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Payless to sell Dexter brand in its stores

June 26, 2007

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— Payless ShoeSource Inc. will become the exclusive U.S. seller of Dexter brand shoes, adding a big piece to Payless' strategy of distancing itself from its bargain-bin shoe past, the companies said today.

Formerly found in department stores like Kohl's and J.C. Penney's, the 50-year-old Dexter brand will begin appearing in Payless' 4,600 stores in a limited men's line this Christmas. A full line of men's and women's casual and dress shoes will go on sale next year, said Matt Rubel, Payless CEO.

The company won't completely abandon its low-cost image. Payless plans to develop the shoes in its New York design studio and charge between $25 and $45 a pair for men - below the $60 price they fetched in department stores - and $15 to $30 for women, Rubel said.

"We have a very large classic and updated customer base, and this will cover that area," he said, adding that it would make department store-quality shoes available to a larger audience. "We believe that because Dexter has had a strong following for many years, that we will bring customers into our stores to buy products they perhaps may not have before."

Jim Issler, chief executive of Connecticut-based H.H. Brown Shoe Co. Inc., which owns the Dexter brand, said the company looked at several partners to sell Dexter and chose Payless because its large number of stores would expand access to the brand.

"We see Payless as the person who will drive a good value," Issler said, adding that H.H. Brown would retain the rights to sell its line of performance bowling and golf shoes as well as its hand-tailored 1957 shoe line.

Under Rubel, the company characterized by cheap, off-brand shoes has aggressively bought or obtained licensing for a wide range of shoe and accessory brands, including Airwalk, American Eagle, Champion, Spalding and Tailwind, which it developed with a subsidiary of Nike Inc.

About 38 percent of the company's products are branded, but Rubel has said he wants to boost the share past 70 percent.

"This is a major step in covering a very large and important customer type for us," he said.

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