Payless February Comps Fall 2.9%

Payless ShoeSource reported that same-store sales decreased 2.9% percent during the February reporting period, the four weeks ended February 28, 2004. Company sales totaled $171.8 million, a 2.0 percent decrease from
$175.3 million during fiscal February of last year.

    Sales were as follows (unaudited):


            FEBRUARY SALES (DOLLARS IN MILLIONS)
     Fiscal      Fiscal        Percent      Same-Store Sales**
      2004*       2003        Increase/           Percent
                             (Decrease)    Increase/(Decrease)

     $171.8      $175.3        (2.0)%             (2.9)%

    *  Effective with the end of 2003, the fiscal year for operations in the
        company's Latin American region will be based on a December 31 year-
        end. Therefore, beginning in February 2004, stores in the company's
        Latin American region (208 stores) 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. Beginning in 2004, same-store sales excludes stores in
        the company's Latin American region.

The competitive environment has been highly promotional since the
beginning of the second quarter last year, and Payless intends to continue to
defend its market share. Specific company initiatives to improve performance
in 2004 include:

    -- Continued commitment to executing the company's merchandise authority
        strategy, building on the progress made last year, delivering value
        to customers through merchandise that is right, distinctive and
        targeted for Payless customers;
    -- Tighter inventory control, reacting more quickly to changes in
        consumer demand, to reduce the need for markdowns;
    -- More focused marketing with complete alignment of messages -- using
        the company's stores as the lead marketing communication vehicle;
        and,
    -- Training store associates to use key service behaviors, identified to
        impact conversion, in their interactions with customers.

Consistent with previous statements made by the company, management
believes that these actions, combined with continuing efforts to reduce
product cost, can contribute to gross margin improvement in 2004, and has
indicated a target of 30% gross margin for the year. The company has not
released any targets or guidance for sales, SG&A expenses, or earnings for
2004, consistent with company policy.