Payless Profit Climbs

Gross margins expand.
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Footwear retailer

Payless ShoeSource

(PSS)

said its first-quarter earnings rose 19.2% as gross margins increased, led by higher unit prices.

The company earned $36 million, or 53 cents a share, including option expenses of 2 cents a share, for the quarter ended April 29, compared with $30.2 million, or 45 cents a share, in the year-ago period. Analysts surveyed by Thomson First Call were expecting a profit of 40 cents a share.

First-quarter revenue fell marginally from a year ago to $694.8 million as against analysts' estimate of $701.45 million. Same-store sales increased 0.4% during the quarter. The average unit retail price for footwear rose by 11.2% while unit sales fell 8.6%.

"We had a solid sales performance in the first quarter of 2006," the company said. "In the categories where we invested in improvements to the quality and aesthetics of our product, we were able to raise average unit retails, which drove our gross margin growth in the quarter."

Payless also bought the American Eagle brand for footwear and accessories from Jimlar for an undisclosed amount.

The Topeka, Kan.-based company intends to open about 80 new stores and close about 60 stores in the year 2006. It also intends to relocate about 130 stores.

The company's stock rose $3.13, or 15%, to $24.01 Wednesday.

This story was created through a joint venture between TheStreet.com and IRIS.