Shoe Pavilion Posts 5.5% Q4 Comps Gain

Shoe Pavilion, Inc. reported preliminary unaudited net income of $1.3 million, or 17 cents per diluted share, for the fourth quarter ended December 31, 2005 compared to net income of $1.0 million or 14 cents per diluted share, for the fourth quarter ended in January 1, 2005.

For all of fiscal 2005, the company reported preliminary unaudited net income of $2.7 million or 36 cents per diluted share compared to $2.1 million or 30 cents per diluted share for the same period last year.

Comparable store net sales increased 5.5% for the fourth quarter ending December 31, 2005 as compared to the same period last year. Net sales for the fourth quarter ended December 31, 2005 increased 18.9% to $29.5 million from $24.8 million for the same period last year.

Comparable store net sales for the twelve months ended December 31, 2005 increased 6.9% from the same period last year. Net sales for the twelve months ended December 31, 2005 increased 19.5% or $102.5 million from $85.8 million for the same period last year.

Gross profit for the full year of 2005 was $36.0 million or 35.1% of net sales compared to $29.9 million or 34.9% for the prior year. Selling, general and administrative expense for the full year of 2005 was $31.1 million or 30.4% of net sales compared to $26.2 million or 30.5% of net sales for the prior year.

The company opened 10 new stores and closed 6 stores during 2005 as part of its strategic plan to close smaller stores upon lease expiration and open larger stores in power retail centers.

Dmitry Beinus, Chairman and CEO, stated, “I am extremely pleased with our operating performance results for the year. We achieved increases and improvement in sales, gross profit and net income in 2005.”

                      SHOE PAVILION, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    (In thousands, except per share amounts and number of stores)

                                13-Weeks  13-Weeks  52-Weeks  52-Weeks
                                  ended     ended     ended     ended
                                December  January   December  January
                                   31,       1,        31,       1,
                                  2005     2005       2005      2005
                                --------- --------- --------- --------
                                Unaudited Unaudited Unaudited

     Total net sales            $ 29,480  $ 24,797  $102,529  $85,770
Cost of sales and related
 occupancy expenses               18,705    15,551    66,526   55,831
                                --------- --------- --------- --------
         Gross profit             10,775     9,245    36,003   29,940
Selling expenses                   6,118     5,679    22,264   19,266
General and administrative
 expenses                          2,474     1,837     8,868    6,924
                                --------- --------- --------- --------
         Income (loss) from
          operations               2,183     1,730     4,871    3,750
Interest expense                    (130)     (117)     (512)    (361)
Other income                           1         0         1       10
                                --------- --------- --------- --------
Income (loss) before income
 taxes                             2,054     1,613     4,360    3,399
Income tax (expense) benefit        (792)     (622)   (1,697)  (1,333)
                                --------- --------- --------- --------
Net income (loss)               $  1,262  $    991  $  2,663  $ 2,066

Earnings (loss) per share:
Basic                           $ 0.18    $ 0.15    $ 0.37    $ 0.30
Diluted                         $ 0.17    $ 0.14    $ 0.36    $ 0.30

Weighted average shares
 outstanding:
Basic                              7,199     6,801     7,199    6,800
Diluted                            7,477     6,970     7,477    6,909


Stores operated at end of
 period                               90        86        90       86