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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended: October 30, 2004

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

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

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

As of November 27, 2004, the number of shares of the Registrant’s Common Stock outstanding was 139,730,302.

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SAKS INCORPORATED and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

(Unaudited)

See notes to condensed consolidated financial statements.

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SAKS INCORPORATED and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

See notes to condensed consolidated financial statements.

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SAKS INCORPORATED and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)

See notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION AND ORGANIZATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended October 30, 2004 are not necessarily indicative of the results that may be expected for the year ending January 29, 2005. The financial statements include the accounts of Saks Incorporated and its subsidiaries (collectively, the “Company”). All intercompany amounts and transactions have been eliminated. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2004.

In order to maintain consistency and comparability between periods presented, certain amounts have been reclassified from previously reported financial statements to conform to the financial statement presentation of the current period. These reclassifications have no effect on previously reported net income, shareholders’ equity or cash flows.

The accompanying balance sheet at January 31, 2004 has been derived from the audited financial statements at that date but does not include all disclosures required by generally accepted accounting principles.

The Company is a national retailer currently operating, through subsidiaries, traditional and luxury department stores. The Company operates the Saks Department Store Group (“SDSG”), which consists of stores operated under the following nameplates: Proffitt’s, McRae’s, Younkers, Parisian, Herberger’s, Carson Pirie Scott, Bergner’s, and Boston Store, as well as Club Libby Lu specialty stores. The Company also operates Saks Fifth Avenue Enterprises (“SFAE”), which consists of Saks Fifth Avenue luxury department stores and Saks Off 5^th stores.

Net sales include sales of merchandise (net of returns and exclusive of sales taxes), commissions from leased departments and shipping and handling revenues related to merchandise sold. Commissions from leased departments were $8,754 and $8,880 for the three months ended October 30, 2004 and November 1, 2003, respectively. Leased department sales were $60,137 and $60,017 for the three months ended October 30, 2004 and November 1, 2003, respectively, and were excluded from net sales. Commissions from leased departments were $29,504 and $27,807 for the nine months ended October 30, 2004 and November 1, 2003, respectively. Leased department sales were $198,440 and $186,715 for the nine months ended October 30, 2004 and November 1, 2003, respectively, and were excluded from net sales.

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Cash and cash equivalents primarily consists of cash on hand in the stores, deposits with banks and investments in money market accounts and short-duration fixed income mutual funds. Certain cash equivalents are stated at cost, which approximates fair value. Cash and cash equivalents included $249,000 at November 1, 2003, invested principally in various short-duration fixed income funds, which were marked to market. Income earned on these cash equivalents was $369 and $1,541 for the three-month periods ended October 30, 2004 and November 1, 2003, respectively. For the nine-month periods ended October 30, 2004 and November 1, 2003, income earned on these cash equivalents was $2,706 and $3,985, respectively. These amounts were reflected in Interest Expense.

NOTE 2 - EARNINGS PER COMMON SHARE

Calculations of earnings per common share (“EPS”) for the three months and nine months ended October 30, 2004 and November 1, 2003 are as follows (income (loss) and shares in thousands):