Shoe Carnival, Inc. reported net earnings for the first quarter ended April 30 increased 31% to $5.9 million as compared with restated net earnings of $4.5 million in the first quarter ended May 1, 2004. Diluted earnings per share increased 32% to 45 cents per share compared with 34 cents per share last year.

Included in the 2005 first quarter results is a non-cash correction of an error in the valuation of inventory related to the accounting for cash discounts on vendor purchases. Previously, cash discounts were recorded as a reduction in cost of sales at the time the vendor was paid. The correction of the error will present cash discounts as a reduction in inventory, which reduces cost of sales when the inventory associated with the discount is sold. The cumulative impact in the first quarter was a reduction in net earnings of $235,000, or two cents per diluted share.

Net sales for the first quarter increased 10.5% to a first quarter record of $160.7 million from $145.5 million last year. Comparable store sales increased 5.5% for the 13-week period.

The gross profit margin for the first quarter of 2005 increased to 29.6 percent from 29.1 percent in the first quarter of 2004. Selling, general and administrative expenses for the first quarter, as a percentage of sales, decreased to 23.6 percent from 23.9 percent in last year's first quarter.

Speaking on the results for the quarter, Mark Lemond, chief executive officer and president said, “We are pleased to announce the highest earnings of any quarter in the company's history. Our quarterly comparable store sales increase of 5.5 percent was the best we've had in several years. Our warmer southern markets, in particular, performed very well, exhibiting an increase of more than 8 percent. The northern markets had to deal with abnormally cool weather during the first quarter, which kept store traffic below expectations. Despite this, the northern stores also saw a respectable increase in comparable store sales of approximately 3 percent. These comparable store sales increases are most directly attributable to the continuing improvements we are making to the fashion content of our product mix. We are also excited about the introduction of our new “Red Nose” advertising campaign in the first quarter. We think the Red Nose campaign will generate a sense of excitement about shopping in our stores, along with displaying the fashion and value people expect when shopping at Shoe Carnival.”

2005 EPS Outlook

Earnings per diluted share in the second quarter of fiscal 2005 are expected to range from $0.16 to $0.18. This assumes a total sales increase of between 7 and 10 percent and comparable store sales increasing between 2 and 4 percent. Included in the earnings estimate for the second quarter is a pre-tax charge of approximately $300,000 for two stores that are expected to close in the third quarter.

For the full year of 2005, earnings per diluted share are expected to range from $1.20 to $1.30.

Store Growth

Currently, the Company expects to open between 12 to 14 stores in fiscal 2005 and close six stores. Five stores were opened in the first quarter and five or six stores are expected to open in the second quarter. No stores were closed during the first quarter and one store is expected to close in the second quarter.

                          SHOE CARNIVAL, INC.
                   (In thousands, except per share)

                                         Thirteen       Weeks Ended
                                       Weeks Ended      May 1, 2004
                                      April 30, 2005  (as restated)(1)
                                      --------------  ----------------

Net sales                                $   160,713      $   145,462
Cost of sales (including buying,
 distribution and occupancy costs)           113,074          103,107
                                        ------------     ------------

Gross profit                                  47,639           42,355
Selling, general and administrative
 expenses                                     37,864           34,765
                                        ------------     ------------

Operating income                               9,775            7,590
Interest expense                                 133              194
                                        ------------     ------------

Income before income taxes                     9,642            7,396
Income tax expense                             3,721            2,884
                                        ------------     ------------

Net income                               $     5,921      $     4,512
                                        ============     ============

Net income per share:
   Basic                                 $       .46      $       .35
                                        ============     ============
   Diluted                               $       .45      $       .34