Shoe Carnival (SCVL) 8-K Shoe Carnival Reports Second Quarter 2008 Results

7500 East Columbia Street Evansville, IN 47715 www.shoecarnival.com (812) 867-4037	Contact Mark L. Lemond President and Chief Executive Officer or W. Kerry Jackson Executive Vice President, Chief Financial Officer and Treasurer
FOR IMMEDIATE RELEASE

SHOE CARNIVAL REPORTS SECOND QUARTER 2008 RESULTS

        Evansville, Indiana, August 21, 2008 - Shoe Carnival, Inc. (Nasdaq: SCVL) a leading retailer of value-priced footwear and accessories, today announced sales and earnings for the second quarter ended August 2, 2008.   

        Net earnings for the thirteen-week second quarter were $977,000, or $0.08 per diluted share, compared to net earnings of $167,000, or $0.01 per diluted share, for the thirteen-week prior year second quarter ended August 4, 2007.

        Sales for the second quarter were $158.5 million compared to sales of $154.8 million for the prior year second quarter. Comparable store sales for the thirteen-week period ended August 2, 2008 decreased 1.0 percent compared with the thirteen-week period ended August 4, 2007.

        The gross profit margin for the second quarter was 26.6 percent compared to 26.0 percent for the second quarter of the prior year. As a percentage of sales, the merchandise margin increased 0.9 percent while buying, distribution and occupancy costs increased 0.3 percent.

        Selling, general and administrative expenses for the second quarter were $40.7 million, or 25.7 percent of sales, compared to $40.1 million, or 25.9 percent of sales, for the second quarter of 2007.

        Speaking on the results for the quarter, Mark Lemond, chief executive officer and president said, "Although consumers continued to face a great deal of economic pressure during the second quarter, we believe their use of the government stimulus checks did provide a short-term boost in our sales. We were able to increase the average realized price for our footwear, particularly within our adult and children's athletic categories. This price increase resulted in the second consecutive quarter of an increase in athletic footwear sales in comparable stores.

        Our second quarter performance continued to reflect strong inventory management and effective expense control. Our merchants reduced year-over-year inventory on a per store basis by approximately 7.0 percent and actually improved merchandise margins. Despite a 1.0 percent decrease in comparable store sales, we were able to leverage our selling, general and administrative expenses by 0.2 percent."

       Net income for the first half of 2008 was $5.8 million, or $0.46 per diluted share, compared with net income of $7.5 million, or $0.55 per diluted share, in the first half last year. Net sales for the first six months was $320.6 million compared to net sales of $320.5 million for the same period last year. Comparable store sales for the twenty-six week period ended August 2, 2008 decreased 3.0 percent compared to the twenty-six week period last year ended August 4, 2007. The gross profit margin for the first six months of 2008 was 27.8 percent compared to 28.1 percent last year. Selling, general and administrative expenses, as a percentage of sales, was 24.9 percent for the first six months of 2008 as compared to 24.8 percent last year.

Store Growth

        Currently, the Company expects to open 24 new stores in fiscal 2008 and close 11 stores. Store openings and closings by quarter and for the fiscal year are currently planned as follows:

	New Stores	Stores Closings
1st Quarter 2008	2	0
2nd Quarter 2008	12	2
3rd Quarter 2008	9	1
4th Quarter 2008	1	8
Fiscal 2008	24	11

The twelve stores opened during the second quarter included locations in:

City                       
Virginia Beach, VA Edwardsville, IL Branson, MO Boise, ID Logan, UT West Jordan, UT McCreeless, TX San Antonio, TX Omaha, NE Council Bluffs, NE Pace, FL Loveland, CO Market/Total Stores in Market
Norfolk/5 St. Louis/11 Springfield/2 Boise/1 Salt Lake City/2 Salt Lake City/2 San Antonio/4 San Antonio/4 Omaha/2 Omaha/2 Mobile/3 Denver/5

Conference Call

        Today, at 2:00 p.m. Eastern time, the Company will host a conference call to discuss the second quarter results. The public can listen to the live webcast of the call by visiting Shoe Carnival's Investor Relations page at www.shoecarnival.com. While the question-and-answer session will be available to all listeners, questions from the audience will be limited to institutional analysts and investors. A replay of the webcast will be available on our website beginning approximately two hours after the conclusion of the conference call and will be archived for one year.

Cautionary Statement Regarding Forward-Looking Information

        This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. A number of factors could cause our actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, but are not limited to: general economic conditions in the areas of the United States in which our stores are located; changes in the overall retail environment and more specifically in the apparel and footwear retail sectors; our ability to generate increased sales at our stores; the potential impact of national and international security concerns on the retail environment; changes in our relationships with key suppliers; the impact of competition and pricing; changes in weather patterns, consumer buying trends and our ability to identify and respond to emerging fashion trends; the impact of disruptions in our distribution or information technology operations; the effectiveness of our inventory management; the impact of hurricanes or other natural disasters on our stores, as well as on consumer confidence and purchasing in general; risks associated with the seasonality of the retail industry; our ability to successfully execute our growth strategy, including the availability of desirable store locations at acceptable lease terms, our ability to open new stores in a timely and profitable manner and the availability of sufficient funds to implement our growth plans; higher than anticipated costs associated with the closing of underperforming stores; the inability of manufacturers to deliver products in a timely manner; changes in the political and economic environments in the People's Republic of China, Brazil, Spain and East Asia, the primary manufacturers of footwear; and the continued favorable trade relati ons between the United States and China and the other countries which are the major manufacturers of footwear.

        In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may be incorrect or imprecise and involve known and unknown risks, uncertainties and other factors. Accordingly, any forward-looking statements included in this press release do not purport to be predictions of future events or circumstances and may not be realized. Forward-looking statements can be identified by, among other things, the use of forward-looking terms such as "believes," "expects," "may," "will," "should," "seeks," "pro forma," "anticipates," "intends" or the negative of any of these terms, or comparable terminology, or by discussions of strategy or intentions. Given these uncertainties, we caution investors not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We disclaim any obligation to update any of these factors or to publicly announce any revisions to the forward-l ooking statements contained in this press release to reflect future events or developments.

        Shoe Carnival is a chain of 303 footwear stores located in the Midwest, South and Southeast. Combining value pricing with an entertaining store format, Shoe Carnival is a leading retailer of name brand and private label footwear for the entire family. Headquartered in Evansville, IN, Shoe Carnival trades on The NASDAQ Stock Market LLC under the symbol SCVL. Shoe Carnival's press releases and annual report are available on the Company's website at www.shoecarnival.com.

Financial Tables Follow

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

	Thirteen			Thirteen			Twenty-six			Twenty-six
	Weeks Ended			Weeks Ended			Weeks Ended			Weeks Ended
	August 2, 2008			August 4, 2007			August 2, 2008			August 4, 2007
Net sales		$	158,480		$	154,805		$	320,599		$	320,458
Cost of sales (including buying,
distribution and occupancy costs)			116,334			114,558			231,373			230,420
Gross profit			42,146			40,247			89,226			90,038
Selling, general and administrative
Expenses			40,661			40,118			79,984			79,443
Operating income			1,485			129			9,242			10,595
Interest income			(39)			(176)			(76)			(510)
Interest expense			36			32			69			64
Income before income taxes			1,488			273			9,249			11,041
Income tax expense			511			106			3,488			3,547
Net income		$	977		$	167		$	5,761		$	7,494
Net income per share:
Basic		$	.08		$	.01		$	.47		$	0.56
Diluted		$	.08		$	.01		$	.46		$	0.55
Average shares outstanding:
Basic			12,367			13,091			12,360			13,295
Diluted			12,463			13,400			12,455			13,634

SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	August 2, 2008			February 2, 2008		August 4, 2007
ASSETS
Current Assets:
Cash and cash equivalents	$		16,659	$	9,177	$	15,466
Accounts receivable			1,961		411		1,216
Merchandise inventories			208,409		200,781		210,043
Deferred income tax benefit			2,481		2,340		2,304
Other			8,383		7,221		10,542
Total Current Assets			237,893		219,930		239,571
Property and equipment-net			71,014		71,686		74,736
Total Assets	$		308,907	$	291,616	$	314,307
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$		74,953	$	67,786	$	84,859
Accrued and other liabilities			14,546		10,689		13,493
Total Current Liabilities		89,499			78,475		98,352
Deferred lease incentives		4,735			5,396		5,442
Accrued rent		5,626			5,925		6,163
Deferred income taxes		917			399		534
Deferred compensation		3,395			3,559		3,543
Other		1,410			1,250		795
Total Liabilities		105,582			95,004		114,829
Total Shareholders' Equity		203,325			196,612		199,478
Total Liabilities and Shareholders' Equity	$		308,907	$	291,616	$	314,307

SHOE CARNIVAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Twenty-six Weeks Ended August 2, 2008			Twenty-six Weeks Ended August 4, 2007
Cash flows from operating activities:
Net income	$	5,761		$	7,494
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization		8,286			7,834
Stock-based compensation		559			830
Loss on retirement and impairment of assets		109			389
Deferred income taxes		377			(216	)
Deferred lease incentives		174			0
Other		(1,135	)		(334	)
Changes in operating assets and liabilities:
Accounts receivable		(1,550	)		(268	)
Merchandise inventories		(7,628	)		(13,381	)
Accounts payable and accrued liabilities		9,992			16,739
Other		(1,164	)		(8,710	)
Net cash provided by operating activities		13,781			10,377
Cash flows from investing activities:
Purchases of property and equipment		(6,700	)		(11,372	)
Proceeds from sale of property and equipment		2			379
Other		0			6
Net cash used in investing activities		(6,698)			(10,987	)
Cash flows from financing activities:
Borrowings under line of credit		6,625			0
Payments on line of credit		(6,625	)		0
Proceeds from issuance of stock		399			513
Excess tax benefits from stock-based compensation		0			290
Common stock repurchased		0			(19,566	)
Net cash provided by (used in) financing activities		399			(18,763	)
Net increase (decrease) in cash and cash equivalents		7,482			(19,373	)
Cash and cash equivalents at beginning of period		9,177			34,839
Cash and Cash Equivalents at End of Period	$	16,659		$	15,466