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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For Fiscal Year Ended: January 29, 2005

or

For the transition period from              to             

Commission File Number: 1-13113

SAKS INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

Registrant’s telephone number, including area code: (205) 940-4000

Securities Registered Pursuant to Section 12 (b) of the Act:

Securities Registered Pursuant to Section 12 (g) of the Act: None

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and 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  ¨    No  x

Indicate by check mark if disclosure of delinquent filers pursuant to 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.  ¨

Indicate by check mark whether registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes  x    No  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of July 29, 2005 (the last business day of the registrant’s most recently completed second fiscal quarter) was approximately $2,815,407,977.

As of August 15, 2005, the number of shares of the Registrant’s Common Stock outstanding was 141,949,607.

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PART I

Item 1. Business.

General

Saks Incorporated, a Tennessee corporation first incorporated in 1919, and its subsidiaries (together the “Company”) operate two business segments, Saks Department Store Group (“SDSG”) and Saks Fifth Avenue Enterprises (“SFAE”).

SDSG currently operates 182 department stores in 19 states under the following nameplates: Parisian (39 stores), Younkers (48 stores), Herberger’s (40 stores), Carson Pirie Scott (31 stores), Bergner’s (14 stores) and Boston Store (10 stores). SDSG stores are principally anchor stores in leading regional or community malls, and the stores typically offer a broad selection of upper-moderate to better fashion apparel, shoes, accessories, jewelry, cosmetics and decorative home furnishings, as well as furniture in selected locations. SDSG stores are promoted as “the best place to shop in your hometown.” In addition, SDSG operates 49 Club Libby Lu mall-based specialty stores, targeting girls aged 4-12 years old.

SFAE includes Saks Fifth Avenue (“SFA”) luxury department stores (56 stores in 25 states) and Off 5th Saks Fifth Avenue Outlet stores (“Off 5th”) (50 stores in 23 states). Saks Fifth Avenue stores are principally free-standing stores in exclusive shopping destinations or anchor stores in upscale regional malls, and the stores typically offer a wide assortment of distinctive luxury fashion apparel, shoes, accessories, jewelry, cosmetics and gifts. Customers may also purchase SFA products by catalog or online at saks.com. Off 5th is intended to be the premier luxury off-price retailer in the United States. Off 5th stores are primarily located in upscale mixed-use and off-price centers and offer luxury apparel, shoes, accessories, cosmetics and decorative home furnishings, targeting the value-conscious customer.

Merchandising, sales promotion, and store operating support functions are conducted in multiple locations. Back office sales support functions for the Company, such as accounting, credit card administration, store planning and information technology, are largely centralized.

A summary of each business segment’s revenue, profitability and total assets for each of the last three years is shown in Note 15: Segment Information, under Notes to Consolidated Financial Statements within Item 8 (Consolidated Financial Statements and Supplementary Data of this Form 10-K) which is contained in this report. All financial information herein gives effect to the restatement described in Note 3: Restatement of Previously Issued Financial Statements, also included within Item 8.

Recent Developments

Audit Committee Investigations

On August 24, 2005, the Company announced completion of management’s confirmatory and supplementary work arising from the findings of the internal investigation conducted by the Audit Committee of the Company’s Board of Directors, which was initially disclosed by the Company on March 3, 2005 (the “Initial Investigation”). The Company also announced the completion of the Audit Committee’s supplemental inquiry that was disclosed on June 3, 2005.

The Initial Investigation was commenced at management’s request. On May 9, 2005, the Company disclosed the independent investigators’ conclusion that, during the Company’s 1999-2003 fiscal years, one of six SFAE merchandising divisions improperly collected markdown allowances from vendors totaling approximately $20 million. The Company also disclosed on May 9, 2005 that Company management was

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undertaking its own work to confirm this amount and to supplementally determine whether that SFAE division improperly collected markdown allowances before fiscal 1999. The Company disclosed on August 24 that management believes that the SFAE division improperly collected from vendors $26.0 million of markdown allowances during the Company’s 1999-2003 fiscal years and $8.2 million of markdown allowances during the 1996–1998 fiscal years. These amounts are attributable to overcollections that resulted from falsification, by merchants in the one SFAE division, of information delivered to vendors.

The Company is advising the affected vendors that it intends to reimburse them for these improperly collected markdown allowances. The Company will also pay the affected vendors interest at the rate of 7.25% per annum, totaling approximately $14.0 million, on these improperly collected markdown allowances. The Company recently began its reimbursement of affected vendors.

The Audit Committee’s investigation also examined SFAE’s allocations to vendors during the 1999-2003 fiscal years of a portion of markdown costs associated with certain of SFAE’s customer loyalty and other promotional activities. The Audit Committee’s investigation concluded that the mechanism for making these allocations was not communicated to vendors. The Company considered these issues and concluded that these allocations did not result in the improper collection of markdown allowances from vendors.

On June 3, 2005, the Company disclosed that the Audit Committee had begun a supplemental inquiry (the “Supplemental Inquiry”) into (1) the timing of recording of inventory markdowns and vendor markdown allowances at SFAE, (2) whether there had been any overcollections of vendor markdown allowances in any of the merchandising divisions of SFAE that had not been the subject of the Initial Investigation, and (3) whether there had been any inappropriate billing/logistics/transportation compliance chargebacks by the Company to any of its merchandise vendors. The Audit Committee requested Company management to review the investigation’s findings regarding the timing of recording of inventory markdowns and to review the timing of recording of vendor markdown allowances.

The Supplemental Inquiry did not find any overcollections of vendor markdown allowances in any of the merchandising divisions of SFAE that had not been the subject of the Initial Investigation. In addition, the Supplemental Inquiry did not find any fraudulent activities with respect to billing/logistics/transportation compliance chargebacks.

The Supplemental Inquiry did find evidence at SFAE of improper timing of recording of inventory markdowns during the fiscal years 1999 and 2001. Company management believes that, as a result of this improper timing, gross margin and operating income (1) for the second quarter of fiscal year 1999 were overstated, and for the third quarter of fiscal year 1999 were understated, by approximately $14.5 million, and (2) for the second quarter of fiscal year 2001 were overstated, and for the third quarter of fiscal year 2001 were understated, by approximately $11.0 million. Company management does not believe that these Audit Committee findings of improper timing of recording of inventory markdowns will have any effect on the restatement (described below) of the Company’s prior financial statements because the improper timing of recording of inventory markdowns during the fiscal years 1999 and 2001 did not affect annual financial results reported for those fiscal years.

Company management’s supplemental review and analysis, in part based on the findings of the Supplemental Inquiry, identified evidence at SFAE of incorrect timing of recording of vendor markdown allowances that affected the quarterly reporting periods for fiscal years 2003 and 2004. Company management believes that, as a result of this incorrect timing, gross margin and operating income (1) for the first quarter of fiscal year 2003 were overstated, and for the second quarter of fiscal year 2003 were understated, by approximately $3.3 million, (2) for the third quarter of fiscal year 2003 were overstated, and for the fourth quarter of fiscal year 2003 were understated, by approximately $4.4 million, (3) for the first quarter of fiscal year

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2004 were overstated, and for the second quarter of fiscal year 2004 were understated, by approximately $4.0 million, and (4) for the third quarter of fiscal year 2004 were overstated, and for the fourth quarter of fiscal year 2004 were understated, by approximately $6.0 million. Company management believes the incorrect timing of recording of vendor markdown allowances did not affect annual financial results for fiscal years 2003 or 2004.

SEC and United States Attorney Investigations

As the Company has previously disclosed, the Company informed the Securities and Exchange Commission (the “SEC”) and the Office of the United States Attorney for the Southern District of New York of the Initial Investigation and Supplemental Inquiry. The Company has been notified that the SEC has issued a formal order of private investigation (the “SEC Investigation”) and that the Office of the United States Attorney has instituted an inquiry (the “United States Attorney Investigation”). The Company is fully cooperating with the SEC and the Office of the United States Attorney.

Review of Lease Accounting Methods

The Office of the Chief Accountant of the SEC on February 7, 2005 issued a letter to the American Institute of Certified Public Accountants regarding certain operating lease accounting issues and their application under Generally Accepted Accounting Principles (“GAAP”). The Company subsequently completed a review of its historical lease accounting methods. As a result of its review, the Company determined that its historical methods of accounting for rent holidays; tenant improvement allowances; and determining lives used in the calculation of depreciation of leasehold improvements and straight-line rent determination for certain leased properties, were not in accordance with GAAP.

Restatement

The Company has determined that the financial statements for the periods from fiscal 1999 through the third quarter of fiscal 2004 should no longer be relied upon because of errors in such financial statements. Accordingly, the Company filed a Form 8-K on March 4, 2005 under Item 4.02(a), whereby the Company concluded that such financial statements should not be relied upon and that the Company would restate its financial statements for these periods to correct for these errors. The Company has also conducted a review of certain other items and made restatement adjustments to its previously issued consolidated financial statements to correct for these certain other items.

The consolidated financial statements and notes thereto included within this Form 10-K have been restated to reflect adjustments to the Company’s previously reported financial information on Form 10-K for fiscal years 1999 through 2003. The Company’s quarterly financial information has also been restated to reflect adjustments to the Company’s previously reported financial information on Form 10-Q for the quarters ended May 1, 2004; July 31, 2004; October 30, 2004; May 3, 2003; August 2, 2003 and November 1, 2003. The Company does not intend to file Forms 10-K/A or Forms 10-Q/A for periods covered by the restatement, as this Form 10-K includes restated information for prior periods.

Sale of Assets

The Company consummated a transaction with Belk, Inc. (“Belk”) on July 5, 2005, in which Belk acquired from the Company, for approximately $622 million in cash, substantially all of the assets directly involved in the Company’s Proffitt’s and McRae’s business operations, plus the assumption of approximately $1 million in capitalized lease obligations and the assumption of certain other ordinary course liabilities associated with the acquired assets. The assets sold included the real and personal property and inventory associated with 22 Proffitt’s stores and 25 McRae’s stores that generated fiscal 2004 revenues of approximately $700 million.

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The Company also announced on April 29, 2005 that it is exploring strategic alternatives for its northern department store division (as a single business operation), operating under the nameplates of Bergner’s, Boston Store, Carson Pirie Scott, Herberger’s and Younkers (which generated fiscal 2004 revenues of approximately $2.2 billion), as well as the Company’s Club Libby Lu specialty store business (which generated fiscal 2004 revenues of approximately $30 million). The strategic alternatives could include the sale of the northern department store division and/or Club Libby Lu.

Tender Offers and Consent Solicitations

On June 14, 2005, the Company received a notice of default with respect to its $230 million 2% Convertible Senior Notes due March 15, 2024 (the “convertible notes”). The notice of default was given by a note holder that stated that it owned more than 25% of the convertible notes. The notice of default stated that the Company breached covenants in the indenture for the convertible notes that require the Company to (1) file with the SEC and the trustee for the convertible notes Annual Reports on Form 10-K and other reports, and (2) deliver to the trustee for the convertible notes, within a 120-day period after the end of the Company’s fiscal year ended January 29, 2005, a compliance certificate specified by the convertible notes indenture. In response to this receipt of a notice of default, on June 20, 2005, the Company announced that it would commence cash tender offers and consent solicitations for three issues of its outstanding senior notes and consent solicitations with respect to two additional issues of its outstanding senior notes and its outstanding convertible senior notes.

On July 19, 2005, the Company completed these cash tender offers and consent solicitations. The consent solicitations (including those that were part of the tender offers) offered holders a one-time fee in exchange for their consent to proposed amendments to the indenture for each issue of notes that would, among other things, extend to October 31, 2005, for purposes of the indentures, the Company’s deadlines to file this Annual Report on Form 10-K and the Company’s Quarterly Report on Form 10-Q for the first fiscal quarter of 2005. Upon completion of the tender offers and consent solicitations, the Company repurchased a total of approximately $585.7 million in principal amount of outstanding senior notes and received consents from holders of a majority of every class of its outstanding senior notes and of its outstanding convertible senior notes. The notes were repurchased at par, which included a consent fee. The repurchase of these notes resulted in a loss on extinguishment of debt of approximately $29.0 million related principally to the write-off of deferred financing costs and a premium on previously exchanged notes. Subsequent to the completion of the tender offers and consent solicitations, the Company repurchased $21.4 million of additional senior notes at par through unsolicited open market repurchases.

Merchandising

In both the SDSG and SFA stores, the Company believes that its commitment to a branded merchandising strategy, enhanced by its merchandise presentation and high level of customer service, makes the Company’s stores a preferred distribution channel for premier brand-name merchandise.

SDSG stores attempt to consistently offer a wide selection of unique and limited distribution merchandise as well as competitively priced national brands. Key brands featured in the Company’s SDSG stores include Liz Claiborne, Jones New York, JH Collectibles, Calvin Klein, Susan Bristol, Marisa Christina, Sigrid Olsen, Polo/Ralph Lauren, Tommy Hilfiger, Columbia, Hart Schaffner & Marx, Estee Lauder, Clinique, Lancome, Chanel, Nine West, Enzo, Franco Sarto, Bandalino, Born, Timberland, Clarks, Dooney & Bourke, Waterford, and Bali. In addition to the these brands, Parisian stores may carry brands such as Karen Kane, BCBG, Garfield & Marks, Tahari, Oakley, Robert Talbott, Hugo Boss, Tommy Bahama, Joseph Abboud, Callaway, Cutter & Buck, Bobbi Brown, Laura Mercier, Trish McEvoy, MAC, Donald Pliner, Stuart Weitzman, Kate Spade, Ferragamo, and

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Brighton, which are typically carried only at specialty stores. SDSG differentiates its offerings from its competitors through exclusive merchandise from its core vendors, assortments from unique and emerging suppliers, and proprietary brands.

SFA stores carry luxury merchandise from both core vendors and new and emerging designers. SFA has key relationships with the leading American and European fashion houses, including Giorgio Armani, Chanel, Dolce and Gabbana, Salvatore Ferragamo, Gucci, Donna Karan, John Varvatos, Calvin Klein, Ralph Lauren, Judith Leiber, Prada, Escada, Carolina Herrera, Oscar de la Renta, St. John, Yves St. Laurent, TOD’S, Ermenegildo Zegna and Max Mara.

The Company has developed a knowledge of each of its trade areas and customer bases for its SDSG, SFA, and Off 5th stores. This knowledge is gained through the Company’s regional merchandising structure in conjunction with store visits by senior management and merchandising personnel and use of on-line merchandise information. The Company strives to tailor each store’s merchandise assortment to the characteristics of its trade areas and customer bases and to the lifestyle needs of its local customers.

Certain departments in the Company’s stores are leased to independent companies in order to provide high quality service and merchandise where specialization, focus, and expertise are critical. The leased departments vary by store to complement the Company’s own merchandising departments. The principal leased department in the SDSG stores is fine jewelry, and the principal leased departments in the SFA stores are furs and certain designer handbags. The terms of the lease agreements typically are between one and seven years and require the lessee to pay for fixtures and provide its own employees. Management regularly evaluates the performance of the leased departments and requires compliance with established customer service guidelines.

For the year ended January 29, 2005, the Company’s percentages of owned sales (exclusive of sales generated by leased departments) by major merchandise category were as follows:

Purchasing and Distribution

The Company purchases merchandise from many vendors. Management monitors profitability and sales history with each vendor and believes it has alternative sources available for each category of merchandise it purchases. Management believes it maintains good relationships with its vendors.

The Company has six distribution facilities serving its stores. Refer to “Item 2. Properties” for a listing of these facilities.

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Each of the Company’s distribution facilities is linked electronically to the Company’s merchandising staff through a warehouse management system that updates the on-hand quantities of each purchase order received. The Company utilizes electronic data interchange (“EDI”) technology with the majority of its vendors, which is designed to move merchandise onto the selling floor more quickly and cost-effectively by allowing vendors to deliver floor-ready merchandise to the distribution facilities. High-speed automated conveyor systems then scan bar coded labels and divert incoming cartons of merchandise to the proper processing areas. Many types of merchandise are processed in the receiving area and immediately “cross docked” to the shipping dock for delivery to the stores. Certain processing areas are staffed with personnel equipped with hand-held radio frequency terminals that can scan a vendor’s bar code and transmit the necessary information to a computer to record merchandise on hand for each store.

Information Technology

Company management believes that technological investments are necessary to support its business strategies, and, as a result, the Company is continually upgrading its information systems to improve efficiency and productivity.

The Company’s information systems provide information deemed necessary for management operating decisions, cost reduction programs, and customer service enhancements. Individual data processing systems include point-of-sale and sales reporting, purchase order management, receiving, merchandise planning and control, payroll, human resources, general ledger, credit card administration, and accounts payable systems. Bar code ticketing is used, and scanning is utilized at point-of-sale terminals. Information is made available on-line to merchandising staff and store management on a timely basis.

The use of EDI technology allows the Company to speed the flow of information and merchandise in an attempt to capitalize on emerging sales trends, maximize inventory turnover, and minimize out-of-stock conditions. EDI technology includes an advance shipping notice system (“ASN”). The ASN system identifies discrepancies between merchandise that is ready to be shipped from a supplier’s warehouse and that which was ordered from the supplier. This early identification provides the Company with a window of time to resolve any discrepancies in order to speed merchandise through the distribution facilities and into its stores.

Marketing

For the SDSG stores, advertising campaigns include fashion and image advertising, price promotions, and special events. The Company uses a multi-media marketing approach for the SDSG stores, including newspaper, television, radio, and direct mail. To promote its image as the fashion and style leader in its trade areas, the Company also sponsors local fashion shows and in-store special events highlighting the Company’s key brands and offerings.

For the SFA stores, the Company’s marketing principally emphasizes the latest fashion trends in luxury merchandise and primarily utilizes direct mail advertising, supplemented with national magazine and local radio advertising. To promote its image as the primary source of luxury goods in its trade areas, SFA sponsors numerous fashion shows and in-store special events highlighting the designers represented in the SFA stores. SFA also participates in “cause-related” marketing. This includes special in-store events and related national advertising designed to drive store traffic, while raising funds for charitable causes and organizations such as women’s cancer research.

In-house advertising and sales promotion staffs, in conjunction with outside advertising agencies, produce the Company’s advertising for both SDSG and SFAE.

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For both SDSG and SFA, the Company utilizes data captured through the use of proprietary credit cards to develop advertising and promotional events targeted at specific customers who have purchasing patterns for certain brands, departments, and store locations.

Proprietary Credit Cards

Prior to April 15, 2003, National Bank of the Great Lakes (“NBGL”), the Company’s wholly owned credit card bank subsidiary, issued all proprietary credit cards to the Company’s customers and made all credit card loans. On April 15, 2003, Household Bank (SB), N.A. (now HSBC Bank Nevada, N.A.), an affiliate of Household International (“HSBC”), acquired the Company’s proprietary credit card business, consisting of the proprietary credit card accounts owned by NBGL and the Company’s ownership interest in the assets of the Saks Credit Card Master Trust, which previously owned and securitized the accounts receivable generated by the proprietary credit card accounts.

As a result of the transaction, and pursuant to a program agreement with a term of ten years, HSBC establishes and owns proprietary credit card accounts for customers of the Company’s operating subsidiaries, retains the benefits and risks associated with the ownership of the accounts, receives the finance charge income and incurs the bad debts associated with those accounts. Pursuant to a servicing agreement with a ten-year term, the Company continues to provide key customer service functions, including new account opening, transaction authorization, billing adjustments and customer inquiries, and receives compensation from HSBC for the provision of these services.

Historically, proprietary credit card holders have shopped more frequently with the Company and purchased more merchandise than customers who pay with cash or third-party credit cards. The Company also makes frequent use of the names and addresses of the proprietary credit card holders in its direct marketing efforts.

The Company seeks to expand the number and use of the proprietary credit cards by, among other things, providing incentives to sales associates to open new credit accounts, which generally can be opened while a customer is visiting one of the Company’s stores. Customers who open accounts are frequently entitled to discounts on initial and subsequent purchases. Proprietary credit card customers are sometimes offered private shopping nights, direct mail catalogs, special discounts, and advance notice of sale events. The Company has created various loyalty programs that reward customers for frequency and volume of proprietary charge card usage.

There are approximately 5.0 million proprietary credit accounts that have been active within the prior twelve months, and approximately 45% of the Company’s 2004 sales were transacted on the proprietary credit cards.

Trademarks and Service Marks

The Company owns many registered trademarks and service marks, including, but not limited to, “Saks Fifth Avenue,” “SFA,” “S5A,” “The Fifth Avenue Club,” and “Off 5th,” along with its various other store names and its private brands. Management believes its trademarks and service marks are important and that the loss of certain of its trademarks or trade names, particularly the store nameplates, could have a material adverse effect on the Company. Many of the Company’s trademarks and service marks are registered in the United States Patent and Trademark Office. The terms of these registrations are generally ten years, and they are renewable for additional ten-year periods indefinitely so long as the marks are in use at the time of renewal. The Company is not aware of any claims of infringement or other challenges to its right to register or use its marks in the United States that would have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

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From time to time, the Company also licenses the trademarks of designers and celebrities so as to be able to offer differentiated product in its stores. Examples of such licenses include those for the trademarks Jane Seymour, Laura Ashley, Ruff Hewn, and Breckenridge, each of which the Company has the exclusive right to use in certain merchandise categories.

Reliance on Fifth Avenue Store

The Company’s Flagship Saks Fifth Avenue store located on Fifth Avenue in New York City accounted for approximately 8% of total Company owned sales and approximately 18% of SFAE’s owned sales in 2004 and plays a significant role in creating awareness for the Saks Fifth Avenue brand name.

Customer Service

The Company believes that good customer service contributes to increased store visits and purchases by its customers.

SDSG stores are intended to be customer-friendly and easy to shop. SDSG stores generally offer two types of service. A higher degree of personalized service is typically offered in several areas of the stores including cosmetics, shoes, women’s better sportswear, women’s special size sportswear, men’s tailored clothing, men’s better sportswear, intimate apparel, china, and furniture. These departments frequently offer clienteling programs and dedicated checkout facilities and are staffed by associates with significant product training. Convenience-oriented service is generally offered in the remaining areas of the stores. These areas frequently feature centralized customer service centers and are staffed with knowledgeable sales associates intending to deliver efficient transactions.

At SFAE, the Company’s goal is to deliver an inviting, customer-focused shopping experience and to “expertly deliver personalized style” to each customer. Compensation for sales associates is, in part, based upon customer satisfaction measures and productivity. Sales associates undergo extensive service, selling, and product-knowledge training and are encouraged to maintain frequent, personal contact with their customers. Sales associates are instructed to keep detailed customer records, send personalized thank-you notes, and routinely communicate with customers to advise them of new merchandise offerings and special promotions. Typical stores also provide comfortable seating areas and refreshments throughout the store. Most SFA stores offer a complimentary personal shopping service called “The Fifth Avenue Club.”

At both SDSG and SFAE, good customer service is encouraged through the development and monitoring of sales/productivity goals and through specific award and recognition programs.

Seasonality

The Company’s business, like that of many retailers, is subject to seasonal influences, with a significant portion of its sales and net income realized during the second half of the fiscal year, which includes the holiday selling season. Generally, more than 30% of the Company’s sales and substantially all of its net income are generated during the fourth fiscal quarter.

Competition

The retail business is highly competitive. The Company’s stores compete with several national and regional department stores, specialty apparel stores, designer boutiques, outlet stores, discount stores, general and mass merchandisers, and mail-order and electronic commerce retailers, some of which have greater financial and other

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resources than those of the Company. Management believes that its knowledge of its trade areas and customer base, combined with providing a high level of customer service and a broad selection of quality fashion merchandise at appropriate prices in good store locations, provides the opportunity for a competitive advantage.

Associates

As of August 1, 2005, the Company employed approximately 45,000 associates, of which approximately 45% were employed on a part-time basis. The Company hires additional temporary associates and increases the hours of part-time employees during seasonal peak selling periods. Less than one percent of the Company’s associates are covered by collective bargaining agreements. The Company considers its relations with its associates to be good.

Website Access to Information

The Company provides access free of charge through the Company’s website, www.saksincorporated.com, to the Company’s annual report on Form 10-K, quarterly reports on From 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission.

Item 1A. Executive Officers of the Registrant.

The name, age, and position held with the Company for each of the executive officers of the Company are set forth below.

R. Brad Martin has served as a Director since 1984 and became Chairman of the Board in February 1987 and Chief Executive Officer in July 1989.

Stephen I. Sadove joined the Company in January 2002 as Vice Chairman and assumed the additional responsibility of Chief Operating Officer in March 2004. Mr. Sadove served as Senior Vice President of Bristol-Myers Squibb and President of Bristol-Myers Squibb Worldwide Beauty Care from 1996 until January 2002. From 1991 until 1996, Mr. Sadove held various other executive positions with Bristol-Myers Squibb. From 1975 until 1991, Mr. Sadove held various positions of increasing responsibility with General Foods USA.

James A. Coggin was named President and Chief Administrative Officer of Saks Incorporated in November 1998. Mr. Coggin served as President and Chief Operating Officer of the Company from March 1995 to November 1998 and served as Executive Vice President and Chief Administrative Officer of the Company from March 1994 to March 1995. From 1971 to March 1994, Mr. Coggin served in various management and executive positions with McRae’s, Inc.

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Douglas E. Coltharp joined the Company in November 1996 as Executive Vice President and Chief Financial Officer. From 1987 to November 1996, Mr. Coltharp was employed by Nationsbank (currently Bank of America), where he held a variety of positions including the post of Senior Vice President of Corporate Finance.

Charles J. Hansen was promoted to Executive Vice President and General Counsel of the Company in September 2003. He served in several capacities in the Company’s Law Department from February 1998 to September 2003, most recently as Senior Vice President and Deputy General Counsel. Prior to that, he served in various legal capacities with Carson Pirie Scott & Co. and its predecessors, including the post of Vice President, General Counsel, and Secretary. Prior to that, he was an attorney with Baxter International, Inc. and Shearman & Sterling.

Kevin G. Wills was appointed to Executive Vice President of Finance and Chief Accounting Officer, the Company’s principal accounting officer, in May 2005. He joined the Company in September 1997 and has served in the following capacities: Vice President of Financial Reporting from September 1997 to August 1998; Senior Vice President of Strategic Planning from September 1998 to August 1999; Senior Vice President of Planning and Administration of SDSG from September 1999 to January 2003; and Executive Vice President of Operations for the Company’s Parisian business from February 2003 to May 2005. Prior to joining the Company, Mr. Wills was Vice President and Controller for the Tennessee Valley Authority and before that, he was an audit manager with Coopers and Lybrand.

Julia A. Bentley has served as Senior Vice President of Investor Relations and Communications and Secretary of the Company since September 1997. Ms. Bentley joined the Company in 1987 and has held various financial positions, including Chief Financial Officer. Prior to joining the Company she was an audit manager with Ernst & Young.

Item 2. Properties.

The Company currently operates six principal distribution facilities as follows:

The Company’s principal administrative offices are as follows:

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The following table sets forth information about the Company’s stores as of August 1, 2005. The majority of the Company’s stores are leased. Store leases generally require the Company to pay a fixed minimum rent and a variable amount based on a percentage of annual sales at that location. Generally, the Company is responsible under its store leases for a portion of mall promotion and common area maintenance expenses and for certain utility, property tax, and insurance expenses. Typically, the Company contributes to common mall maintenance and is responsible for property tax and insurance expenses at its owned locations. Generally, store leases have primary terms ranging from 20 to 30 years and include renewal options ranging from 5 to 20 years. Off 5th leases typically have shorter terms.

In addition to the stores listed above, SDSG also operated 49 Club Libby Lu specialty stores at August 1, 2005. These stores are leased and are typically one to two thousand square feet of space in regional malls.

Item 3. Legal Proceedings.

Investigations

For information on the Company’s Audit Committee investigations, the SEC Investigation and the United States Attorney Investigation, See Item 1. “Business – Recent Developments.”

Vendor Litigation

On May 17, 2005, International Design Concepts, LLC (“IDC”), filed suit against the Company in the Southern District of New York raising various claims, including alleged breach of contract, fraud and unjust enrichment. The suit alleges that from 1996 to 2003 the Company improperly took chargebacks and deductions for vendor markdowns, which resulted in IDC going out of business. The suit seeks damages in the amount of such unauthorized chargebacks and deductions. A second amended complaint was filed by IDC on June 14, 2005 asserting an additional claim for damages under the Uniform Commercial Code for vendor compliance chargebacks.

On May 20, 2004, Onward Kashiyama USA, Inc. (“Onward”) filed a breach of contract claim against the Company and SDSG in New York Supreme Court. The suit alleged that, starting in 1999, the Company took unauthorized chargebacks with respect to Onward’s delivery of merchandise to the Company. The suit sought damages in the amount of such allegedly improper chargebacks. The Initial Investigation determined that the

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Company improperly collected markdown allowances from Onward. The Company and Onward settled the claim on August 23, 2005.

As discussed above in Item 1 “Recent Developments – Audit Committee Investigation,” the Company intends to reimburse all vendors from whom markdown allowances were determined to have been improperly collected. For additional information on the vendor repayment plan, see Item 1 “Recent Developments – Audit Committee Investigation.”

Shareholder Derivative Suits

On April 29, 2005, a shareholder derivative action was filed in the Circuit Court of Jefferson County, Alabama for the putative benefit of the Company against the members of the Board of Directors and certain executive officers alleging breach of their fiduciary duties in failing to correct or prevent problems with the Company’s accounting and internal control practices and procedures, among other allegations. Two similar shareholder derivative actions were filed on May 4, 2005 and May 5, 2005, respectively, in the Chancery Court of Davidson County, Tennessee. All three actions generally seek unspecified damages and disgorgement by the executive officers named in the complaints of cash and equity compensation received by them.

On July 12, 2005, the Board of Directors created a Special Litigation Committee (“SLC”) to investigate the derivative claims and to determine whether the litigation is in the best interests of the Company. On August 1, 2005, the Company filed a motion in the Alabama action to dismiss the complaint, or, in the alternative, to stay all proceedings pending the outcome of the SLC’s investigation. On August 19, 2005, the Company filed an agreed motion in the Tennessee actions to stay all proceedings for a period of ninety days pending the recommendation of the SLC as to whether the Company should pursue the litigation. The SLC’s investigation is ongoing, but it is too early to predict when the SLC will complete its work.

Other

In addition to the proceedings described above, the Company is involved in several legal proceedings arising from its normal business activities and has accruals for losses where appropriate. Management believes that none of these additional legal proceedings will have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

During 2003, the Company voluntarily entered into a consent order with the U.S. Office of the Comptroller of the Currency (the “OCC”). The consent order requires, among other things, that the Company implement and monitor policies and procedures to ensure compliance with the provisions of the Bank Secrecy Act and the related regulations of the OCC, including without limitation the requirements to maintain policies and procedures designed to comply with the record keeping and reporting requirements of the Bank Secrecy Act and to timely file Currency Transaction Reports and Suspicious Activity Reports with respect to certain currency payments taken by the Company on proprietary credit card accounts for which the Company or its subsidiaries act as servicer. The Company believes that it is complying in all material respects with the consent order.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The Company’s common stock trades on the New York Stock Exchange (“NYSE”) under the symbol SKS. As of August 15, 2005, there were approximately 2,000 shareholders of record. The prices in the table below represent the high and low sales prices for the stock as reported by the NYSE.

The Company did not declare any dividends to common shareholders for the fiscal year ended January 31, 2004. For the fiscal year ended January 29, 2005, the Company declared a special one-time cash dividend of $2.00 per share of common stock payable on May 17, 2004 to holders of record on April 30, 2004. The dividend payout totaled approximately $285 million. Future dividends, if any, will be determined by the Company’s Board of Directors in light of circumstances then existing, including earnings, financial requirements, and general business conditions.

The Company did not repurchase any common stock during the fourth quarter of 2004.

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Item 6. Selected Financial Data.

The following selected financial data are derived from the consolidated financial statements of the Company and have been restated for each of 2003, 2002, 2001 and 2000 to reflect adjustments that are further discussed in Recent Developments within Item 1., Business and in Note 3: Restatement of Financial Statements under Notes to Consolidated Financial Statements included within Item 8., Consolidated Financial Statements and Supplementary Data of this Form 10-K. The selected financial data set forth below should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s Consolidated Financial Statements and notes thereto and the other information contained elsewhere in this Form 10-K.

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The following tables present the effect of the adjustments resulting from the restatement on the Company’s Consolidated Statements of Income and the Condensed Consolidated Balance Sheets as of and for the years ended January 31, 2004, February 1, 2003, February 2, 2002 and February 3, 2001, including the percentage increase or decrease. See Management’s Discussion and Analysis of Financial Condition and Results of Operation –“Restatement of Previously Issued Financial Statements” and Note 3 of the Consolidated Financial Statements for a description of the transactions resulting in the adjustments and for analyses of the effect of the adjustments on the principal consolidated balance sheet and statement of income accounts affected.

CONDENSED STATEMENT OF INCOME

See Management’s Discussion and Analysis of Financial Condition and Results of Operations - “Restatement of Previously Issued Financial Statements” and Note 3 of Notes to Consolidated Financial Statements.

NM is defined as “Not Meaningful.”

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CONDENSED STATEMENT OF INCOME

See Management’s Discussion and Analysis of Financial Condition and Results of Operations - “Restatement of Previously Issued Financial Statements” and Note 3 of Notes to Consolidated Financial Statements.

NM is defined as “Not Meaningful.”

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CONDENSED STATEMENT OF INCOME