UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE
    ACT OF 1934

For the quarterly period ended  October 31, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from            to

Commission File Number:        0-21360

                               Shoe Carnival, Inc.
             (Exact name of registrant as specified in its charter)

           Indiana                                      35-1736614
 (State or other jurisdiction of                (IRS Employer Identification  
 incorporation or organization)                  Number) 


8233 Baumgart Road, Evansville, Indiana                    47711
(Address of principal executive offices)                 (Zip Code)
 
                                 (812) 867-6471
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X ] No [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Common Stock, $.01 par value,  13,173,055  shares  outstanding as of December 1,
1998.



<PAGE>

                               SHOE CARNIVAL, INC.
                          INDEX TO FINANCIAL STATEMENTS


                                                                     Page

Part I   Financial Information
         Item 1 - Financial Statements (Unaudited)
          Condensed Balance Sheets .............................        3
          Condensed Statements of Income........................        4
          Condensed Statement of Shareholders' Equity...........        5
          Condensed Statements of Cash Flows....................        6
          Notes to Condensed Financial Statements...............        7

         Item 2 - Management's Discussion and Analysis..........     8-11

Part II  Other Information

         Item 6.  Exhibits and Reports on Form 8-K..............       12



         Signature..............................................       13




                                       2
<PAGE>

<TABLE>
<CAPTION>


                               SHOE CARNIVAL, INC.
                            CONDENSED BALANCE SHEETS
                                    Unaudited

                                           October 31,  January 31,  November 1,
                                               1998        1998         1997
                                           -----------  -----------  -----------
                                                        (In thousands)

                                     ASSETS
<S>                                          <C>          <C>          <C> 
Current Assets:
   Cash and cash equivalents................ $   2,036    $   1,571    $   1,687
   Accounts receivable......................       710          781        1,015
   Notes receivable from shareholders.......         0           22           22
   Merchandise inventories..................    76,126       59,444       67,160
   Deferred income tax benefit..............       797          933          351
   Other....................................       995          834          842
                                             ---------    ---------    ---------
Total Current Assets........................    80,664       63,585       71,077
Property and equipment-net..................    37,806       31,969       31,892
                                             ---------    ---------    ---------
Total Assets................................ $ 118,470    $  95,554    $ 102,969
                                             =========    =========    =========


                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable......................... $  16,485    $   9,521    $  10,503
   Accrued and other liabilities............     6,544        4,487        5,556
   Current portion of long-term debt........       863          688          718
                                             ---------    ---------    ---------
Total Current Liabilities...................    23,892       14,696       16,777
Long-term debt..............................     8,843        6,133       12,580
Deferred lease incentives...................     1,926        1,308        1,364
Deferred income taxes.......................     1,991        1,808        1,330
                                             ---------    ---------    ---------
Total Liabilities...........................    36,652       23,945       32,051
                                             ---------    ---------    ---------

Shareholders' Equity:
   Common  stock,  $.01 and no par  value,
    50,000  shares  authorized,  13,173,
    13,088, 13,055 shares issued and 
    outstanding at October 31, 1998,
    January 31, 1998 and November 1, 1997...       132            0            0
   Additional paid-in capital...............    62,364       61,844       61,673
   Retained earnings........................    19,322        9,765        9,245
                                             ---------    ---------    ---------
Total Shareholders' Equity..................    81,818       71,609       70,918
                                             ---------    ---------    ---------
Total Liabilities and Shareholders' Equity.. $ 118,470    $  95,554    $ 102,969
                                             =========    =========    =========

</TABLE>

                   See Notes to Condensed Financial Statements


                                       3
<PAGE>



<TABLE>
<CAPTION>

                               SHOE CARNIVAL, INC.
                         CONDENSED STATEMENTS OF INCOME
                                    Unaudited

                             Thirteen      Thirteen    Thirty-nine   Thirty-nine
                            Weeks Ended   Weeks Ended  Weeks Ended   Weeks Ended
                            October 31,   November 1,  October 31,   November 1,
                               1998           1997        1998          1997
                            -----------   -----------  -----------  ------------
                                   (In thousands, except per share data)
<S>                         <C>           <C>          <C>          <C>    
Net sales.................. $    76,442   $    66,364  $   210,240  $    188,085
Cost of sales (including 
  buying, distribution and 
  occupancy costs).........      52,225        45,874      144,799       131,143
                            -----------   -----------  -----------   -----------

Gross profit...............      24,217        20,490       65,441        56,942
Selling, general and 
  administrative expenses..      18,078        15,183       49,127        44,802
                            -----------   -----------  -----------   -----------

Operating income...........       6,139         5,307       16,314        12,140
Interest expense, net......         106           247          386           725
                            -----------   -----------  -----------   -----------

Income before income taxes.       6,033         5,060       15,928        11,415
Income taxes...............       2,413         1,970        6,371         4,544
                            -----------   -----------  -----------   -----------

Net income................. $     3,620   $     3,090  $     9,557   $     6,871
                            ===========   ===========  ===========   ===========

Net income per share:
    Basic.................. $       .27   $       .23  $       .73   $       .52
                            ===========   ===========  ===========   ===========
    Diluted................ $       .27   $       .23  $       .71   $       .52
                            ===========   ===========  ===========   ===========

Average shares outstanding:
    Basic..................      13,170        13,051       13,142        13,042
                            ===========    ==========  ===========   ===========
    Diluted................      13,380        13,330       13,432        13,223
                            ===========    ==========  ===========   ===========


</TABLE>

                   See Notes to Condensed Financial Statements



                                       4
<PAGE>


<TABLE>
<CAPTION>

                               SHOE CARNIVAL, INC.
                   CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
                                    Unaudited



                                                 Additional
                                 Common Stock     Paid-In    Retained
                                Shares   Amount   Capital    Earnings    Total
                                ------   ------  ----------  --------  --------                                     
                                                 (In thousands)
<S>                              <C>     <C>      <C>        <C>       <C>  
Balance at January 31, 1998...   13,088  $    0   $  61,844  $  9,765  $  71,609
   Employee stock purchase
        plan purchases........       11                 101                  101
   Exercise of stock options..       74                 551                  551
   Increase in par value......              132        (132)
   Net income.................                                  9,557      9,557
                                -------  ------    --------  --------  ---------
Balance at October 31, 1998...   13,173  $  132    $ 62,364  $ 19,322  $  81,818
                                =======  ======    ========  ========  =========

</TABLE>


                   See Notes to Condensed Financial Statements


                                       5
<PAGE>

<TABLE>
<CAPTION>

                               SHOE CARNIVAL, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                    Unaudited

                                                        Thirty-nine  Thirty-nine
                                                        Weeks Ended  Weeks Ended
                                                        October 31,  November 1,
                                                           1998         1997
                                                        -----------  ----------- 
                                                              (In thousands)
<S>                                                     <C>          <C> 
Cash flows from operating activities:
   Net income.......................................... $     9,557  $    6,871
   Adjustments to reconcile net income to net
      cash provided by operating activities:
     Depreciation and amortization.....................       4,647       4,167
     Loss on retirement of assets......................         342         282
     Deferred income taxes.............................         318         323
     Compensation for forgiveness of debt..............           0         158
     Other  ...........................................        (218)        (94)
     Changes in operating assets and liabilities:
       Merchandise inventories.........................     (16,682)     (7,920)
       Accounts receivable.............................          71         (99)
       Accounts payable and accrued liabilities........       9,022      (1,102)
       Other...........................................        (162)         63
                                                        -----------  ----------

Net cash provided by operating activities..............       6,895       2,649
                                                        -----------  ----------

Cash flows from investing activities:
   Purchases of property and equipment.................      (9,202)     (5,712)
   Lease incentives....................................         835           0
   Other...............................................          25          18
                                                        -----------  ----------

Net cash used in investing activities..................      (8,342)     (5,694)
                                                        -----------  ----------

Cash flows from financing activities:
   Borrowings under line of credit.....................      88,050     105,725
   Payments on line of credit..........................     (86,250)   (102,225)
   Payments on capital lease obligations...............        (540)       (510)
   Proceeds from issuance of stock.....................         652         117
                                                        -----------  ----------

Net cash provided by financing activities..............       1,912       3,107
                                                        -----------  ----------

Net increase in cash and cash equivalents..............         465          62
Cash and cash equivalents at beginning of period.......       1,571       1,625
                                                        -----------  ----------

Cash and cash equivalents at end of period............. $     2,036  $    1,687
                                                        ===========  ==========

Supplemental disclosures of cash flow information:
   Cash paid during period for interest................ $       420  $      715
   Cash paid during period for income taxes............ $     5,434  $    3,483
Supplemental disclosure of noncash investing activities:
   Capital lease obligations incurred.................. $     2,099  


</TABLE>

                   See Notes to Condensed Financial Statements




                                       6
<PAGE>




                               SHOE CARNIVAL, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                    Unaudited

Note 1 - Basis of Presentation

In the opinion of management,  the accompanying  unaudited  condensed  financial
statements  contain all  adjustments  necessary to present  fairly the financial
position of the Company and the results of its operations and its cash flows for
the periods presented.  Certain information and disclosures normally included in
notes to financial  statements  have been condensed or omitted  according to the
rules and  regulations of the Securities and Exchange  Commission,  although the
Company  believes  that the  disclosures  are  adequate to make the  information
presented not misleading.

The results of operations for the interim periods are not necessarily indicative
of the results to be expected for the full year.

It is suggested that these financial  statements be read in conjunction with the
financial  statements and financial notes thereto included in the Company's 1997
Annual Report.





                                       7
<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>

Results of Operations
                                                                      
                        Number of Stores         Store Square Footage Comparable          
                        ----------------         --------------------    Store
                 Beginning               End of    Net        End        Sales
Quarter Ended    Of Period Opened Closed Period   Change    of Period   Increase
-------------    --------- ------ ------ ------  -------    --------- ----------
<S>                <C>       <C>    <C>    <C>   <C>        <C>           <C>       
May 2, 1998         92        3     0       95    46,000    1,067,000     7.0%
August 1, 1998      95        7     0      102    85,000    1,152,000     2.9%
October 31, 1998   102        8     0      110   101,000    1,253,000     2.2%
Year-to-date        92       18     0      110   232,000    1,253,000     3.9%

May 3, 1997         93        0     2       91   (19,000)   1,007,000     4.4%
August 2, 1997      91        0     0       91     5,000    1,012,000     8.8%
November 1, 1997    91        4     1       94    32,000    1,044,000     4.0%
Year-to-date        93        4     3       94    18,000    1,044,000     5.4%

</TABLE>

The following table sets forth the Company's results of operations  expressed as
a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>

                               Thirteen     Thirteen    Thirty-nine  Thirty-nine
                              Weeks Ended  Weeks Ended  Weeks Ended  Weeks Ended
                              October 31,  November 1,  October 31,  November 1,
                                  1998         1997         1998         1997
                              -----------  -----------  -----------  -----------
<S>                              <C>          <C>          <C>          <C> 
Net sales....................    100.0%       100.0%       100.0%       100.0%
Cost of sales (including 
  buying, distribution and 
  occupancy costs)...........     68.3         69.1         68.9         69.7
                              -----------  -----------  -----------  -----------

Gross profit.................     31.7         30.9         31.1         30.3
Selling, general and
   administrative expenses...     23.7         22.9         23.4         23.8
                              -----------  -----------  -----------  -----------

Operating income.............      8.0          8.0          7.7          6.5
Interest expense.............       .1           .4           .2           .4
                              -----------  -----------  -----------  -----------

Income before income taxes...      7.9          7.6          7.5          6.1
Income taxes.................      3.2          2.9          3.0          2.4
                              -----------  -----------  -----------  -----------

Net income...................      4.7%         4.7%         4.5%         3.7%
                              ===========  ===========  ===========  ===========
</TABLE>

Net Sales

Net sales increased $10.1 million to $76.4 million in the third quarter of 1998,
a 15.2%  increase over net sales of $66.4 million in the  comparable  prior year
period.  The increase was attributable to a 2.2% comparable store sales increase
and the sales generated by the 22 new stores opened in 1997 and 1998,  partially
offset by the reduction in sales for three stores closed in 1997. The comparable
store sales increase was supported with increases in the majority of the product
categories.  Average  footwear unit prices and footwear unit sales in comparable
stores increased 1.7% and .9%, respectively.


                                       8
<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)



Sales of private label and non-name  brand footwear  constituted  11.5% of total
footwear  sales in the third quarter of 1998 as compared with 15.3% in the prior
year quarter.  Net sales  increased $22.2 million to $210.2 million in the first
nine months of 1998, an 11.8%  increase over net sales of $188.1  million in the
comparable prior year period. The increase was attributable to a 3.9% comparable
store sales increase and the sales generated by the 22 new stores opened in 1997
and 1998,  partially offset by the reduction in sales for the five stores closed
in 1997. The comparable store sales increase was supported with increases in all
major  shoe  categories.  Average  footwear  unit  prices in  comparable  stores
increased 5.5% while footwear unit sales decreased 1.3%.  Sales of private label
and non-name  brand  footwear  constituted  13.6% of total footwear sales in the
first nine months of 1998 as compared with 16.2% in the prior year.

Gross Profit

Gross profit  increased  $3.7 million to $24.2  million in the third  quarter of
1998, an 18.2%  increase  over gross profit of $20.5  million in the  comparable
prior year period.  The Company's  gross profit  margin  increased to 31.7% from
30.9%. As a percentage of sales,  the merchandise  gross profit margin increased
0.7% and buying, distribution and occupancy costs decreased 0.1%.

Gross profit increased $8.5 million to $65.4 million in the first nine months of
1998,  a 14.9%  increase  over gross profit of $56.9  million in the  comparable
prior year period.  The Company's  gross profit  margin  increased to 31.1% from
30.3%. As a percentage of sales,  the merchandise  gross profit margin increased
0.6% and buying, distribution and occupancy costs decreased 0.2%.

Selling, General and Administrative Expenses

Selling,  general and  administrative  expenses  increased $2.9 million to $18.1
million in the third quarter of 1998 from $15.2 million in the comparable  prior
year period. As a percentage of sales,  these expenses  increased 0.8% primarily
due  to the  increase  in  store  opening  costs,  slightly  higher  advertising
expenditures  for new stores and the higher ratio of costs relative to sales for
those stores open for only a short period during the quarter.  Total pre-opening
costs for the eight stores  opened in the third quarter of 1998 were $641,000 or
0.8% of sales,  as compared  to  $211,000 or 0.3% of sales,  for the four stores
opened in the third quarter of 1997.

Selling,  general and  administrative  expenses  increased $4.3 million to $49.1
million in the first nine  months of 1998 from $44.8  million in the  comparable
prior year period.  As a percentage of sales,  these  expenses  decreased  0.4%.
Total  pre-opening  costs for the 18 stores  opened in the first nine  months of
1998 was $1.5  million or 0.7% of sales,  as  compared  to  $211,000  or 0.1% of
sales, for the four stores opened in the first nine months of 1997.

Interest Expense

The  reduction in net interest  expense in the third  quarter and the first nine
months of 1998 as compared  with the third  quarter and the first nine months of
1997 resulted from a combination of reduced borrowings and lower interest rates.

Income Taxes

The effective  income tax rate of 40.0% for the third quarter and the first nine
months of 1998 and 38.9% and 39.8% for the third  quarter  and first nine months
of 1997,  respectively,  differed from the statutory federal rates due primarily
to state and local income taxes, net of the federal tax benefit.


                                       9
<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)



Liquidity and Capital Resources

The  Company's  primary  sources  of funds are cash flows  from  operations  and
borrowings under its revolving  credit facility.  Net cash provided by operating
activities  was $6.9  million  during the first nine  months of 1998.  Excluding
changes  in  operating  assets  and  liabilities,  cash  provided  by  operating
activities  was $14.6  million in the first nine months of 1998.  An increase in
merchandise  inventories  of $16.7 million was partially  offset by a $9 million
increase  in  accounts  payable  and  accrued   liabilities.   The  increase  in
merchandise  inventories  was  primarily  due to seasonal  fluctuations  and the
additional 18 stores opened in 1998.

Working  capital  increased  to $56.8  million  at October  31,  1998 from $48.9
million at January 31,  1998 and the  current  ratio was 3.4 to 1 at October 31,
1998  as  compared  with  4.3 to 1 at  January  31,  1998.  Long-term  debt as a
percentage  of total  capital was 9.8% at October 31, 1998,  compared to 7.9% at
January  31,  1998.  The  increase  in working  capital  and long term debt as a
percent of total capital was primarily due to seasonal fluctuations.

Capital  expenditures  were  $11.3  million  in the  first  nine  months of 1998
(including  $2.1  million  of  capital  lease  assets).  Of these  expenditures,
approximately $7.6 million was incurred for new stores and the relocation of two
existing stores. The remaining capital  expenditures in the first nine months of
1998 were  primarily  for  merchandise  display  and  signage  enhancements  and
technological improvements in the stores.

The Company has opened 20 stores in 1998,  including  two stores opened early in
the fourth quarter.  Three stores were opened in the first quarter, seven in the
second quarter,  eight in the third quarter and two in the fourth quarter.  Four
stores  were opened in the third  quarter of 1997 and one store was closed.  Two
additional  stores were closed in the first quarter of 1997. In 1999 the Company
anticipates opening between 25 and 30 stores.

The actual amount of the Company's cash  requirements  for capital  expenditures
depends  in part on the  number  of new  stores  opened,  the  amount  of  lease
incentives,  if any, received from landlords and the number of stores remodeled.
The opening of new stores  will be  dependent  upon,  among  other  things,  the
availability of desirable  locations,  the negotiation of acceptable lease terms
and general  economic and business  conditions  affecting  consumer  spending in
areas the  Company  targets  for  expansion.  The  Company's  current  prototype
utilizes  between  12,000 and 18,000  square feet  depending  upon,  among other
factors, the location of the store and the population base the store is expected
to  service.  Capital  expenditures  for a new store  are  expected  to  average
approximately $400,000,  including point-of-sale  equipment,  which is generally
acquired  through   equipment  leasing   transactions.   The  average  inventory
investment  in a new store is  expected  to range  from  $550,000  to  $850,000,
depending on the size and sales  expectation  of the store and the timing of the
new store opening. Pre-opening expenses, such as advertising, salaries, supplies
and utilities, are expected to average approximately $80,000 per store.

The Company's $35 million  credit  facility  provides for a combination  of cash
advances on a revolving basis and the issuance of commercial  letters of credit.
Borrowings  under the  revolving  credit line are based on  eligible  inventory.
Borrowings and letters of credit  outstanding under this facility at October 31,
1998 were $7.5 million and $5.2 million, respectively.

The Company  anticipates  that its existing cash and cash flow from  operations,
supplemented by borrowings under the credit facility, will be sufficient to fund
its planned  expansion and other  operating cash  requirements  for at least the
next 12 months.



                                       10
<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)



Impact of Year 2000

The  Company  has  invested  significant  resources  in the  latest  information
technologies  over the past five years and therefore has minimized the effect of
the Year 2000 problem.  Management  initiated a company wide program to evaluate
all  computer  systems  and  applications  and has  determined  the  adjustments
necessary  to become  Year  2000  compliant.  It is  anticipated  that  existing
internal   resources  will  be  sufficient  to  correct  any  internal   systems
deficiencies  by the end of fiscal 1998 at an estimated  cost of  $150,000.  The
Company  is  currently  making  inquiries  of  its  major  suppliers  and  other
third-party  entities  with which it has  business  relations  and is  obtaining
assurances  of their Year 2000  compliance.  However,  there can be no assurance
that the systems of other companies,  on which the Company's  systems rely, will
also be corrected in a timely  manner,  or that any such failure to correct such
systems  by another  company  would not have a  material  adverse  effect on the
Company's  systems.  Contingency  plans  are  currently  being  developed  to be
implemented  in the event any  information  technology  system,  non-information
technology  system,  third  party or supplier  is not Year 2000  compliant  in a
timely manner.


Seasonality

The Company's  quarterly  results of operations have fluctuated and are expected
to  continue  to  fluctuate  in the  future  primarily  as a result of  seasonal
variances and the timing of sales and costs  associated with opening new stores.
Non-capital  expenditures,  such as advertising  and payroll,  incurred prior to
opening a new store are  charged  to  expense  in the month the store is opened.
Therefore,  the Company's results of operations may be adversely affected in any
quarter in which the Company opens new stores.

The Company has three  distinct  selling  periods:  Easter,  back-to-school  and
Christmas.


Factors That May Effect Future Results

This report contains certain forward looking statements that involve a number of
risks and  uncertainties.  Among the factors that could cause actual  results to
differ materially are the following: general economic conditions in the areas of
the United  States in which the  Company's  stores are  located;  changes in the
overall retail  environment  and more  specifically  in the apparel and footwear
retail sectors;  the impact of competition,  weather  patterns,  consumer buying
trends  and the  ability of the  Company to  identify  and  respond to  emerging
fashion trends;  the  availability of desirable store locations and management's
ability  to  negotiate  acceptable  lease  terms and open new stores in a timely
manner;  and changes in the political and economic  environments in the People's
Republic  of China,  where most of the  Company's  private  label  products  are
manufactured,  and the continued favorable trade relationships between China and
the United States.


                                       11
<PAGE>

                               SHOE CARNIVAL, INC.
                           PART II - OTHER INFORMATION



Item 6.   Exhibits and Reports on Form 8-K

    (a)   Exhibits

          (27)  Financial Data Schedule

    (b)   Reports on Form 8-K

          No reports on Form 8-K were filed during the quarter ended October 31,
          1998.


                                       12
<PAGE>


                               SHOE CARNIVAL, INC.
                                    SIGNATURE




Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report to be  signed,  on its  behalf by the
undersigned thereunto duly authorized.



Date:  December 11,  1998                          SHOE CARNIVAL, INC.
                                                     (Registrant)



                                                   By: /s/ W. Kerry Jackson
                                                       W. Kerry Jackson
                                                       Vice President and
                                                       Chief Financial Officer




                                       13
<PAGE>