(FORTUNE Small Business) – Bakers Footwear Group is the very model of a modern, fast-growing public company. It projects sales of $180 million this year from shoe stores all over the country. The St. Louis company is rolling out an updated store design and plans to open 30 to 35 new outlets in 2005.

Ten years ago, however, this third-generation family business was on its knees. Edison Brothers Stores was launched in 1922 by Harry, Irving, Mark, Sam, and Simon Edison, five sons of a Latvian immigrant who had peddled shoes off a pack mule in southern Georgia. The Edisons opened their first ladies' shoe store in downtown Atlanta. They named it Chandler's after a popular car, so as not to sully the family name if they went broke. They named their second store after a prominent Atlanta family named Baker--not after their own.

They needn't have worried. When Fortune profiled Edison Brothers in 1948, it was the largest chain of women's shoe stores in the country. Over the years Edison grew into a $1.5-billion-a-year apparel conglomerate. But by the early 1990s Edison Brothers had lost the pulse of American fashion. In 1995 the venerable company declared bankruptcy.

The failure of Edison Brothers was heartbreaking for the Edison family, but they had already beaten stiff odds. Only 30% of family businesses make it to the second generation, according to the Cox Family Enterprise Center. Just 12% survive to the third. The third generation of Edisons is represented by Peter Edison, 49, a Harvard MBA who joined the family business as a shoe salesman in 1977. In 1997, Peter became the last Edison to leave the floundering family firm. He struck out on his own, spending $450,000 of his own money to take over a rival St. Louis shoe company called Weiss & Newman. Two years later, with an hour to go before liquidation, Peter and other investors bought Edison's flagship shoe chain, Bakers, for just $8 million.

Bakers had no cash and only enough shoes to sell for the current season. And the venerable brand had lost much of its luster. "Bakers had become synonymous with cheap shoes," Edison admits. Within two months Edison had closed dozens of failing stores. He also started remodeling stores one by one. "The new stores look like an upscale boutique," says Ron Bookbinder, a senior retail analyst with Sterne Agee & Leach. Sales in renovated stores are up by as much as 50%.

Once a year Edison takes his son Jack, 17, to visit a few Bakers stores. They sit on the floor of the mall and watch the shoes of female shoppers. Father and son try to guess which women are Bakers' customers. A scant 3% of family firms survive into the fourth generation, and Edison says he wants Jack to follow his bliss. Just for the record, Peter's father said the same thing.