Saks Incorporated Announces Executive Management Changes; Saks Also Announces It Will Explore Strategic Alternatives for Parisian

Retailer Saks Incorporated (NYSE:SKS) (the "Company") todayannounced that its Board of Directors has approved several executivechanges, designed to reflect a more streamlined organization goingforward. Stephen I. Sadove, currently Vice Chairman and ChiefOperating Officer of the Company, has been named Chief ExecutiveOfficer of Saks Incorporated, succeeding R. Brad Martin in that role.Martin will remain as Chairman of the Board and during 2006 willcontinue to perform executive responsibilities, including focusing onthe operations and strategic alternatives process for Parisian, onClub Libby Lu, and on real estate matters. Martin intends to end hisexecutive and management responsibilities at the end of fiscal 2006.In addition, the Company announced that the position of Chairman andChief Executive Officer of Saks Fifth Avenue Enterprises ("SFAE") hasbeen eliminated, and consequently, Fred Wilson, who held thatposition, has resigned from the Company. Sadove will assume Wilson'sresponsibility for SFAE. These changes are effective immediately.

The Company also announced that the Board has approved a plan toexplore strategic alternatives for its Parisian specialty departmentstore business, which will generate 2005 revenues of approximately$700 million.

The Company also confirmed that it anticipates completing the saleof its Northern Department Store Group ("NDSG") to The Bon-Ton Stores,Inc. early in the first fiscal quarter of 2006 and provided an updateon various other business matters, including its active sharerepurchase program.

Executive Changes

As part of a succession plan that was put in place some time agoby the Board of Directors and in conjunction with the anticipated NDSGtransaction, the Parisian strategic alternatives process, and thecorporate restructuring that will follow the NDSG sale, Steve Sadovehas been named Chief Executive Officer of Saks Incorporated. Sadovesucceeds Martin in this role. Martin will continue to serve asChairman of the Board. During 2006, Martin primarily will focus on theoperations of and the strategic alternative process for Parisian, onClub Libby Lu, and on real estate matters. Toni Browning, Presidentand CEO of Parisian; Mary Drolet, President of Club Libby Lu; and PaulRuby, SVP of Real Estate, will report to him. Martin intends to endhis executive and management responsibilities at the end of fiscal2006.

Martin noted, "I am excited about Steve's assumption of the CEOposition. My goal has been to reduce my day-to-day operationalactivities. I approached the Board over a year ago about expandingSteve's responsibilities within the Company in conjunction withadjusting my continuing responsibilities. Steve and I have workedtogether very closely since 1998 - first, as he served as a member ofthe Board of Directors of the Company and then when he joined ourmanagement team in 2002. Steve has been a terrific partner and hasserved our Company well. He is a proven and talented executive and isthe right person to lead Saks Incorporated as we intensify our focuson Saks Fifth Avenue."

On behalf of the Board of Directors, Ronald de Waal, non-executiveVice Chairman of the Board, stated, "Brad Martin has essentially builtthis enterprise, and the Company's enormous growth over the past 16years was driven by his entrepreneurial leadership and guidance. Weare pleased to be able to accommodate Brad's personal wishes, whichwere expressed to us in 2004, to gradually transition into anon-management role within the Company. We also are pleased that wehave a succession plan in place to allow this transition to happensmoothly. Steve Sadove is a proven executive with the background andexpertise necessary to lead our Company in 2006 and beyond."

Sadove joined the management team of Saks Incorporated in January2002 as Vice Chairman and assumed the additional role of ChiefOperating Officer in March 2004. Before joining Saks, Sadove built adistinguished marketing and consumer products career spanning over 25years. Between 1975 and 1991, Sadove held various positions ofincreasing responsibility with General Foods USA, and between 1991 and2001, he held several key roles at Bristol-Myers Squibb includingPresident, Bristol-Myers Squibb Worldwide Beauty Care and Nutritionalsand Senior Vice President of Bristol-Myers Squibb. During his tenureat Bristol-Myers Squibb, Sadove led Clairol to become the number onehair care business in the United States, relaunched the HerbalEssences brand into a $700 million business, and completed the sale ofthe beauty care business to Procter & Gamble for approximately $5billion.

As CEO of Saks Incorporated, Sadove will be responsible for SFAEand for all of the Company's support functions, transition servicesfor Belk and Bon-Ton, and administrative functions. His direct reportswill include Jim Coggin, President and Chief Administrative Officer;Doug Coltharp, EVP and Chief Financial Officer; Kevin Wills, EVP ofFinance and Chief Accounting Officer; Charles Hansen, EVP/GeneralCounsel; and Dave Ferguson, Chief Ethics and Compliance Officer.Sadove will report to the Board of Directors.

Sadove commented, "I am honored and excited about the opportunityto expand my role within the Company. Brad Martin has been a wonderfulmentor and partner, and I look forward to his continued support inthese roles in the future. During the sixteen years Brad served as theCompany's CEO, the Saks team accomplished much. From the ten-storebase in 1989, Brad led the Company to become one of the largest andmost important retail enterprises in the country. He was instrumentalin creating opportunities for associates and value for shareholders aswe grew rapidly in a competitive and consolidating industry, whileincreasing our share price at a double-digit compound rate over thattime frame."

Exploring Strategic Alternatives for Parisian

Martin said, "The Company's Board of Directors and management teamhave been and remain actively engaged in creating shareholder value.In 2005, the Company established a process to carefully consider itsmix of businesses and their future potential to create this value.Through this process, we have reviewed whether there were transactionsavailable for our current asset mix that could create shareholdervalue greater than we could create through execution of the Company'soperating strategies. This review identified a significant opportunityto create value through monetizing assets in our slower growthtraditional department store businesses. In the last eight months, wesold our Proffitt's/McRae's business to Belk, Inc. for $623 million inJuly 2005 and announced plans to sell the NDSG business to Bon-Ton for$1.185 billion."

Martin continued, "We believe the next appropriate step in thisprocess is to explore strategic alternatives for our Parisianspecialty department store business, which could include its sale. Webelieve there is a very bright future for this unique franchise andthat meaningful opportunity exists for continued revenue growth andsubstantial operating income improvement. Our strategic alternativeprocess could lead to an exciting and independent future for thisbusiness, as well as create additional shareholder value for SaksIncorporated."

Parisian, which operates 40 specialty department stores in ninestates, will generate 2005 revenues of approximately $700 million.Parisian is known for its superior level of personalized service anddistinctive merchandise offerings. The stores carry a wide selectionof fashion apparel, shoes, and accessories for the entire family, aswell as cosmetics and specialty gift items. In addition to brandstypically found at traditional department stores, Parisian storescarry brands such as Karen Kane, BCBG, Garfield & Marks, Tahari,Robert Talbott, Tommy Bahama, Joseph Abboud, Hugo Boss, Callaway,Cutter & Buck, Bobbi Brown, Laura Mercier, Trish McEvoy, MAC, DonaldPliner, Stuart Weitzman, Kate Spade, Ferragamo, Via Spiga, andBrighton, which are typically carried only at specialty stores.

Martin noted, "The operating performance of Parisian has steadilyimproved over the last two years through solid comparable store salesgrowth, gross margin expansion, and careful expense management. Atalented leadership team, led by Toni Browning, is in place. Webelieve there is a significant growth opportunity for this uniquebusiness.

"A great example of this growth potential is our October 2005entry into metropolitan Memphis with the opening of a new prototypeParisian store. This distinctive store has been met with enthusiasticcustomer response, and we look forward to further expansion ofParisian into both existing trade areas and other geographic areasthat are contiguous to our core trade areas."

The Company has announced plans to add new Parisian stores in itsexisting Birmingham, Alabama and Detroit, Michigan trade areas, andthe Company plans to enter the Little Rock and Rogers, Arkansas tradeareas over the next 18 months.

Goldman Sachs & Co. and Citigroup Corporate and Investment Bankinghave been retained to advise the Company in this formal process. Therecan be no assurance that this strategic alternative process willresult in a transaction.

Planned Consummation of NDSG Transaction and Use of Proceeds

The Company anticipates that it will consummate the sale of NDSGto Bon-Ton early in the first fiscal quarter of 2006. Closing of thetransaction is subject to conditions, including Bon-Ton's financingfor the transaction and various other customary conditions. Bank ofAmerica, N.A. has executed a commitment letter with Bon-Ton to providefor the financing of the transaction, which commitment letter includesa number of conditions. All waiting periods under theHart-Scott-Rodino Antitrust Improvements Act have expired.

Sadove commented, "The NDSG business has continued to generatesolid comparable store sales in the fourth quarter and shows continuedoperating improvement. This is a wonderful franchise business, and itwill be a great fit with the Bon-Ton organization. The NDSG team iskeenly focused on both operating the business and on preparing for thetransition to Bon-Ton. We are confident that the transition will be asmooth one."

Sadove noted, "Upon completion of this transaction, the Companywill have received more than $1.7 billion in cash from the sales ofNDSG and Proffitt's/McRae's. With our strong balance sheet and ourexpectations for improved SFAE performance, we believe that it will beappropriate to distribute a substantial portion of the proceeds fromthe NDSG transaction to our shareholders, either in the form of sharerepurchases, a special cash dividend, or a combination of the two. Wewill provide more clarity on our anticipated use of proceedssubsequent to the NDSG transaction closing."

In December 2005, in anticipation of the closing of the NDSGtransaction, the Company's Board of Directors approved a 35 millionshare increase to its existing 35 million common share repurchaseauthorization. To date during the fiscal fourth quarter, the Companyhas repurchased 12.9 million shares for approximately $223.7 million,leaving approximately 37.8 million shares remaining under its 70million share repurchase authorization.

As part of the NDSG transaction, the Company will enter into afee-for-services arrangement to provide Bon-Ton with specified supportservices, including information technology, credit services, and otherback office support functions, for a period of time. The Companyentered into a similar agreement with Belk, Inc. in conjunction withits sale of Proffitt's/McRae's and is currently providing services toBelk under that agreement.

Corporate Restructuring

The Company has begun reorganizing and appropriately downsizingits corporate and back office support infrastructure. Sadove noted,"We are focused on appropriately sizing our central servicesinfrastructure while retaining key personnel needed to support theexisting business and to fulfill our support service agreements withBelk and Bon-Ton." The Company is undertaking the strategicrestructuring of its organization, preparing for the independentoperation of SFAE, as well as Parisian during its strategicalternatives process.

Saks Fifth Avenue Enterprises

SFAE, which consists of 55 Saks Fifth Avenue stores, 50 Saks Off5th stores, and saks.com, will generate 2005 revenues of approximately$2.7 billion.

As noted, the position of Chairman and CEO of Saks Fifth AvenueEnterprises has been eliminated, and consequently, Fred Wilson hasresigned from the Company. Wilson joined SFAE as President and CEO inDecember 2003 and was named Chairman and CEO of SFAE in February 2004.Andrew Jennings will remain President and Chief Operating Officer ofSaks Fifth Avenue, reporting to Sadove, and Ron Frasch will retain hisrole as Vice Chairman and Chief Merchant of Saks Fifth Avenue,reporting to Jennings. Mike Archbold, EVP and CFO of SFAE, will reportto Sadove.

Sadove said, "While 2005 has been a challenging year for SFAE, wehave made meaningful progress on a number of fronts. Fred Wilsoncontributed to SFAE's strengthened merchandising, service, storepresentation, and marketing efforts; growing the Saks Direct business,with year-to-date revenues up over 30% from last year; and enhancingour positions in key markets such as Atlanta, San Antonio, and BocaRaton through our recently completed renovations. We are appreciativeof Fred's contributions to the business and wish him the very best."

Sadove continued, "I am confident there is ample opportunity torestore SFAE's performance to appropriate levels, and I look forwardto the challenge. We now have improved processes and financialdisciplines in place, and we will drive strategic value at SFAEthrough increasing store productivity, enhancing inventoryproductivity, and delivering cost efficiencies. Saks Fifth Avenue isthe most prestigious brand in retailing, and we have a strong,talented, experienced, and focused team. I believe SFAE has a verybright future and that we can create shareholder value with thisbusiness."

Jennings, who joined Saks Fifth Avenue in 2004, is an acclaimedinternational retail executive with more than 30 years of achievementat some of the world's most prestigious luxury and department storesincluding Holt Renfrew, House of Fraser, and Harrod's. Frasch, whojoined Saks Fifth Avenue in 2004, also has a distinguished retailcareer spanning over 30 years, previously holding key positions atsuch retailers as Neiman Marcus/Bergdorf Goodman, Escada, and SaksFifth Avenue.

About the Company

Saks Incorporated operates Saks Fifth Avenue Enterprises, whichconsists of 55 Saks Fifth Avenue stores, 50 Saks Off 5th stores, andsaks.com. The Company also currently operates its Saks DepartmentStore Group with 40 Parisian stores; 142 Younkers, Herberger's, CarsonPirie Scott, Bergner's, and Boston Store stores; and 58 Club Libby Luspecialty stores.

Forward-looking Information

The information contained in this press release that addressesfuture results or expectations is considered "forward-looking"information within the definition of the Federal securities laws.Forward-looking information in this document can be identified throughthe use of words such as "may," "will," "intend," "plan," "project,""expect," "anticipate," "should," "would," "believe," "estimate,""contemplate," "possible," and "point." The forward-lookinginformation is premised on many factors, some of which are outlinedbelow. Actual consolidated results might differ materially fromprojected forward-looking information if there are any materialchanges in management's assumptions.

The forward-looking information and statements are or may be basedon a series of projections and estimates and involve risks anduncertainties. These risks and uncertainties include such factors as:the level of consumer spending for apparel and other merchandisecarried by the Company and its ability to respond quickly to consumertrends; adequate and stable sources of merchandise; the competitivepricing environment within the department and specialty storeindustries as well as other retail channels; the effectiveness ofplanned advertising, marketing, and promotional campaigns; favorablecustomer response to relationship marketing efforts of proprietarycredit card loyalty programs; appropriate inventory management;effective expense control; successful operation of the Company'sproprietary credit card strategic alliance with HSBC Bank Nevada,N.A.; geo-political risks; changes in interest rates; the outcome ofthe formal investigation by the Securities and Exchange Commission andthe inquiry the Company understands has been commenced by the Officeof the United States Attorney for the Southern District of New Yorkinto the matters that were the subject of the investigations conductedduring 2004 and 2005 by the Audit Committee of the Company's Board ofDirectors and any related matters that may be under investigation orthe subject of inquiry; the ultimate amount of reimbursement tovendors of improperly collected markdown allowances; the ultimateimpact of improper timing of recording of inventory markdowns; theultimate impact of incorrect timing of recording of vendor markdownallowances; the outcome of the shareholder litigation that has beenfiled relating to the matters that were the subject of the AuditCommittee's initial investigation; and the effects of the delay in thefiling with the SEC of the Company's Form 10-K for the fiscal yearended January 29, 2005 and its Quarterly Reports on Form 10-Q for thefiscal quarters ended April 30, 2005 and July 30, 2005. For additionalinformation regarding these and other risk factors, please refer toExhibit 99.1 to the Company's Form 10-K for the fiscal year endedJanuary 29, 2005 filed with the SEC, which may be accessed via EDGARthrough the Internet at www.sec.gov.

Management undertakes no obligation to correct or update anyforward-looking statements, whether as a result of new information,future events, or otherwise. Persons are advised, however, to consultany further disclosures management makes on related subjects in itsreports filed with the SEC and in its press releases.