$22.50
0.80 (+3.66%)
Collective Brands Inc. (PSS)
CAPS Rating:
A specialty family footwear retailer in the western hemisphere, which is dedicated to democratizing fashion and design in footwear and accessories and inspiring fun, fashion possibilities for the family at a great value.
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Payless Shoesource operates as a family footwear specialty retailer offering athletic, casual, dress shoes and accessories such as handbags and hosiery for women, men and children. The Company operates its business in two segments: Payless Domestic and Payless International. This largest footwear retailer in the Western hemisphere has 4574 retail shoe stores in US, Puerto Rico, US Virgin islands and Central American Region.
Payless Shoesource has been the zest amongst its customers with significant improvement in the brand equity as per one survey. Since the company has a dominant hold in the children’s footwear market, their multi-year direct to retail licensing agreement with Disney could augur well. Payless and Exeter have teamed up to launch athletic shoes called ‘Tailwind’ which will be exclusively available at Payless Stores by early 2007. Payless designer collections are the most broadly distributed designer footwear lines available in the US today. Their recent partnership with New-York based designer ‘Laila Rose’ could enable them to deliver the original designs featuring the latest trends. This line is expected to be available in approximately 400 Payless stores by 2007.
Furthermore, their alliance with Abaete should do well as this line is expected to arrive in 800 stores by the coming spring. Through an agreement with Airwalk, they have entered into watches and eyewear market. The company is aggressive on direct sourcing to improve their margins in the future. Also, the recent performance of the company has been good with strong footwear sales in women’s and children’s categories. They have consistently generated positive same-store sales in past few quarters. Looking at the series of initiatives, we believe Payless Shoesource will OUTPERFORM
Payless ShoeSource (PSS), the dominant footwear retailer with over 4500 stores in the U.S. is riding high. Fourth quarter of 2006 was another excellent quarter for PSS as revenues rose by 13% thanks to the robust performance from women’s and children’s categories. Going forward, PSS is focused on increasing its branded footwear sales that currently constitute 25% of their total footwear sales. This, coupled with direct sourcing initiatives could have positive impact on company’s gross margins in the future. One of the sales drivers for 2007 would be company’s teaming up with Nike’s subsidiary, ‘Exeter’. The Tailwind collection, designed by Exeter would be exclusively sold in PSS outlets by the end of fiscal 2007. Company’s move to expand its foothold in active sports lifestyle market involves recent acquisition of Collective International. Importantly, this acquisition would help PSS to further develop one of its best selling ‘Airwalk’ brand of which it was the licensee since 2003. Customer response towards ‘Hot Zone’ store format in the fourth quarter had been good. Encouraged by the outcome, most of stores that are to be opened, relocated and refurbished would be in the same format, which could drive traffic. Additionally, company has a deal with Disney to develop kid shoes, which would gain additional momentum in their flourishing children market. Considering the spate of initiatives, at the current levels, shareholders would be paying less for the value that is being perceived in this scrip.