Collective Brands Outline Growth Initiatives

Collective Brands, Inc., at its first investor conference since its launch and transformation through the acquisition of The Stride Rite Corporation by Payless ShoeSource, Inc., provided analysts and investors with additional detail on its business strategies, unique competitive capabilities and enhanced financial and operating goals that will drive greater growth than each company would have achieved standing alone.

“Collective Brands will be more than simply the sum strength of our business units' individual core competencies, expertise and heritage; we intend to leverage this exceptional foundation to become the preeminent, consumer-centric, global footwear, accessories and lifestyle brand company,” said Matthew E. Rubel, chief executive officer and president of Collective Brands, Inc., at a meeting held today in New York.

The Company provided investors with financial targets it expects to achieve:

    *  Excluding the impact of purchase accounting, the acquisition is

       expected to be accretive to earnings per share in 2008 as the Stride

       Rite unit's earnings contribution is expected to exceed the incremental

       interest expense.  Due to the impact of purchase accounting, the Stride

       Rite acquisition is not expected to be earnings per share accretive in

       2008 on a GAAP basis.

    *  Excluding purchase accounting, the 2006 - 2009 compound annual growth

       rate in operating profit is expected to be in the mid-to-upper teens.

       Including purchase accounting, the 2006 - 2009 compound annual growth

       rate in operating profit is expected to be in the low-teens on a GAAP

       basis.

    *  Cumulative synergies from 2008-2010 in the range of $45 million to $50

       million.

    *  Specific year synergies of $5 million in 2008; $12 million to $15

       million in 2009; and $25 million to $30 million in 2010.

    *  Leverage ratio as defined by lease adjusted total debt/EBITDAR expected

       to return to pre-acquisition level by end of 2009, approximating 4.6

       times.

Collective Brands hybrid (retail/wholesale/licensing business model) is expected to drive improvement in:

    *  Sales growth through world class brand building and consumer centric

       focus

    *  Gross margin by leveraging significant sourcing and manufacturing

       benefits

    *  Capital utilization as its less capital intensive wholesaling business

       grows

    *  Liquidity and cash flow generation in excess of a pure retail model

    *  Asset efficiency as expected improved working capital productivity

       results from leveraging physical distribution network and inventory

       management systems

In their individual presentations, the CBI management team outlined specific initiatives, across each business unit and business discipline, including marketing, merchandising process and drivers, retail operations, brand management, licensing, wholesale and supply chain, designed to capitalize on key industry growth trends and the company's competitive advantages:

    *  Well-recognized and growing portfolio of brands

    *  Hybrid business model with diverse channels to serve customers

    *  Strong marketplace positioning

    *  Enhanced international growth opportunities

    *  Vertically-integrated, highly efficient supply chain

    *  Effective growth and integration strategies at Stride Rite

    *  Seasoned management team