In an effort to strengthen and refocus its athletic footwear business, Footstar, Inc. on Friday announced it intends to close in the near term approximately 165 underperforming stores, including all of its 88 Just For Feet stores and 77 of its 429 Footaction stores. In a motion filed with the Court today, the Company has requested authorization to hold Going out of Business Sales at these locations and to establish an auction process for the retention of a liquidation agent to assist with these sales.

Dale Hilpert, Chairman, President and Chief Executive Officer, commented, “We are conducting a thorough review of our operations as we work to develop a long-term business strategy that will form the basis of a Plan of Reorganization. While this analysis is underway, we determined that it would be in the best interests of the Company and its creditors to take immediate action to reduce losses in the Company's Athletic segment. The Just For Feet business has been unprofitable since its acquisition in 2000, primarily as a result of its high lease costs. By exiting this business and closing 77 unprofitable Footaction stores, we will have a financially stronger core Athletic division, consistent with our objective of refocusing our resources on a more profitable business base.”

R. Shawn Neville, President and Chief Executive Officer of Footstar's Athletic segment, said, “Following the closings, Footaction will operate 352 stores with continued strength and focus in major metropolitan markets across the country. With this more focused store base, we will be better able to build upon our leadership position with our core athletic consumers. We look forward to capitalizing on Footaction's unique competitive strengths to reposition this business for financial stability and improved profitability.”

Mr. Hilpert concluded, “We deeply regret the impact the closings will have on our Associates, and will do what we can to help ease the transition for those who are affected. However, we strongly believe this action will be a critical component in Footstar's successful reorganization.”

Liquidation sales at the closing stores are anticipated to begin shortly after Court approval is received. The closures are expected to be completed by summer. Affected associates will be paid as normal until their locations close.

A list of the stores the Company expects to close, subject to Court approval, is available Store Closing List.