Shoe Carnival Conference Call Highlights

reported its third quarter earnings on Monday. Shares of the company are up 17 percent. Below are some key highlights from its conference call.

• We are pleased to report that our comparable store sales for the third quarter increased 2.3% driven primarily by the power of the fashion boot category for the family. • Although store traffic was down low single digits, increases in average unit retail were significant resulting in mid-single digit increase in our average transaction. • Strong boot sales at high margins allowed us to increase our overall merchandise margin by 20 basis points while continuing to clear out the last of our spring and summer merchandise. • We believe that our key initiatives, including national advertising, better brands in our women's department and a reinvigorated e-commerce presence are helping us to bring new customers to our store and our website. • Gross profit was flat as a percentage of sale versus third quarter last year, while SG&A was deleveraged by 60 basis point as a percent of sales. • Resulting in the EPS for the quarter of $0.54, which is above the previously stated guidance of $0.45 to $0.51. • We ended the quarter with inventory down approximately 0.6% on a per store basis, which is in line with our expectation. • I continue to be pleased with our merchants' execution of our current initiative as they lowered inventory levels in our smaller volume stores while maintaining depth of key seasonal items in core basics. • Although we don't report e-commerce sales separately, we are very pleased with the sales increases we experienced for the quarter. • On September 16, we transitioned away from our third-party fulfillment arrangement and moved to a ship from store fulfillment model. • Our stores associates have embraced this strategy and are executing on a very high level. • Today, we have 250 Shoe Carnival stores capable of fulfilling e-commerce orders every day. • As this business continues to grow, we will add additional stores to this program eventually expanding ship from store to all stores. • This initiative not only expanded the selection of styles, but it also increased the depth and sizes available online which in turn improved conversion. • Early this year, we identified boots as a key opportunity for the second half of the year. • Our marketing team built their plans around it and our stores have boots prominently displayed. • I believe our boot assortment is the best selection of boots we have ever offered and the strategy is working. Season-to-date, sales in boots for the family are up in the high 20%s on a comparable store basis. • This strong boot trend continued throughout the month of November as boots for the family produced a comparable store sales increase in the 30%s. • Our children's business ended the quarter with a mid-single digit comparable store sales increase. • We ended the third quarter of 2014 with 404 stores operating in 33 states and Puerto Rico. • For the quarter, we opened seven new stores, including our first store in the Philadelphia market and we closed one store. • For the remainder of 2014, our plans call for opening one more store by year-end, which will bring our new store total for the year to 31 stores. • We will close an additional five stores to end fiscal 2014 with approximately 400 stores.

• We ended the third quarter of 2014 with 404 stores operating in 33 states and Puerto Rico. • For the quarter, we opened seven new stores, including our first store in the Philadelphia market and we closed one store. • For the remainder of 2014, our plans call for opening one more store by year-end, which will bring our new store total for the year to 31 stores. • We will close an additional five stores to end fiscal 2014 with approximately 400 stores. • Gross profit margin for the quarter was 30.1%.

• We expect fourth quarter net sales to be in the range of $218 million to $222 million with comparable store sales increase in the range of 3% to 5%. • This range takes into account the November comp store sales increase of 5.8% and the expectation of a comp increase ranging from 1.5% to 4.5% for the combined December-January period. • Earnings per diluted share in the fourth quarter of fiscal 2014 are expected to be in the range of $0.06 to $0.10. • In the fourth quarter last year, sales were $200.3 million and diluted earnings per share were $0.03. • Included in the earnings estimate for the fourth quarter is the expectation that at the high end of our guidance, the gross profit margin will be down 0.3%. • Our guidance includes additional freight costs of approximately $0.01 per share we expect to incur in Q4 relating to the slowdown.