Leading footwear retailer Payless ShoeSource Inc on Wednesday suffered a 19 per cent slip in first quarter net income to $23.9 million from $29.7m in the year-ago period as price cuts ate into its gross margins.

The Kansas-based company said it underestimated demand for colour footwear but expects second quarter profits to climb 13-19 per cent year-on-year as it corrected the merchandising mistakes and cut expenses.