Shoe Carnival Details New Store Locations

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Evansville-based Shoe Carnival Inc. (Nasdaq: SCVL) is forging ahead with plans to add 32 stores during its current fiscal year. The expansion includes two locations in Puerto Rico. The company is also reporting fiscal second quarter earnings of $2.6 million, compared to $5.8 million for the same period a year earlier. September 3, 2014

News Release

EVANSVILLE, Ind. - Shoe Carnival, Inc. (Nasdaq: SCVL) a leading retailer of value-priced footwear and accessories, today reported results for the second quarter ended August 2, 2014.

Second Quarter Highlights

Net sales increased $5.7 million to $222.1 million, as compared to net sales reported for the second quarter of fiscal 2013

Earnings per diluted share were $0.13, within the Company’s guidance for the quarter

Per-store inventories were down 2.2 percent at the end of the quarter, as compared to the second quarter last year

161,000 shares of common stock were repurchased under the current share repurchase program

Sixteen new stores were opened during the quarter, which included entry into two new major markets – Buffalo, NY and Miami, FL as compared to eight stores in the second quarter last year

Omni-channel capabilities advance with key system initiatives to support long-term growth

“The second quarter proved challenging as store traffic remained soft and consumers shopped closer to need. As a result, our comparable store sales turned positive in July as customers shopped Shoe Carnival’s broad selection of brand-name athletic and casual shoes at exceptional values for back-to-school,” commented Cliff Sifford, President and CEO. “As we navigate through this choppy sales environment, we will continue to make investments that we believe will benefit our long-term sales and earnings growth. Two initiatives we are excited about are the conversion from third-party fulfillment of our e-commerce orders to fulfilling those orders from our stores and distribution center and the addition of our first-ever mobile app. With these two initiatives set to launch in the third quarter, we are aggressively moving forward in the evolution of the omni-channel shopping experience for our customer.”

Second Quarter Financial Results

The Company reported net sales of $222.1 million for the second quarter of fiscal 2014, a 2.6 percent increase, as compared to net sales of $216.4 million for the second quarter of fiscal 2013. Comparable store sales decreased 2.1 percent in the second quarter of fiscal 2014.

The gross profit margin for the second quarter of fiscal 2014 decreased to 28.0 percent compared to 28.9 percent in the second quarter of fiscal 2013. The merchandise margin decreased 0.2 percent. Buying, distribution and occupancy expenses increased 0.7 percent as a percentage of sales.

Selling, general and administrative expenses for the second quarter of fiscal 2014 increased $5.0 million to $58.0 million. As a percentage of sales, these expenses increased to 26.1 percent compared to 24.5 percent in the second quarter of fiscal 2013.

Net earnings for the second quarter of fiscal 2014 were $2.6 million, or $0.13 per diluted share. For the second quarter of fiscal 2013, the Company reported net earnings of $5.8 million, or $0.29 per diluted share.

Six Month Financial Results

Net sales during the first six months of fiscal 2014 increased $9.1 million to $457.8 million as compared to the same period last year. Comparable store sales for the twenty-six week period ended August 2, 2014 decreased 1.8 percent. Net earnings for the first six months of fiscal 2014 were $11.7 million, or $0.58 per diluted share, compared to net earnings of $15.4 million, or $0.76 per diluted share, in the first six months of last year. The gross profit margin for the first six months of fiscal 2014 was 28.8 percent compared to 29.2 percent last year. Selling, general and administrative expenses, as a percentage of sales, were 24.5 percent for the first six months of fiscal 2014 compared to 23.7 percent last year. The Company opened 23 stores during the first six months of fiscal 2014 as compared to opening 21 stores during the first six months of last year.

Share Repurchase Program

In the second quarter of fiscal 2014, the Company repurchased approximately 161,000 shares of its common stock at a total cost of $3.0 million. As of August 2, 2014, approximately 381,000 shares had been repurchased at an aggregate cost of $7.7 million. The amount that remained available under the share repurchase authorization at August 2, 2014 was $17.3 million.

Third Quarter and Second Half Fiscal 2014 Earnings Outlook

For the 13 weeks ending November 1, 2014, earnings per diluted share are expected to be in the range of $0.45 to $0.51, compared to $0.54 in last year’s third quarter. For the second half of fiscal 2014, earnings per diluted share are expected to be in the range of $0.53 to $0.64, compared to $0.57 in second half of last year.

The Company’s guidance is based on the expectation that third quarter net sales will be in the range of $247 to $252 million. This expectation includes a range for comparable store sales of down 1.0 percent to a 1.0 percent gain. For the second half of fiscal 2014, the Company expects net sales in the range of $462 to $471 million with comparable store sales in the range of flat to a 2.0 percent gain.

Looking ahead, Mr. Sifford stated, “Given our customers’ recent purchasing habits, we believe it is prudent to have a conservative outlook for the third quarter. We are incrementally more positive on the fourth quarter based on the anticipation of a strong boot season and we are well positioned with the right product assortment to take every advantage of improved consumer demand.”

The Company expects to open 32 new stores and close three stores in fiscal 2014. Store openings and closings by quarter for the fiscal year are as follows:

New Stores Store Closings

1st quarter 2014 7 1

2nd quarter 2014 16 0

3rd quarter 2014 0 0

4th quarter 2014 9 2

Fiscal year 2014 32 3

The 16 new stores opened during the second quarter include locations in:

City Market Total Stores in the Market

Gadsden, AL Birmingham 6

Jasper, AL Birmingham 6

Nogales, AZ Tucson 2

Coral Springs, FL Miami 2

Tamarac, FL Miami 2

Panama City Beach, FL Panama City 2

Orland Park, IL Chicago 24

Shelby Township, MI Detroit 6

Westland, MI Detroit 6

Hamburg, NY Buffalo 2

Niagara Falls, NY Buffalo 2

Lawton, OK Wichita Falls 2

Bayamon, PR Puerto Rico 9

Mayaguez, PR Puerto Rico 9

Madison, WI Madison 1

Brookfield, WI Milwaukee 3

Conference Call

Today, at 4:30 p.m. Eastern Time, the Company will host a conference call to discuss the second quarter results. Participants can listen to the live webcast of the call by visiting Shoe Carnival's Investors webpage 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 the Company’s website beginning approximately two hours after the conclusion of the conference call and will be archived for one year.

About Shoe Carnival

Shoe Carnival, Inc. is one of the nation’s largest family footwear retailers, offering a broad assortment of value priced dress, casual and athletic footwear for men, women and children with emphasis on national and regional name brands. As of September 3, 2014, the Company operates 398 stores in 33 states and Puerto Rico, and offers online shopping at www.shoecarnival.com. 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.sh