Payless September Comps Decrease 5.6%

Payless ShoeSource, Inc. reported that same-store sales decreased 6.5% during the September reporting period, the five weeks ended October 2, 2004. September same-store sales decreased 5.6% excluding the approximately 440
North American Payless ShoeSource and Parade stores that the company previously announced it will exit as part of its strategic initiatives. The company will begin to liquidate the inventory in most of these stores in
October, at which time they will be eliminated from the same-store sales calculations.

Company sales totaled $250.2 million, a 7.1% decrease from
$269.5 million during fiscal September of last year.

Total sales for the first eight months of fiscal 2004 were $1.92 billion,
a 0.7 percent decrease from $1.93 billion during the similar period in fiscal
2003. Same-store sales decreased 1.1 percent during the first eight months of
the fiscal year.

Sales were as follows (unaudited):

                    SEPTEMBER SALES (DOLLARS IN MILLIONS)

     Fiscal   Fiscal   Percent       Same-Store Sales**
     2004*    2003     Increase/     Percent Increase/(Decrease)
                      (Decrease)     Actual       Adjusted***

     $250.2   $269.5    (7.1)%      (6.5)%         (5.6)%


                   YEAR-TO-DATE SALES (DOLLARS IN BILLIONS)

     Fiscal   Fiscal   Percent       Same-Store Sales**
     2004*    2003     Increase/     Percent Increase/(Decrease)
                       (Decrease)    Actual       Adjusted***

      $1.92    $1.93    (0.7)%      (1.1)%         (0.8)%

     *   Effective with the end of 2003, the fiscal year for operations in the
         company's Latin American region is based on a December 31 year-end.
         Stores in the company's Latin American region (210 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.  Same-store-sales exclude stores in the company's Latin
         American region.

     *** Excluding the Parade and North American Payless ShoeSource stores
         that the company previously announced it will exit as part of its
         strategic initiatives.

“We are not satisfied with our September sales results,” said Steven J.
Douglass, Chairman and Chief Executive Officer of Payless ShoeSource, Inc.
“To improve the near-term execution of our core business strategy — to be the
Merchandise Authority in value-priced footwear and accessories through
merchandise that is Right, Distinctive and Targeted for our customers — we
are adjusting certain key tactics, including:

• refocusing and intensifying our messaging, increasing the frequency of
  communication with customers through print and broadcast media;

• simplifying our process for the planning and execution of merchandise
  assortments;

• and adjusting our store-level execution to achieve better balance
  between the tasks necessary to run a best-of-kind retail store and
  customer service through use of our Key Service Behaviors.”

“Payless ShoeSource is committed to serving the interests of our
shareowners by building long-term shareowner value. We have made difficult
decisions and are taking action to position ourselves for improved performance
in 2005 and beyond. Because of the negative sales results in the past three
months, it is unlikely that the company will achieve its objective of 30%
gross margin for fiscal 2004, however gross margins for the second half and
full year 2004 should exceed 2003 levels. We also intend to successfully
complete all of our strategic initiatives by fiscal year-end 2004, and to end
the year with our inventory assortment appropriately positioned for Spring
2005.”

Progress on Strategic Initiatives

In August the company announced a series of strategic initiatives as part
of a plan designed to sharpen the company's focus on its core business
strategy, reduce expenses, accelerate decision-making, increase profitability,
improve operating margin, and build value for shareowners over the long-term.
The initiatives include exiting Parade, Peru and Chile; the closing of
approximately 260 additional Payless ShoeSource stores; the reduction of
wholesale businesses that provide no significant growth opportunity; and a
reduction of the company's expense structure.

During September, the company eliminated approximately 200 management and
administrative positions, and closed 29 of the 260 Payless ShoeSource stores.

In early October, the company began to liquidate the inventory in
approximately 190 Payless ShoeSource stores, and will soon commence inventory
liquidation in all Parade stores. These stores will be excluded from same-
store sales calculations beginning in October. Revenues from the stores will
be included in the company's total sales until the stores close.