Payless ShoeSource Announces Agreement with Shopko To Operate Shoe Departments in Shopko Stores

Jul 29, 1999, 01:00 ET from Payless ShoeSource

    TOPEKA, Kan., July 29 /PRNewswire/ -- Payless ShoeSource, Inc. (NYSE:   PSS)
 and ShopKo Stores, Inc. (NYSE:   SKO) today announced a strategic alliance and
 have signed a definitive agreement for Payless to operate the shoe departments
 in ShopKo's stores under the "Payless ShoeSource" name.
     Payless will begin operating the shoe departments in 13 ShopKo stores in
 late 1999, and expects to begin operating the shoe departments in all ShopKo
 stores by the fall of 2000.  The shoe departments will offer the same footwear
 and accessories available in Payless ShoeSource stores.
     "The combination of ShopKo stores with Payless ShoeSource branded shoe
 departments presents an exciting opportunity for both companies.  The
 substantial overlap between the customers we serve and our complementary
 product offerings provides another great avenue to serve our customers,"
 remarked Steven J. Douglass, Chairman and Chief Executive Officer of Payless.
     "This collaborative agreement represents our commitment to meeting
 ShopKo's customer lifestyle needs, and is yet another example of a strategic
 business alliance providing growth for ShopKo," said ShopKo President and
 Chief Executive Officer William Podany.  "Payless' sourcing and merchandising
 expertise will result in a much enhanced footwear offering at ShopKo, and the
 well known Payless brand will have instant credibility with our customers."
     Payless ShoeSource, Inc. is North America's largest family footwear
 retailer.  The company operates 4,414 Payless ShoeSource stores offering
 quality family footwear at affordable prices.  Payless also operates 215
 Parade of Shoes stores featuring fashionable mid-priced women's footwear.  In
 addition, customers can buy shoes online anytime from the company's E-Commerce
 site at
     ShopKo Stores, Inc., a Fortune 500 company headquartered in Green Bay,
 Wisconsin, operates 314 retail stores in 22 states, primarily in the Midwest,
 Western Mountain and Pacific Northwest regions.  Retail operations include 158
 specialty discount stores operating under the ShopKo name in mid-sized and
 larger cities, 152 Pamida discount stores in smaller, rural communities, and
 four Heartland Furniture stores.  The company also serves the rapidly growing
 managed health care industry through its subsidiary, ProVantage Health
 Services, Inc. (NYSE:   PHS).  ProVantage is a leading health benefit management
 company providing health benefit management services, pharmacy mail services,
 vision benefit management services, and health information and clinical
 support services.  For more information about ShopKo, Pamida or ProVantage,
 visit their web site at
     This press release contains forward-looking statements that are subject to
 risks and uncertainties.  Forward-looking statements include the timing of
 store openings and the expected advantages of operating shoe departments in
 specialty discount stores.  A variety of known and unknown risks,
 uncertainties and other factors could cause actual results and expectations to
 differ materially from the anticipated results or expectations.  Additional
 information concerning a number of factors that could cause actual results to
 differ materially from the information contained in this release can be found
 in Payless ShoeSource, Inc.'s 1998 Annual Report to Shareowners and its Form
 10-K for fiscal 1998, as filed with the Securities and Exchange Commission,
 and in ShopKo Stores, Inc.'s current Annual Report on Form 10-K and as may be
 described from time to time in ShopKo's subsequent SEC filings.

SOURCE Payless ShoeSource