UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 10-K

(Mark One)
[ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

       For the fiscal year ended:        January 29, 2000

                                       OR

[   ]  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            (I.R.S. Employer
          incorporation or organization)           Identification No.)


            8233 Baumgart Road
            Evansville, Indiana                         47725
       (Address of principal executive offices)       (Zip Code)

                                 (812) 867-6471
              (Registrant's telephone number, including area code)

       Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

       Securities registered pursuant to Section 12(g) of the Act:

                          COMMON STOCK, $. 01 PAR VALUE

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 ___

Indicate by check mark if disclosure of delinquent  filers  pursuant of Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K [ X ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant  based on the last sale  price for such  stock at March 29,  2000 was
approximately  $67,914,797 (assuming solely for the purposes of this calculation
that all Directors and executive officers of the Registrant are "affiliates").

Number of Shares of Common Stock, $.01 par value,  outstanding at April 14, 2000
was 12,948,206.

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain  information  contained in the Definitive Proxy Statement for the Annual
Meeting of Shareholders of Registrant to be held on June 8, 2000 is incorporated
by reference into Part III hereof.


                                       1
<PAGE>

                               Shoe Carnival, Inc.
                               Evansville, Indiana

               Annual Report to Securities and Exchange Commission
                                January 29, 2000

                                     PART I

ITEM 1.  BUSINESS

General

Shoe Carnival, Inc. (the "Company") is a high volume, value-oriented retailer of
family footwear operating  predominately in the Midwest,  South and Southeastern
regions of the  United  States.  The  Company  adheres  to a highly  promotional
marketing  concept that enables it to be  competitive  in the retail  markets it
enters.  The  Company's  stores are  characterized  by a high energy  atmosphere
designed to  encourage  customer  participation  and provide a fun and  exciting
shopping experience.

Business Strategy

The Company's goal is to establish  itself as one of the nation's leading family
footwear  retailers and the dominant footwear retailer in each market it serves.
To accomplish its goal, the Company provides a selection and variety of footwear
normally  associated with a "category  killer"  superstore in an exciting retail
environment.  In the 52 week period ended January 29, 2000 ("fiscal 1999"),  the
average size,  annual sales and sales per square foot for Shoe Carnival's stores
open the full year were approximately 11,500 square feet, $2.7 million and $238,
respectively, each substantially above the industry averages.

Management believes that shoppers prefer the value, convenience and selection of
the superstore retail format and that, as a result, superstores will continue to
grow and increase their market share at the expense of department  stores,  mass
merchandisers and traditional  specialty  retailers.  This trend is evidenced by
the  acceptance of  superstores  in other  specialty  niches,  including,  among
others,  toys, office products,  consumer  electronics and  do-it-yourself  home
improvement. Management believes that the Company differentiates itself from its
competitors and gains significant competitive advantage through certain business
strategies which include:

     Distinctive   Retail  Approach.   The  Company's  stores  are  larger  than
     traditional  shoe  stores.  The  Company  seeks to  create a  carnival-like
     atmosphere in each of its stores by decorating  with bright lights,  colors
     and neon signs,  and by  featuring  an  in-store  "barker"  who  advertises
     current  specials,  organizes  contests and games, and assists and educates
     customers  with the  features and location of  merchandise.  This  exciting
     in-store  atmosphere is designed to encourage  customer  participation  and
     spontaneity,  producing a sense of urgency to buy. Management believes this
     highly promotional  atmosphere results in various  competitive  advantages,
     including  increased  multiple  unit sales,  the building of a loyal repeat
     customer base and the creation of word-of-mouth advertising.

     Broad Merchandise  Assortment.  The Company's  merchandising strategy is to
     provide  superior  value to its customers by offering a broad  selection of
     competitively priced name brand and private label merchandise.  The average
     store  carries  over 27,700 pairs of shoes in four  general  categories  --
     men's,  women's,  children's and athletics.  The Company buys dress, casual
     and  athletic  shoes as well as boots and  sandals  from a wide  variety of
     vendors. In addition to footwear,  Shoe Carnival stores also carry selected
     accessory items complimentary to the sale of footwear.

     Emphasis on Value.  Management  believes that its wide selection of popular
     styles of name brand  merchandise at  competitive  prices  generates  broad
     customer appeal.  To supplement its name brand  offerings,  the Company has
     established  a private  label  program  that  offers the  consumer  quality
     footwear  at lower  prices  than name brand  merchandise.  Sales of private
     label  merchandise  generally result in higher gross profit margins for the
     Company than sales of name brand  merchandise.  The Company  believes  that
     providing a wide selection of  competitively  priced name brand and quality
     private label footwear provides superior value to its customers.

                                       2
<PAGE>


     Low Operating Costs. The Company's operating methods, cost control programs
     and  store  locations  are  all  designed  to  minimize   operating  costs.
     Merchandise in the Company's  stores is displayed by style and color on the
     selling floor,  enabling customers who so choose to serve themselves.  This
     approach, in conjunction with wage and inventory control programs,  results
     in  lower  labor  costs  than  those  incurred  by  department  stores  and
     traditional shoe stores. In addition,  the Company prefers to locate stores
     predominantly in strip shopping  centers,  as opposed to enclosed malls, to
     take advantage of the generally lower occupancy costs.

     Competitive  Pricing.  The Company,  as a result of its low-cost  operating
     structure and high volume,  is able to price its merchandise  below that of
     traditional  department  stores and shoe store chains.  The Company  offers
     value to customers with specialized  promotions,  competitive pricing and a
     vast selection of name brand and private label merchandise.

     Emphasis on Information  Technology.  The Company has invested  significant
     resources in information technology.  The Company's systems are designed to
     provide  management  with the timely  information  necessary to monitor and
     control  all  phases  of   operations.   Management  is  planning   further
     technological   enhancements  related  to  point-of-sale,   purchasing  and
     inventory control,  labor management and distribution,  which should enable
     the Company to better manage its operations.

Expansion Strategy

The majority of the  Company's  sale and  earnings  growth is expected to result
from the  opening of new stores.  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 the areas the  Company  targets for
expansion.  The  Company's  strategy  is to  expand  into  new  markets  and  to
consolidate  and  improve its market  share  position  in its  existing  markets
through the clustering of stores.  Clustering involves the operation of multiple
locations  in a  particular  metropolitan  area or in  several  smaller  markets
located  in  reasonable  proximity  to one  another.  Management  believes  this
strategy  enables  the  Company to obtain  economies  of scale  with  respect to
advertising, distribution and management costs.

The  Company  plans to open 30 to 35 stores  in 2000.  Thereafter,  the  Company
intends to expand at a rate of approximately  20% to 25% per year. During fiscal
2000,  new stores are  expected to be located  primarily  in the North  Central,
Midwest,  Midsouth and  Southeast.  The Company  intends to enter larger markets
(populations   greater   than   400,000)  by  opening  two  or  more  stores  at
approximately  the same time. In smaller  markets that can only support a single
store,  the Company will seek locations in reasonably  close  proximity to other
Company markets.  This strategy allows for more efficient management and reduces
distribution  costs. In addition to new market expansion and consistent with its
clustering  approach,  the Company has targeted  certain of its existing markets
for additional new stores when  appropriate  store locations  become  available.
Although  opening new stores in existing  markets may adversely affect the sales
of existing  stores,  management  believes  that cost  efficiencies  and overall
incremental sales gains should more than offset any detrimental effect.

Prior to entering a new market,  the Company performs a market,  demographic and
competition  analysis to  evaluate  the  suitability  of the  potential  market.
Potential store site selection  criteria  include,  among other factors,  market
demographics,  traffic  counts,  the retail  mix of a  potential  strip  center,
visibility  within  the  center and from  major  thoroughfares,  overall  retail
activity of the area and proposed lease terms. The time required to open a store
after signing a lease depends  primarily upon the landlord's  ability to deliver
the premises to the Company.  Upon acceptance of the premises from the landlord,
the Company can generally open a store within 30 to 45 days.

Merchandising

The  Company's  merchandising  strategy  is  designed  to  provide a very  large
selection of quality  family  footwear at a price  competitive  with or slightly
below that of  competitors.  The  Company's  stores carry a broad  assortment of
current  season name brand  footwear,  supplemented  with the Company's  private
label merchandise and select name brand close-out merchandise.

The  combination  of name brand and private label  footwear  gives the Company a
merchandise  assortment  that  enables  it to  compete  effectively.  The mix of
merchandise and the name brands offered in a particular store are based upon the
demographics of each market,  among other factors.  The Company typically offers
lower prices on both name brand and private label  merchandise  than  department
stores and  traditional  shoe stores.  Furthermore,  the Company  competes  with
off-price retailers,  mass merchandisers and discount stores by offering a wider
and deeper selection of merchandise at competitive  prices. The Company's stores
also carry  selected  other  merchandise  such as handbags,  wallets,  shoe care
items, socks and sports apparel.

                                       3
<PAGE>

Women's.  The women's  department  offers  current  season  name brand,  branded
close-out and private label merchandise providing a wider selection than that of
most of the Company's  competitors.  This  department is further  segmented into
women's dress shoes, casual shoes, sandals, boots and sport shoes, thus covering
all facets of a woman's footwear needs.

Men's.  The  men's  department  offers  primarily  name  brand  footwear  and is
segmented into men's dress shoes, casual shoes, sandals and boots. The Company's
stores offer a complete assortment of men's footwear at affordable prices. As in
the  women's  department,  this  assortment  is  supplemented  with  name  brand
close-outs and private label products.

Children's.  Children's  footwear is segmented  into dress shoes,  casual shoes,
boots,  athletic  shoes,  sandals and infant  shoes,  again  offering a complete
selection  of  footwear  for  the  child.  Approximately  71% of the  children's
business is done in the athletic shoe category.

Athletics.  The men's and women's athletic  business is divided into a number of
buying  groups  representing  a complete  assortment of athletic  footwear.  The
Company carries court shoes,  fitness and aerobic shoes,  leisure shoes, walking
shoes, running shoes and many specialty shoes such as cleats and soccer shoes.

The table below sets forth the Company's percentage of sales by product category
for fiscal 1999, 1998 and 1997.

                                            1999        1998        1997
                                           ------      ------      ------
Women's                                     27.9%       27.4%       27.2%
Men's                                       17.4        17.5        16.9
Children's                                  15.6        16.2        16.4
Athletic                                    34.4        34.2        34.6
Accessories and Miscellaneous Items          4.7         4.7         4.9
                                           ------      ------      ------
                                           100.0%      100.0%      100.0%
                                           ======      ======      ======
Pricing

The Company's  pricing strategy is designed to emphasize value.  Initial pricing
decisions  are guided by gross profit margin  targets which vary by  merchandise
category  and  depend  on  whether  the  item is name  brand  or  private  label
merchandise. Markdowns are centrally managed by the buying staff through the use
of weekly sales and inventory  analysis  generated by the  Company's  management
information system.

In-store signage is used extensively to highlight special promotional  markdowns
and to advertise markdowns to meet or beat competitors' sale prices.

Advertising and Promotion

In-store  promotions  are a key  ingredient in the Company's  marketing  effort.
Although most in-store promotions are pre-planned, store managers are encouraged
to use their own creativity in devising on-the-spot promotional activities, such
as customer contests and games. The Company has several standardized promotions,
including a Spin-N-Win(TM)  wheel,  where a customer can win instant  discounts,
and a "Money Machine," where randomly  selected  customers attempt to catch cash
and coupons during a 30-second period inside a transparent  booth where cash and
coupons are blown furiously around them. Both of these promotions  exemplify the
Company's  emphasis on fun and  excitement  in order to enhance  the  customer's
total shopping experience.

The Company uses various  forms of media  advertising  in  conjunction  with its
extensive in-store  promotions.  The focus of the Company's media advertising is
to communicate  the  exceptional  value offered by the Company on name brand and
private label footwear.  Print ads typically display a selection of special sale
items  or  desirable  new  products.  Radio  and  television  spots  utilize  an
entertaining  format to capture the consumers  attention  while  highlighting on
sale items or special promotions.

                                       4
<PAGE>

The  Company  directs  approximately  59% of its  total  advertising  budget  to
television and radio, but also utilizes print media (including newspaper inserts
and direct mail) and outdoor  advertising.  A special  effort is made to utilize
the cooperative  advertising  dollars offered by vendors whenever  possible.  By
widely  advertising  through  newspaper,  television  and radio prior to a grand
opening,  the  Company  strives  to make each new store  opening a major  retail
event. Major promotions during the grand openings and peak selling periods allow
customers to win prizes such as cruises, computers, merchandise or cash.

Store Operations

Management of store  operations is the  responsibility  of the Company's  Senior
Vice  President - Store  Operations,  who is assisted  by  divisional  managers,
regional  managers  and the  individual  store  managers.  The  Company's  store
management structure is flat relative to most other retailers.  This permits the
Company  to reduce  management  expense  by  eliminating  the  district  manager
position and delegating more  responsibility to store managers.  Currently there
are two divisions  designated as the North and South  Divisions.  The divisional
managers are currently  responsible  for eight and nine regions,  but ultimately
are expected to manage between ten and fifteen regions. Each regional manager is
responsible for the operation of between six and thirteen stores and is required
to visit each store periodically, concentrating more heavily on under-performing
stores.  Regional managers  collectively  meet with their respective  divisional
manager on a monthly basis, except during peak sales periods, and quarterly with
the  Senior  Vice  President  - Store  Operations  and other  members  of senior
management to discuss Company strategies,  merchandise,  advertising,  financial
performance and personnel requirements.

Each store has a store manager and one to four assistant managers,  depending on
the sales  volume of the store.  The sales staff  ranges from 2 to 63  employees
depending on the size of the store and the time of year. Store managers and most
assistant  managers are paid a salary,  while all other store employees are paid
on an hourly  basis.  The Company  provides an incentive  compensation  plan for
virtually all employees.  Regional and store manager  incentive  plans are based
primarily  upon the  sales  and  profitability  of their  respective  stores  as
compared to defined goals.  Assistant  store managers and other store  employees
earn incentive  compensation  based on the store exceeding  inventory  shrinkage
goals.

Administrative  functions are centrally controlled from corporate  headquarters.
These functions include accounting,  purchasing, store maintenance,  information
systems, advertising,  distribution and pricing. Regional and store managers are
expected and  encouraged  to provide  feedback to all corporate  departments  to
improve  efficiencies.  Regional  and store  managers  are  charged  with making
merchandising decisions necessary to maximize sales and profits primarily though
merchandise placement, signage and timely clearance of slower selling items.

The Company  maintains  inventory  shrinkage rates (.4% of sales in fiscal 1999)
substantially  below the retail  industry  average.  Management  attributes this
success to an in-store loss prevention staff, improved information reporting and
surveillance  systems in many of the Company's stores.  Management also believes
that tying  incentive  compensation  for store  employees to the  achievement of
targeted shrinkage levels raises employee awareness of loss prevention.

Store Location and Design

The number of stores opened and closed for fiscal years 1999,  1998 and 1997 are
as follows:

   Fiscal Year                              1999        1998        1997
                                           ------      ------      ------
   Stores open at beginning of year          111          92          93
   Opened during year                         28          20           4
   Closed during year                          1           1           5
                                           ------      ------      ------
   Stores open at end of year                138         111          92
                                           ======      ======      ======

At January 29, 2000, the Company had 138 stores located in 20 states,  primarily
in the Midwest,  South and Southeastern  regions of the United States.  Although
five stores are located in enclosed  malls,  the Company  prefers strip shopping
center  locations,  where  occupancy  costs are typically  lower and the Company
enjoys  greater  operating  freedom  to  implement  its  non-traditional  retail
methods.  Management feels that most consumers enjoy the convenience  offered by
strip shopping centers as opposed to enclosed malls.

                                       5
<PAGE>

All of the Company's  stores are leased rather than owned.  Management  believes
that the  flexibility  afforded  by  leasing  allows  the  Company  to avoid the
inherent   risk  of  owning   real   estate,   particularly   with   respect  to
under-performing  stores. In a particular market, potential store site selection
criteria include, among other factors, market demographics,  traffic counts, the
retail mix of a potential retail strip center,  visibility within the center and
from major thoroughfares, overall retail activity of the area and proposed lease
terms.

The Company's  stores are designed and fixtured to reflect the high energy level
of its  retail  concept  and to convey a  carnival-like  atmosphere.  Stores are
typically  equipped  with  a  sound  system,  microphone,  "Money  Machine"  and
Spin-N-Win(TM)  wheel.  Open-stock  inventories,  neon signs,  flashing  colored
lights and large mirrors,  striking fixtures and colorful carpet are utilized to
make the  stores  appear  larger and more  exciting.  Merchandise  is  typically
displayed within a store by category,  with athletic footwear (and licensed team
sports apparel in certain stores)  generally  located in the center of the store
to provide a transition  between women's and men's footwear.  Checkout  counters
are  located  at the  front of each  store,  supermarket  style,  to  facilitate
high-volume  throughput and minimize inventory shrinkage.  The average store has
approximately five checkout lanes.

As of January 29, 2000,  the  Company's  stores  averaged  approximately  11,500
square feet,  ranging in size from 6,600 to 26,500  square  feet,  except for an
atypical mall store of approximately 2,100 square feet. Currently, the new store
prototype  calls for  between  12,000 and 15,000  square  feet but stores in the
8,000 square foot range will be considered.  The size of the stores is dependent
upon, among other factors, the location of the store and the population base the
store is expected to service. The sales area of most stores is approximately 85%
of the gross store size.

Capital  expenditures  for new stores  are  expected  to  average  approximately
$350,000,  including point-of-sale equipment which is generally acquired through
equipment leasing transactions. The average inventory in a new store is expected
to range from $450,000 to $750,000,  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.

Distribution

The Company operates a single  distribution  facility in Evansville,  Indiana. A
92,000 square foot addition to the  distribution  center which began in the Fall
of 1998,  was completed in 1999 at a total cost of $7.6  million.  The expansion
doubled the size of the distribution center to 200,000 square feet and installed
state-of-the-art material handling, picking, sorting equipment and software. The
enhanced facility should result in operating efficiencies in the near future and
increase the Company's distribution capacity to at least 400 stores.

The distribution center processes virtually all merchandise prior to shipping to
the stores. At a minimum,  this includes count verification,  price and bar code
labeling  of each unit,  redistribution  of an order into size  assortments  and
allocation of shipments to individual stores.  Once a distribution order form is
received  from the buying  staff,  the  remainder of the  distribution  process,
including packing,  allocating,  storing and shipping is essentially  paperless.
Merchandise is shipped to each store from one to two times a week,  depending on
store  volume,  proximity  to other  stores and  proximity  to the  distribution
center.  The  majority of  shipments  are handled by a dedicated  carrier,  with
occasional use of common carriers.

Management Information Systems

The  Company  has  devoted  significant  resources  to expand its  sophisticated
information  technology  systems.  The corporate computer network connects every
store,  providing up-to-date sales and inventory  information as required.  Each
store has an independent point-of-sale controller,  with two to 12 point-of-sale
terminals per store. To provide maximum flexibility and maintain data integrity,
the Company's information systems are based upon relational database technology.
The Company's  distribution  facility utilizes a spread spectrum radio frequency
network to assure accurate,  real-time  information  throughout the distribution
operation.  Each member of the buying and distribution  staff has on-line access
to  up-to-date  sales and  inventory  information  broken down by store,  style,
color,  size and width.  Additional  data  analysis  can be quickly  provided on
demand by using either a fourth generation language programming tool or personal
computer tools that access the Company's database.

State of the art  point-of-sales  systems utilize bar code technology to capture
sales, gross margin and inventory information.  The system provides, in addition
to other features, full price management (including price look-up),  promotional
tracking  capabilities  (in support of the  spontaneous  nature of the  in-store
price  promotions),  real-time  margin analysis by product category at the store
level, check approval and customer tracking.

                                       6
<PAGE>

Competition

The retail footwear  business is highly  competitive.  The Company believes that
the principal  competitive  factors in its industry are  merchandise  selection,
price, fashion,  quality,  location,  store environment and service. The Company
competes  primarily with department stores,  shoe stores,  sporting goods stores
and mass merchandisers.

Many  of  the  Company's   competitors   are   significantly   larger  and  have
substantially  greater financial and other resources than the Company.  However,
management  believes that its distinctive retail format, in combination with its
wide merchandise  selection,  competitive prices and low operating costs, enable
the Company to compete effectively in each market that it enters.

Employees

At January 29, 2000, the Company had  approximately  2,700  employees,  of which
approximately  1,360 were employed on a part-time or seasonal basis.  The number
of employees  fluctuates  during the year primarily due to seasonality.  None of
the Company's employees is represented by a labor union.

Management  attributes a large portion of the Company's success in various areas
of cost  control to its  inclusion  of  virtually  all  employees  in  incentive
compensation plans. The Company also contributes all or a portion of the cost of
medical,  disability  and life  insurance  coverage for those  employees who are
eligible to participate in Company  sponsored  plans. All employees also receive
discounts on Company  merchandise.  The Company  considers its relationship with
its employees to be satisfactory.

Trademarks

The Company owns the following federally registered trademarks and servicemarks:
Shoe  Carnival(R),  The  Carnival(R),   Nuff  Said(R),  Donna  Lawrence(R),  Oak
Meadow(R),  Victoria  Spenser(R),  Chase and Brittany's(R),  Via Nova(R),  Fresh
Stuff(R), Innocence(R) and Carnival Lites(R). The Company believes its marks are
valuable  and,  accordingly,  intends  to  maintain  its marks  and the  related
registrations. The Company is not aware of any pending claims of infringement or
other challenges to the Company's right to use its marks.


ITEM 2.  PROPERTIES

The Company  leases all existing  stores and intends to lease all future stores.
All leases for  existing  stores  provide  for fixed  minimum  rentals  and most
provide for contingent rental payments based upon various specified  percentages
of sales above minimum levels. Certain leases also contain escalator clauses for
increases in minimum rentals, operating costs and taxes.

The Company owns its headquarters  and distribution  center which are located at
8233 Baumgart Road, Evansville, Indiana. See ITEM 1 "Business--Distribution."


ITEM 3.  LEGAL PROCEEDINGS

The Company is involved in various legal  proceedings  incidental to the conduct
of its business.  Management does not expect that any such proceedings will have
a material  adverse  effect on the Company's  financial  position and results of
operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company did not submit any matters to a vote of security  holders during the
fourth quarter of the 1999 fiscal year.

                                       7
<PAGE>

Executive Officers of the Company

     Name               Age               Position
------------------      ---      -----------------------------------------------
J. Wayne Weaver          65      Chairman of the Board and Director

Mark L. Lemond           45      President, Chief Executive Officer and Director

Timothy T. Baker         43      Senior Vice President - Store Operations

Clifton E. Sifford       46      Senior Vice President - General Merchandise
                                 Manager

W. Kerry Jackson         38      Vice President - Chief Financial Officer and
                                 Treasurer

Mr. Weaver is the Company's principal  shareholder and has served as Chairman of
the Board of the Company since March 1988. From 1978 until February 2, 1993, Mr.
Weaver had served as president  and chief  executive  officer of Nine West Group
Inc., a designer,  developer  and marketer of women's  footwear.  He has over 40
years of experience in the footwear industry. Mr. Weaver is a former director of
Nine West Group Inc. Mr. Weaver serves as chairman and chief  executive  officer
of  Jacksonville  Jaguars,  LTD and chairman and chief  executive  officer of LC
Footwear, LLC.

Mr.  Lemond has been  employed by the Company as President  and Chief  Executive
Officer since  September  1996.  From March 1988 to September  1996,  Mr. Lemond
served as Executive  Vice  President,  Chief  Financial  Officer,  Treasurer and
Assistant  Secretary.  On  February  3, 1994,  Mr.  Lemond was  promoted  to the
position of Chief Operating Officer.  Mr. Lemond has served as a director of the
Company  since March 1988.  Prior to March  1988,  he served in similar  officer
capabilities  with Russell's Shoe Biz, Inc. Prior to joining Russell's Shoe Biz,
Inc. in 1987,  Mr. Lemond was a partner with a public  accounting  firm. He is a
Certified Public Accountant.

Mr. Baker has been employed by the Company as Vice President - Store  Operations
since May 1992.  Prior to that  time,  he served as a  Regional  Manager  of the
Company. Mr. Baker was promoted to Senior Vice President on March 25, 1994. From
1983 to June  1989,  Mr.  Baker  held  various  retail  positions  with  Payless
ShoeSource.

Mr.  Sifford has been employed by the Company as Senior Vice President - General
Merchandise  Manager  since April 13, 1997.  Prior to joining the  Company,  Mr.
Sifford served as merchandise manager-shoes for Belk Store Services, Inc.

Mr. Jackson has been employed by the Company as Vice President - Chief Financial
Officer and Treasurer since September 1996. From January 1993 to September 1996,
Mr. Jackson served as Vice President - Controller and Chief Accounting  Officer.
Prior to January 1993,  Mr. Jackson held various  accounting  positions with the
Company. Prior to joining the Company in 1988, Mr. Jackson was associated with a
public accounting firm. He is a Certified Public Accountant.

Executive  officers  of the  Company  serve at the  discretion  of the  Board of
Directors.  There is no family  relationship  between  any of the  directors  or
executive officers of the Company.

(Pursuant to General Instruction G(3) of Form 10-K, the foregoing information is
included as an unnumbered  Item in Part I of this Annual Report in lieu of being
included  in the  Company's  Proxy  Statement  for its 2000  Annual  Meeting  of
Shareholders.)

                                       8
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

The Common  Stock has been quoted on the Nasdaq  Stock  Market under the trading
symbol "SCVL" since March 16, 1993.

The quarterly high and low trading prices for 1999 and 1998 are as follows:

                                      High                Low
                                    -------             -------
Fiscal Year 1999
First Quarter                       $ 15.50             $  8.88
Second Quarter                        17.13               13.00
Third Quarter                         13.31                8.50
Fourth Quarter                        10.69                7.13

Fiscal Year 1998
First Quarter                       $ 12.75             $  8.13
Second Quarter                        15.00               10.06
Third Quarter                         11.06                6.50
Fourth Quarter                        11.31                8.50



As of April 14,  2000,  there were  approximately  266  holders of record of the
Common Stock.

The Company does not currently  intend to pay cash dividends on its Common Stock
in the foreseeable  future.  The payment of any future  dividends will be at the
discretion of the Company's Board of Directors and will depend upon, among other
things, future earnings, operations, capital requirements, the general financial
condition of the Company and general business conditions.

No unregistered equity securities were sold by the Company during fiscal 1999.

                                       9
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

(In thousands, except share and operating data)

Fiscal years (1)                 1999      1998      1997      1996      1995
                               --------  --------  --------  --------  --------
<S>                            <C>       <C>       <C>       <C>       <C>
Income Statement Data:
 Net sales                     $339,929  $280,157  $246,520  $233,945  $228,263
 Cost of sales (including
   buying,distribution and
   occupancy costs)             238,097   196,141   173,953   168,814   176,019
                               --------  --------  --------  --------  --------
 Gross profit                   101,832    84,016    72,567    65,131    52,244
 Selling, general and
   administrative expenses       80,888    66,464    59,438    57,405    58,946
 Restructuring (credit) charge                                   (474)    3,282
                               --------  --------  --------  --------  --------
 Operating income (loss)         20,944    17,552    13,129     8,200    (9,984)
 Interest expense                 1,010       507       912     1,242     1,626
                               --------  --------  --------  --------  --------
Income (loss) before income      19,934    17,045    12,217     6,958   (11,610)
  taxes
Income tax expense (benefit)      7,973     6,818     4,826     2,818    (4,420)
                               --------  --------  --------  --------  --------
Net income (loss)              $ 11,961  $ 10,227  $  7,391  $  4,140  $ (7,190)
                               ========  ========  ========  ========  ========
Net income (loss) per share:
  Basic (2)                   $    .90  $    .78  $    .57  $    .32  $   (.55)
  Diluted (2)                 $    .88  $    .76  $    .56  $    .32  $   (.55)

Average shares outstanding:
  Basic                         13,284    13,150    13,049    13,023    13,019
  Diluted                       13,578    13,429    13,238    13,029    13,031
-------------------------------------------------------------------------------
Selected Operating Data (3):
 Stores open at end of period       138       111        92        93        95
 Square footage of store space
   at year end (000's)            1,590     1,274     1,021     1,026     1,024
 Average sales per store (000's)$ 2,744  $  2,791  $  2,720  $  2,543  $  2,497
 Average sales per square foot  $   238  $    250  $    245  $    233  $    230
 Comparable store sales            1.4%      3.6%      6.1%     (1.1%)   (10.0%)
-------------------------------------------------------------------------------
Balance Sheet Data:
 Working capital               $ 68,346  $ 47,668  $ 48,889  $ 45,090  $ 50,206
 Total assets                   162,853   120,761    96,201    93,926   102,265
 Long-term debt and other
   indebtedness                  22,338     1,361     6,133     9,621    18,922
 Total shareholders' equity      93,345    82,667    71,609    63,772    59,571
-------------------------------------------------------------------------------

<FN>
(1)   On February 9, 1995, the Company's Board of Directors approved a change in
      the fiscal  year to a 52/53 week year  ending on the  Saturday  closest to
      January 31. Unless otherwise stated, references to years 1999, 1998, 1997,
      1996, and 1995 relate  respectively  to the fiscal years ended January 29,
      2000, January 30, 1999,  January 31, 1998,  February 1, 1997, and February
      3, 1996. Fiscal year 1995 consisted of 53 weeks and the other fiscal years
      consisted of 52 weeks.

(2)   Per share data has been restated for the adoption of SFAS 128.


(3)   Selected Operating Data has been adjusted to a comparable 52 week basis
      for 1995.

</FN>
</TABLE>

                                       10
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

The Company's fiscal year consists of a 52/53 week period ending on the Saturday
closest to January 31. Unless  otherwise  stated,  references to the years 1999,
1998 and 1997 relate  respectively  to the fiscal years ended  January 29, 2000,
January 30, 1999 and January 31, 1998. Each of the years presented consist of 52
weeks.  The  Company's  fiscal year ending  February 3, 2001 will  consist of 53
weeks.

Results of Operations

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

                                            1999        1998        1997
                                           ------      ------      ------

Net sales                                  100.0%      100.0%      100.0%
Cost of sales (including buying,
  distribution and occupancy costs)         70.0        70.0        70.6
                                           ------      ------      ------
Gross profit                                30.0        30.0        29.4
Selling, general and
  administrative expenses                   23.8        23.7        24.1
                                           ------      ------      ------
Operating income                             6.2         6.3         5.3
Interest expense                             0.3         0.2         0.3
                                           ------      ------      ------
Income before income taxes                   5.9         6.1         5.0
Income tax expense                           2.4         2.4         2.0
                                           ------      ------      ------
Net income                                   3.5%        3.7%        3.0%
                                           ======      ======      ======

1999 Compared to 1998

Net Sales

Net sales  increased  $59.8 million to $339.9  million in 1999, a 21.3% increase
over net sales of $280.2 million in 1998. The increase was  attributable  to the
sales  generated  by the 27 new  stores in 1999 (net of one store  closed), the
effect of a full year's worth of sales for the 19 new stores in 1998 (net of one
store  closed) and a  comparable  store sales  increase  of 1.4%.  Increases  in
comparable  store sales were realized in all major footwear  categories with the
exception of the  children's  category.  Average sales per square foot in stores
open the full year  decreased to $238 in 1999 from $250 in 1998 due to the lower
sales  productivity  of stores opened in 1998.  Average  footwear unit prices in
comparable  stores  increased  1.8%  for the  year  while  footwear  unit  sales
decreased 0.3%.

Gross Profit

Gross profit increased $17.8 million to $101.8 million in 1999, a 21.2% increase
from gross profit of $84.0 million in 1998.  The  Company's  gross profit margin
remained  steady at 30.0%  for the two  years.  As a  percentage  of  sales,  an
increase  in the  merchandise  gross  profit  margin  of 0.3% was  offset  by an
increase of 0.3% in buying,  distribution  and occupancy  costs. The increase in
the buying,  distribution  and occupancy  costs was largely the result of higher
distribution  costs  associated  with  inefficiencies   experienced  during  the
expansion of the Company's distribution center. (See discussion of capital asset
acquisitions under "Liquidity and Capital Resources".)

                                       11
<PAGE>

Selling, General and Administrative Expenses

Selling,  general and  administrative  expenses increased $14.4 million to $80.9
million in 1999 from $66.5  million in 1998.  As a  percentage  of sales,  these
expenses  increased 0.1% in 1999 primarily as a result of the higher advertising
costs.  The  Company's   policy  is  to  expense  all  non-capital   pre-opening
expenditures as they are incurred. The aggregate of pre-opening expenses for the
28 new stores in 1999 was approximately $2.1 million, or 0.6% of sales, and $1.7
million, or 0.6% of sales for the 20 new stores in 1998.

Interest Expense

Net interest  expense of $1.01 million in 1999 resulted from interest expense of
$1.04 million and interest income of $32,000.  Net interest  expense of $507,000
in 1998  resulted  from  interest  expense of $553,000  and  interest  income of
$46,000.  The increase in interest  expense was  attributable  to higher average
debt balances in 1999. The weighted average interest rate on total debt was 7.3%
in 1999 and 8.5% in 1998.

Income Taxes

The effective  income tax rate for 1999 and 1998 was 40%. The  effective  income
tax rate for both years  differed from the statutory rate due primarily to state
and local income taxes, net of the federal tax benefit.

1998 Compared to 1997

Net Sales

Net sales  increased  $33.6 million to $280.2  million in 1998, a 13.6% increase
over net sales of $246.5 million in 1997. The increase was  attributable  to the
opening of 20 stores in 1998, the effect of a full year's worth of sales for the
four stores in 1997 and a comparable store sales increase of 3.6%.  Increases in
comparable  store sales were realized in all major footwear  categories with the
exception of the women's category which was even for the year. Average sales per
square foot in stores open the full year  increased to $250 in 1998 from $245 in
1997.

Gross Profit

Gross profit  increased $11.4 million to $84.0 million in 1998, a 15.8% increase
from gross profit of $72.6 million in 1997.  The  Company's  gross profit margin
increased to 30.0% from 29.4%. As a percentage of sales,  the merchandise  gross
profit margin  increased by 0.4% while buying,  distribution and occupancy costs
decreased 0.2%. The increase in the merchandise  gross profit margin was largely
the result of the increased margin realized on the sale of athletic footwear.

Selling, General and Administrative Expenses

Selling,  general and  administrative  expenses  increased $7.0 million to $66.4
million in 1998 from $59.4  million in 1997.  As a  percentage  of sales,  these
expenses  decreased  0.4% in 1998. An  increasing  sales base helped to leverage
administrative  and hourly  payroll  expenses and reduce  overall  expenses as a
percent of sales in spite of increases in advertising and pre-opening costs. The
aggregate of  pre-opening  expenses for 20 new stores in 1998 was  approximately
$1.7  million,  or 0.6% of sales,  and  $211,000,  or 0.1% of sales for four new
stores in 1997.

Interest Expense

Net  interest  expense of $507,000 in 1998  resulted  from  interest  expense of
$553,000 and  interest  income of $46,000.  Net interest  expense of $912,000 in
1997 resulted from interest  expense of $946,000 and interest income of $34,000.
The decrease in interest expense was attributable to lower average debt balances
in 1998. The weighted  average  interest rate on total debt was 8.5% in 1998 and
7.7% in 1997.

                                       12
<PAGE>

Income Taxes

The increase in the effective  income tax rate for 1998 to 40.0%, as compared to
39.5% in 1997,  was primarily due to an increase in the statutory rate resulting
from higher taxable income.  The effective income tax rate in 1998 differed from
the statutory  rate due  primarily to state and local income  taxes,  net of the
federal tax benefit.



Liquidity and Capital Resources

The Company's sources and uses of cash are summarized as follows:

(000's)
Fiscal years                                      1999       1998       1997
                                                --------   --------   --------
Net income plus depreciation and amortization   $ 20,339   $ 16,795   $ 13,145
Deferred income taxes                              1,131        414        219
Working capital (increases) decreases            (20,787)     1,326     (3,149)
Other operating activities                          (328)        80        400
                                                --------   --------   --------
Net cash provided by operating activities            355     18,615     10,615
Net cash used in investing activities            (19,441)   (12,487)    (7,469)
Net cash provided by (used in) financing
  activities                                      18,817     (5,755)    (3,200)
                                                --------   --------   --------
Net (decrease) increase in cash and cash
  equivalents                                       (269)       373        (54)
Cash and cash equivalents at beginning of year     1,944      1,571      1,625
                                                --------   --------   --------
Cash and cash equivalents at end of year        $  1,675   $  1,944   $  1,571
                                                ========   ========   ========

The  Company's  primary  sources  of funds are cash flows  from  operations  and
borrowings  under its revolving  credit  facility.  Cash provided from operating
activities was $355,000, $18.6 million and $10.6 million in 1999, 1998 and 1997,
respectively.  Excluding  changes in  operating  assets and  liabilities,  $21.1
million, $17.3 million and $13.8 million was provided by operating activities in
1999,  1998 and 1997,  respectively.  Merchandise  inventories  increased  $29.3
million to $104.7  million at January 29, 2000  compared  with $75.4  million at
January 30, 1999. The increase in  merchandise  inventories  resulted  primarily
from the 27  additional  stores  operated  at January  29,  2000,  and the early
receipt  of  approximately  $8 million  of spring  merchandise  in order to take
advantage of any early warm weather and to help  mitigate any  potential  vendor
Year 2000 issues.

Working  capital  was $68.3  million at January  29,  2000 and $47.7  million at
January 30, 1999.  The current  ratio at January 29, 2000 was 2.7 as compared to
2.5 at January 30, 1999. The increase from the prior year was primarily a result
of an  increase  in  merchandise  inventories  due to higher  receipts of spring
merchandise  in  January  2000 as  compared  to the prior  year.  As a result of
outstanding  borrowings of $21.0  million  under the  revolving  line of credit,
long-term  debt  as  a  percentage  of  total  capital   (long-term   debt  plus
shareholders' equity) increased to 19.3% at January 29, 2000 as compared to 1.6%
at January 30, 1999.

Capital expenditures, net of lease incentives, were $20.3 million in 1999, $14.6
million in 1998 and $7.5 million in 1997.  These  amounts  include  $808,000 and
$1.9  million  of  capital  lease   obligations   incurred  in  1999  and  1998,
respectively.  No capital lease  obligations  were incurred in 1997. Of the 1999
expenditures,  $10.0  million was  incurred  for new stores and $5.3 million was
incurred for the expansion of the existing  distribution  center.  The remaining
capital  expenditures  in 1999 were  primarily for various  store  improvements,
remodels and enhancements to computer systems.

An expansion of the Company's  distribution  center,  which began in the Fall of
1998,  was  completed  in 1999 at a total  cost of $7.6  million,  of which $5.3
million  was  spent  during  1999.  The  expansion   doubled  the  size  of  the
distribution  center  to  200,000  square  feet and  installed  state-of-the-art
material  handling,  picking and sorting  equipment and  software.  The enhanced
facility should result in operating efficiencies in the near future and increase
the Company's distribution capacity to at least 400 stores.

Capital expenditures, including assets acquired through leasing arrangements but
net of lease incentives, are expected to be $16 million to $18 million in fiscal
2000.  The actual  amount of cash required 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.

                                       13
<PAGE>

In fiscal  2000,  the  Company  intends  to open 30 to 35 stores at an  expected
aggregate  cost of between $11 million and $13 million.  The  remaining  capital
expenditures are expected to be incurred for store remodels, visual presentation
enhancements  and  various  other  store  improvements  along  with a  continued
investment in technology.

The Company's  current store prototype  utilizes between 8,000 and 15,000 square
feet  depending  upon,  among other  factors,  the location of the store and the
population base the store is expected to service. Net capital expenditures for a
new store is expected to average approximately $350,000, 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
$450,000 to $750,000,  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. On a per-store basis, for the 28 stores opened
during  1999,  the  initial  inventory  investment  averaged  $632,000,  capital
expenditures averaged $330,000 and pre-opening expenses averaged $76,000.

On  January  7,  2000,  the  Company's  Board of  Directors  authorized  a share
repurchase  program that will allow the Company to purchase up to $10 million of
the outstanding  common stock. As of January 29, 2000, the Company had purchased
291,900  shares  at an  approximate  cost  of  $2.4  million.  Additional  share
repurchases  will  continue  as  market  conditions  allow and will be funded by
borrowings  under the line of credit.  The  treasury  shares may be  reissued in
connection  with  possible  future  stock  offerings,   dividends,  stock  based
compensation programs and other general corporate uses.

At January 29, 2000, the Company's  credit facility  provided for $45 million in
cash  advances  and  letters of credit  issuances.  Borrowings  under the credit
facility are based on eligible inventory.  At January 29, 2000, outstanding cash
advances  and  letters  of  credit  were  $21.0   million  and  $11.2   million,
respectively.  On March 24, 2000, the credit  agreement was amended to allow for
up to $55  million  in cash  advances  and  letters  of credit and to extend the
maturity date to March 31, 2002.

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


Impact of Year 2000

The "Year 2000 Issue"  generally  refers to computer  systems that were designed
and  developed  using two digits,  rather than four,  to specify the year.  As a
result,  such  systems  that  utilize  a two  digit  date  may  not be  able  to
distinguish  the year 2000 from the year 1900.  This could  result in  erroneous
data or complete failure of some systems unless corrective actions are taken.

Management  initiated  a  company-wide  program in 1998 to address the Year 2000
Issue.  All phases of the program were  completed in 1999. The total cost of the
two year Year 2000 project was approximately  $201,000,  of which  approximately
$142,000 was incurred and expensed in 1998 and $59,000 was incurred and expensed
in 1999.  Allocating existing resources rather than incurring  incremental costs
funded the majority of the Year 2000 compliance costs.

The Company has not  experienced  any  significant  disruption or changes in its
operations as a result of the Year 2000 Issue. Additionally,  the Company is not
aware of any  significant  issues  that have  arisen as a result of  product  or
supplier  Year  2000-related  failures.  As there can be no  assurance  that the
Company's  efforts to achieve Year 2000 readiness have been successful,  or that
critical suppliers and customers will not experience Year 2000-related  failures
in the future,  the Company  will  continue to monitor its exposure to Year 2000
issues  and will  leave its  contingency  plans in place in the  event  that any
significant Year 2000 issues arise.

                                       14
<PAGE>

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 the
opening of a new store are charged to expense. Therefore,  results of operations
may be adversely affected in any quarter in which the Company opens new stores.

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

Factors That May Effect Future Results

This Annual 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.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company  is  exposed  to market  risk in that the  interest  payable on the
Company's Credit Agreement is based on variable  interest rates and therefore is
affected by changes in market  rates.  The Company  does not use  interest  rate
derivative instruments to manage exposure to changes in market interest rates. A
1% change  in the  weighted  average  interest  rate  charged  under the  Credit
Agreement would have resulted in interest  expense  fluctuating by approximately
$108,000 in 1999 and $49,000 in 1998.

                                       15
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Management

Management  of the Company is  responsible  for the  preparation,  integrity and
objectivity of the financial  information  included in this Annual  Report.  The
consolidated   financial  statements  have  been  prepared  in  conformity  with
generally accepted  accounting  principles and necessarily include amounts which
are based upon estimates and judgments by management.

Management  maintains  internal  accounting  control systems designed to provide
reasonable  assurance that assets are safeguarded,  transactions are executed in
accordance with  management's  authorization  and the accounting  records may be
relied upon for the  preparation  of financial  statements  and other  financial
information.  This  system  of  internal  controls  has  been  designed  and  is
maintained in  recognition  of the concept that the cost of controls  should not
exceed the benefit derived therefrom.

The Audit Committee of the Board of Directors meets periodically with management
and the  independent  auditors  to  review  matters  relating  to the  Company's
financial reporting,  the adequacy of internal control systems and the scope and
results of the annual audit.  Representatives  of the independent  auditors have
free access to the Audit Committee and the Board of Directors.

The Company's  consolidated financial statements have been audited by Deloitte &
Touche LLP,  whose report,  which  follows,  expresses an opinion as to the fair
presentation  of the financial  statements and is based on an independent  audit
performed in accordance with generally accepted auditing standards.


Independent Auditors' Report

To the Board of Directors and Shareholders of Shoe Carnival, Inc.:

We have audited the accompanying  consolidated  balance sheets of Shoe Carnival,
Inc.,  as of January 29, 2000 and January 30, 1999 and the related  consolidated
statements  of income,  shareholders'  equity and cash flows for the years ended
January  29,  2000,  January 30,  1999 and  January  31,  1998.  Our audits also
included the financial  statement schedule listed in the Index at Item 14. These
financial  statements and financial statement schedule are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.  We believe our audits  provide a reasonable
basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of Shoe Carnival, Inc., at January 29,
2000 and January 30, 1999,  and the results of its operations and its cash flows
for the years ended January 29, 2000,  January 30, 1999 and January 31, 1998, in
conformity with accounting principles generally accepted in the United States of
America.  Also,  in  our  opinion,  such  financial  statement  schedule,   when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly in all material respects the information set forth.



/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Stamford, Connecticut
March 10, 2000
(March 24, 2000 as to Note 5)

                                       16
<PAGE>

<TABLE>
<CAPTION>

Shoe Carnival, Inc.
Consolidated Balance Sheets
                                               January 29,         January 30,
(In thousands)                                     2000                1999
                                              -------------       -------------
<S>                                           <C>                 <C>
Assets
Current Assets:
  Cash and cash equivalents                   $       1,675       $       1,944
  Accounts receivable                                   694                 567
  Merchandise inventories                           104,730              75,390
  Deferred income tax benefit                           876                 782
  Other                                               1,168               1,222
                                              -------------       -------------
Total Current Assets                                109,143              79,905
Property and equipment-net                           53,710              40,856
                                              -------------       -------------
Total Assets                                  $     162,853       $     120,761
                                              =============       =============
Liabilities and Shareholders' Equity
Current Liabilities:
  Accounts payable                            $      33,817       $      25,698
  Accrued and other liabilities                       6,266               5,757
  Current portion of long-term debt                     714                 782
                                              -------------       -------------
Total Current Liabilities                            40,797              32,237
Long-term debt                                       22,338               1,361
Deferred lease incentives                             3,077               2,424
Deferred income taxes                                 3,296               2,072
                                              -------------       -------------
Total Liabilities                                    69,508              38,094
                                              -------------       -------------
Shareholders' Equity:
  Common stock, $. 01 par value,
    50,000 shares authorized
    13,345 and 13,179 shares issued                     133                 132
  Additional paid-in capital                         63,683              62,543
  Retained earnings                                  31,953              19,992
  Treasury stock, at cost, 292 shares                (2,424)
                                              -------------       -------------
Total Shareholders' Equity                           93,345              82,667
                                              -------------       -------------
Total Liabilities and Shareholders' Equity    $     162,853       $     120,761
                                              =============       =============

</TABLE>

See notes to consolidated financial statements

                                       17
<PAGE>

<TABLE>
<CAPTION>


Shoe Carnival, Inc.
Consolidated Statements of Income



(In thousands, except per share data)
Fiscal years ended                        January 29,  January 30,  January 31,
                                             2000         1999         1998
                                          -----------  -----------  -----------
<S>                                       <C>          <C>          <C>
Net sales                                 $   339,929  $   280,157  $   246,520
Cost of sales (including buying,
  distribution and occupancy costs)           238,097      196,141      173,953
                                          -----------  -----------  -----------
Gross profit                                  101,832       84,016       72,567
Selling, general and administrative
  expenses                                     80,888       66,464       59,438
                                          -----------  -----------  -----------
Operating income                               20,944       17,552       13,129
Interest expense                                1,010          507          912
                                          -----------  -----------  -----------
Income before income taxes                     19,934       17,045       12,217
Income tax expense                              7,973        6,818        4,826
                                          -----------  -----------  -----------
Net income                                $    11,961  $    10,227  $     7,391
                                          ===========  ===========  ===========
Net income per share:
  Basic                                   $       .90  $       .78  $       .57
  Diluted                                 $       .88  $       .76  $       .56

Average shares outstanding:
  Basic                                        13,284       13,150       13,049
  Diluted                                      13,578       13,429       13,238

</TABLE>

See notes to consolidated financial statements

                                       18
<PAGE>

<TABLE>
<CAPTION>


Shoe Carnival, Inc.
Consolidated Statements of Shareholders' Equity


(In thousands)

                             Common Stock   Additional
                       ---------------------- Paid-In Retained Treasury
                       Issued Treasury Amount Capital Earnings   Stock   Total
                       ------ -------- ------ ------- -------- -------- --------
<S>                    <C>    <C>      <C>    <C>     <C>      <C>      <C>

Balance at
  February 1, 1997     13,032       0  $   0  $61,398 $  2,374 $     0  $63,772
Compensation from
  stock option grant                              158                       158
Exercise of stock
  options                  41                     191                       191
Employee stock
  purchase plan
  purchases                15                      97                        97
Net income                                               7,391            7,391
                       ------ -------- ------ ------- --------  ------- --------
Balance at
  January 31, 1998     13,088       0      0   61,844    9,765       0   71,609
Exercise of stock
  options                  76                     690                       690
Employee stock purchase
  plan purchases           15                     141                       141
Increase in par value                    132     (132)
Net income                                              10,227           10,227
                       ------ -------- ------ ------- --------  ------- --------
Balance at
  January 30, 1999     13,179       0    132   62,543   19,992       0   82,667
Exercise of stock
  options                 153              1    1,002                     1,003
Employee stock purchase
  plan purchases           13                     138                       138
Common stock repurchased         (292)                          (2,424)  (2,424)
Net income                                              11,961           11,961
                       ------ -------- ------ ------- -------- -------- --------
Balance at
  January 29, 2000     13,345    (292) $ 133  $63,683 $ 31,953 $(2,424) $93,345
                       ====== ======== ====== ======= ======== ======== ========
</TABLE>

See notes to consolidated financial statements

                                       19
<PAGE>

<TABLE>
<CAPTION>

Shoe Carnival, Inc.
Consolidated Statements of Cash Flows


(In thousands)
Fiscal years ended

                                          January 29,  January 30,  January 31,
                                             2000         1999         1998
                                          -----------  -----------  -----------
<S>                                       <C>          <C>          <C>
Cash Flows From Operating Activities
Net income                                $    11,961  $    10,227  $     7,391
Adjustments to reconcile net income
  to net cash provided by operating
  activities:
    Depreciation and amortization               8,378        6,568        5,754
    Loss on retirement of assets                   35          380          392
    Deferred income taxes                       1,131          414          219
    Compensation for forgiveness of debt                                    158
    Other                                        (363)        (300)        (150)
    Changes in operating assets and
      liabilities:
        Merchandise inventories               (29,340)     (15,299)        (851)
        Accounts receivable                      (128)         214          137
        Accounts payable and accrued
          liabilities                           8,628       16,801       (2,506)
        Other                                      53         (390)          71
                                          -----------  -----------  -----------
Net cash provided by operating activities         355       18,615       10,615
                                          -----------  -----------  -----------
Cash Flows From Investing Activities
  Purchases of property and equipment         (20,478)     (14,061)      (7,493)
  Lease incentives                              1,016        1,416
  Other                                            21          158           24
                                          -----------  -----------  -----------
Net cash used in investing activities         (19,441)     (12,487)      (7,469)
                                          -----------  -----------  -----------
Cash Flows From Financing Activities
  Borrowings under line of credit             203,625      102,675      141,600
  Payments on line of credit                 (182,625)    (108,375     (144,400)
  Payments on long-term debt                     (899)        (886)        (688)
  Proceeds from issuance of stock               1,140          831          288
  Common stock repurchased                     (2,424)
                                          -----------  -----------  -----------
Net cash provided by (used in) financing
  activities                                   18,817       (5,755)      (3,200)
                                          -----------  -----------  -----------
Net (decrease) increase  in cash and cash
  equivalents                                    (269)         373          (54)
Cash and cash equivalents at beginning of
  year                                          1,944        1,571        1,625
                                          -----------  -----------  -----------
Cash and Cash Equivalents at End of Year  $     1,675  $     1,944  $     1,571
                                          ===========  ===========  ===========
Supplemental disclosures of cash flow
  information:
    Cash paid during year for interest    $       901  $       580  $       953
    Cash paid during year for income taxes      6,443        6,651        4,350
    Capital lease obligations incurred            808        1,908

</TABLE>

See notes to consolidated financial statements

                                       20
<PAGE>

Shoe Carnival, Inc.
Notes to Consolidated Financial Statements

Note 1 - Organization and Description of Business

The  consolidated  financial  statements  include the accounts of Shoe Carnival,
Inc. and its wholly-owned  subsidiary SCLC, Inc.  (collectively  the "Company").
Shoe Carnival, Inc. (the "Company"), was incorporated on February 25, 1988 under
the name of DAR Group  Investments,  Inc.  The Company  changed its name to Shoe
Carnival,  Inc., on January 15, 1993. SCLC, Inc. was incorporated on February 1,
1999.  The  Company's  primary  activity  is the sale of  footwear  and  related
products  through  Company-operated  retail  stores  in the  Midwest,  South and
Southeastern regions of the United States.

Note 2 - Summary of Significant Accounting Policies

Fiscal Year

The Company's fiscal year consists of a 52/53 week period ending on the Saturday
closest to January 31. Unless  otherwise  stated,  references to the years 1999,
1998 and 1997 relate  respectively  to the fiscal years ended  January 29, 2000,
January 30, 1999 and January 31, 1998.  All three  fiscal years  consisted of 52
weeks.

Cash and Cash Equivalents

The  Company   considers  all  certificates  of  deposit  and  other  short-term
investments  with an original  maturity  date of three months or less to be cash
equivalents.

Merchandise Inventories

Merchandise  inventories  are  stated at the  lower of cost or market  using the
first-in,  first-out  (FIFO)  method.  In determining  market value,  management
estimates  the  future  sales  price of items of  merchandise  contained  in the
inventory as of the balance sheet date. Factors considered in this determination
include among others,  current and recently recorded sales prices, the length of
time product has been held in inventory and quantities of various product styles
contained in inventory.  The ultimate  amount  realized from the sale of certain
product could differ materially from management's estimates.

Property and Equipment

Property  and  equipment is stated at cost.  Depreciation  and  amortization  of
property, equipment and leasehold improvements are provided on the straight-line
method  over the  shorter  of the  estimated  useful  lives of the assets or the
applicable  lease terms.  Lives used in computing  depreciation and amortization
range from two to 30 years. Expenditures for maintenance and repairs are charged
to expense as incurred.  Expenditures which materially increase values,  improve
capacities or extend useful lives are capitalized.  Upon sale or retirement, the
costs and related  accumulated  depreciation or amortization are eliminated from
the  respective  accounts  and  any  resulting  gain  or  loss  is  included  in
operations.

Deferred Lease Incentives

All incentives received from landlords for leasehold  improvements and fixturing
of new stores are recorded as deferred income and amortized over the life of the
lease on a straight-line basis as a reduction of rental expense.

Revenue Recognition

Sales are recorded net of an estimate for returns and allowances.

                                       21
<PAGE>

Shoe Carnival, Inc.
Notes to Consolidated Financial Statements - Continued

Store Opening Costs

Non-capital  expenditures incurred prior to the opening of a new store have been
charged to expense in the month the store was opened prior to 1999. Statement of
Position  98-5,  "Reporting on the Costs of Start-up  Activities"  requires that
beginning in 1999 all  pre-opening  and other  start-up costs be expensed in the
period  incurred.  Accordingly,  with the  adoption  of SOP  98-5 in  1999,  all
pre-opening costs were expensed in the period incurred. This change did not have
a material impact on the Company's consolidated financial statements.

Advertising Costs

Print,  radio and  television  communication  costs are generally  expensed when
incurred.  Internal  production  costs are expensed  when  incurred and external
production costs are expensed in the year the  advertisement  first takes place.
Advertising  expenses included in selling,  general and administrative  expenses
were $14.8 million in 1999, $11.5 million in 1998 and $9.0 million in 1997.

Comprehensive Income

Statement  of  Financial  Standard  ("SFAS")  No. 130,  "Comprehensive  Income,"
requires the presentation of comprehensive  income,  in addition to the existing
income statement. Comprehensive income is defined as the change in equity during
a period from  transactions and other events,  excluding  changes resulting from
investments  by owners and  distributions  to owners.  For all years  presented,
there  are no items  requiring  separate  disclosure  in  accordance  with  this
statement.

Segments of an Enterprise and Related Information

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information" requires the disclosure of segment related information based on how
management makes decisions about allocating  resources to segments and measuring
their  performance.  The Company has one  business  segment that offers the same
principal  product and service  throughout the Midwest,  South and  Southeastern
regions of the United States. Based on the current  organizational  structure of
the Company,  the financial  information  presented is in  compliance  with this
accounting pronouncement.

Derivative Instruments and Hedging Activities

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting  for Derivative  Instruments and Hedging  Activities".  SFAS No. 133
requires that  derivative  instruments be recognized as assets or liabilities in
the statement of financial position. In June 1999, SFAS No. 137, "Accounting for
Derivative  Instruments  and Hedging  Activities - Deferral of Effective Date of
FASB  Statement No. 133",  deferred the  implementation  of SFAS No. 133 for the
Company until the quarter ended May 5, 2001. The Company is currently  assessing
the effect of the  adoption  of SFAS No. 133 in fiscal  year 2001,  but does not
anticipate a material impact on its financial position.

Use of Management Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  that  management  make certain  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements.  The reported  amounts of revenues and expenses during the reporting
period may be affected by the estimates and  assumptions  management is required
to make. Actual results could differ from those estimates.

                                       22
<PAGE>

Shoe Carnival, Inc.
Notes to Consolidated Financial Statements - Continued

Note 3 - Property and Equipment-net

The following is a summary of property and equipment:

(000's)                                        January 29,         January 30,
                                                  2000                1999
                                             -------------       -------------
Land                                         $         205       $         205
Buildings                                            8,912               5,863
Furniture, fixtures and equipment                   46,615              32,389
Leasehold improvements                              29,601              22,848
Equipment under capital leases                       4,305               5,242
Construction in progress                                                 2,263
                                             -------------       -------------
Total                                               89,638              68,810
Less accumulated depreciation
  and amortization                                  35,928              27,954
                                             -------------       -------------
Property and equipment-net                   $      53,710       $      40,856
                                             =============       =============

Note 4 - Accrued and Other Liabilities

Accrued and other liabilities consisted of the following:

(000's)                                        January 29,         January 30,
                                                  2000                1999
                                              -------------       -------------
Employee compensation and benefits            $       1,848       $       2,009
Accrued rent                                          1,336               1,060
Other                                                 3,082               2,688
                                              -------------       -------------
Total accrued and other liabilities           $       6,266       $       5,757
                                              =============       =============

Note 5 - Long-Term Debt

Long-term debt consisted of the following:

(000's)                                        January 29,         January 30,
                                                  2000                1999
                                              -------------       -------------
Credit agreement                              $      21,000
Capital lease obligations (see Note 6)                2,052       $       2,143
                                              -------------       -------------
Total                                                23,052               2,143
Less current portion                                    714                 782
                                              -------------       -------------
Total long-term debt, net of
  current portion                             $      22,338       $       1,361
                                              =============       =============

                                       23
<PAGE>


Shoe Carnival, Inc.
Notes to Consolidated Financial Statements - Continued

During 1998 and until April 16, 1999,  the Company had an unsecured  $35 million
credit  agreement (the "Credit  Agreement")  with a bank group which allowed for
both cash advances and the issuance of letters of credit. On April 16, 1999, the
Credit  Agreement  was  amended to  increase  the total  credit  facility to $45
million,  to adjust certain economic terms and financial covenants and to extend
the maturity date to March 31, 2001.

Borrowings under the amended  facility are based on eligible  inventory and bear
interest,  at the  Company's  option,  at the agent  bank's prime rate (8.50% at
January 29, 2000) minus 0.5% or LIBOR plus from 0.75% to 1.5%,  depending on the
Company's  achievement  of certain  performance  criteria.  A commitment  fee is
charged, at the Company's option, at 0.3% per annum on the unused portion of the
bank group's  commitment or 0.15% per annum of the total commitment.  The Credit
Agreement contains various  restrictive and financial  covenants,  including the
maintenance  of specific  financial  ratios.  At January 29,  2000,  outstanding
letters of credit were approximately $11.2 million.

On March 24, 2000, the Credit Agreement was amended to increase the total credit
facility to $55 million and to extend the maturity date to March 31, 2002.

Note 6 - Leases

The  Company  leases all of its retail  locations  and certain  equipment  under
operating  leases  expiring  at various  dates  through  2015.  One  hundred and
thirty-two leases provide for contingent rental payments of between 2% and 5% of
sales in  excess of stated  amounts.  Certain  leases  also  contain  escalation
clauses  for  increases  in  minimum  rentals,  operating  costs and  taxes.  In
addition,  the Company leases  equipment  under  capitalized  leases expiring at
various dates through 2003.

Rental expense for the Company's operating leases consisted of:

(000's)
Fiscal years                          1999            1998              1997
                                   ---------        ---------        ---------
Rentals for real property          $  17,394        $  13,822        $  12,210
Equipment rentals                        386              437              393
                                   ---------        ---------        ---------
Total                              $  17,780        $  14,259        $  12,603
                                   =========        =========        =========

Future minimum lease payments at January 29, 2000 are as follows:

(000's)                            Operating         Capital
Fiscal years                         Leases          Leases
                                   ---------        ---------
2000                               $  20,898        $     853
2001                                  20,316              780
2002                                  20,065              570
2003                                  18,865              102
2004                                  16,740
Thereafter to 2015                    64,374
                                   ---------        ---------
Minimum lease payments             $ 161,258            2,305
                                   =========

Less imputed interest at rates
  ranging from 7.5% to 11.9%                              253
                                                    ---------
Present value of net minimum lease
  payments of which $714 is
  included in current liabilities                   $   2,052
                                                    =========

The present value of minimum lease payments for equipment under capital lease is
included in long-term debt (see Note 5).

                                       24
<PAGE>

Shoe Carnival, Inc.
Notes to Consolidated Financial Statements - Continued


Investment in equipment  under capital lease,  which is included in property and
equipment, was:

(000's)                          January 29,       January 30,
                                    2000              1999
                                 -----------       -----------
Equipment                        $     4,305       $     5,242
Less accumulated amortization          2,075             3,037
                                 -----------       -----------
Equipment under capital
  lease-net                      $     2,230       $     2,205
                                 ===========       ===========

Note 7 - Income Taxes

The provision for income taxes consisted of:

(000's)
Fiscal years                         1999            1998            1997
                                   --------        --------        --------
Current:
  Federal                          $  5,857        $  5,591        $  3,965
  State                                 985             813             641
                                   --------        --------        --------
 Total current                        6,842           6,404           4,606

Deferred:
  Federal                               990             375             189
  State                                 141              39              31
                                   --------        --------        --------
 Total deferred                       1,131             414             220
                                   --------        --------        --------
 Total provision                   $  7,973        $  6,818        $  4,826
                                   ========        ========        ========

Included in other current  assets are income tax  receivables  in the amounts of
$7,000 and $159,000 as of January 29, 2000 and January 30, 1999, respectively.

A reconciliation between the statutory federal income tax rate and the effective
income tax rate is as follows:

Fiscal years                         1999            1998            1997
                                   --------        --------        --------
U.S. Federal statutory tax rate      35.0%           35.0%           34.0%
State and local income taxes,
  net of federal tax benefit          5.1             5.1             5.1
Other                                (0.1)           (0.1)            0.4
                                   --------        --------        --------
Effective income tax rate            40.0%           40.0%           39.5%
                                   ========        ========        ========

                                       25
<PAGE>

Shoe Carnival, Inc.
Notes to Consolidated Financial Statements - Continued

Deferred income taxes are the result of temporary differences in the recognition
of revenue and expense for tax and financial reporting purposes.  The sources of
these differences and the tax effect of each are as follows:

(000's)                                       January 29,      January 30,
                                                 2000             1999
                                            -------------    -------------
Deferred tax assets:
  Accrued rent                              $         524    $         421
  Accrued compensation                                241              203
  Federal net operating loss carryforward             131              176
  Lease incentives                                     10               14
  Other                                               149              137
                                            -------------    -------------
  Total deferred tax assets                 $       1,055    $         951
                                            =============    =============
Deferred tax liabilities:
  Depreciation                              $       1,781    $       1,378
  Purchase accounting adjustments                     844              852
  Inventory valuation                                 190               11
  Inventory purchase discounts                        660
                                            -------------    -------------
  Total deferred tax liabilities            $       3,475    $       2,241
                                            =============    =============

Note 8 - Employee Benefit Plans

Retirement Savings Plan

On February  24,  1994,  the  Company's  Board of  Directors  approved  the Shoe
Carnival Retirement Savings Plan (the "Retirement Plan"). The Retirement Plan is
open to all employees who have been employed for one year, are at least 21 years
of age and who work at least 1,000 hours per year. The primary savings mechanism
under  the  Retirement  Plan is a  401(k)  plan  under  which  an  employee  may
contribute  up to 15% of earnings  with the Company  matching  the first 4% at a
rate of 50%.

Employee and Company  contributions  are paid to a trustee and invested in up to
16 investment options at the participants'  direction. The Company contributions
to the participants'  accounts become fully vested upon completion of five years
of  participation in the Retirement  Plan.  Contributions  charged to expense in
1999, 1998 and 1997 were $256,000, $199,000 and $214,000, respectively.

Stock Purchase Plan

On May 11, 1995, the Company's  shareholders  approved the Shoe  Carnival,  Inc.
Employee  Stock  Purchase  Plan (the  "Stock  Purchase  Plan") as adopted by the
Company's  Board of  Directors  on February  9, 1995.  The Stock  Purchase  Plan
reserves 300,000 shares of the Company's common stock (subject to adjustment for
any subsequent  stock splits,  stock  dividends and certain other changes in the
common  stock) for issuance  and sale to any employee who has been  employed for
more than a year at the  beginning  of the calendar  year,  and who is not a 10%
owner of the  Company's  stock,  at 85% of the then  fair  market  value up to a
maximum of $5,000 in any calendar  year.  During 1999,  13,020  shares of common
stock were purchased by participants in the plan and proceeds to the Company for
the sale of those shares totaled approximately $138,000.

                                       26
<PAGE>

Shoe Carnival, Inc.
Notes to Consolidated Financial Statements - Continued

Note 9 - Stock Option and Incentive Plans

1993 Stock Option and Incentive Plan

Effective  January 15, 1993, the Company's  Board of Directors and  shareholders
approved the 1993 Stock Option and Incentive  Plan (the "1993  Plan").  The 1993
Plan  reserves  for  issuance  1,500,000  shares of the  Company's  common stock
(subject to adjustment  for any  subsequent  stock splits,  stock  dividends and
certain  other changes in the common  stock)  pursuant to any  incentive  awards
granted  by  the  Stock  Option  Committee  of  the  Board  of  Directors  which
administers  the 1993 Plan.  The 1993 Plan  provides  for the grant of incentive
awards in the form of stock  options or  restricted  stock to officers and other
key employees of the Company. Stock options granted under the plan may be either
options  intended to qualify for federal income tax purposes as "incentive stock
options" or options not qualifying  for favorable tax treatment  ("non-qualified
stock  options").  At January 29, 2000,  205,922 shares of unissued common stock
were reserved for future grants under the plan.

On March 7, 2000, the Stock Option Committee granted options for an aggregate of
136,300  shares  of the  Company's  common  stock to  certain  officers  and key
employees.  The options  were granted at fair market value and have a term of 10
years.  The  options  become  exercisable  in thirds on each of the first  three
anniversaries of the grant date.

Outside Directors Stock Option Plan

Effective March 4, 1999, the Company's  Board of Directors  approved the Outside
Directors Stock Option Plan (the "Directors  Plan"). The Directors Plan reserves
for issuance 25,000 shares of the Company's  common stock (subject to adjustment
for any subsequent  stock splits,  stock  dividends and certain other changes to
the common stock).  The Directors Plan calls for each  non-employee  Director to
receive on April 1st of each  year an  option to purchase  1,000  shares  of the
Company's common stock at the market price on the date of grant. The option will
vest six months from the grant date and expire ten years from the date of grant.
At January 29, 2000,  23,000  shares of unissued  common stock were reserved for
future grants under the plan.

The Company applies Accounting  Principles Board Opinion No. 25, "Accounting for
Stock  Issued to  Employees"  (APB No. 25), in  accounting  for  employee  stock
options.  Accordingly,  no compensation expense has been recognized for the 1993
Plan or the Directors Plan.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, "Accounting for Stock-Based Compensation," and has been determined
as if the Company had  accounted for its stock options under SFAS No. 123's fair
value method.  The fair value of these options was estimated at grant date using
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions:

Fiscal years                            1999         1998         1997
                                      --------     --------     --------
Risk free interest rate                 5.4%         5.6%         6.8%
Expected dividend yield                 0.0%         0.0%         0.0%
Expected volatility                    72.1%        74.3%        53.4%
Expected term                         5 Years      5 Years      5 Years

                                       27
<PAGE>

Shoe Carnival, Inc.
Notes to Consolidated Financial Statements - Continued

For the  purpose  of pro forma  disclosures,  the  estimated  fair  value of the
options is amortized to expense over the options' vesting period.  The Company's
pro forma information follows:


(000's, except per share data)
Fiscal years                                 1999        1998        1997
                                          ---------   ---------   ---------
Pro forma net income                      $  11,243   $   9,832   $   6,789
Pro forma net income per share-Basic      $     .85   $     .75   $     .52
Pro forma net income per share-Diluted    $     .83   $     .73   $     .51

The  weighted-average  fair value of options granted was $7.03,  $7.12 and $3.29
for 1999, 1998 and 1997, respectively.


The following  table  summarizes the  transactions  pursuant to the stock option
plans for the three-year period ended January 29, 2000:

                                                            Weighted Average
                                     Shares                  Exercise Price
                             ------------------------   ------------------------
                             Outstanding  Exercisable   Outstanding  Exercisable
                             -----------  -----------   -----------  -----------
Balance at February 1, 1997     643,925     207,374        $ 6.15       $ 7.95
  Granted                       208,500                      6.10
  Cancelled                     (73,836)                     5.73
  Exercised                     (51,121)                     5.70
                             -----------                   ------
Balance at January 31, 1998     727,468     507,683          6.21       $ 6.52
  Granted                       212,500                     11.00
  Cancelled                      (2,767)                     9.39
  Exercised                     (79,927)                     6.68
                             -----------                   ------
Balance at January 30, 1999     857,274     517,842          7.34       $ 6.30
  Granted                       322,750                     11.09
  Cancelled                     (18,094)                    10.32
  Exercised                    (152,584)                     6.58
                             -----------                   ------
Balance at January 29, 2000   1,009,346     534,382        $ 8.60       $ 6.68
                             ===========                   ======



The following table summarizes information regarding outstanding and exercisable
options at January 29, 2000:


                         Options Outstanding              Options Exercisable
                 ----------------------------------    -------------------------
                             Weighted    Weighted                    Weighted
                   Number    Average     Average         Number      Average
    Range of     of Options  Remaining   Exercise     of  Options    Exercise
Exercise Price   Outstanding   Life       Price       Exercisable     Price
---------------  ----------- ---------  ----------    ----------- -------------
$ 4.25 - $ 6.00    408,484      6.7      $  5.54       387,572       $  5.53
$ 6.25 - $10.88    122,400      5.2      $  8.73        82,650       $  8.45
$11.00 - $11.13    456,962      8.7      $ 11.07        55,160       $ 11.00
$11.63 - $17.25     21,500      7.6      $ 13.26         9,000       $ 13.51

                                       28
<PAGE>

Shoe Carnival, Inc.
Notes to Consolidated Financial Statements - Continued

Note 10 - Shareholders' Equity

On  January  7,  2000,  the  Company's  Board of  Directors  authorized  a share
repurchase  program that will allow the Company to purchase up to $10 million of
the outstanding  common stock. As of January 29, 2000, the Company had purchased
291,900 shares at an approximate cost of $2.4 million.

Note 11 - Contingencies

Litigation

The Company is involved in various routine legal  proceedings  incidental to the
conduct of its  business,  none of which is expected to have a material  adverse
effect on the Company's financial position.

Note 12 - Other Related Party Transactions

The  Company's  Chairman and  Principal  Shareholder  and his son are  principal
shareholders  of LC Footwear,  LLC and PL Footwear,  Inc. The Company  purchases
name brand merchandise from LC Footwear,  LLC, while PL Footwear, Inc. serves as
an import agent for the Company.  PL Footwear,  Inc. represents the Company on a
commission  basis in dealings with shoe factories in mainland China,  where most
of the Company's private label shoes are manufactured.

The Company purchased approximately $798,000 and $138,000 of merchandise from LC
Footwear, LLC in 1999 and 1998,  respectively.  Commissions paid to PL Footwear,
Inc. were $1,061,000 and $912,000 in 1999 and 1998, respectively.

Note 13 - Quarterly Results (Unaudited)

Quarterly results are determined in accordance with the accounting policies used
for annual data and include  certain  items based upon  estimates for the entire
year.  All fiscal  quarters in 1999 and 1998 include  results for 13 weeks.  The
following table summarizes results for 1999 and 1998:

(000's, except per share data)
                                    First       Second       Third      Fourth
1999                                Quarter     Quarter     Quarter     Quarter
                                    --------    --------    --------    --------
Net sales                           $ 78,111    $ 83,206    $ 94,223    $ 84,389
Gross profit                          24,858      25,094      29,455      22,425
Operating income                       6,890       5,630       7,291       1,133
Net income                             4,044       3,264       4,233         420
Net income per share - Basic        $    .31    $    .25    $    .32    $    .03
Net income per share - Diluted      $    .30    $    .24    $    .31    $    .03

(000's, except per share data)
                                    First       Second       Third      Fourth
1998                                Quarter     Quarter     Quarter     Quarter
                                    --------    --------    --------    --------
Net sales                           $ 65,694    $ 68,104    $ 76,442    $ 69,917
Gross profit                          20,674      20,550      24,217      18,575
Operating income                       5,365       4,810       6,139       1,238
Net income                             3,115       2,822       3,620         670
Net income per share - Basic        $    .24    $    .21    $    .27    $    .05
Net income per share - Diluted      $    .23    $    .21    $    .27    $    .05

                                       29
<PAGE>


                               SHOE CARNIVAL, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                                     Charged
                                    Balance at    (Credited) to   Balance at
                                    Beginning       Costs and     End of
           Descriptions             of Period        Expenses     Period
                                   -----------    -------------  -----------
Year ended January 31, 1998
    Reserve for sales returns
      and allowances               $   114,492    $         0    $   114,492
    Inventory reserve              $ 1,300,000    $   125,000    $ 1,425,000

Year ended January 30, 1999
    Reserve for sales returns
      and allowances               $   114,492    $         0    $   114,492
    Inventory reserve              $ 1,425,000    $   175,000    $ 1,600,000

Year ended January 29, 2000
    Reserve for sales returns
      and allowances               $   114,492    $         0    $   114,492
    Inventory reserve              $ 1,600,000    $         0    $ 1,600,000


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

There have been no changes in or  disagreements  with the Company's  independent
accountants on accounting or financial disclosures.

                                       30
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information  required by this Item concerning the Directors and nominees for
Director of the Company and concerning  any  disclosure of delinquent  filers is
incorporated herein by reference to the Company's definitive Proxy Statement for
its  2000  Annual  Meeting  of  Shareholders,  to be filed  with the  Commission
pursuant to Regulation 14A within 120 days after the end of the Company's fiscal
year.  Information  concerning the executive officers of the Company is included
under the caption  "Executive  Officers of the  Company" at the end of Part I of
this Annual Report.  Such  information is incorporated  herein by reference,  in
accordance with General  Instruction G(3) to Form 10-K and Instruction 3 to Item
401(b) of Regulation S-K.


ITEM 11.  EXECUTIVE COMPENSATION

The information  required by this Item concerning  remuneration of the Company's
officers  and  Directors  and  information   concerning  material   transactions
involving such officers and Directors is incorporated herein by reference to the
Company's definitive Proxy Statement for its 2000 Annual Meeting of Shareholders
which will be filed  pursuant to Regulation 14A within 120 days after the end of
the Company's fiscal year.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required  by this  Item  concerning  the  stock  ownership  of
management  and  five  percent  beneficial  owners  is  incorporated  herein  by
reference  to the  Company's  definitive  Proxy  Statement  for its 2000  Annual
Meeting of  Shareholders  which will be filed  pursuant to Regulation 14A within
120 days after the end of the Company's last fiscal year.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required by this Item  concerning  certain  relationships  and
related  transactions  is  incorporated  herein by  reference  to the  Company's
definitive  Proxy  Statement for its 2000 Annual Meeting of  Shareholders  which
will be filed  pursuant to  Regulation  14A within 120 days after the end of the
Company's last fiscal year.

                                       31
<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

 (a) 1.   Financial Statements:

          The  following  financial  statements  of the  Company are set
          forth in Part II, Item 8.

          Report of Management

          Independent Auditors' Report

          Consolidated Balance Sheets at January 29, 2000 and January 30, 1999

          Consolidated  Statements of Income for the years ended January 29,
          2000, January 30, 1999 and January 31, 1998

          Consolidated  Statements of  Shareholders'  Equity for the years ended
          January 29, 2000, January 30, 1999 and January 31, 1998

          Consolidated  Statements of Cash Flows for the years ended January 29,
          2000, January 30, 1999 and January 31, 1998

          Notes to Consolidated Financial Statements

     2.   Financial Statement Schedules:

          The following  financial  statement schedule of the Company is
          set forth in Part II, Item 8.

          Schedule II    Valuation and Qualifying Accounts

     3.   Exhibits:

          A list of exhibits  required to be filed as part of this report is set
          forth in the  Index  to  Exhibits,  which  immediately  precedes  such
          exhibits, and is incorporated herein by reference.

 (b)      Reports on Form 8-K

          No  reports on Form 8-K were filed  during the  quarter  ended
          January 29, 2000.

                                       32
<PAGE>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) 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.

                                        Shoe Carnival, Inc.


Date:    April 26, 2000                 By: /s/ Mark L. Lemond
                                           ----------------------
                                           Mark L. Lemond
                                           President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

      Signature                           Title                      Date
     -----------                       -----------                ----------

/s/ J. Wayne Weaver       Chairman of the Board and Director     April 26, 2000
-------------------
J. Wayne Weaver

/s/ Mark L. Lemond        President, Chief Executive Officer     April 26, 2000
------------------        and Director
Mark L. Lemond            (Principal Executive Officer)

/s/ William E. Bindley    Director                               April 26, 2000
----------------------
William E. Bindley

/s/ Gerald W. Schoor      Director                               April 26, 2000
--------------------
Gerald W. Schoor

/s/ W. Kerry Jackson      Vice President - Chief Financial       April 26, 2000
--------------------      Officer and Treasurer
W. Kerry Jackson          (Principal Financial and Accounting
                          Officer)


                                       33
<PAGE>

                                INDEX TO EXHIBITS


 Exhibit
   No.                               Description
--------                            -------------
  3-A      (7) (i) Restated Articles of Incorporation of Registrant

           (6) (ii) Articles of Amendment of Restated Articles of Incorporation
               of Registrant

  3-B      (3) By-laws of Registrant, as amended to date

    4      (8) (i) Amended and Restated Credit  Agreement and Promissory Notes
               dated April 16, 1999,  between  Registrant and Mercantile Bank
               National  Association,  First Union National Bank and Old
               National Bank

               (ii) Amendment to Amended and Restated Credit Agreement and
               Promissory Notes dated March 24, 2000, between Registrant and
               Mercantile Bank National Association, First Union National Bank
               and Old National Bank

 10-D*     (1) 1989 Stock Option Plan of Registrant and amendments to such Plan

 10-E*     (2) 1993 Stock Option and Incentive Plan of Registrant, as amended

 10-F*     (1) Executive Incentive Compensation Plan of Registrant

 10-G*     (9) Outside Directors Stock Option Plan

 10-I      (1) Non-competition Agreement dated as of January 15, 1993, between
               Registrant and J. Wayne Weaver

 10-K      (1) Form of stock option exercise documents dated November 1, 1992,
               between Registrant and each of fourteen executive officers and
               key employees, including:  (i) Exercise Notice; (ii) Subscription
               Agreement; (iii) Promissory Note; (iv) Pledge Agreement;
               (v) Stock Power

 10-L*     (2) Employee Stock Purchase Plan of Registrant, as amended

 10-M*     (4) Consulting agreement dated May 28, 1997, between Registrant and
               David H. Russell

 10-N*     (5) Employment agreement dated April 14, 1997, between Registrant and
               Clifton E. Sifford

   21          A list of subsidiaries of Shoe Carnival, Inc.

   23          Written consent of Deloitte & Touche LLP

   27          Financial Data Schedule

*    The  indicated  exhibit  is  a  management  contract,  compensatory  plan
     or arrangement required to filed by Item 601 of Regulation S-K.

(1)  The copy of this exhibit  filed as the same exhibit  number to the
     Company's Registration  Statement on Form S-1  (Registration No. 33-57902)
     is incorporated herein by reference.

(2)  The copy of this exhibit  filed as the same exhibit  number to the
     Company's Quarterly  Report  on  Form  10-Q  for  the  quarter  ended
     August  2,  1997 is incorporated herein by reference.

(3)  The copy of this exhibit  filed as the same exhibit  number to the
     Company's Quarterly  Report  on Form  10-Q  for the  quarter  ended
      November  2,  1996 is incorporated herein by reference.

(4)  The copy of this exhibit filed as the same exhibit  number to the Company's
     current  Report on Form 8-K dated June 9, 1997 is incorporated herein
     by reference.

                                       34
<PAGE>

(5)  The copy of this exhibit filed as the same exhibit  number to the Company's
     Quarterly  Report  on  Form  10-Q  for the  quarter  ended  May 3,  1997 is
     incorporated herein by reference.

(6)  The copy of this exhibit filed as the same exhibit  number to the Company's
     Quarterly  Report  on Form  10-Q for the  quarter  ended  August 1, 1998 is
     incorporated herein by reference.

(7)  The copy of this  exhibit  filed as exhibit  number 3.1 to the  Company's
     current  report on Form 8-K dated July 17,  1996 is incorporated herein
     by reference.

(8)  The copy of this exhibit as exhibit 4(i) to the  Company's  Annual  Report
     on Form 10-K for the year ended January 30, 1999 is incorporated herein
     by reference.

(9)  The copy of this exhibit filed as exhibit number 4.4 to the Company's
     Registration  Statement on Form S-8  (Registration  No 333-82819)
     is incorporated herein by reference.

                                       35
<PAGE>