Shoe Carnival (SCVL) 8-K Results of Operations and Financial Condition

Exhibit 99.1

8233 Baumgart Road	Contact Mark L. Lemond
Evansville, IN 47725	President and Chief Executive Officer
www.shoecarnival.com	or W. Kerry Jackson
(812) 867-4037	Executive Vice President, Chief Financial Officer
	and Treasurer
FOR IMMEDIATE RELEASE

SHOE CARNIVAL REPORTS SECOND QUARTER 2006 RESULTS

Second Quarter Results

          Evansville, Indiana, August 17, 2006 - Shoe Carnival, Inc. (Nasdaq: SCVL) a leading retailer of value-priced footwear and accessories, today announced sales and earnings for the second quarter ended July 29, 2006.  Net earnings for the 13-week second quarter increased 5.8 percent to $2.9 million as compared with net earnings of $2.7 million in the second quarter ended July 30, 2005.  Diluted earnings per share increased 5 percent to $0.21 per share compared with $0.20 per share last year.

          Net sales for the second quarter decreased 1.2 percent to $146.9 million from $148.7 million last year.  Comparable store sales decreased 1.0 percent for the 13-week period.

           The gross profit margin for the second quarter of 2006 was 27.8 percent compared to 27.9 percent for the second quarter of 2005.  While the merchandise gross profit margin, as a percentage of sales, was 0.3 percent better than last year, buying, distribution and occupancy costs rose by 0.4 percent due to the decline in comparable store sales.  Selling, general and administrative expenses for the second quarter, as a percentage of sales, decreased to 24.8 percent from 24.9 percent in last year’s second quarter. Consequently, the Company's operating margin was unchanged from the prior year at 3.0 percent.

           Speaking on the results for the quarter, Mark Lemond, chief executive officer and president said, “We continue to see the back-to-school customer shopping closer to the actual back-to-school date.  We have observed this trend in the prior two years as well as in fiscal 2006.  Our men’s and women’s athletic sales were below plan in the second quarter, particularly in the last week of July.  However our children’s product, including children’s athletics, and our men’s and women’s dress and casual product continue to sell very well.”

          Net income for the first half of 2006 was $10.3 million, or $0.75 per diluted share, compared with net income of $8.6 million, or $0.64 per diluted share, last year.  Net sales increased 1.9 percent to $315.4 million for the first six months from sales of $309.4 million last year.  Comparable store sales increased 1.8 percent for the six-month period. Gross profit margin for the first six months of 2006 increased to 29.3 percent from 28.8 percent last year.  Selling, general and administrative expenses, as a percentage of sales, decreased to 24.1 percent in the first six months of 2006 from 24.2 percent last year.

           Mr. Lemond continued “Our early results so far in the third quarter have been encouraging.  In the areas of the country where schools are already back in session, our stores have experienced early comparable store sales increases.  It is clearly apparent to us that the customer continues to shop closer to need for their back-to-school purchases.”

2006 EPS Outlook

           Earnings per diluted share in the third quarter of fiscal 2006 are expected to range from $0.55 to $0.57.  This assumes a comparable store sales increase of 1 to 2 percent.

           For the full year of 2006, we expect diluted earnings per share to range from $1.65 to $1.70.

Store Growth

          Currently, the Company expects to open 14 or 15 stores in fiscal 2006 and close seven stores.  Store openings and closings by quarter and for the year are planned as follows:

	New Stores	Stores Closed
1st Quarter 2006	0	0
2nd Quarter 2006	4	2
3rd Quarter 2006	8	3
4th Quarter 2006	2 or 3	2
Fiscal 2006	14 or 15	7

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

City	Market/Total Stores in Market
McAllen, TX	McAllen/2
Pearland, TX	Houston/4
Oxford, AL	Birmingham/3
Johnson City, TN	Johnson City/1

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 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; 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 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; the availability of desirable store locations at acceptable lease terms and our ability to open new stores in a timely and profitable manner; higher than anticipated costs associated with the closing of under-performing 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, a major manufacturer of footwear; and the continued favorable trade relations between the United States and China and 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-looking statements contained in this press release to reflect future events or developments.

          Shoe Carnival is a chain of 266 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 Weeks Ended July 29, 2006			Thirteen Weeks Ended July 30, 2005			Twenty-six Weeks Ended July 29, 2006			Twenty-six Weeks Ended July 30, 2005
Net sales	$	146,886		$	148,658		$	315,355		$	309,371
Cost of sales (including buying, distribution and occupancy costs)		106,045			107,200			223,064			220,274
Gross profit		40,841			41,458			92,291			89,097
Selling, general and administrative expenses		36,421			36,980			76,055			74,844
Operating income		4,420			4,478			16,236			14,253
Interest income		(302	)		(24	)		(510	)		(35	)
Interest expense		42			152			74			296
Income before income taxes		4,680			4,350			16,672			13,992
Income tax expense		1,818			1,646			6,410			5,367
Net income	$	2,862		$	2,704		$	10,262		$	8,625
Net income per share:
Basic	$	.21		$	.21		$	.77		$	.66
Diluted	$	.21		$	.20		$	.75		$	.64
Average shares outstanding:
Basic		13,353			13,112			13,300			13,018
Diluted		13,715			13,511			13,684			13,394

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

	July 29, 2006		January 28, 2006		July 30, 2005
ASSETS
Current Assets:
Cash and cash equivalents	$	25,407	$	20,304	$	7,053
Accounts receivable		1,759		286		976
Merchandise inventories		203,688		183,993		206,277
Deferred income tax benefit		1,154		1,075		350
Other		5,486		2,327		5,205
Total Current Assets		237,494		207,985		219,861
Property and equipment-net		61,822		66,848		69,336
Total Assets	$	299,316	$	274,833	$	289,197
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	75,835	$	64,756	$	70,142
Accrued and other liabilities		12,629		11,451		12,970
Current portion of long-term debt		0		0		9
Total Current Liabilities		88,464		76,207		83,121
Long-term debt		0		0		17,725
Deferred lease incentives		5,819		6,399		6,399
Accrued rent		6,356		6,658		6,870
Deferred income taxes		1,539		2,151		3,200
Deferred compensation		2,538		2,263		1,967
Total Liabilities		104,716		93,678		119,282
Total Shareholders’ Equity		194,600		181,155		169,915
Total Liabilities and Shareholders’ Equity	$	299,316	$	274,833	$	289,197

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

	Twenty-six Weeks Ended July 29, 2006			Twenty-six Weeks Ended July 30, 2005
Cash flows from operating activities:
Net income	$	10,262		$	8,625
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		7,132			7,434
Stock option income tax benefit		0			1,086
Stock-based compensation		966			114
Loss on retirement of assets		127			223
Deferred income taxes		(691	)		(2,050	)
Lease incentives		127			323
Other		(735	)		(327	)
Changes in operating assets and liabilities:
Accounts receivable		(1,473	)		(137	)
Merchandise inventories		(19,695	)		(25,687	)
Accounts payable and accrued liabilities		8,617			12,315
Other		(2,876	)		(4,917	)
Net cash provided by (used in) operating activities		1,761			(2,998	)
Cash flows from investing activities:
Purchases of property and equipment		(5,787	)		(8,606	)
Proceeds from sale of property and equipment		7,200			66
Other		2			153
Net cash provided by (used in) investing activities		1,415			(8,387	)
Cash flows from financing activities:
Borrowings under line of credit		0			140,750
Payments on line of credit		0			(130,325	)
Payments on long-term debt		0			(47	)
Proceeds from issuance of stock		1,813			3,171
Excess tax benefits from stock-based compensation		355			0
Common stock repurchased		(241	)		0
Net cash provided by financing activities		1,927			13,549
Net increase in cash and cash equivalents		5,103			2,164
Cash and cash equivalents at beginning of period		20,304			4,889
Cash and Cash Equivalents at End of Period	$	25,407		$	7,053