Exhibit 99.1

                           Payless ShoeSource Announces:

     --  Results for the Second Quarter of Fiscal 2004

     --  Strategic Initiatives

    TOPEKA, Kan., Aug. 12 /PRNewswire-FirstCall/ -- Payless ShoeSource, Inc.
(NYSE: PSS) today announced results for the second quarter 2004 and a series
of strategic initiatives as part of an ongoing program to build long-term
shareowner value.

    The company announced that for the second quarter of fiscal 2004, which
ended July 31, 2004, net earnings were $3.7 million and diluted earnings per
share were $0.05.  The results include a non-cash pre-tax restructuring charge
of $36.7 million related to the strategic initiatives.  After income taxes,
minority interest and anticipated income tax rate adjustments, the charge was
$16.9 million or $0.25 per share on a diluted basis.  During the second
quarter of fiscal 2003, the company achieved net earnings of $5.2 million and
diluted earnings per share of $0.08.


    Strategic Initiatives

    During the second quarter, the company decided to take action relating to
five strategic initiatives.  These initiatives are directed toward sharpening
the company's focus on its core business strategy, increasing profitability,
improving the company's operating margin and building long-term shareowner
value.  The strategic initiatives include:

    --  The previously announced decision to sell or dispose of all 181 Parade
        stores, and related operations;

    --  The sale or disposal of all 32 Payless ShoeSource stores in Peru and
        Chile, and related operations;

    --  The closing of approximately 260 Payless ShoeSource stores, in
        addition to the approximately 230 stores that had originally been
        scheduled for closing or relocation as a part of the normal course of
        business in fiscal 2004;

    --  The reduction of wholesale businesses that provide no significant
        growth opportunity, and;

    --  A comprehensive review of our expense structure and appropriate
        reductions to improve profitability.

       In fiscal 2003, the operations relating to the strategic initiatives had
combined sales of approximately $210 million and operating losses of
approximately $29 million.  The non-cash pre-tax restructuring charge of
$36.7 million in the second quarter is related to the impairment of the assets
associated with Chile, Peru, Parade and the approximately 260 Payless stores
to be closed.  The company intends to complete these strategic initiatives by
the end of fiscal 2004.

    The company estimates that the costs for lease terminations, severance,
and other exit costs relating to the strategic initiatives could be in the
range of $40 million to $60 million.  However, the final financial impact of
the strategic initiatives is dependent upon the ultimate exit transactions.
The present value of operating leases on all operations relating to the
strategic initiatives was approximately $116 million as of the end of the
second quarter 2004.


    Chairman's Comments

    "Payless ShoeSource is committed to serving the interests of our
shareowners by building long-term shareowner value through improved execution
of our core business strategy," said Steven J. Douglass, Chairman and Chief
Executive Officer of Payless ShoeSource, Inc.  "During the second quarter, we
made decisions on strategic initiatives in order to sharpen our focus on our
core business strategy.

    "The decision to exit Parade was based on the conclusion that its
contribution to our core business strategy is diminishing.  Parade, which
offers mid-price footwear and accessories in leather and fine fabrics for
women, provided Payless the opportunity to develop relationships with footwear
designers and branded footwear suppliers, as well as a window on women's
fashion direction.  We believe that the Payless merchandising team now has a
solid foundation of fashion knowledge and relationships and that therefore, an
exit from Parade is now in the best long-term interest of our shareowners.

    "As we have previously disclosed, operations in Chile and Peru were not
performing up to our company standards.  After careful review, and several
months of effort to improve performance in these two countries, we determined
it is now prudent to focus resources on more profitable alternatives.

    "In addition, because of the weaker sales performance during second
quarter 2004, our management team decided to accelerate the closing of
approximately 260 stores despite the fact that their leases are not scheduled
to expire for a number of years.  This action was a proactive decision to more
quickly position the chain to increase profits and net margin -- and
ultimately provide a greater return to shareowners.

    "We have been exploring a number of small wholesaling opportunities over
the past few years.  The decision to reduce our wholesaling effort is also
consistent with our intent to focus on our core business."


    Review Of Second Quarter Operations

    Company sales for the second quarter 2004 totaled $727.9 million, a
0.5 percent decrease from $731.5 million during the second quarter 2003.
Same-store sales decreased 0.9 percent during the second quarter 2004.  Unit
sales decreased by 8.0 percent and average unit retail increased by
8.0 percent in the second quarter, compared with the same period last year.
In the first six months of 2004, company sales totaled $1.45 billion, a
1.4 percent increase from $1.43 billion in the first six months of 2003.  Also
during the first six months of 2004, same-store sales increased 0.9 percent.

    Gross margin was 30.9 percent of sales in the second quarter 2004 versus
27.1 percent in the second quarter 2003.  The improvement resulted primarily
from fewer markdowns, as the company was less promotional than in 2003, as
well as more favorable initial mark-ups relative to the same period last year.
During the first six months of 2004, gross margin was 30.8 percent of sales
versus 28.2 percent in the first six months of 2003.

    Selling, general and administrative expenses were 26.2 percent of sales in
the second quarter 2004 versus 25.8 percent in the second quarter 2003.  The
increase over last year reflects higher payroll-related costs, increased
expenses for insurance, professional services related to the proxy contest,
costs related to compliance with Sarbanes-Oxley, and the negative leverage of
lower sales.  These were partially offset by a $2.6 million decrease in
advertising expense relative to the second quarter 2003.  In addition, during
the second quarter 2003 the company wrote off debt costs in conjunction with
the debt restructuring.  During the first six months of 2004, selling, general
and administrative expenses were 26.9 percent of sales versus 25.8 percent in
the first six months of 2003.  The rate of increase in S,G & A narrowed in the
second quarter.  However, the company is not satisfied with the current S,G &
A expense rate and is reviewing opportunities to reduce its cost structure.

    The effective income tax benefit rate of 58.2% for the quarter was driven
primarily by the impact of the impairment charges, which necessitated an
adjustment to reflect an effective income tax rate of 23.2 percent for the
first half of the year.  The company anticipates a tax benefit at the rate of
23.2 percent for the fiscal year 2004.

    Minority interest represents the company's joint venture partners' share
of operating profits or losses on international operations.  The increase in
minority interest in the second quarter is due to the impairment charge
recorded on operations in Peru and Chile.

    During the first six months of fiscal 2004, net earnings were
$17.5 million and diluted earnings per share were $0.26, including the
impairment charges for the strategic initiatives in the second quarter.
During the first six months of 2003, net earnings were $19.3 million and
diluted earnings per share were $0.28.


    Balance Sheet

    The company ended the second quarter 2004 with a cash balance of
$185.7 million, an increase of $71.3 million over the second quarter 2003.

    Total inventories at the end of the second quarter 2004 were
$414.3 million compared to $418.6 million at the end of the second quarter
2003.  Inventory per store decreased by 2.0 percent.

    There were no borrowings on the company's Revolving Credit Facility
outstanding as of the end of the second quarter 2004.


    Store Count and Capital Expenditures

    In the second quarter 2004, the company opened 68 new stores and closed
62, for a net increase of 6 stores.  The total store count at the end of the
second quarter 2004 was 5,072, including 150 stores in the company's Central
American region, 62 stores in South America and 296 stores in Canada.

    With the exit from approximately 470 to 475 stores relating to the
strategic initiatives, and the 230 stores that were already scheduled for
closing or relocation as part of the normal course of business in 2004, the
company now intends to close a total of approximately 700 to 705 stores in
fiscal 2004.  The company remains on schedule to open approximately 300 new
stores in fiscal 2004, resulting in a total expected net reduction of
approximately 400 to 405 stores for the year.  The company began the year with
5,042 stores.  Thus the company's store count is expected to be approximately
4,640 stores at the end of fiscal 2004.

    Payless ShoeSource expects to open its first test store in Japan during
2004.  The company has curtailed any other expansion into new international
markets to focus on its core business.

    Total capital expenditures were $25.4 million in the second quarter 2004,
and $51.0 million for the first half of the year.  Payless expects net capital
expenditures for the fiscal year 2004 to be approximately $110 million.

    Commenting on the second quarter results, Mr. Douglass said, "Our sales
performance started strong during the second quarter of 2004, with same-store
sales growth of 3.9 percent during May.  However, in June, sales of seasonal
merchandise slowed across much of the country.  Also, many competitors in the
apparel and footwear market appeared to take clearance markdowns earlier in
the season.  In addition, throughout the quarter, it is likely that consumer
buying patterns were impacted by higher energy prices.  Payless decided to
remain less promotional than last year and therefore protect our gross margin.
Our tighter inventory management provided us the flexibility to improve
operating results, absent the restructuring charge, despite lower sales for
the quarter."


    Board Of Directors

    In July 2004, Judith K. Hofer was elected to the Company's Board of
Directors, with a term to expire in 2005.  Ms. Hofer was also elected to serve
on the Compensation, Nominating and Governance Committee of the company's
Board of Directors.  Ms. Hofer brings to the Payless Board extensive expertise
in retail merchandising over a 36-year career in retail management.

    With the addition of Ms. Hofer, the Payless ShoeSource Board now consists
of ten directors, including eight independent directors.


    2004 Outlook

    Payless remains committed to its objective of 30% gross margin for fiscal
2004.  To accomplish this objective, the company must achieve low-single-digit
positive same store sales on a consistent basis for the remainder of the year
through:

    --  More consistent, improved execution of the company's Merchandise
        Authority strategy, delivering value to customers through merchandise
        that is right, distinctive and targeted for Payless customers;

    --  Tight control of inventory, reacting quickly to changes in consumer
        demand, to minimize the need for markdowns;

    --  Focused marketing with complete alignment of messages; and,

    --  Continued emphasis on educating Payless store associates to use key
        service behaviors, identified to impact conversion in their
        interactions with customers.

       Payless does not give specific guidance for sales or earnings.  Key
components of cash flow, excluding the impact of the strategic initiatives for
fiscal year 2004 are expected to include:

    --  Depreciation and amortization of $100 to $105 million dollars;

    --  Capital expenditures of $110 million dollars, net of the contribution
        from the Company's joint venture partners; and,

    --  Working capital should be approximately neutral for the full year,
        subject to normal seasonal fluctuations.

       Payless ShoeSource, Inc. is the largest family footwear retailer in the
Western Hemisphere.  The Company operates a total of 5,072 stores offering
quality family footwear and accessories at affordable prices.  In addition,
customers can buy shoes over the Internet through Payless.com(R), at
http://www.payless.com .

    This release contains forward-looking statements relating to such matters
as anticipated financial performance, international expansion opportunities,
consumer spending patterns, capital expenditure plans, business prospects,
products, future store openings and closings, possible strategic initiatives
and similar matters.  Forward looking statements are identified by words such
as "expects," "anticipates," "intends," "plans," "believes," "seeks," or
variations of such words.  A variety of known and unknown risks and
uncertainties and other factors could cause actual results and expectations to
differ materially from the anticipated results or expectations which include,
but are not limited to: changes in consumer spending patterns; changes in
consumer preferences and overall economic conditions; the impact of
competition and pricing; changes in weather patterns; the financial condition
of the Company's suppliers and manufacturers; changes in existing or potential
duties, tariffs or quotas; changes in relationships between the United States
and foreign countries, changes in relationships between Canada and foreign
countries; economic and political instability in foreign countries, or
restrictive actions by the governments of foreign countries in which suppliers
and manufacturers from whom the Company sources are located or in which the
Company has retail locations or otherwise does business; changes in trade,
customs and/or tax laws; fluctuations in currency exchange rates; availability
of suitable store locations on acceptable terms; the ability to terminate
leases on acceptable terms; the ability to hire and retain associates;
performance of other parties in strategic alliances; and general economic,
business and social conditions, performance of our partners in joint ventures;
the ability to comply with local laws in foreign countries; threats or acts of
terrorism; strikes, work stoppages and/or slow downs by unions that play a
significant role in the manufacture, distribution or sale of product.  Please
refer to the Company's 2003 Annual Report and its Form 10-K for the fiscal
year ended January 31, 2004 for more information on these and other risk
factors that could cause actual results to differ.  The Company does not
undertake any obligation to release publicly any revisions to such
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.

    [Unaudited Condensed Consolidated Statements of Earnings, Balance Sheets
and Statements of Cash Flows Attached]


    NOTES REGARDING ATTACHMENTS:

    --  The condensed consolidated statements of earnings, balance sheets and
        statements of cash flows have been prepared in accordance with the
        Company's accounting policies as described in the Company's 2003 Form
        10-K, on file with the Securities and Exchange Commission, and should
        be read in conjunction with the 2003 Annual Report to Shareowners.  In
        the opinion of management, this information is fairly presented, and
        all adjustments (consisting only of normal recurring adjustments)
        necessary for a fair statement of the results for the interim periods
        have been included.

                              PAYLESS SHOESOURCE, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                 (UNAUDITED)

    (Millions, except per share data)
                                              13 Weeks          26 Weeks
                                            Ended  Ended     Ended    Ended
                                            July   August    July     August
                                             31,      2,      31,        2,
                                            2004    2003     2004      2003

    Net sales                              $727.9  $731.5  $1,449.9  $1,429.2

    Cost of sales                           502.7   533.2   1,003.5   1,026.5

    Gross margin                            225.2   198.3     446.4     402.7

    Selling, general and administrative
     expenses                               190.7   188.7     390.0     368.8

    Restructuring                            36.7     -        36.7       -

    Operating (loss) profit                  (2.2)    9.6      19.7      33.9

    Interest expense, net                     4.5     3.3       8.9       7.4

    (Loss) Earnings before income taxes
     and minority interest                   (6.7)    6.3      10.8      26.5

    (Benefit) Provision for income taxes     (3.9)    2.3       2.5       9.7

    Net (loss) earnings before minority
     interest                                (2.8)    4.0       8.3      16.8

    Minority interest, net of income tax      6.5     1.2       9.2       2.5

    Net Earnings                             $3.7    $5.2     $17.5     $19.3

       Diluted earnings per share           $0.05   $0.08     $0.26     $0.28

    Basic earnings per share                $0.05   $0.08     $0.26     $0.28

    Diluted weighted average shares
     outstanding                             68.1    68.1      68.0      68.1

    Basic weighted average shares
     outstanding                             68.0    68.0      68.0      68.0

                              PAYLESS SHOESOURCE, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (UNAUDITED)

                                             July 31,   August 2,  January 31,
    (dollars in millions)                      2004       2003        2004

    ASSETS:

    Current assets:
        Cash and cash equivalents             $185.7      $114.4      $148.9
        Restricted cash                         33.5        33.0        33.5
        Inventories                            414.3       418.6       392.4
        Current deferred income taxes           23.3        16.1        17.3
        Other current assets                    65.1        67.8        61.0
    Total current assets                       721.9       649.9       653.1

    Property and Equipment:
        Land                                     8.0         8.4         8.0
        Property, buildings and equipment    1,183.9     1,149.7     1,188.7
        Accumulated depreciation              (795.9)     (737.7)     (764.7)
        Property and equipment, net            396.0       420.4       432.0

    Favorable leases, net                       24.3        31.8        29.2

    Deferred income taxes                       32.8        29.1        27.7

    Goodwill, net                                5.9         5.9         5.9

    Other assets                                29.3        31.7        24.9

    TOTAL ASSETS                            $1,210.2    $1,168.8    $1,172.8


    LIABILITIES AND EQUITY:

    Current liabilities:
        Current maturities of
         long-term debt                         $0.8        $0.9        $0.9
        Notes payable                           33.5        33.0        33.5
        Accounts payable                       129.9       114.3       133.0
        Accrued expenses                       146.6       120.6       117.8
    Total current liabilities                  310.8       268.8       285.2

    Long-term debt                             204.1       203.1       202.8
    Deferred income taxes                       ---         ---          0.7
    Other liabilities                           62.6        54.9        60.6
    Minority interest                            8.2        18.3        16.0

    Equity                                     624.5       623.7       607.5

    TOTAL LIABILITIES AND EQUITY            $1,210.2    $1,168.8    $1,172.8

                              PAYLESS SHOESOURCE, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

                                               Year to Date        Year Ended
                                           July 31,     August 2,  January 31,
    (dollars in millions)                    2004          2003        2004

    OPERATING ACTIVITIES:
    Net earnings (loss)                     $17.5         $19.3         $(0.1)
    Adjustments for noncash items
     included in net earnings (loss):
          Restructuring                      36.7          ---           ---
          Loss on impairment and disposal
           of assets                          4.8          10.3          16.6
          Depreciation and amortization      49.8          50.2          99.3
          Amortization of unearned
           restricted stock                   0.4           0.3           0.8
          Deferred income taxes             (11.8)          0.2           1.1
          Minority interest, net of tax      (9.2)         (2.5)         (7.0)
          Income tax charge of stock
           option exercises                  ---           ---           (0.8)
    Changes in working capital:
          Inventories                       (21.9)         33.9          60.1
          Other current assets               (4.1)         (6.9)          2.7
          Accounts payable                   (3.1)          7.9          26.6
          Accrued expenses                   28.8          (5.1)         (5.9)
    Other assets and liabilities, net        (2.4)         10.8          17.9

    TOTAL OPERATING ACTIVITIES               85.5         118.4         211.3

    INVESTING ACTIVITIES:
    Capital expenditures                    (51.0)        (55.3)       (114.4)
    Disposition of property and equipment    ---           ---            1.0

    TOTAL INVESTING ACTIVITIES              (51.0)        (55.3)       (113.4)

    FINANCING ACTIVITIES:
    Issuance of notes payable                ---            4.5           5.0
    Restricted cash                          ---           (4.5)         (5.0)
    Issuance of long-term debt                1.6         196.7         196.7
    Payment of deferred financing costs      (0.2)         (5.0)         (7.1)
    Repayments of long-term debt             (0.5)       (216.6)       (216.9)
    Net purchases of common stock            ---           (0.2)         (0.3)
    Contributions by minority owners          1.5           3.6           4.4
    Other financing activities               (0.1)         (0.7)          0.7

    TOTAL FINANCING ACTIVITIES                2.3         (22.2)        (22.5)

    INCREASE IN CASH                         36.8          40.9          75.4

    Cash and Cash Equivalents, Beginning
     of Period                              148.9          73.5          73.5
    Cash and Cash Equivalents, End of
     Period                                $185.7        $114.4        $148.9

SOURCE  Payless ShoeSource, Inc.
    -0-                             08/12/2004
    /CONTACT:  Timothy J. Reid of Payless ShoeSource, Inc., +1-785-295-6695/
    /Company News On-Call:  http://www.prnewswire.com/comp/136152.html /
    /Web site:  http://www.paylessinfo.com /
    (PSS)

CO:  Payless ShoeSource, Inc.
ST:  Kansas
IN:  REA FAS
SU:  ERN ERP