Payless ShoeSource, Inc. reported that same-store sales decreased 1.5 percent during the December reporting period, the five weeks ended December 31, 2005.

Company sales totaled $264.3 million, a 3.2% decrease from $273.1 million during fiscal December of last year.

Sales were as follows (unaudited):


                    DECEMBER SALES* (DOLLARS IN MILLIONS)
     Fiscal    Fiscal     Percent        Same-Store Sales***
     2005**    2004**     Increase/      Percent
                          Decrease       Increase/Decrease
     $264.3    $273.1     (3.2)%         (1.5)%


                  YEAR-TO-DATE SALES* (DOLLARS IN BILLIONS)
     Fiscal    Fiscal     Percent        Same-Store Sales***
     2005**    2004**     Increase/      Percent
                          Decrease       Increase/Decrease
     $2.53     $2.52      0.3%            2.5%

December results were impacted by stronger than expected November sales and timing shifts in receipt flows, which reduced inventory levels in the stores. The lower inventory levels, combined with less aged product, will facilitate a cleaner transition into the spring season.

The company remains committed to its goal of achieving low single-digit positive same-store sales growth through more consistent execution of its merchandise strategy to inspire fun, fashion possibilities for the family.

At the end of fiscal December, 26 stores remained closed from the impact of hurricanes Katrina, Rita and Wilma.