Shoe Stores

Shoe City, a chain of athletic shoe stores, agreed to pay $85,000 in penalties, restitution and costs to settle allegations of false and misleading advertising. Shoe City, based in Fullerton, didn't admit any wrongdoing in settling a civil lawsuit brought last week by the Orange County district attorney's consumer protection division.

The International Council of Shopping Centers said specialty-store sales for the week ended Dec. 14 at the nation's malls increased 0.6% over the same period a year ago. Shoe stores, whose sales rose 3.5%, were the best-performing category. Jewelry stores were next, with a 2.8% increase. For the holiday season so far, sales are up 2% over the same period in 1996, the trade group said. The results do not include sales at mall anchor department stores.

The New York investor, who is also continuing efforts to acquire Lucky Stores of Dublin, Calif., said in an SEC filing that he holds 9.1%, or 497,600 shares, of Morse Shoe, a retailer of moderately priced footwear through Fayva and Morse family shoe stores. The Canton, Mass., company, which had 1985 revenue of $541 million, said it received a letter from Edelman requesting a meeting to discuss an acquisition and would consider the request in due course.

Pacific Sunwear of California Inc. said it did not expect its One Thousand Steps shoe stores to generate enough money over the life of their leases to recoup the Anaheim company's initial investment in the chain. As a result, the surf and skate apparel retailer said it would take a second-quarter impairment charge of about $10 million, or 9 cents a share.

May Department Stores Co., which owns 13 regional department store chains, said today it will acquire the Richmond, Va.,-based Thalhimers chain for $325 million. Thalhimers operates 26 stores in Virginia, North Carolina, South Carolina and Tennessee and had sales of $445 million in 1989. Like other May acquisitions, Thalhimers will retain its name and continue to be headquartered in Richmond. The deal is subject to federal regulatory approval. Thalhimers is owned by Carter Hawley Hale Stores.

Three members of a Los Angeles family have pleaded guilty to federal fraud charges and have forfeited more than $6.6 million in assets. Behrooz Heravi, 46; Bijan Heravi, 47; and Behzad Heravi, 43, were indicted in March on charges of attempting to bilk government health care programs Medi-Cal and Medicare. The Heravis owned two shoe stores in the Los Angeles area.