Last time a Fool took a close look at cut-price shoe retailer Payless ShoeSource
Revenues for the quarter, preannounced last week, rose 3.5% year over year to $722 million. Same-store sales improved 2.8%. The company expects to report EPS of between $0.16 and $0.21, quite possibly down from last year's $0.21 -- which were themselves off significantly from the $0.35 reported two years ago. (It looks even worse if you consider that the company's share count is significantly lower this year than in 2003 or 2002.)
Payless has a ways to go before it reaches its stated goal of becoming "the merchandise authority for value-priced footwear and accessories." Management is working to better select merchandise, better marketing, better service and better store experience -- but must carefully balance operational improvement with the cost controls that will maintain profit margins.
This is especially true given that the company has not had a good run of years. Revenues have fallen steadily during the last four full years. That's hurt profits, as have rising costs and expenses. Same-store sales have declined. Poor merchandising has bloated inventory levels.
And so there's work, aplenty, to do. Interestingly, however, investors have found early returns a good fit: The company's shares are performing well -- and outpacing the S&P 500 -- in early 2004.
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Fool contributor Dave Marino-Nachison doesn't own any of the companies in this article.