of at least a majority of the shares of Common Stock of the
Corporation present and entitled to vote at a meeting of shareholders of the
Corporation held within twelve (12) months after adoption of the Plan by the
Board. Any Option granted under the Plan prior to such shareholder
approval, shall be conditioned upon receipt of such approval, and may not be
exercised in whole or in part unless the Plan has been approved by the
shareholders as provided herein. If not approved by shareholders within
twelve (12) months after approval by the Board, the Plan shall be rescinded,
and any Options granted under the Plan shall be void retroactive to the
Grant Date.

This NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN is hereby executed as of the
22nd day of March, 1995.

CROWLEY, MILNER AND COMPANY

By: /s/ MARK A. VANDENBERG
--------------------------
Its: Vice President-
Finance, Secretary
and Treasurer

BOARD APPROVAL: March 22, 1995

SHAREHOLDER APPROVAL: May 17, 1995

AMENDMENT NO.1 TO AGREEMENT AND PLAN OF REORGANIZATION

This AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF REORGANIZATION
("Amendment No. 1") is made as of December 29, 1995 between CROWLEY, MILNER
AND COMPANY, a Michigan corporation ("Crowley's"), and the several
shareholders of STEINBACH STORES, INC., an Ohio corporation ("Steinbach"),
listed on the signature page hereof (collectively, the "Shareholders").

Recitals

1. Prior to the date hereof, the parties hereto entered into
that certain Agreement and Plan of Reorganization dated November 17, 1995
(the "Agreement and Plan of Reorganization").

2. The parties hereto desire to amend the Agreement and Plan of
Reorganization.

Agreement

NOW, THEREFORE, in consideration of these premises and subject to
the terms and conditions contained herein and for the other consideration
provided herein, the parties agree to amend the Agreement and Plan of
Reorganization as follows:

A. Delivery of Disclosure Schedules. Section 4.2(b) of the
Agreement and Plan of Reorganization is amended and restated in its entirety
as follows:

(b) Delivery of Disclosure Schedules. The Shareholders shall
deliver the several Schedules described herein as being part of the
Disclosure Schedules (collectively, the "Disclosure Schedules") on or before
Wednesday, January 31, 1996.

B. Delivery of Disclosure Exhibits. Section 4.3(b) of the
Agreement and Plan of Reorganization is amended and restated in its entirety
as follows:

(b) Delivery of Disclosure Exhibits. Crowley's shall deliver
the several Exhibits described herein as being part of the Disclosure
Exhibits (collectively, the "Disclosure Exhibits") on or before Wednesday,
January 31, 1996.

C. Due Diligence Review by Shareholders. The last sentence of
Section 5.9 of the Agreement and Plan of Reorganization is amended and
restated in its entirety as follows:

The condition precedent set forth in this Section 5.9 shall expire on
Thursday, February 15, 1996.

D. Due Diligence Review by Crowley's. The last sentence of
Section 6.6 of the Agreement and Plan of Reorganization is amended and
restated in its entirety as follows:

The condition precedent set forth in this Section 6.6 shall expire on
Thursday, February 15, 1996.

E. Termination -- Methods. Sections 8.1(d) and (e) of the
Agreement and Plan of Reorganization are amended and restated in their
entirety as follows:

(d) On or before Thursday, February 15, 1996, by the
Shareholders if the conduct or results of the Shareholders' due diligence
review described in Section 5.9 hereof shall not have been satisfactory to
the Shareholders and their advisors as determined in their sole discretion.

(e) On or before Thursday, February 15, 1996, by Crowley's if
the conduct or results of Crowley's due diligence review described in
Section 6.6 hereof shall not have been satisfactory to Crowley's and its
advisors as determined in their sole discretion.

F. Waivers. Crowley's hereby waives any failure by the
Shareholders to comply with the provisions of Section 4.2(b) prior to the
effective date of this Amendment No. 1 and the Shareholders hereby waive any
failure by Crowley's to comply with the provisions of Section 4.3(b) prior
to the effective date of this Amendment No. 1.

G. Effective Date. The effective date of this Amendment No. 1
is as of the date first written above.

H. Continuation of Agreement. Except as expressly modified or
amended hereby, all of the terms and conditions of the Agreement and Plan of
Reorganization shall continue and remain in full force and effect.

I. Definitions. Capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Agreement and Plan of
Reorganization.

J. Counterparts. This Amendment No. 1 may be executed in any
number of counterparts, each of which shall be treated as an original but
all of which, collectively, shall constitute a single instrument.

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

CROWLEY, MILNER AND COMPANY,

By:
------------------------
Its:
------------------------

JEROME SCHOTTENSTEIN SUB CHAPTER S
TRUST NOS. 1, 2, 3, 4, 5, 6, 7,
8, 9 and 10, each a Shareholder and
collectively the Shareholders

By:
-----------------------------
Jay L. Schottenstein, Trustee
for each of the above-named
Trusts

INTERIM OPERATING AGREEMENT

THIS AGREEMENT (the "Agreement") is entered into as of December 29,
1995 among Crowley, Milner and Company ("Crowley's"), a Michigan
corporation, Steinbach Stores, Inc. ("Steinbach"), an Ohio corporation, and
the shareholders (the "Shareholders") of Steinbach.

RECITALS

A. By agreement dated as of November 17, 1995 between Crowley's
and the Shareholders (the "Purchase Agreement"), the Shareholders agreed to
sell to Crowley's, and Crowley's agreed to purchase, all of the outstanding
shares of Steinbach (the "Steinbach Shares"). This Agreement constitutes
both the Acquired Stores Operation Agreement and the Non-Acquired Stores
Operation Agreement described in Sections 4.10(a) and (b) of the Purchase
Agreement. Except as otherwise indicated in this Agreement, capitalized
terms used in this Agreement are defined as set forth in the Purchase
Agreement.

B. Steinbach operates twenty-four (24) department stores, of
which the fifteen (15) stores (the "Acquired Stores") listed on Exhibit A to
this Agreement are to continue to be the property of and to be operated by
Steinbach after the closing of the transactions contemplated by the Purchase
Agreement (the "Closing"), and the nine (9) remaining stores (the "Non-
acquired Stores") and certain office and warehouse/distribution properties
(together with the Non-acquired Stores, the "Excluded Assets") are to be
disposed of by Steinbach either prior to the Closing or as soon thereafter
as, in the reasonable opinion of the Shareholders or their designated
representative, is practicable.

C. For purposes of determining the consideration to be paid by
Crowley's for the Steinbach Shares, Steinbach's Net Book Value, as defined
in the Purchase Agreement, is to be determined as of December 30, 1995 and
will include the Acquired Stores and certain other assets and liabilities,
as agreed upon by the parties, and will not include the Excluded Assets or
the Excluded Liabilities.

D. The Closing is subject to certain conditions which are not
expected to be satisfied until early 1996. It is the intention of the
parties that, subject to the terms of this Agreement and the Purchase
Agreement, Steinbach be operated from December 30, 1995 until the Excluded
Assets are disposed of, until the Purchase Agreement is terminated, or until
the Closing, whichever is the latest to occur, (the "Contract Period") so as
to ensure that the Acquired Stores are operated at the risk and for the
benefit of Crowley's, as though Crowley's had become the sole shareholder of
Steinbach at December 30, 1995 and as though the Acquired Stores, from and
after that date, were the sole asset of Steinbach, and so that the Excluded
Assets are operated or disposed of and the Excluded Liabilities are
discharged by Steinbach at the risk and for the benefit of the Shareholders
as though, from and after that date, the Excluded Assets were the property
and the Excluded Liabilities were the obligations of the Shareholders.

E. The parties recognize that, during the Contract Period and
prior to the Closing, Crowley's desires to integrate the Acquired Stores
into its department store operations, but may require the use of certain of
the Excluded Assets and of Steinbach personnel to accomplish the transition,
and that the Shareholders may require the assistance of Crowley's in the
operation of one or more of the Non-acquired Stores prior to the disposition
of those stores.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

ACQUIRED STORES
Section 1.1. Operation of Acquired Stores. During the Contract
Period, the Acquired Stores shall be operated under the management and
supervision of Crowley's. Subject only to the requirements of the Lease
Contracts and the other contracts with third parties pertaining to the
Acquired Stores and to applicable law, Crowley's shall have the right to
determine and direct all store operations and policies, including, but not
limited to, staffing, hours of operation, selection, purchase and pricing of
merchandise, advertising and all other matters, whether similar or
dissimilar to the foregoing, having to do with the operation of the Acquired
Stores.

Section 1.2. Revenues, Expenses and Risk of Loss. During the
Contract Period, all revenues from the operation of the Acquired Stores and
all costs, expenses, claims and charges of every kind relating to the
operation and occupancy of the Acquired Stores after December 30, 1995 shall
be for the account of Crowley's.

All risk of damage to or loss of the Acquired Stores after December
30, 1995 shall be borne by Crowley's.

Section 1.3. Sales and Other Taxes. Crowley's shall cause
Steinbach to collect and pay, in accordance with applicable law, all sales,
excise and gross receipts taxes payable to any taxing authority having
jurisdiction for sales at the Acquired Stores during the Contract Period.
The cost of such taxes shall be for the account of Crowley's. Upon request.
Crowley's will provide to the Shareholders or their representative
verification of the collection and payment of such taxes.

Section 1.4. Compliance With Leases and Laws. Crowley's shall
cause the Acquired Stores to be operated at all times during the Contract
Period in accordance with applicable laws and shall observe and comply with
all of the terms, covenants and conditions of the Lease Contracts and other
contracts with third parties.

Section 1.5. Insurance. Until the Closing, Steinbach will continue
in effect all liability, casualty, property loss and other insurance
coverage on the Acquired Stores and the conduct of business in the Acquired
Stores. The cost of such coverage will be for the account of Crowley's, and
all recoveries relating to any occurrence at any Acquired Store will be for
the benefit of Crowley's.

Section 1.6. Indemnification. Crowley's agrees to indemnify the
Shareholders against and hold them harmless from any loss, damage or expense
(including reasonable attorney's fees) suffered by them, or any of them,
resulting from (i) any breach by Crowley's of this Agreement, including, but
not limited to, any failure by Crowley's to comply with Sections 1.3 and 1.4
hereof, (ii) any claim asserted by any person employed in the operation of
the Acquired Stores during the Contract Period arising from facts and
circumstances after December 30, 1995, (iii) any claim based upon death,
personal injury or property damage arising out of any occurrence at any
Acquired Store during the Contract Period, and (iv) any claims made under
letters of credit relating to obligations for inventory received after
December 30, 1995.

ARTICLE II
NON-ACQUIRED STORES AND EXCLUDED ASSETS

Section 2.1. Interim Operation and Disposition of Excluded Assets.
The Shareholders agree that, as soon as reasonably practicable after
December 30, 1995, they will cause Steinbach to dispose of the Excluded
Assets, to pay and discharge the Excluded Liabilities and to terminate all
employees not associated with the operation of the Acquired Stores
("Terminated Employees") pursuant to Section 4.9(a) of the Purchase
Agreement. Except as otherwise provided in this Agreement, the operation
and disposition of the Excluded Assets and discharge of the Excluded
Liabilities shall be for the account and benefit and at the sole risk of the
Shareholders. Subject only to the requirements of the Purchase Agreement,
agreements with third parties, including leases affecting the Excluded
Assets, and applicable law, the Shareholders, acting through their
designated representative, shall have the sole right to determine the time
and manner of the liquidation of Non-acquired Store inventories, the
termination of Terminated Employees, and the consideration for and terms of
disposition of all other Excluded Assets. Subject to the discretion so
reserved to them, the Shareholders shall use their best reasonably
commercial efforts to terminate the Terminated Employees and dispose of the
Excluded Assets and the Excluded Liabilities on or prior to the Closing
Date. For purposes of this Agreement, the term "Excluded Assets" shall
include inventory held in Steinbach's warehouse and distribution center at
the close of business on December 30, 1995, but shall not include inventory
held in any Acquired Store, except as otherwise agreed to by the parties.

Section 2.2. Revenues, Expenses and Risk of Loss. During the
Contract Period, all revenues and proceeds from the operation and
disposition of the Excluded Assets and all costs, expenses, claims and
charges of every kind relating to the operation, occupancy and disposition
of the Excluded Assets and the payment and discharge of the Excluded
Liabilities shall be for the account of the Shareholders. To the extent
that cash provided by the operation and disposition of the Excluded Assets
is insufficient for the payment of such costs and expenses', the funding of
any such deficiency will be the Shareholders' responsibility.

All risk of damage to or loss of the Excluded Assets shall be borne
by the Shareholders.

Section 2.3. Sales and Other Taxes. The Shareholders shall cause
to be collected and paid, in accordance with applicable law all taxes
related to the operation and disposition of Excluded Assets and the Excluded
Liabilities, as well as all sales, excise and gross receipts taxes payable
to any taxing authority having jurisdiction for sales at the Non-acquired
Stores subsequent to December 30, 1995. The cost of such taxes will be for
the account of the Shareholders. Upon request, the Shareholders will cause
to be provided to Crowley's verification of the collection and payment of
such taxes.

Section 2.4. Compliance With Applicable Agreements and Laws. The
Shareholders shall cause the Excluded Assets to be operated and maintained
at all times subsequent to December 30, 1995 and until such Excluded Assets
are no longer held in the name of Steinbach's in accordance with applicable
laws, and shall observe and comply with all of the terms, covenants and
conditions of applicable leases and agreements with third parties.

Section 2.5. Insurance. The Shareholders shall cause Steinbach to
continue in effect during the Contract Period all liability, casualty,
property loss and other insurance coverage on the Excluded Assets and the
conduct of business in the Excluded Assets. The cost of such coverage will
be for the account of the Shareholders, and any recoveries relating to any
occurrence at any of the Excluded Assets will be for the benefit of the
Shareholders.

Section 2.6. Indemnification. The Shareholders agree to indemnify
Crowley's against and hold it harmless from any loss, damage or expense
(including reasonable attorneys' fees) suffered by it resulting from (i)
any breach by the Shareholders of this Agreement, including, but not limited
to, any failure by the Shareholders to comply with Sections 2.3 and 2.4
hereof, (ii) any claim asserted by any person employed in the operation of
any of the Excluded Assets during the Contract Period, and (iii) any claim
based upon death, personal injury or property damage arising out of any
occurrence at any Non-acquired Store during the Contract Period.

ARTICLE III
OTHER MATTERS

Section 3.1. Interim Provision of Services. Upon request of the
Shareholders to Crowley's, Crowley's will provide personnel and
administrative services to assist in the operation of Non-Acquired Stores,
and upon request of Crowley's to the Shareholders, the Shareholders will
cause Steinbach to provide administrative services to assist in the
operation of the Acquired Stores and the integration of the Acquired Stores
into Crowley's department store operation; provided, however, that the
provision of such assistance will not interfere with the orderly operation
and liquidation of the Excluded Assets in the case of assistance requested
by Crowley's, and provided that the provision of such assistance will not
interfere with the orderly conduct of Crowley's business, including the
operation of the Acquired Stores, in the case of assistance requested by the
Shareholders. Services provided hereunder will be paid for by the party
requesting such assistance at the cost thereof recorded on the books of
Steinbach in the case of services requested by Crowley's, and at the cost
thereof recorded on Crowley's books in the case of services requested by the
Shareholders, unless the parties shall otherwise agree.

Section 3.2. Obligations under National City Bank Loan Agreement.
Notwithstanding the undertaking by the Shareholders and Steinbach in Section
4.9(b) of the Purchase Agreement, Crowley's has requested that Steinbach's
existing line of credit with National City Bank and related loan agreement
("the NCB Line of Credit") not be terminated until the Closing, and that
Steinbach be permitted to continue to make draws thereunder in connection
with the operation of the Acquired Stores; Steinbach and the Shareholders
agree that the NCB Line of Credit will be maintained and the loan agreement
will not be terminated until the Closing. All advances made to Steinbach
under the NCB Line of Credit after December 30, 1995, in connection with the
operation of the Acquired Stores will be for Crowley's account and, to the
extent that such advances are not repaid from revenues from the operation of
the Acquired Stores, Crowley's will pay or will advance funds to Steinbach
for the payment of such advances and all related interest and fees. All
advances made to Steinbach under the NCB Line of Credit after December 30,
1995, which pertain to the Excluded Assets or the Excluded Liabilities will
be for the Shareholders' account and, to the extent that such advances are
not repaid from revenues from the operation and disposition of the Excluded
Assets, the Shareholders will pay or will advance funds to Steinbach for the
payment of such advances and all related interest and fees. The parties
further agree that advances under the NCB Line of Credit made in connection
with the operation of the Acquired Stores will be limited to an amount
outstanding at any one time not in excess of 20% of the retail value of the
inventory held for the Acquired Stores and that the NCB Line of Credit will
be terminated and all advances thereunder will be repaid on the date the
Closing occurs.

Section 3.3. Steinbach's Books and Records; Final Accounting.
Crowley's and the Shareholders will cause Steinbach to keep books and
records of account of the operation of the Acquired Stores and the operation
and disposition of the Excluded Assets and the Excluded Liabilities
accurately reflecting the allocation of revenues and expenses according to
the intent of this Agreement. As soon as practicable following the end of
the Contract Period Crowley's and the Shareholders will cause Steinbach to
prepare and submit to the Shareholders and Crowley's a statement of the
results of its operations during the Contract Period and such allocation,
and Steinbach will distribute to the Shareholders all amounts shown to be
due to them (or the Shareholders will pay to Steinbach all amounts shown to
be due from them) hereunder.

Section 3.4. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Michigan without regard to
principles of conflicts of law.

Section 3.5. Counterparts and Modification. This Agreement may be
executed in counterpart originals and may not be modified except in a
writing executed by each of the parties hereto.

Section 3.6. Headings. Headings used herein are for convenience
only and are not to be used to interpret the meaning of this Agreement.

Section 3.7. Further Assurances. Each of the parties agree, from
time to time during the Contract Period when so requested by another party,
to perform, execute, acknowledge or deliver or cause to be performed,
executed, acknowledged or delivered, all such further acts, deeds and
assurances as may be reasonably required to effect the purpose and
transactions described in this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.

CROWLEY, MILNER AND COMPANY

By:
---------------------------
Its:
---------------------------

STEINBACH STORES, INC.

By:
____________________________
Its:____________________________

JEROME SCHOTTENSTEIN SUBCHAPTER S
TRUSTS NOS. 1 THROUGH 1O,
SHAREHOLDERS

By: ____________________________
Jay L. Schottenstein, Trustee
for each of the above-named
Trusts

<PAGE>

EXHIBIT A

Interim Operating Agreement

Acquired Stores

New England
1 University Mall, Burlington, Vermont (store #22)
2 Champlain Center North, Plattsburg, New York (store #20)
3 Steeplegate Mall, Concord, New Hampshire (store #39)

Albany
4 Clifton Country Mall, Clifton Park, New York (store #4)
5 Northway Plaza, Glens Falls, New York (store #11)

Syracuse
6 Riverside, North Utica, New York (store #19)
7 Salmon Run Mall, Watertown, New York (store #15)
8 New Hartford Shopping Center, New Hartford, New York
(store #18)

Mid New York
9 Newburg Mall, Newburg, New York (store #6)
10 Downtown Tarrytown, Tarrytown, New York (store #9)

Connecticut
11 Blackrock Shopping Center, Fairfield, Connecticut (store #23)
12 Hamden Mart, Hamden, Connecticut (store #25)
13 Waterford Shopping Center, Waterford, Connecticut (store #24)

South New Jersey
14 Brick Plaza, Bricktown, New Jersey (store #55)
15 Downtown Red Bank, Red Bank, New Jersey (store #64)

EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS

REPORT ON FORM 10-K FOR THE PERIOD
ENDED FEBRUARY 3, 1996

Fiscal Year Ended
February 3 January 28 January 29
1996 1995 1994
---------- ---------- ----------
PRIMARY
Average shares outstanding 966,069 1,018,300 1,018,134

Net effect of dilutive stock
options--based on the treasury
stock method using average
market price 19,739 202,603 129,924
--------- --------- ---------
TOTAL 985,808 1,220,903 1,148,058
========= ========= =========

Net earnings (loss) $(2,344,487) $1,030,977 $ 513,717
=========== ========== ===========
Per share amount $(2.38) $0.84 $ 0.45
======= ===== ======
FULLY DILUTED
Average shares outstanding N/A (a) N/A (a) N/A (a)

(a) The fully-diluted computations for the years ended February 3, 1996,
January 28, 1995 and January 29, 1994 are not reported as the calculation
did not exceed 3% of the primary calculation.

We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-48389 and 33-61201) pertaining to the Crowley, Milner and
Company 1992 Incentive Stock Plan, in the Registration Statement (Form S-8
No. 33-61203) pertaining to the Crowley, Milner and Company 1995 Non-
Employee Director Stock Option Plan, and in the Registration Statement (Form
S-8 No. 33-61207) pertaining to the Crowley, Milner and Company Profit
Sharing Plan, of our report dated April 5, 1996, with respect to the
financial statements and schedule of Crowley, Milner and Company included in
its Annual Report on Form 10-K for the year ended February 3, 1996.

ERNST & YOUNG LLP

Detroit, Michigan
April 29, 1996

<ARTICLE> 5
<MULTIPLIER> 1

<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> FEB-03-1996
<CASH> 540,613
<SECURITIES> 0
<RECEIVABLES> 2,076,476
<ALLOWANCES> 61,558
<INVENTORY> 16,636,538
<CURRENT-ASSETS> 21,760,023
<PP&E> 23,594,510
<DEPRECIATION> 13,835,919
<TOTAL-ASSETS> 34,704,621
<CURRENT-LIABILITIES> 16,918,231
<BONDS> 5,325,000
<COMMON> 966,069
0
0
<OTHER-SE> 5,987,175
<TOTAL-LIABILITY-AND-EQUITY> 34,704,621
<SALES> 105,862,503
<TOTAL-REVENUES> 106,187,274
<CGS> 72,323,820
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 33,446,093
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,804,572
<INCOME-PRETAX> (2,344,487)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,384,487)
<EPS-PRIMARY> (2.38)
<EPS-DILUTED> (2.38)

</TABLE>