Footstar, Inc. has entered into a definitive agreement to sell the Company's distribution center in Mira Loma, California and to outsource certain warehousing and distribution operations to support the ongoing needs of the Company's Meldisco division.

The Mira Loma facility will be acquired by Alere Property Group LLC , a real estate company specializing in California industrial real estate. Alere will, in turn, lease the land and buildings to FMI International LLC (“FMI”), a leading third-party provider of logistics services to the fashion, footwear and retail industries. FMI will purchase the materials handling equipment in the Mira Loma facility, and provide warehousing and distribution services to the Company's Meldisco division under an eight-year agreement. The total proceeds to Footstar in connection with the sale is expected to be approximately $20 million. The transaction is subject to Bankruptcy Court approval and is expected to close as soon as practicable once Court approval is received. The Company has requested a hearing date for July 19, 2004.

Dale W. Hilpert, Chairman, President and Chief Executive Officer, said, “This agreement is another step in the re-positioning of the Company as we develop our plan of reorganization so we can emerge from Chapter 11 and maximize value for our stakeholders. We are pleased to have secured continuous logistics services at the Mira Loma distribution center through FMI and are delighted that FMI has extended employment offers to all associates at the Mira Loma facility. We look forward to completing the transaction as soon as possible.”