Payless June Comps Fall 1.0%

Payless ShoeSource, Inc. same-store sales decreased 1.0 percent during the June reporting period, the five weeks ended July 3, 2004. Company sales totaled $289.2 million, a 0.7 percent decrease from $291.3 million during fiscal June of last year. Same-store sales increased 2.1 percent during the first five months of the fiscal year.

   Sales were as follows (unaudited):

                     JUNE SALES (DOLLARS IN MILLIONS)

   Fiscal      Fiscal         Percent         Same-Store Sales**
    2004*       2003         Increase/              Percent
                            (Decrease)       Increase/(Decrease)

   $289.2      $291.3         (0.7)%                (1.0)%


                 YEAR-TO-DATE SALES (DOLLARS IN BILLIONS)

   Fiscal      Fiscal         Percent         Same-Store Sales**
    2004*       2003         Increase/                  Percent
                            (Decrease)       Increase/(Decrease)


   $1.26        $1.23           2.6%                  2.1%

The company's sales in June were disappointing, particularly following the strong performance during the previous three months. Sales of seasonal merchandise appear to have been affected by the rainy and cool weather across much of the country, and many competitors in the apparel and footwear market appeared to become more promotional in the latter part of the month. In addition, while much progress has been made this year, the company believes that it must continue to work to achieve more consistent execution of its Merchandise Authority strategy across more merchandise categories.

The company continues to strive for its stated financial goals of 30% gross margin and improved profitability in fiscal 2004. To attain these goals, the company must achieve low-single-digit positive same-store sales on a consistent basis for the remainder of the year