Sterling Provides Default Status Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 28, 2012) - Sterling Shoes Inc. (the "Company") provides its bi-weekly Default Status Report under National Policy 12-203 - Cease Trade Orders for Continuous Disclosure Defaults. On May 2, 2012, the Company announced that the filings of its annual financial statements for the financial year ended December 31, 2011, management discussion and analysis and related CEO and CFO certifications would not be filed by the filing deadline.

As noted in the Company's press released dated May 22, 2012, the Company's wholly-owned subsidiary, Sterling Shoes GP Inc. ("Sterling GP"), the general partner of Sterling Shoes Limited Partnership ("Sterling LP"), and Sterling LP successfully completed the sale of the majority of the assets of Sterling LP including 69 of the Company's retail locations operating under the Sterling Shoes, Shoe Warehouse and Freedman banners to Town Shoes Limited ("Town") for a purchase price of approximately $17.5 million, subject to certain post-closing adjustments (the "Transaction"). The Transaction was completed pursuant to a purchase agreement dated as of April 16, 2012 among Sterling GP, Sterling LP, Town and Alvarez Marsal Canada Inc., in its capacity as the court appointed monitor pursuant to the Company's proceedings under the Companies' Creditors Arrangement Act (the "CCAA").

Other than noted above, since its last default announcement on May 14, 2012, there have not been any material changes to the information contained therein; nor any failure by the Company to fulfill its intentions as stated therein with respect to satisfying the provisions of the alternative information guidelines, and there are no additional defaults or anticipated defaults subsequent to such announcement. Further, there have been no additional material changes respecting the Company and its affairs. The Company intends to file, if required, its next Default Status Report by June 11, 2012.

Additional information about Sterling Shoes Inc. can be found in the disclosure documents filed by Sterling Shoes Inc. with the securities regulatory authorities, available at www.sedar.com.