• The Wall Street Journal (subscription required), Monday, February 12, 2007 12 PM

Payless ShoeSource--the bargain shoe retailer that's seen its fortunes flag in recent year under pressure from Wal-Mart and other discount rivals--is undergoing a makeover. Long known for cluttered, warehouse-like stores, CEO Matthew E. Rubel believes stylish products and spruced-up stores will lure young, hip consumers.

Payless is offering trendier products, such as Lucite platform wedges and patent-leather zippered boots by fashion designer Laura Poretzky. Most of its shoes are still inexpensive, but it is also testing pairs that cost $40 or even $60.

The company is opening a design office in New York this summer to focus on original styles, and for the first time, it has its own design chief. It is also advertising in Vogue, getting exposure for its shoes on the runways of New York's Fashion Week, and spending more than $100 million a year on marketing. Even its logo has been redesigned, although it still uses the trademark Payless orange.

In the most recent quarter reported, which ended Oct. 28, 2006, sales at stores open at least a year grew 5.2%.

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