"The combination of low single digit same-store sales growth, gross margin expansion and prudent expense control demonstrates that these factors working in concert can drive earnings improvements in the future. Our new product, store format and service initiatives are resonating with our consumer," he added.
The company is committed to refining its international business strategy, and is very pleased with its growth and operating performance in Latin America. In order to focus on additional opportunities for expansion in this region, the company will exit retail operations in Japan, closing its one test location.
The exit of operations is planned to be substantially completed by the end of the third quarter of 2006. Total exit costs are estimated to be between $2 and $3 million, with virtually all costs incurred in the third quarter of 2006. Results of Japan retail operations for all periods will be reported as discontinued operations beginning with the third quarter of 2006.
In the second quarter 2006, the company opened 10 new stores and closed 28, for a net decrease of 18 stores. It also relocated 28 stores. The store count as of the end of the second quarter 2006 was 4,584. During fiscal year 2006, it intends to open approx. 70 new stores and close approx. 70, for no change in store count. It also intends to relocate approx. 120 stores.
Payless ShoeSource remains committed to its long-standing goal to achieve low single-digit positive same-store sales on a consistent basis, through successful execution of its merchandising strategies. It does not provide guidance for sales, earnings or margins. However, its business model and strategy is designed to leverage its sales performance, and the goal is to achieve earnings per share growth in the mid-teens over time.
Payless ShoeSource Inc is the largest specialty family footwear retailer in the Western Hemisphere, dedicated to democratizing fashion and design in footwear and accessories and inspiring fun, fashion possibilities for the family at a great value.
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