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EVANSVILLE, IN-Despite sluggish sales in the first weeks of the back-to-school season, Shoe Carnival Inc.’s president and chief executive officer, Mark Lemond, assured investors during Tuesday’s Q2 earnings call that the company has seen positive results in third week of August. In Carnival’s southern regions, where schools tend to start earlier, sales have been exceeding the company’s expectations. “It appears that consumers are shopping closer to the back-to-school date, or even after school starts, more than they have in recent years,” Lemond told investors.

Reiterating the late start in back-to-school sales, Clifton E. Sifford, executive vice president and general merchandise manager, attributed the trend to the challenging effect of changing styles. “I think part of the reason is the consumer is somewhat confused,” Sifford said. “They know a new fashion trend is happening within the athletic arena but they don’t know what to wear it with or how to pair it up with the apparel they want to wear. I think they got to school and saw what was happening and now they are in our store making their selection.”

Yet, even with disappointing numbers in the last two weeks of its second quarter as a result of the back-to-school season, the company closed its Q2 with a 39% increase in profit, posting $2.7 million compared with net income of $1.9 million in the second quarter last year. The company attributed the gain to the increase in women’s non-athletic products to make up 26.2% of total sales, up from 23.5% in the second quarter of 2004.

Diluted earnings per share increased 33% to 20 cents per share, in line with analysts’ expectations, from 15 cents per share during 2004. The company reported a 7.6% increase in second quarter sales to $148.7 million from $138.1 million last year, while comparable store sales increased by 2.9% for the 13-week period.

Shoe Carnival now anticipates an increase in comparable store sales for the third quarter of 1% to 3%. Diluted earnings per share are expected to be between 43 cents and 45 cents for the third quarter compared to 38 cents for the third quarter of 2004. Diluted earnings per share for the full year of 2005 are anticipated to be between $1.20 and $1.25.

During the first half of 2005 12 new stores were opened, seven of which were opened in the second quarter, and one store was closed. An additional three stores are expected to open in the second half of 2005. The company expects to close seven stores during the last two quarters of this year, two of which will be closed in the last week of the fiscal year. Shoe Carnival operates a chain of 265 footwear stores located in the Midwest, South and Southeast.

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