Payless Comps Down 2.4% For July

Payless ShoeSource, Inc. reported that same-store sales decreased 2.4% during July while sales totaled $177.9 million, a 3.5% decrease from $184.4 million during fiscal July of last year. Same-store sales for the year-to-date period increased 2.1%.

    Sales were as follows (unaudited):


                     JULY SALES* (DOLLARS IN MILLIONS)
     Fiscal           Fiscal             Percent         Same-Store Sales***
     2005**           2004**             Increase/       Percent
                                        (Decrease)       Increase/(Decrease)
     $177.9           $184.4            (3.5)%          (2.4)%

                   2nd QUARTER SALES* (DOLLARS IN MILLIONS)
     Fiscal           Fiscal             Percent         Same-Store Sales***
     2005**           2004**             Increase/       Percent
                                        (Decrease)       Increase/(Decrease)
     $693.9           $695.6            (0.2)%           1.5%

                    YEAR-TO-DATE SALES* (DOLLARS IN BILLIONS)
     Fiscal           Fiscal             Percent         Same-Store Sales***
     2005**           2004**             Increase/       Percent
                                        (Decrease)       Increase/(Decrease)
     $1.39            $1.39              0.1%            2.1%

     * Sales from continuing operations.

     ** The fiscal year for operations in the company's Latin American region
     and Japan is based on a December 31 year-end.  Operations in the
     company's Latin American region (178 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.

The company's July sales performance was disappointing, reflecting softer than expected early back-to-school sales. Also, in the second quarter, the company expects to incur approximately $8 million of charges, pre-tax, associated with the management transition, including previously-disclosed charges of approximately $7 million related to the former chief executive officer's employment agreement.

Matthew E. Rubel, chief executive officer and president, said, “We do not believe that July results are indicative of our longer term opportunities. In the two weeks since joining Payless, I have become even more confident that we can build on our unique and powerful platform as the largest specialty family footwear retailer in the Western hemisphere, by leveraging our outstanding strengths in sourcing and distribution. We remain committed to our goal of achieving low single-digit positive same-store sales growth through more consistent execution of our merchandise authority strategy.

“We will focus on building stronger emotional connections with the consumer through enticing product, powerful brand communications and compelling point of sale.”