Footwear giant Payless ShoeSource Inc has posted a third quarter loss of $2.2 million, compared with a profit of $29.6m in the same period of 2002.

The Kansas-based retailer also saw third quarter sales fall 0.5 per cent year-on-year to $709.8m, while same store sales declined 1.4 per cent based on the same period 12 months ago.

The company, which entered the quarter with 22 per cent more inventory than the same period last year, said it expected profit margins to remain under pressure through to the end of 2003.

Payless is the largest family footwear retailer in the Western Hemisphere, with 5050 stores and an online retail business in operation.