Saks Incorporated Completes Internal Investigations; Company Anticipates Filing 2004 Form 10-K on or about September 1, 2005

Completion of Management's Confirmatory and Supplementary Work

The Audit Committee's initial investigation disclosed on March 3,2005 was commenced at management's request. On May 9, 2005, theCompany disclosed the independent investigators' conclusion that,during the Company's 1999-2003 fiscal years, one of six Saks FifthAvenue ("SFAE") merchandising divisions improperly collected markdownallowances from vendors totaling approximately $20 million. TheCompany also disclosed on May 9, 2005 that Company management wasundertaking its own work to confirm this amount and to supplementallydetermine whether that SFAE division improperly collected markdownallowances before fiscal 1999. This work has been completed, andCompany management believes that the SFAE division improperlycollected from vendors $26 million of markdown allowances during theCompany's 1999-2003 fiscal years and $8.2 million of markdownallowances during the 1996-1998 fiscal years. These amounts areattributable to overcollections that resulted from falsification, bymerchants in the one SFAE division, of information delivered tovendors.

The Company is advising the affected vendors that it intends toreimburse them for these improperly collected markdown allowances. TheCompany will also pay the affected vendors interest at the rate of7.25% per annum, totaling approximately $14 million, on theseimproperly collected markdown allowances. The Company recently beganits reimbursement of affected vendors.

The Audit Committee's investigation also examined SFAE'sallocations to vendors during the 1999-2003 fiscal years of a portionof markdown costs associated with certain of SFAE's customer loyaltyand other promotional activities. The Audit Committee's investigationconcluded that the mechanism for making these allocations was notcommunicated to vendors. The Company considered these issues andconcluded that these allocations did not result in the impropercollection of markdown allowances from vendors.

Completion of Audit Committee's Supplemental Inquiry

On June 3, 2005, the Company disclosed that the Audit Committeehad begun a supplemental inquiry into (1) timing of recording ofinventory markdowns and vendor markdown allowances at SFAE, (2)whether there had been any overcollections of vendor markdownallowances in any of the merchandising divisions of SFAE that had notbeen the subject of the Audit Committee's initial investigation, and(3) whether there had been any inappropriatebilling/logistics/transportation compliance chargebacks by the Companyto any of its merchandise vendors. The Audit Committee requestedCompany management to review the investigation's findings regardingtiming of recording of inventory markdowns and to review timing ofrecording of vendor markdown allowances. This supplemental inquiry hasnow been completed.

The Audit Committee's supplemental inquiry did not find anyovercollections of vendor markdown allowances in any of themerchandising divisions of SFAE that had not been the subject of theAudit Committee's initial investigation. Steps to confirm amounts ofmarkdown allowances collected from certain vendors during specifiedseasons have begun, and this work is ongoing. In addition, thesupplemental inquiry did not find any fraudulent activities withrespect to billing/logistics/transportation compliance chargebacks.

The Audit Committee's supplemental inquiry did find evidence atSFAE of improper timing of recording of inventory markdowns during thefiscal years 1999 and 2001. Company management believes that, as aresult of this improper timing, gross margin and operating income (1)for the second quarter of fiscal year 1999 were overstated, and forthe third quarter of fiscal year 1999 were understated, byapproximately $14.5 million, and (2) for the second quarter of fiscalyear 2001 were overstated, and for the third quarter of fiscal year2001 were understated, by approximately $11 million. As a result ofthese findings, the Company will take disciplinary action with respectto one current SFAE associate concerning this activity. Companymanagement does not believe that these Audit Committee findings ofimproper timing of recording of inventory markdowns will have anyeffect on the restatement (described below) of the Company's priorfinancial statements because the improper timing of recording ofinventory markdowns during the fiscal years 1999 and 2001 did notaffect annual financial results reported for those fiscal years.

Company management's supplemental review and analysis, in partbased on the findings of the Audit Committee's investigation,identified evidence at SFAE of incorrect timing of recording of vendormarkdown allowances that affected the quarterly reporting periods forfiscal years 2003 and 2004. Company management believes that, as aresult of this incorrect timing, gross margin and operating income (1)for the first quarter of fiscal year 2003 were overstated, and for thesecond quarter of fiscal year 2003 were understated, by approximately$3.3 million, (2) for the third quarter of fiscal year 2003 wereoverstated, and for the fourth quarter of fiscal year 2003 wereunderstated, by approximately $4.4 million, (3) for the first quarterof fiscal year 2004 were overstated, and for the second quarter offiscal year 2004 were understated, by approximately $4 million, and(4) for the third quarter of fiscal year 2004 were overstated, and forthe fourth quarter of fiscal year 2004 were understated, byapproximately $6 million. Company management expects to reflect thesequarterly overstated and understated amounts in the restated quarterlyfinancial information for fiscal years 2003 and 2004 that will beincluded in the footnotes to the financial statements that the Companywill include in its Annual Report on Form 10-K for the fiscal yearended January 29, 2005 (the "2004 10-K"). Company management believesthe incorrect timing of recording of vendor markdown allowances didnot affect annual financial results for fiscal years 2003 or 2004.

Status of Financial Statement Restatement and 2004 10-K

The Company's March 3, 2005 press release disclosed that theCompany expected to restate its financial statements for fiscal 1999through the third quarter of fiscal 2004. The Company expects that itsrestatement work will be completed, and the 2004 Form 10-K will befiled, on or shortly after September 1, 2005. The Company also expectsthat its Quarterly Reports on Form 10-Q for the fiscal quarters endedApril 30, 2005 and July 30, 2005 will be filed on or shortly afterSeptember 30, 2005.

As previously disclosed, the Company has informed the Securitiesand Exchange Commission and the Office of the United States Attorneyfor the Southern District of New York of the Audit Committee's initialinvestigation and its supplemental inquiry. The Company is continuingto cooperate fully with investigations being conducted by the SEC andthe Office of the United States Attorney.

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 increased relationship marketing efforts ofproprietary credit card loyalty programs; appropriate inventorymanagement; effective expense control; successful operation of theCompany's proprietary credit card strategic alliance with HSBC BankNevada, N.A.; geo-political risks; changes in interest rates; theoutcome of the formal investigation by the SEC and the inquiry openedby the United States Attorney for the Southern District of New Yorkinto the matters that were the subject of the Audit Committee'sinvestigations; the ultimate amount of reimbursement to vendors ofimproperly collected markdown allowances; the ultimate impact ofimproper timing of recording of inventory markdowns; the ultimateimpact of incorrect timing of recording of vendor markdown allowances;the outcome of the shareholder litigation that has been filed relatingto the matters that were the subject of the Audit Committee's initialinvestigation; the availability of funds, either through cash on handor the Company's revolving credit facility, to repay any amounts dueshould any notes become accelerated; decisions by merchandise andother vendors to restrict or eliminate customary trade and othercredit terms for the Company's future merchandise orders and otherservices, which could require the Company to pay cash or secureletters of credit for such orders and which could have a materialadverse effect on the Company's liquidity position and financialcondition; and the delay in the filing with the SEC of the Company'sForm 10-K for the fiscal year ended January 29, 2005 and its QuarterlyReport on Form 10-Q for the fiscal quarter ended April 30, 2005 andthe consequences thereof. For additional information regarding theseand other risk factors, please refer to Exhibit 99.1 to the Company'sForm 10-K for the fiscal year ended January 31, 2004 filed with theSEC, which may be accessed via EDGAR through the Internet atwww.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.