Shoe Carnival, Inc. announced net earnings for the first quarter ended May 3, 2003 decreased 10 percent to $5.1 million as compared with net earnings of $5.7 million in the first quarter ended May 4, 2002. Diluted earnings per share decreased 11 percent to $.39 per share from $.44 per share last year.

Net sales for the first quarter increased 5.8 percent to $136.9 million from $129.4 million last year. Comparable store sales decreased 5.5 percent for the 13-week period.

The gross profit margin for the first quarter of 2003 decreased to 29.9 percent from 30.2 percent in the first quarter of 2002. Included in gross profit is a gain of $175,000, or 0.1 percent of sales, attributable to an insurance settlement for inventory damaged by a tornado in September 2002. Selling, general and administrative expenses for the first quarter, as a percentage of sales, increased to 23.8 percent from 23.0 percent in last year’s first quarter. New store pre-opening costs incurred in the first quarter were $772,000 or 0.6 percent of sales, compared with $432,000 or 0.3 percent of sales last year. The Company opened 13 new stores in the first quarter of 2003 versus opening six stores in the first quarter of 2002. SG&A expenses are net of a gain of $89,000 from an insurance settlement for fixed assets damaged by a tornado.

Interest expense declined to $166,000 in the first quarter from $264,000 last year due to lower average borrowings and a lower effective interest rate. The effective income tax rate for the first quarter of 2003 and 2002 was 37.5 percent.

Commenting on the results, Mark Lemond, president and chief executive officer, said, “We believe that the combination of a continued weak economy, the conflict in Iraq and abnormal weather patterns during the spring selling season resulted in lower customer traffic. Our business strategy over the past five quarters has focused on strict cost controls and reduced inventory levels. While sales and earnings fell short of our original expectations for the first quarter, we effectively managed our inventories and ended the quarter with inventories down 1.2 percent on a per-store basis.”

The Company ended the first quarter with 220 stores. Eleven stores are expected to open in the second quarter and approximately 16 stores are expected to open in the second half of 2003. After closing four stores in the latter half of the year, the Company expects to end fiscal 2003 with approximately 243 stores.

Mr. Lemond concluded, “Due to the continuing challenges at retail, we believe it is prudent to be cautious in our outlook for the second quarter and we will manage our inventories and expenses accordingly. We now expect second quarter earnings to be in the range of $.27 to $.31 per diluted share.”

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

                                                13 Weeks Ended
                                               May 3,     May 4,
                                                2003       2002
                                             ---------  ---------

Net sales                                    $136,850   $129,384
Cost of sales (including buying,
 distribution and occupancy costs)             95,969     90,302
                                              --------   --------
Gross profit                                   40,881     39,082
Selling, general and administrative expenses   32,587     29,761
                                              --------   --------
Operating income                                8,294      9,321
Interest expense                                  166        264
                                              --------   --------
Income before income taxes                      8,128      9,057
Income taxes                                    3,048      3,396
                                              --------   --------
Net income                                   $  5,080   $  5,661