Shoe Carnival Doubles Earnings on 11.7% Comp-Sales Increase

Shoe Carnival, Inc. net earnings for the fourth quarter increased 154% to $3.0 million from net earnings of $1.2 million in the fourth quarter last year. Diluted earnings per share increased to 22 cents per share from 9 cents per share last year. Net sales for the fourth quarter increased 13.7% to $163.6 million from $143.9 million last year. Comparable store sales increased 11.7% for the 13-week period.

The gross profit margin for the fourth quarter of fiscal 2005 increased to 28.6 percent from 27.3 percent in the fourth quarter of fiscal 2004. Selling, general and administrative expenses for the fourth quarter, as a percentage of sales, decreased to 25.6 percent from 26.1 percent in last year's fourth quarter. Included in the fourth quarter selling, general and administrative expenses is a charge of $821,000 for store closing costs related to fiscal 2005 store closings and impairment charges for three stores expected to be closed in fiscal 2006. In the fourth quarter of fiscal 2004, we incurred $114,000 in store closing costs.

Net earnings for the 52-week 2005 fiscal year increased 50 percent to $18.8 million, or $1.40 per diluted share, from $12.5 million, or $0.96 per diluted share, for the 2004 fiscal year.

For the 52-week 2005 fiscal year, net sales increased 11.1 percent to $655.6 million from sales of $590.2 million for fiscal 2004. Comparable store sales increased 6.9 percent for the 52-week period.

Commenting on the results, Mark Lemond, president and chief executive officer said, “The comparable store sales increase in the fourth quarter was the highest quarterly sales increase in the Company's history. Our customers' response to our better fashion assortment resulted in double-digit comparable store sales increases for both our women's and men's non-athletic footwear. In turn, these record sales led to a record-breaking earnings performance in the fourth quarter. Our diluted earnings per share for the quarter increased over 140 percent compared to the fourth quarter of fiscal 2004.”

“The fourth quarter was just one part of a record-breaking year. Fiscal 2005 ended with a comparable store sales increase at 6.9 percent, the best annual performance in our history. As was the case for the fourth quarter, each of our product categories had comparable store sales increases for the full year, with women's non-athletic and men's non-athletic achieving solid double-digit increases. Our annual earnings were record breaking as well. For fiscal 2005, our diluted earnings per share were $1.40, a 46 percent increase from $0.96 for fiscal 2004.”

“The footwear industry is positioned for a solid performance in fiscal 2006. We feel we can capitalize on the positive retail environment and build upon our momentum from the second half of fiscal 2005 by continuing to attract customers with our broad selection of today's fashions at value prices.”

The Company opened 15 new stores in fiscal 2005 and closed seven to end the year with 263 stores. Total gross retail selling square footage increased 2.6 percent to end the year at 3.0 million square feet.

The company expects to open 13 to 15 new stores, and close five, in fiscal 2006.

Earnings per diluted share in the first quarter of fiscal 2006 are expected to range from $0.52 to $0.54. This assumes a total sales increase of between 5 and 6 percent and comparable store sales of between 4 and 5 percent. Earnings per diluted share for the first quarter of fiscal 2005 were $0.45.

For the full year of fiscal 2006, earnings per diluted share are expected to range from $1.65 to $1.75.

                          SHOE CARNIVAL, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                   (In thousands, except per share)
                              (Unaudited)


                        Thirteen    Thirteen    Fifty-two   Fifty-two
                       Weeks Ended Weeks Ended Weeks Ended Weeks Ended
                       January 28, January 29, January 28, January 29,
                          2006        2005        2006        2005
                       ----------- ----------- ----------- -----------

Net sales                $163,570    $143,878    $655,638    $590,186
Cost of sales
 (including buying,
  distribution and
  occupancy costs)        116,853     104,567     465,942     422,961
                       ----------- ----------- ----------- -----------

Gross profit               46,717      39,311     189,696     167,225
Selling, general and
 administrative
 expenses                  41,836      37,549     158,860     146,360
                       ----------- ----------- ----------- -----------

Operating income            4,881       1,762      30,836      20,865
Interest (income)
 expense-net                   (7)        150         354         658
                       ----------- ----------- ----------- -----------

Income before income
 taxes                      4,888       1,612      30,482      20,207
Income tax expense          1,873         426      11,692       7,678
                       ----------- ----------- ----------- -----------

Net income               $  3,015    $  1,186    $ 18,790    $ 12,529
                       =========== =========== =========== ===========

Net income per share:
   Basic                 $    .23    $    .09    $   1.43    $    .98
                       =========== =========== =========== ===========
   Diluted               $    .22    $    .09    $   1.40    $    .96
                       =========== =========== =========== ===========

Average shares
 outstanding:
   Basic                   13,246      12,842      13,128      12,820
                       =========== =========== =========== ===========
   Diluted                 13,586      13,038      13,457      13,051
                       =========== =========== =========== ===========