October Comps Up 1.4% at Payless

Payless ShoeSource same-store sales increased 1.4 percent during the October reporting period, the four weeks ended Saturday, November 1, 2003.

Company sales totaled $207.5 million, a 2.5 percent increase from $202.5 million during fiscal October of last year.

Total sales for the first nine months of fiscal 2003 were $2.14 billion, a 4.0 percent decrease from $2.23 billion during the similar period in fiscal 2002. Same-store sales decreased 4.7 percent during the first nine months of the fiscal year.

Sales were as follows:

                        OCTOBER SALES (DOLLARS IN MILLIONS)
     Fiscal          Fiscal            Percent            Same-Store Sales*
     2003             2002            Increase/                Percent
                                      (Decrease)         Increase/(Decrease)
     $207.5          $202.5              2.5%                    1.4%

                      3RD QUARTER SALES (DOLLARS IN MILLIONS)
     Fiscal          Fiscal            Percent            Same-Store Sales*
     2003             2002            Increase/                Percent
                                      (Decrease)         Increase/(Decrease)
     $709.7          $713.0             (0.5)%                  (1.4)%

                     YEAR-TO-DATE SALES (DOLLARS IN BILLIONS)
     Fiscal          Fiscal            Percent            Same-Store Sales*
     2003             2002            Increase/                Percent
                                      (Decrease)         Increase/(Decrease)
     $2.14            $2.23             (4.0)%                  (4.7)%

     *Same-store sales represent sales of those stores open during both
      periods.

The intense promotional activity that began during the second quarter 2003 persisted throughout the third quarter. While unit sales increased during the third quarter, retail prices declined, resulting in a third quarter sales decline relative to third quarter 2002.

As previously indicated, the company was very aggressive in taking markdowns throughout the third quarter. This action, combined with the lower sales, put significant pressure on margins. In addition, the company stepped up its advertising efforts during the quarter. As a result, the company expects to report a slight loss for the third quarter 2003.

The company expects the retail environment to remain highly promotional in the fourth quarter. Therefore, the pressure on margins and financial results is expected to persist through the end of the year.