PSS: Positive Price Gap Trend
Competitive product pricing spreads are key at PSS. Recent trends look positive.
One thing we know is that PSS targets its pricing to be about 20% below competing product on a like-for-like basis.
When the spread widens, it usually is indicative of either PSS getting more aggressive on price, or the marketplace getting less competitive.
On the flip side, when PSS’ discount to peers narrows, it suggests either a more competitive and risky marketplace, or a more confident (and offensive) Payless. That’s what we think we’re seeing today.
We won’t begin to suggest that our tracking analysis of shoe styles across low-price competitors is fully representative of a 3,000+ store chain with thousands of SKUs. But we do think that it is a directionally relevant coincidental indicator.
In aggregate, we’ve seen PSS’ discount on key styles come narrow over the past two weeks. Did the company plan this around its analyst meeting to appear to be less promotional? We don’t think so. We also don’t think that the company is about to get steamrolled by having to lower its prices. In fact, one of the drivers for the recent trend is not having the $5.99 intro price point promotion negatively impact the mix today as much as it did in Aug/Early September.
Overall, this is a small, but positive supportive nugget to our above consensus estimates.