Payless November Comps fall 2.3%; Closes 85 Stores

Payless ShoeSource same-store sales decreased 2.3% during
the November reporting period, the four weeks ended November 27, 2004. Company sales totaled $206.4 million, a 1.0 percent decrease from $208.5 million during fiscal November of last year.

Total sales for the first ten months of fiscal 2004 were $2.34 billion,
compared with $2.35 billion during the similar period in fiscal 2003. Same-
store sales decreased 0.6 percent during the first ten months of the fiscal
year.

     Sales were as follows (unaudited):

                       NOVEMBER SALES (DOLLARS IN MILLIONS)

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

    $206.4           $208.5           (1.0)%           (2.3)%


                     YEAR-TO-DATE SALES (DOLLARS IN BILLIONS)

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

    $2.34             $2.35           (0.2)%           (0.6)%


    * Effective with the end of 2003, the fiscal year for operations in the
    company's Latin American region is based on a December 31 year-end.
    Operations in the company's Latin American region (197 stores) and Japan
    are included in total company results on a one-month lag relative to
    results from other regions.

    ** Same-store sales represent sales of those stores in the United States,
    Canada, Puerto Rico, Guam and Saipan that were open during both periods.
    Same-store-sales exclude stores in the company's Latin American region.
    In addition, beginning in October, all Parade stores and the North
    American Payless ShoeSource stores that are part of the company's
    previously announced strategic initiatives are excluded from same-store
    sales results.  Revenues from these stores are included in the company's
    total sales until the stores close.  Third-party liquidation sales are
    recognized at the time the sale is made to the customer, are calculated
    based upon contractually guaranteed amounts pursuant to our agreements
    with liquidators and are net of associated fees.

Progress on Strategic Initiatives

In August the company announced a series of strategic initiatives as part
of a plan designed to sharpen the company’s focus on its core business
strategy, reduce expenses, accelerate decision-making, increase profitability,
improve operating margin, and build value for shareowners over the long-term.
The initiatives include exiting Parade, Peru and Chile; the closing of
approximately 260 additional Payless ShoeSource stores; the reduction of
wholesale businesses that provide no significant growth opportunity; and a
reduction of the company’s expense structure.

The company estimates that the total costs relating to the strategic
initiatives could be in the range of $77 million to $90 million, consistent
with previous disclosures.

During November, the company closed 85 stores in North America. In
addition, on October 27th, 2004, the company entered into an agreement to
transfer ownership of its Peruvian business entity, including all related
operations and liabilities, to Orion Investment Capital Inc., an organization
comprised of some owners of the company’s South American joint-venture
partner, in consideration of Orion assuming the liabilities of the entity.
The transaction was completed on November 15th, 2004.

The company expects to complete all of the strategic initiatives by the
end of fiscal 2004, and to end the year with its inventory assortment
appropriately positioned for Spring 2005.

On November 19th, the company opened its first store in Japan. The company
has curtailed any other expansion into new international markets to focus on
its core business.