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.

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.

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.

Item 6. SELECTED FINANCIAL DATA

Fiscal Year
1995 1994 1993 1992 1991
(In Thousands Except Per Share and Statistical Data)

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

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.

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.

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.

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.

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

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

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

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

CROWLEY, MILNER AND COMPANY
STATEMENTS OF SHAREHOLDERS' EQUITY

Common Stock Other Retained
Shares Amount Capital Earnings
------- ------ ------- --------

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

F-5

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

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

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

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

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

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

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

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

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

S-1

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.