Payless ShoeSource, Inc. saw small sales gains during the second quarter, but work on the back-end in the form of a better merchandise margin and increases in average unit retail helped the company enjoy a major advance on the bottom line. However, in legal news, Asics Corp. was granted a motion for preliminary injunction enjoining Payless from infringing the Asics Stripe Design Trademark. The injunction relates to Payless Champion shoes, whose
logo treatment resembles that of Asics.
Same-store sales increased 2.2% during the second quarter. Company sales during the second quarter totaled $706.4 million, a 1.8% increase from $693.9 million during the second quarter last year. Average unit retail for footwear increased by 12.3%, though footwear unit sales decreased by 8.3% relative to the same period last year.
The company posted net income of $32.5 million for the second quarter, an increase of 63.3% from $19.9 million during the same period last year. Diluted EPS increased to 48 cents from 29 cents during Q2 of fiscal 2005.
In other PSS news, the company will close its single test location in Japan,
instead focusing its international efforts in Latin America. Total exit costs are
estimated to be between $2 million and $3 million, with virtually all costs incurred
in the third quarter of 2006.
In the second quarter, the company opened 10 new stores and closed 28, for
a net decrease of 18 stores. The company also relocated 28 stores. The store
count as of the end of the second quarter was 4,584. During the fiscal year,
the company intends to open approximately 70 new stores and close approximately
70, for no change in store count. The company also intends to relocate
approximately 120 stores.
