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PAYLESS SHOESOURCE
Paying Less for Fashion

BACKGROUND

Payless ShoeSource, Inc. is the largest footwear retailer in the United States. The company operates about 4,700 stores in all 50 states as well as Puerto Rico, Guam, Saipan, the U.S. Virgin Islands, Canada, Central America, the Caribbean, Ecuador, and Japan. It also sells footwear via the Internet at www.payless.com. Payless has built its success by offering a large selection of shoes at very low prices, most selling for less than $15 as of 2004. The company has been able to maintain its affordable prices by sticking exclusively to a self-service format, keeping a tight rein on cost structure, and insisting on efficient sourcing and inventory controls. Payless ShoeSource targets as its main customers women from 18 to 44 years of age with household incomes of less than $75,000, and it estimates that in any given year, 40 percent of the women in this target group buy at least one pair of footwear at a Payless store. The company remained a May subsidiary until 1996, when it was spun off to May shareholders as an independent, publicly traded firm.

Payless ShoeSource founded in Topeka, Kansas in 1956 by brothers Louis and Shaol Pozez that is owned by Collective Brands, Inc, on a revolutionary idea - selling shoes in a self-select environment. In 1961, it became a public company as the Volume Shoe Corporation which merged with the May Department Stores Company in 1979. More than 50 years later, Payless continues the self-select model combined with leading customer service to provide a fun and engaging shopping experience for our customers.

Today, Payless serves millions of consumers through its powerful global network of stores in all 50 U.S. states, as well as in Puerto Rico, Guam, Saipan, the U.S. Virgin Islands, Canada, Central America, the Caribbean and South America. The company also has an expanding presence in the Eastern Hemisphere through franchising arrangements. 

UPDATING

1956: Pay-Less National is founded in Topeka, Kansas, by two cousins, Louis and Shaol Pozez, to open self-service stores selling budget footwear.

1962: The Company goes public as Volume Distributors.

1967: The company is renamed Volume Shoe Corporation; an accelerated expansion program is launched.

1978: The Payless ShoeSource name is adopted for the bulk of the company's retail outlets.

1979: Volume Shoe is acquired by the May Department Stores Company.

1991: The company name is changed to Payless ShoeSource, Inc.

1996: May spins Payless off to shareholders, making it once again an independent, publicly traded firm. 1997: The mid-priced shoe chain Parade of Shoes is acquired from J. Baker, Inc.; the first Canadian Payless stores open.

1999: The firm launches e-commerce at payless.com.

2000: Payless enters into a joint venture to expand into the Central American region.

2004: As part of a major restructuring, Payless announces that it will close down the Parade chain and close hundreds of Payless ShoeSource outlets.

PEOPLE AND ORGANIZATIONS INVOLVED

Matt Rubel:  Nowadays he is Senior Advisor at TPG Capital, L.P. and TPG Growth and served as the Chief Executive Officer and President at Collective Brands. He served as the Chief Executive Officer and President at Payless Shoesource Inc., a subsidiary of Collective Brands. He served as the Chairman, President and Chief Executive Officer of Cole Haan, Inc from February 1999 to July 2005, where he transformed it into a global lifestyle brand celebrating American luxury. Prior to joining Cole Haan, Mr. Rubel served as an Executive Vice President of J. Crew Group. He is responsible for the success of Payless, Cole Haan and J. Crew. His involvement in this case is vital to these brands.  http://investing.businessweek.com/research/stocks/private/person.asp?personId=23134722&privcapId=23307

Cole Haan, J. Crew: specialty retailers throughout the United States. Matt Rubel is the one responsible for...
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