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Payless: Payless'
built 655 days ago
In July 2006, Payless launched the Payless Fashion Lab™ and Hot Zone store formats. All new Payless stores feature one of these two formats, which center on a self-select shopping environment and are intended to let shoppers have fun and experiment with fashion by letting them more quickly find the styles they love. The fashion lab design is completely new and has re-invented self-select shoe shopping. This store format allows shoppers to shop by product/trend story versus the racked-by-size format long used by Payless. Hot Zone formats marry the opened up front of store display area of fashion lab with the traditional racking systems. The Payless Fashion Lab format is helping Payless secure locations in high-fashion malls and other premier shopping areas such as New York's Fifth Ave. and SoHo; San Francisco Centre near Union Square; Valley Fair Mall, Santa Clara, Calif.; Houston Galleria; and Dallas Galleria, among others.
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In 1979 Volume Shoe, with its 739 Payless ShoeSource stores generating annual sales of $191 million, was acquired by the May Department Stores Company in a $160 million stock swap. May was one of the leading retailers in the United States, with annual sales near $3 billion. The retail giant owned 11 department and discount store chains, but Volume Shoe was May's first entry into the discount shoe business. Volume Shoe was considered an excellent acquisition by analysts. The self-service shoe chain was earning operating profits of $28 million or almost 15 percent of sales, one of the best performances in the retail sector. May's capital allowed the Payless chain to expand at an accelerated pace and by 1981 there were 1,089 Payless outlets in 34 states.
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Payless Car Rental has entered into an affiliate agreement with Network Car & Truck Rentals Australia to expand its brand throughout Australia and New Zealand. The new partnership brings 90 new locations to Payless' portfolio. Reciprocal reservation systems and Internet links will exist between the two companies, offering car rental reservations through [www.paylesscarrental.com]. This move, combined with Payless' recent affiliation with Sixt Rent A Car in Europe, means that the company has a presence in 60 countries with more than 1,400 locations.
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Although Payless's earnings ... increased through the late 1980s, return on sales failed to keep pace with the company's earlier performance or with May's core department store holdings. Earnings as a percentage of sales had been about 15 percent when May purchased Volume Shoe, but flat sales in the discount shoe sector saw this figure fall to about 11 percent in the late 1980s and then tumble again to less than 8 percent in 1995. Growing competition from giant discount chains such as Wal-Mart and Kmart as well as an overall decline in the off-price apparel market contributed to this downturn. In addition, the consolidation and conversion of 679 shoe stores acquired from Kobacker Co. and Shoe Works Inc. in 1994 added substantially to operating costs. Payless, whose contribution to May's overall sales shrank from 20 to 14 percent from 1993 to 1996, was no longer considered a key part of May's long-term strategy for growth, and in 1996 May spun off Payless ShoeSource to shareholders.
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Analysts ... have admired Payless' prowess in cutting profitable deals with overseas manufacturers and in distributing shoes to retail outlets quickly and precisely. Having opened a new distribution warehouse in Redlands, Calif., this summer, Collective Brands will open another in Ohio next year. In addition to stocking Payless stores, the new facilities could help the company deliver quick-changing styles and keep sizes in stock for its wholesale customers. That's a task whose complexity has led the more upscale department stores and family-footwear chains to shy away from making and distributing their own shoes.
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Last year, Payless shoppers bought more than 570,000 brooches, allowing Payless to donate more than half a million dollars to the Komen Foundation. This year, the company says it hopes to exceed last year's results.
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