Footstar Comments on Tax Treatment of Special Distribution

MAHWAH, N.J.--(Business Wire)--
Footstar, Inc. today announced it has received a tax opinion from
a nationally recognized firm that the $1 per share special
distribution, paid on June 3, 2008 to shareholders of record on May
28, 2008, more likely than not qualifies as a liquidating distribution
from the corporation's perspective. Footstar shareholders should seek
advice from their own tax advisors regarding the tax treatment of this
distribution from a shareholder's perspective. As previously reported,
the Company is taking steps to prepare for the anticipated wind-down
of its business in 2009.

Footstar has nominated Adam Finerman and Gerald Kelly for
re-election to its Board of Directors at its Annual Meeting of
Shareholders to be held on June 17, 2008. Footstar recommends that
shareholders vote for Messrs. Kelly and Finerman by returning the
WHITE proxy card that has been sent to them.

About Footstar, Inc.

Footstar, Inc. (OTCBB: FTAR) is a discount footwear retailer. The
Company operates licensed footwear departments nationwide in Kmart and
Rite Aid Stores.

NOTE: Footstar's certificate of incorporation contains
restrictions that prohibit parties from acquiring 4.75% or more of
Footstar's common stock without its prior consent and as further
provided therein.

Forward-Looking Statements

This release contains forward-looking statements made in reliance
upon the safe harbor provisions of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. These statements may be identified by the use of
words such as "anticipate," "estimates," "should," "expect,"
"guidance," "project," "intend," "plan," "believe" and other words and
terms of similar meaning, in connection with any discussion of our
financial statements, business, results of operations, liquidity,
future operating or financial performance and other future events and
circumstances. Factors that could affect our forward-looking
statements include, among other things, our ability to manage the
anticipated wind-down of our current businesses in connection with the
termination of our Kmart business, the impact of the payment of the
$1.00 per share special distribution on June 3, 2008 on our future
cash requirements and liquidity needs, both for our operating plans
and any contingencies and obligations, and the other risks and
uncertainties discussed more fully in our 2007 Annual Report on Form
10-K and the 2008 first quarter report on Form 10-Q.

Because the information in this release is based solely on data
currently available, it is subject to change and should not be viewed
as providing any assurance regarding our future performance. Actual
results, performance, events, plans and expectations may differ from
our current projections, estimates and expectations and the
differences may be material, individually or in the aggregate, to our
business, financial condition, results of operations, liquidity or
prospects. Additionally, we do not plan to update any of our
forward-looking statements based on changes in assumptions, changes in
results or other events subsequent to the date of this release, other
than as included in our future required SEC filings, or as may
otherwise be legally required.

Media:
Kekst and Company
Wendi Kopsick/Jeremy Fielding
212-521-4800
or
Investor:
Michael Lynch, 201-934-2577
Chief Financial Officer

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