Saks Incorporated Announces Results for the Third Quarter and Nine Months Ended October 27, 2012

  Saks Incorporated Announces Results for the Third Quarter and Nine Months
  Ended October 27, 2012

          – Company updates outlook for the fourth quarter of 2012 –

Business Wire

NEW YORK -- November 13, 2012

Retailer Saks Incorporated (NYSE: SKS) (“Saks” or the “Company”) today
announced results for the third quarter and nine months ended October 27,
2012.

Sales for the Third Quarter and Nine Months Ended October 27, 2012

For the third quarter ended October 27, 2012, total sales were $713.2 million,
a 3.0% increase over total sales of $692.3 million for the prior year third
quarter ended October 29, 2011. Comparable store sales increased 3.3% for the
quarter.

For the nine months ended October 27, 2012, total sales were $2,170.9 million,
a 3.9% increase over total sales of $2,088.5 million for the prior year nine
months ended October 29, 2011. Comparable store sales increased 4.3% for the
nine months.

Overview of Results for the Third Quarter and Nine Months Ended October 27,
2012

For the third quarter ended October 27, 2012, the Company recorded net income
of $22.6 million, or $.14 per diluted share. Those results included a reversal
of approximately $3.3 million in Federal income tax reserves deemed no longer
necessary. Excluding this item, the Company would have recorded net income of
$19.3 million, or $.12 per share, for the quarter ended October 27, 2012. For
the prior year third quarter ended October 29, 2011, the Company recorded net
income of $17.8 million, or $.11 per diluted share.

For the nine months ended October 27, 2012, the Company recorded net income of
$42.5 million, or $.28 per diluted share. Those results included after-tax
charges totaling $1.5 million composed of $1.8 million of pre-opening costs
associated with the Company’s new fulfillment center and $3.0 million of asset
impairments and store closing costs, netted against the aforementioned $3.3
million income tax reserve reversal. Excluding these items, the Company would
have recorded net income of $44.0 million, or $.29 per share, for the nine
months ended October 27, 2012.

For the prior year nine months ended October 29, 2011, the Company recorded
net income of $37.8 million, or $.24 per diluted share. Those results included
after-tax charges totaling $2.9 million comprised of a pension and related
benefit charge, a third-party receivable write-down, and an asset impairment
charge totaling $1.8 million; $1.8 million of store closing expenses; a $0.3
million loss on debt extinguishment (related to the early retirement of
approximately $1.9 million of senior notes); and a reversal of approximately
$1.0 million in state income tax reserves deemed no longer necessary.
Excluding these after-tax charges, the Company would have recorded net income
of $40.7 million, or $.25 per share, for the nine months ended October 29,
2011.

Comments on the Third Quarter and Nine Months Ended October 27, 2012

Stephen I. Sadove, Chairman and Chief Executive Officer of the Company, noted,
“In spite of the continued uncertain macro environment, we were pleased to
post a modest year-over-year increase in operating income and net income for
the third quarter.

“Our comparable store sales increase of 3.3% in the third quarter was below
our initial expectation but was on top of a very solid 5.8% comparable store
sales increase in the prior year third quarter. On a year-to-date basis,
comparable store sales increased 4.3%, and similarly, this was on top of very
strong 10.3% increase in the first nine months of last year.”

Sadove continued, “For the quarter, our gross margin rate deterioration was
partially offset by modest SG&A leverage. The third quarter gross margin rate
was slightly below our expectations, and the level of SG&A leverage modestly
exceeded our expectations.”

Several merchandise categories showed sales strength during the third quarter,
including women’s and men’s contemporary apparel, women’s and men’s shoes,
handbags, fine jewelry, and fragrances. The New York City flagship store sales
performance was positive and generally in line with the aggregate comparable
store sales performance of the Company’s Saks Fifth Avenue stores during the
quarter.

For the third quarter, the gross margin rate was 43.9% compared to last year’s
third quarter rate of 44.2%. The gross margin rate decline was related
principally to a modest increase in targeted promotional activity during the
quarter. For the nine months, the gross margin rate was 41.9% compared to
42.1% in the first nine months of last year.

As a percent of sales, SG&A expenses were 27.3% in the third quarter this year
compared to 27.5% in the prior year third quarter. The Company achieved
leverage in the third quarter while incurring incremental SG&A expenses to
support its omni-channel and Project Evolution (information technology systems
and enhancements) initiatives. As a percent of sales (excluding certain
items), SG&A expenses were 26.5% for the first nine months this year compared
to 26.3% for the same period last year.

For the quarter, the Company’s operating income was 5.7% of sales compared to
5.7% of sales in the prior year third quarter. Excluding the aforementioned
certain items, the Company’s operating income was 4.6% of sales for the
current year nine months compared to 4.9% of sales in the prior year nine
month period.

Balance Sheet Highlights

Consolidated inventories at October 27, 2012 totaled $927.1 million, a 5.1%
increase over the prior year. Inventories increased 2.5% on a comparable
stores basis.

At quarter end, the Company had approximately $74.2 million of cash on hand
and no direct outstanding borrowings on its revolving credit facility. During
the quarter, the Company repurchased a small amount of common stock, bringing
the year-to-date repurchases to $79.1 million (approximately 8.0 million
shares at an average price per share of $9.90).

In accordance with FASB Accounting Standard Codification 470 related to
accounting for convertible debt instruments that may be settled in cash upon
conversion (including partial cash settlement) (“ASC 470”), issuers of
convertible debt instruments must separately account for the liability and
equity components in a manner that will reflect the entity’s nonconvertible
debt borrowing rate when interest cost is recognized in subsequent periods.
The discounts (the difference between the convertible rate and a
nonconvertible borrowing rate on each issuance) on the Company’s two series of
convertible notes are being accreted to interest expense through the note
maturity dates. Accordingly, at October 27, 2012, $12.7 million of the $230
million 2.0% convertible notes balance and $6.5 million of the $120 million
7.5% convertible notes balance were classified in equity.

Funded debt (including capitalized leases, senior notes, and the debt and
equity components of the convertible debentures) at October 27, 2012 totaled
approximately $404.8  million, and debt-to-capitalization was 25.9% (without
giving effect to cash on hand).

Net capital spending for the nine months ended October 27, 2012 totaled
approximately $74.3 million.

Outlook for the Fourth Quarter of 2012

Sadove commented, “As the overall macroeconomic environment remains very
uncertain, we continue to approach the future cautiously but very
strategically. We remain focused on executing our core merchandising, service,
and marketing strategies, and at the same time, we are making the systems and
infrastructure investments necessary to evolve our business to more fully
embrace omni-channel retailing. We are confident that these investments will
position us for the future and will generate incremental sales and operating
margin improvement over time. We remain very optimistic about the outlook for
luxury retailing and for Saks Fifth Avenue.

“Having said that, sales trends have been soft for the first two weeks of
November in the aftermath of Hurricane Sandy. Many of our stores, representing
about 40% of our total company revenues, were directly impacted by the storm,
and we have experienced a decline in saks.com sales generated from our
customers in the Northeast. Additionally, sales in a number of our other
stores, particularly in Florida, were indirectly affected by the storm, as
many of our Northeastern customers have ties to those markets. In aggregate,
we estimate that Hurricane Sandy impacted about 55% of our total company store
revenue base. Based on these current sales trends we are adjusting our outlook
for the fourth quarter, which we believe represents a more realistic view of
the business.”

The Company’s assumptions for the balance of 2012 are outlined below.
Variation from the sales trends, up or down, could materially impact the other
assumptions listed.

  *Year-over-year comparable store sales are expected to be relatively flat
    for the fourth quarter. This comparable store sales assumption is
    predicated on sales for the balance of the quarter returning to a growth
    rate similar to the comparable store sales increase posted in the third
    quarter.
  *Comparable store inventory levels are expected to be up in the low-single
    digit range at fiscal year end.
  *Based upon current inventory levels and composition and the Company’s
    promotional calendar and permanent markdown cadence, the Company expects
    its year-over-year gross margin rate to be flat to down 50 basis points in
    the fourth quarter.
  *As a percent of sales on a year-over-year basis, the Company expects
    approximately 20 to 60 basis points of SG&A expense leverage in the fourth
    quarter. SG&A dollar increases are expected to primarily arise from
    incremental variable costs associated with planned sales growth (primarily
    sales associates’ commissions) and investment spending to support the
    Company’s omni-channel initiatives and Project Evolution.
  *Other Operating Expenses (rentals, depreciation, and taxes other than
    income taxes) are expected to total $84 million to $86 million for the
    fourth quarter. Depreciation and amortization, which are included in the
    above amounts, should total approximately $123 million for the full fiscal
    year.
  *Based on existing debt arrangements, maturities, and interest rates,
    interest expense should total approximately $10 million for the fourth
    quarter.
  *An effective tax rate of approximately 40.0% for the year.
  *A basic common share count of approximately 150 million and a diluted
    common share count of approximately 194 million for the full fiscal year.
    Share counts used in earnings per share calculations are expected to
    fluctuate by quarter during the year based on income levels, convertible
    debt, and equity awards.
  *Net capital expenditures of approximately $115 million for the full year.

The fiscal year ending February 2, 2013 contains a 53^rd week which is
included in the assumptions outlined above. Management estimates that the
53^rd week will represent approximately $40 million in incremental revenues
and incremental diluted earnings per share of approximately $.04 for the
fiscal year.

Additional Comments on Hurricane Sandy

Eleven Saks Fifth Avenue stores out of the Company’s 45 stores were closed
from one to seven days, including the Company’s New York flagship which was
closed for two days. Fifteen of the Company’s 64 OFF 5TH stores were closed
for up to five days. None of the Company’s stores sustained material damage.

Sadove noted, “We were as prepared as we could have been for such an event.
Our business continuity plans were quickly executed, and we set about trying
to assure that each of our associates was safe and that we could get our
stores and support locations up and running as quickly as possible. This was a
collaborative and inspiring effort among countless associates in our
organization. It is truly remarkable what we were able to accomplish in just a
few days.”

“Thankfully, none of our associates was injured, but many suffered devastating
personal property losses and have been displaced due to the storm,” Sadove
continued. “Several years ago, we established an associate relief fund for
aiding associates and their families that were victim to such natural
disasters. Following Hurricane Sandy, we made a meaningful corporate donation
to this fund and will also match associate contributions to the fund. We were
also proud to make a donation to the American Red Cross, our national charity
partner, for their relief efforts. Seeing how everyone has come together to
restore our Company’s operations and to assist those in need has been very
moving. I am very proud of our entire organization.”

Sales Detail

Total sales numbers below represent owned department sales, leased department
commissions, shipping and handling revenue, and sales return adjustments for
Saks Fifth Avenue stores, Saks Fifth Avenue OFF 5TH stores, and Saks Direct.
Total sales (in millions) for the third quarter and nine months ended October
27, 2012 compared to last year’s third quarter and nine months ended October
29, 2011 were:

                                                    Total      Comparable
                   This Year         Last Year         Increase    Increase
Third Quarter      $   713.2         $   692.3         3.0   %     3.3    %
Nine months        $   2,170.9       $   2,088.5       3.9   %     4.3    %
                                                                   
                                                                   
Leased department commissions included in the total sales numbers above were
as follows (sales in millions):

                   This Year         Last Year
Third Quarter      $   10.0          $   10.2
Nine months        $   31.7          $   27.4
                                                                   

Other Information

For the current and prior year third quarters ended October 27, 2012 and
October 29, 2011, the Company’s two convertible debt instruments were
dilutive; therefore, the applicable shares (approximately 40.9 million) were
added to the weighted average shares outstanding, and the applicable after-tax
interest expense (approximately $4.2 million per quarter) was added to net
income for the fully diluted earnings per share calculation.

For the current and prior year nine month periods ended October 27, 2012 and
October 29, 2011, respectively, the Company’s two convertible debt instruments
were not dilutive; therefore, the applicable shares were not added to the
weighted average shares outstanding and the applicable after-tax interest
expense was not added to net income for the fully diluted earnings per share
calculation.

Conference Call Information

Management has scheduled a conference call at 9:30 a.m. Eastern Time on
Tuesday, November 13, 2012 to discuss results for the third quarter and nine
months ended October 27, 2012. To participate, please call (201) 689-8874 (10
minutes prior to the call). A replay of the call will be available for 48
hours following the live call. The dial-in number for the replay is (201)
612-7415 (account number 378; conference ID number 383740).

Interested parties also have the opportunity to listen to the conference call
over the Internet by visiting the Investor Relations section of Saks
Incorporated’s corporate website at
http://phx.corporate-ir.net/phoenix.zhtml?c=110111&p=irol-irhome. To listen to
the live call, please go to the address listed at least 15 minutes early to
register, download, and install any necessary audio software. For those who
cannot listen to the live broadcast, a replay will be available shortly after
the call, and a transcript will be posted on the Company’s web site within 24
to 48 hours.

To be placed on the Company’s e-mail notification list for press releases, SEC
filings, certain analytical information, and/or upcoming events, please go to
www.saksincorporated.com, click on “Investor Relations,” click on “E-mail
Alerts,” and fill out the requested information.

About the Company

The Company currently operates 45 Saks Fifth Avenue stores, 65 Saks Fifth
Avenue OFF 5TH stores, and saks.com. Saks Fifth Avenue is proud to be named a
J.D. Power and Associates 2012 Customer Service Champion and is only one of 50
U.S. companies so named.

Forward-looking Information

The information contained in this press release that addresses future 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 through the use of words such
as “may,” “will,” “intend,” “plan,” “project,” “expect,” “anticipate,”
“should,” “would,” “believe,” “estimate,” “contemplate,” “possible,” and
“point.” The forward-looking information is premised on many factors, some of
which are outlined below. Actual consolidated results might differ materially
from projected forward-looking information.

The forward-looking information and statements are or may be based on a series
of projections and estimates and involve risks and uncertainties. These risks
and uncertainties include such factors as: the

level of consumer spending for luxury apparel and other merchandise carried by
the Company and its ability to respond quickly to consumer trends;
macroeconomic conditions and their effect on consumer spending; the Company’s
ability to secure adequate financing; adequate and stable sources of
merchandise; the competitive pricing environment within the retail sector; the
effectiveness of planned advertising, marketing, and promotional campaigns;
favorable customer response to relationship marketing efforts of proprietary
credit card loyalty programs; appropriate inventory management; effective
expense control; successful operation of the Company’s proprietary credit card
strategic alliance with Capital One Financial Corporation; geo-political
risks; the performance of the financial markets; changes in interest rates;
and fluctuations in foreign currency and exchange rates. For additional
information regarding these and other risk factors, please refer to the
Company’s filings with the SEC, including its Annual Report on Form 10-K/A for
the fiscal year ended January 28, 2012, its Quarterly Reports on Form 10-Q,
and its Current Reports on Form 8-K, which may be accessed via the Internet at
www.sec.gov.

The Company undertakes no obligation to correct or update any forward-looking
statements, whether as a result of new information, future events, or
otherwise.






SAKS INCORPORATED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
                                                            
                                                 (UNAUDITED)
                                                 October 27,   October 29,
                                                 2012          2011
ASSETS
Current assets
Cash and cash equivalents                        $ 74,202      $ 73,710
Merchandise inventories                            927,125       882,389
Other current assets                               83,864        72,359
Deferred income taxes, net                        81,530       58,290
Total current assets                               1,166,721     1,086,748
                                                               
Property and equipment, net                        879,567       862,247
Deferred income taxes, net                         131,664       159,401
Other assets                                      24,293       38,368
TOTAL ASSETS                                     $ 2,202,245   $ 2,146,764
                                                               
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable                           $ 195,374     $ 221,753
Accrued expenses and other current liabilities     281,615       243,919
Current portion of long-term debt                 9,326        7,088
Total current liabilities                          486,315       472,760
                                                               
Long-term debt                                     376,369       365,737
Other long-term liabilities                       161,018      134,575
Total liabilities                                  1,023,702     973,072
Commitments and contingencies
Shareholders' equity                              1,178,543    1,173,692
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 2,202,245   $ 2,146,764







SAKS INCORPORATED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share amounts)
                                                                
                                 (UNAUDITED)
                                 Three Months Ended
                                 October 27, 2012        October 29, 2011
                                                                       
Net sales                        $ 713,222     100.0 %   $ 692,311     100.0 %
Cost of sales                     400,265    56.1  %    386,498    55.8  %
           Gross margin            312,957     43.9  %     305,813     44.2  %
                                                                       
Selling, general and               194,643     27.3  %     190,179     27.5  %
administrative expenses
Other operating expenses:
    Property and equipment         26,960      3.8   %     24,932      3.6   %
    rentals
    Depreciation and               29,906      4.2   %     30,487      4.4   %
    amortization
    Taxes other than income        19,819      2.8   %     19,437      2.8   %
    taxes
    Store pre-opening costs        730         0.1   %     811         0.1   %
Impairments and dispositions      217        0.0   %    218        0.0   %
           Operating income        40,682      5.7   %     39,749      5.7   %
                                                                       
Other income (expense):
    Interest expense               (9,328  )   -1.3  %     (11,909 )   -1.7  %
    Other income, net             107        0.0   %    564        0.1   %
           Income before           31,461      4.4   %     28,404      4.1   %
           income taxes
                                                                       
Provision for income taxes        8,859      1.2   %    10,633     1.5   %
Net income                       $ 22,602     3.2   %   $ 17,771     2.6   %
                                                                       
Earnings per share:
    Basic                        $ 0.15                  $ 0.12
    Diluted                      $ 0.14                  $ 0.11
                                                                       
Weighted-average common
shares:
    Basic                          147,547                 154,080
    Diluted                        191,093                 199,053







SAKS INCORPORATED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share amounts)
                                                                
                             (UNAUDITED)
                             Nine Months Ended
                             October 27, 2012          October 29, 2011
                                                                       
Net sales                    $ 2,170,944     100.0 %   $ 2,088,489     100.0 %
Cost of sales                 1,261,441    58.1  %    1,208,197    57.9  %
           Gross margin        909,503       41.9  %     880,292       42.1  %
                                                                       
Selling, general and           575,397       26.5  %     551,994       26.4  %
administrative expenses
Other operating expenses:
     Property and              79,203        3.6   %     75,169        3.6   %
     equipment rentals
     Depreciation and          88,978        4.1   %     88,579        4.2   %
     amortization
     Taxes other than          64,204        3.0   %     63,595        3.0   %
     income taxes
     Store pre-opening         4,793         0.2   %     1,358         0.1   %
     costs
Impairments and               5,207        0.2   %    3,252        0.2   %
dispositions
           Operating           91,721        4.2   %     96,345        4.6   %
           income
                                                                       
Other income (expense):
     Interest expense          (28,287   )   -1.3  %     (38,548   )   -1.8  %
     Loss on
     extinguishment of         -             0.0   %     (539      )   0.0   %
     debt
     Other income, net        1,554        0.1   %    1,560        0.1   %
           Income before       64,988        3.0   %     58,818        2.8   %
           income taxes
                                                                       
Provision for income taxes    22,538       1.0   %    21,007       1.0   %
Net income                   $ 42,450       2.0   %   $ 37,811       1.8   %
                                                                       
Earnings per share:
     Basic                   $ 0.28                    $ 0.24
     Diluted                 $ 0.28                    $ 0.24
                                                                       
Weighted-average common
shares:
     Basic                     151,152                   155,739
     Diluted                   154,025                   159,851
                                                                       
                                                                       

Contact:

Saks Incorporated
Julia Bentley, 865-981-6243
www.saksincorporated.com