Corporate Video Scripts

TITLE: Credit overview/loyalty LENGTH: EDIT DATE: AIR DATE: May 27 corp.

VIDEO

MONTAGE: Credit card swipes, cash registers, credit applications being filled out

WIDE Jodi walking in cosmetics ‐ camera is outside the entrance looking in.

Elmhurst footage

MED in COSMETICS

Elmhurst footage

AUDIO

MUSIC UP AND UNDER

JODI: One of the major goals for Saks Incorporated in 1999 is to increase the percentage of our total sales made using our in‐house credit cards. In 1998, Saks Incorporated associates opened nearly 1.2 million new accounts across all divisions. This year we plan to open more than 1.2 million new accounts ‐ and there are a number of initiatives planned for helping us reach that goal.

V/) One exciting change is the conversion of the Saks Fifth Avenue credit card portfolio to the Saks Incorporated credit system. Both the credit and IT departments are currently focused on the massive task of converting the system which is currently managed by an outside company. By July of this year, the conversion will be complete and we will begin to service Saks Fifth Avenue customers from our Elmhurst, Illinois credit facility. The conversion will create more than 200 new full time and part time positions in the Chicago area and will allow us to provide more personalized service to our Saks Fifth Avenue customers.

1

2

3

4

signs

WIDE in COSMETICS Strolling

GFX: (Over falling credit card footage) ACQUISITION of new accounts ACTIVATION of dormant accounts LOYALTY building

MONTAGE: footage of instant credit applications being signed with the word ACQUISITION appearing full screen

MEN’S Wide shot as Jodi walks around to the back of the wrap stand, camera follows.

Same shot ‐ CU on Jodi’s hand taking out a credit app. shot pulls out.

JODI (On camera) Saks Fifth Avenue associates will hear more about that conversion on the June 10 Saks Fifth Avenue show.

V/O The credit department is in the process of installing cutting‐edge technology to better serve all of our external and internal customers as well. This technology includes a new call management system, a new phone monitoring system, a new scheduling system and a new automated voice system creating a state of the art credit facility for our company.

JODI (On camera) With these streamlined systems and facilities in place, Credit Promotions is currently blanketing the company with campaigns focusing on three primary points:

V/O Acquisition of new accounts Activation of dormant accounts and building loyalty among customers who already use our account.

MUSIC UP AND UNDER

JODI (On camera) As I mentioned earlier, a major goal for the year is to open at least 1.2 million new accounts ‐ so that’s our company’s ACQUISITION goal for the year.

How will this goal be accomplished?

Although some of these acquisitions will come from external credit

5

6

7

8

GFX: (Over blank credti app. footage) Building list Customers must: * be in the store * have photo ID and credit card

* be 18 or older * sign and date the applications

* check “yes” or “no” for Accountgard Protection

BUST in MEN’s at wrap stand

MONTAGE: hands with regular credit cards swiping, the word ACTIVATION comes full screen.

WIDE walking down the aisle in MEN’S

B‐roll of shoppers

promotions such as the pre‐approved mailings and telemarketing, the majority of these will come from Instant Credit processed by sales associates throughout the company.

(SWING)

Here’s a reminder of some procedures that will help move you and your customer through the Instant Credit process more efficiently:

9

V/O: Customers can use the Instant

Credit application only when they’re 10 in the store.

Customers must have photo

identification

and a major credit card when

applying for Instant Credit.

Verify that the customer is of legal age ‐ 18, and make sure the customer has signed and dated the application.

11

And finally, for all divisions except

Saks Fifth Avenue, ensure the

customer has checked either yes or no for Accountgard Protection.

JODI (On camera) By following these simple steps, and by setting division, store, and personal goals for soliciting 12 instant credit ‐ everyone becomes an active participant in achieving the

credit ACQUISITION goals of our

company.

13

MUSIC UP AND UNDER

WIDE walking up to the wrap stand.

MONTAGE: CU of Loyalty credit cards in hands with the word LOYALTY coming full screen.

KIDS CU of Jodi’s hand swiping a card, pulls out.

Background footage of loyalty cards, then each individual card comes full as it’s mentioned

JODI (On camera) Another important focus for corporate credit is the “Activation” of inactive accounts.

First, research is conducted to determine underpenetrated markets.

An underpenetrated market is one where the average percentage of the total store’s business that is done on the in‐house card is below that division’s average.

V/O: For example, with the purchase of 15 former Mercantile stores last fall, just over 160,000 accounts were converted to our credit cards in these markets.

That represents about 65% percent of all credit accounts opened in these markets and it takes some time and effort to build sales on these new accounts. For example, the percentage of credit sales in Nashville where we have five of these new stores is 37% versus a 42% average for established Proffitt’s stores in that area. Many areas of the company are focusing on building store traffic and sales in underpenatrated markets like these.

Corporate credit does its part in these markets by giving the inactive customers in the area incentives to come visit the store and use their credit card.

JODI (On camera) Here again, sales associates are invaluable to the process: by simply asking each customer “May I put this on your Proffitt’s card?” selling associates take an active role in the company’s success.

14

15

16

17

18

Wide

GFX (over loyalty card footage background) “Qualifications & Benefits” Spend a minimum of $1,000 each year

Qualifying customer receives a new credit card and a gift check.

bust

GFX (over loyalty card footage background) “Qualifications & Benefits” Members earn one base point for every dollar spent using their card.

“Qualifications & Benefits” All loyalty members who earn a minimum of 1,000 points in the previous calendar year will receive a merchandise gift check based on their total points.

“Qualifications & Benefits” Priority Alterations and Free gift wrap certificates; and exclusive mailings including the quarterly full color mini‐ magazine

Med

So, we ACQUIRE new accounts, we ACTIVATE existing credit accounts ‐ what’s left? The LOYALTY factor.

MUSIC UP AND UNDER

JODI: Building customer loyalty is a major component in solidifying our company’s long‐term success.

Corporate Credit is taking a leading role in building customer loyalty by aggressively moving credit loyalty programs to the forefront.

V/O: The current loyalty programs ‐ either Gold Cards or First Place ‐ are in place in McRae’s, Younkers, Proffitt’s and Parisian. Saks Fifth Avenue has the Saks First program which is similar to the Gold Card and First Place programs. Loyalty programs are being developed for the Herberger’s and Carson Pirie Scott divisions as well.

JODI: Shoppers using the Gold or First Place cards represent the very best customers in terms of annual spending with our company.

V/O In order to be a part of the program, the customer must spend a minimum of $1,000 in that division in one year. Accounts are reviewed each January to determine who qualifies and who is dropped from the program. If a customer qualifies, they receive a new credit card, a letter explaining the benefits of the program, and a gift check welcoming that

19

20

21

22

23

24

GFX (over loyalty card footage background) Elane’s chart (Loyalty by division)

Med.

GFX(over card footage background) Elane’s chart (regular charge cards by division)

Bust

GFX (over card footage background) Chart showing both Loyalty and non loyalty card accounts. Highlighting examples as she speaks.

customer to the program.

JODI: (on camera) When introducing the loyalty card programs to customers in your department, make sure to explain the premium services of the program.

V/O: Members earn one Base Point for every dollar spent using their Gold or First Place Card. All loyalty members who earn a minimum of 1,000 points in the previous calendar year will receive a merchandise gift check based on their total points.

Other perks of the program include Priority Alterations and Free gift wrap certificates; and exclusive mailings including the quarterly full color mini‐ magazine featuring seasonal trends.

JODI (on camera) Perhaps the biggest motivation for introducing charge customers to the loyalty program, is to simply look at the numbers. Here’s a look at how the Loyalty card programs add up by division.

V/O This chart shows us how many Loyalty card participants there are by each division, what percent these account holders represent of total charge account customers in that division; how much each of these customers contribute to the total percent of credit sales; the percent of customers that were active shoppers last year; and finally, the average amount each of these active loyalty account cardholders spends per year.

JODI: As you can see, each of these

25

26

27

28

29

30

31

WIDE Walking out

GFX (over card footage background) building 10.3 million regular in‐house card holders + 1.2 million new accounts we hope to acquire = 11.5 million regular in‐house charge accounts

GFX (over card footage background) building 50% or 5.7 million current active accounts x $500 average spent per year = $2.8 billion dollars.

BETTER ‐ Wide walking

GFX (over card footage background) 50% or 5.7 million current active accounts building x 25% customers newly activated = 8.2 million customers = $4.1 billion dollars

BETTER ‐ Med.

customers spent an average of $1,500 in 1998. This represents $499 million in sales to Saks Incorporated.

Now let’s take a look at the standings of our standard in‐house non‐loyalty charge accounts.

V/O: Here we see the number of card holders by division; the percentage of those card holders who actively made a purchase last year; and the average amount spent by these non‐loyalty card holders during the course of a year.

JODI: Now here’s where the numbers really count ‐ let’s compare:

V/O: Customers using Younkers’ “Gold” card spent an average of $1,670 last year ‐ while customers using a regular Younkers card spent only $468 during the year.

In addition Gold card or First Place card customers throughout our various divisions actively used their cards over 95% of the time last year, however, nearly 50% of our regular card holders did not make one single purchase at all last year.

JODI: Pretty amazing don’t you think?

Now let’s do some forecasting with these numbers using our “Acquisitions,” “Activation,” and “Loyalty” initiatives.

V/O: According to the charts we’ve been looking at, we have a total of approximately 10.3 million regular in‐ house card holders ‐ those are the non‐loyalty accounts. We add to that

32

33

34

35

36

37

38

GFX: (over card footage background) 11.5 million regular in‐house charge accounts x 25% upgraded to loyalty accounts building = 2.8 million customers x $1,500 average each year = $6.1 billion dollars

BETTER ‐ Med.

BETTER ‐ Wide Jodi walks out

MONTAGE

number the 1.2 million new accounts we hope to acquire this year, giving us a grand total of 11.5 million regular in‐house charge accounts.

Now remember, only about 50% or 5.7 million of these accounts are active ‐ so their $500 average per year generates around $2.8 billion dollars.

JODI (on camera) So what if we activated 25% more of these card holders bringing our total number of active card customers from 5.7 million to 8.2 million.

V/O: That brings our sales from these shoppers alone up from $2.8 billion to $4.1 billion dollars.

JODI (on camera) Now it gets really exciting! Let’s upgrade 25% of those regular account holders ‐ which if you’re paying attention, will be 11.5 million customers if we reach our acquisition goals this year ‐ and let’s make them loyalty card holders.

V/O: We would then have 2.8 million customers spending an average of $1,500 each year instead of $500 per year for a grand total of $6.1 billion dollars.

JODI: (On camera) It’s all just fascinating, don’t you think? And all of this success really boils down to understanding and embracing three simple corporate‐wide initiatives: acquisition, activation and loyalty.

(swing)

Well, I hope you’ve enjoyed our little math tutorial. Good luck with your credit goals for the year. Now if you’ll excuse me, I’m off to do a little activating myself!

MUSIC UP AND OUT

Script for CEO Brad Martin’s loyalty segment of the May 20 “Psychology of Our Customer” Corporate Broadcast ****BRAD**** SO FAR THIS MORNING WE’VE HEARD SOME VALUABLE INFORMATION FROM EXPERTS WHO HAVE SHED SOME NEW LIGHT ON WHAT MAKES OUR CUSTOMER’S TICK AND HOW WE CAN BEHAVE IN A WAY TO ACCOMMODATE OUR CUSTOMER’S SPECIFIC NEEDS. THE SINGLE MOST IMPORTANT FACTOR IN THE SUCCESS OF OUR COMPANY IS CREATING AND MAINTAINING RELATIONSHIPS BETWEEN CUSTOMERS AND ASSOCIATES. NOW THAT MAY SEEM LIKE A HEAVY BURDEN FOR OUR SALES ASSOCIATES TO CARRY, BUT BUILDING CUSTOMER LOYALTY IS NOT TO LIMITED HOW SALES ASSOCIATES PERFORM AT THE WRAP STAND. THE SUCCESS OR FAILURE OF OUR COMPANY IS IMPACTED BY EVERY PERSON IN EVERY DEPARTMENT OF THIS COMPANY. FOR EXAMPLE, ALTHOUGH SPEED AND ACCURACY OF TRANSACTIONS AT THE REGISTER IS ONE FACTOR GREATLY IMPACTING THE LOYALTY OF A CUSTOMER, SOME OF THE BIGGEST ISSUES WHICH IMPEDE CUSTOMER LOYALTY INCLUDE: BEING OUT OF STOCK ON ADVERTISED ITEMS, NOT STOCKING BASIC ITEMS, AND THE INTEGRITY OF OUR PRICING. WE MUST ALL TAKE AN ACTIVE ROLL IN SUPPORTING EACH OTHER AS WE FOCUS ON OUR COMPANY’S GOAL OF EXCELLENT CUSTOMER SERVICE. ONE PRO-ACTIVE APPROACH IS TO EVALUATE THE RELATIONSHIP BETWEEN CUSTOMER LOYALTY AND ASSOCIATE LOYALTY. AS YOU BEGIN TO THINK ABOUT THESE TWO COMPONENTS, IT’S EASY TO SEE HOW OUR HAPPINESS AND THAT OF OUR CUSTOMERS IS INTERTWINED. AND ONCE YOU’VE IDENTIFIED THE CORRELATION, YOU CAN BEGIN ACTIVELY FOSTER AN ENVIRONMENT OF GROWTH AND OPPORTUNITY BY RECOGNIZING TEAM MEMBERS FOR THEIR LOYAL SERVICE. JUST AS SALES ASSOCIATES MUST BE SENSITIVE IN HOW THEY GREET AND THANK CUSTOMERS IN OUR STORES, MANAGERS MUST BE SENSITIVE IN ISSUING DIRECTIVES BY ACCESSING THE IMPACT ON THE FRONT-LINE. AND JUST AS WE MUST LISTEN TO THE NEEDS OF OUR CUSTOMERS IN ORDER TO BUILD A WINNING RELATIONSHIP WITH THEM, MANAGERS MUST ALSO LISTEN TO AND INVOLVE ASSOCIATES IN DECISIONS EFFECTING THEM WHETHER IT’S NEW CORPORATE BENEFITS OR SCHEDULING HOURS. REFLECT UPON OUR FOUR CORNERSTONES OF STYLE, QUALITY, SERVICE AND INTEGRITY, AND THINK FOR A MOMENT, HOW CAN YOU GO THE EXTRA MILE TO SOLVE A PROBLEM, NOT JUST A PROBLEM WITH ONE OF OUR VALUED CUSTOMERS, BUT PROBLEMS EFFECTING CO-WORKERS AS WELL USING THOSE CORNERSTONES AS YOUR ROAD MAP. THINK ABOUT

IT . . . WHEN HAVE YOU OR ANYONE YOU KNOW EVER BEEN JUMPED ON FOR USING GOOD JUDGMENT AND COMMON SENSE FOR TRYING TO ACCOMMODATE A CUSTOMER OR HELP A CO-WORKER? BY DEVELOPING A MIND-SET WHICH FOCUSES ON PAYING ATTENTION TO CUSTOMERS AND CO-WORKERS IN ORDER TO BUILD WINNING RELATIONSHIPS, THE SUCCESS WE EXPERIENCE AS INDIVIDUALS WILL LEAD THE WAY TO OUR SUCCESS AS A COMPANY. ****JODI (LIVE)****

*** 6-24-99*** *** SAKS TV – INFORMATION TECHNOLOGY **** **** LIVE PROMPTOR SCRIPT *** ***(INTRO TAPE *** *** DENISE *** FROM THE COMPUTERS IN OUR OFFICES TO THE SPACE-AGE FABRICS IN OUR STORES - IT’S THE WONDERFUL WORLD OF TECHNOLOGY COMING UP NEXT ON SAKS TV. *** TAPE (SAKS TV OPEN) *** *** DENISE *** WHEN YOU STOP TO CONSIDER ALL OF THE WAYS TECHNOLOGY TOUCHES OUR LIVES, IT CAN BE MIND-BOGGLING. GONE ARE THE DAYS OF MANUAL TYPEWRITERS AND HAND DELIVERED TELEGRAMS - TODAY IT’S LAP-TOP COMPUTERS AND COMMUNICATION VIA EMAIL. IN THIS EDITION OF SAKS TV, WE EXPLORE PLANS AND INITIATIVES DESIGNED TO MAXIMIZE OUR SUCCESS AS WE HEAD INTO THE MILLENNIUM. EXECUTIVE VICE PRESIDENT & CHIEF INFORMATION OFFICER - DAN SMITH JOINS US LIVE LATER TO ANSWER YOUR CALLS. BUT FIRST, LET’S BEGIN OUR JOURNEY INTO THE WONDERFUL WORLD OF TECHNOLOGY WITH AN IN-DEPTH LOOK AT THE SAKS INCORPORATED INFORMATION TECHNOLOGY TEAM. (SWING) THE I.T. DIVISION CONSISTS OF ASSOCIATES WITH A WIDE VARIETY OF SKILLS, ALL OF WHICH KEEP OUR COMPANY’S TECHNOLOGY UP TO DATE AND IN SMOOTH WORKING ORDER. TO UNDERSTAND THE VARIOUS INITIATIVES AND SUPPORT I.T. PROVIDES, IT MIGHT BE HELPFUL TO UNDERSTAND HOW THE I.T. TEAM IS STRUCTURED. FIRST THERE IS THE APPLICATIONS TEAM. THESE PEOPLE WORK TO DEVELOP NEW SYSTEMS FOR THE COMPANY SUCH AS THE MERCHANT’S NEW VENDOR ANALYSIS SYSTEM. THEY ARE ALSO RESPONSIBLE FOR TROUBLE-SHOOTING EXISTING SYSTEMS SUCH AS THOSE USED BY SALES ASSOCIATES AT POINT OF SALE TERMINALS. NEXT THERE’S THE COMPUTER OPERATIONS TEAM WHO IS IN CHARGE OF MONITORING THE MAINFRAME. THIS TEAM ENSURES THE MAINFRAME IS PROCESSING ALL OF THE DATE CORRECTLY FOR OUR VARIOUS CORPORATE SYSTEMS SUCH AS CREDIT AND SALES AUDIT. IF THE MAINFRAME ISN’T WORKING PROPERLY, THE COMPUTER OPERATIONS TEAM GETS THE RIGHT FOLKS IN LINE TO REPAIR IT.

ANOTHER MAJOR I.T. GROUP IS TECHNOLOGICAL SERVICES AND TELECOMMUNICATIONS. THESE ARE THE TECHYIST OF THE TECH TEAMS AND THEY ARE RESPONSIBLE FOR HOW WELL THE MAINFRAME WORKS. THEY ALSO KEEP THE TELEPHONES AND COMPUTER NETWORKS FUNCTIONING PROPERLY. AND THEN OF COURSE THERE ARE THE HARDWARE TEAM FROM I.T. THESE ARE THE HANDS-ON PEOPLE WHO INSTALL AND REPAIR EVERYTHING FROM PCS TO POINT-OF-SALE TERMINALS. LET’S TAKE A CLOSER LOOK AT THE VARIOUS SYSTEM SUPPORT AND UPGRADES THE I.T. TEAM IS INVOLVED IN. *** TAPE (I.T. OVERVIEW, AT YOUR SERVICE) *** *** DENISE *** IN A RECENT “TIME” MAGAZINE/CNN POLE, 59% OF AMERICANS SAID THEY ARE VERY VERY CONCERNED ABOUT THE VARIETY OF PROBLEMS THE Y2K BUG COULD POSSIBLY CAUSE OUR SOCIETY. COMPANIES ACROSS THE NATION ARE SPENDING A GREAT DEAL OF TIME AND MONEY TO ENSURE Y2K RELATED PROBLEMS ARE SOLVED BEFORE THEY BECOME A REALITY. THE SAKS INCORPORATED INFORMATION TECHNOLOGY DIVISION HAS BEEN WORKING HARD AS WELL TO MAKE SURE THE FIRST DAY OF THE MILLENNIUM IS JUST ANOTHER DAY FOR ASSOCIATES AND CUSTOMERS VISITING OUR STORES. LET’S TAKE A LOOK. *** TAPE (Y2K) ***

YOU KNOW, I JUST CAN’T ESCAPE THE BUZZ . . . Y2K, MILLENNIUM BUG, YEAR 2000 COMPLIANCE, AND I’LL BET THERE’S BEEN SOME TALK AROUND YOUR WATER COOLER AS TO WHAT THE WORK DAY WILL BE LIKE ON JANUARY FIRST 2000.

SFX

JUST TO GIVE YOU AN IDEA OF WHAT’S HAPPENING BEHIND THE SCENES AT SAKS INCORPORATED TO MAKE THINGS RUN SMOOTHLY ON THAT DAY ‐ I.T. WILL HAVE CHECKED MORE THAN 3000 PCS, 15,000 POINT OF SALE TERMINALS AND 10 MILLION LINES OF COMPUTER CODE ALONG WITH THE HUNDREDS OF OTHER PIECES OF

HARDWARE USED TO NETWORK ALL OF THOSE PIECES TOGETHER. (WALKING) WE ALSO HAVE HUNDREDS OF PEOPLE, INCLUDING ASSOCIATES OUTSIDE OF I.T. CONTRIBUTING TIME OR EXPERTISE TO MAKE SURE THAT THE RIGHT CHANGES ARE MADE AND EQUIPMENT IS RESEARCHED AND TESTED ‐ ALL SO THAT EVERYTHING FROM THE TV IN YOUR STORE WORKS SO YOU CAN WATCH SAKS TV, TO EXAMINING THE TIME‐KEEPING SYSTEM TO INSURE PAYCHECKS ARE CORRECT. (SITS)

SFX

THE Y2K PROBLEM REALLY BOILS DOWN TO HOW COMPUTER CHIPS STORE DATES. IN ORDER TO SAVE SPACE, MANY COMPUTER SYSTEMS WERE PROGRAMMED TO STORE REFERENCES TO YEARS AS ONLY 2 DIGITS, SO INSTEAD OF USING 1999 TO REFER TO THIS YEAR, THE COMPUTER REFERENCES THIS YEAR AS 99. THE PROBLEM HERE IS THAT WHEN WE ROLL INTO THE NEXT CENTURY, THE SYSTEM WILL THE THINK 00 IS 1900.

SFX

ENOUGH TECH TALK, LET ME PAINT YOU PICTURE OF OF STORE OPERATIONS ON THE FIRST DAY OF THE MILLENNIUM ‐ AND AS YOU’RE ABOUT TO FIND OUT ‐ IT’S A HUGE TEAM EFFORT.

SFX

TECH GUY: FIRST OF ALL ‐ THE DOORS WILL OPEN. (HE SWIPES A SECURITY CARD) LOSS PREVENTION IS REVIEWING ALL OF THE SECURITY SYSTEMS, INCLUDING CAMERAS AND ALARMS ‐ CHECKING WITH EACH VENDOR TO MAKE SURE THE SYSTEMS WORK CORRECTLY.

SFX

THE LIGHTS WILL BE ON. STORE PLANNING STARTED REVIEWING THE ENERGY MANAGEMENT SYSTEMS IN EACH LOCATION SEVERAL MONTHS AGO AND IS IN THE PROCESS OF UPGRADING THESE

SYSTEMS TO MAKE SURE THEY WILL TURN THE LIGHTS ON AT THE RIGHT TIME. THIS PROJECT WILL BE FINISHED IN THE FALL.

SFX

THE PHONES WILL WORK. WHEN YOU GET TO YOUR WRAP STAND AND PICK UP YOUR PHONE YOU’LL ACTUALLY BE TESTING THE PHONE SWITCH IN YOUR STORE AND THE VOICE NETWORK WITH ONE CALL. (INTO THE PHONE AS IF TALKING TO SOMEONE) YES, WE’VE REPLACED SWITCHES AND UPGRADED SOFTWARE AS NEEDED. (HANGS UP) ALL OK THERE TOO.

SFX

THE POINT OF SALE TERMINALS WILL BE UP AND RUNNING WITH THE CORRECT PRICE CHANGES IN EFFECT. SOFTWARE UPGRADES ARE TAKING PLACE THROUGHOUT THE COMPANY NOW AND I.T. REPRESENTATIVES ARE VISITING EVERY STORE TO MAKE SURE THE INSTALLATION IS DONE CORRECTLY.

SFX

RINGING YOUR FIRST SALE WILL PROVE THAT YOUR REGISTER AND THE IN STORE CONTROLLER ARE IN FINE WORKING ORDER. AS A MATTER OF FACT, WHILE PREPARING FOR THIS DAY WE DISCOVERED THAT ONE OF THE MOST IMPORTANT PIECES OF EQUIPMENT IN A STORE IS THE STORE CONTROLLER. THIS PROCESSOR HOLDS THE PRICE FILES, ROUTES AUTHORIZATIONS TO THE MAINFRAME, AND MOST IMPORTANTLY GATHERS SALES DATA AND SENDS IT ON FOR MAINFRAME PROCESSING. IF FOR ANY REASON THE CONNECTION TO THE MAINFRAME IS LOST, THESE SMART BOXES CAN COLLECT DATA FOR DAYS IF NEEDED. THE CREDIT AUTHORIZATION CODE YOU GET BACK WHEN RINGING A SALE LETS YOU KNOW THE CONNECTION TO THE MAINFRAME AND THE NETWORK ARE IN WORKING ORDER.

SFX

NOW I KNOW YOU’VE PROBABLY HAD SOME CONCERNS ABOUT THINGS LIKE CREDIT STATEMENTS. THE SAKS INCORPORATED CREDIT SYSTEM IS AN APPLICATION USING ALL FOUR DIGITS WHEN REFERING TO THE YEAR, SO WHEN WE CALCULATE YOUR CUSTOMER’S FIRST PAYMENT IN THE YEAR 2000, THEIR STATEMENT WILL INCLUDE ONLY ONE MONTHS WORTH OF FINANCE CHARGES NOT 99 YEARS WORTH.

INCIDENTALLY, WHEN CUSTOMERS ASK YOU ABOUT THESE ISSUES,

SFX

WE RECOMMEND YOU ADVISE THEM TO KEEP COPIES OF THEIR 1999 STATEMENTS ALONG WITH ANY CURRENT RECEIPTS FROM OUR STORE OR ANY OTHER BUSINESS THEY USE FOR THAT MATTER. STATEMENTS AND RECEIPTS CONTAIN THE KIND OF INFORMATION THAT MOST COMPANIES WILL USE WHEN FIXING ANY PROBLEMS.

SFX

WHAT KINDS OF THINGS DON’T YOU HAVE TO WORRY ABOUT?

SFX

IN OUR STORE LOCATIONS CRTS, PRINTERS, AND CALCULATORS AREN’T SMART ENOUGH TO WORRY ABOUT DATES.

SFX

AT HOME ‐ CARS SHOULD BE OK THEY CALCULATE HOW MANY DAYS FROM YOUR LAST MAINTENANCE WORK, BUT DON’T KEEP A CALENDAR.

SFX

MOST APPLIANCES DON’T CARE ABOUT DATES EITHER. THEY CALCULATE TIME BUT NOT DATES.

SFX

PREPERATION AND COMMUNICATION ARE REALLY THE KEYS TO MAKING SURE YOUR STORE, OFFICE AND HOME IS Y2K COMPLIANT: I.T. WILL CONTINUE TO INVESTIGATE AND TEST EQUIPMENT AND SOFTWARE BUT EVERYONE’S INVOLVEMENT IS IMPORTANT: TAKE SOME TIME OUT OF YOUR DAY TO LOOK AROUND AND UNDERSTAND WHAT EQUIPMENT YOU USE TO DO YOUR JOB.

V/O MAKE A LIST AND DISCUSS IT WITH YOUR MANAGER AND TEAM. WATCH FOR THE SAKS INCORPORATED Y2K NEWSLETTERS AND CHECK LISTS WHICH WILL CONTINUE TO PROVIDE IMPORTANT INFORMATION THROUGHOUT THIS YEAR. AND FINALLY, CONTACT THE I. T. YEAR 2000 TEAM IF YOU HAVE ANY QUESTIONS OR THOUGHTS CONCERNING Y2K COMPLIANCE.

SFX WELL, I HOPE I’VE ALLEVIATED SOME MILLENNIUM ANXIETY FOR YOU ‐ NOW IF YOU’LL EXCUSE ME ‐ I’D BETTER POP BACK INTO THE LAB AND GET BACK TO MY SYSTEM CONVERSIONS. *** DENISE *** WE BEGIN THIS MONTH’S EDITION OF NEWS FLASH WITH A PROCEDURAL UPDATE FROM CORPORATE CREDIT. THE INSTANT CREDIT FORMS HAVE BEEN REDESIGNED AND ARE NOW IN STORES. THE FORMS HAVE THE FOLLOWING IMPORTANT CHANGES: THEY NO LONGER CONTAIN A “TEAR-OFF” PORTION FOR CUSTOMERS TO USE AS A TEMPORARY CARD; THERE IS A NEW SPACE PROVIDED FOR THE ACCOUNT NUMBER ON THE UPPER THIRD OF THE APPLICATION; AND FINALLY, THE FORM NOW INCLUDES A LINE TO WRITE THE FIRST 4 DIGITS OF THE CREDIT CARD CUSTOMERS PRESENT WHEN APPLYING. WATCH FOR POSTERS AND FLYERS POSTED IN YOUR STORES SOON. (SWING) FROM LOSS PREVENTION - A CORPORATE WIDE INITIATIVE IS BEING IMPLEMENTED - “THE EASTBORNE LOSS PREVENTION SYSTEM” MONITORS POINT OF SALE ACTIVITY AND USES DATA FROM CREDIT, PAYROLL, AND SALES AUDIT TO PRODUCE DETAILED REPORTS. THESE REPORTS WILL BE USED BY L.P. AND MANAGEMENT TO IDENTIFY SHORTAGE CAUSING FACTORS, AND REDUCE LOSS..

FROM HUMAN RESOURCES - “SAKS INCORPORATED’S WELLNESS WORKS” ANNOUNCES OUR COMPANY’S COMMITMENT TO WORK AND FAMILY ISSUES WITH A NEW PROGRAM. “THE NEW PARENTS PROGRAM” CELEBRATES PARENTHOOD BY PROVIDING USEFUL HEALTH & WELLNESS INFORMATION TO ASSOCIATES DURING THIS EXCITING YET CHALLENGING EVENT. EFFECTIVE IMMEDIATELY, ASSOCIATES WHO BECOME PARENTS THROUGH BIRTH OR ADOPTION, WILL RECEIVE A NEW PARENTS PACKET CONTAINING MEDICAL RESOURCE GUIDES, BENEFITS INFORMATION AND A 20% DISCOUNT COUPON FOR INFANT APPAREL. THE PACKET IS PRESENTLY AVAILABLE TO ALL DIVISIONS ACCEPT SAKS FIFTH AVENUE. SEE AN H.R. REPRESENTATIVE FOR DETAILS. (SWING) FROM CORPORATE COMMUNICATIONS - THE JULY ISSUE OF “THE CORNERSTONE” PROFILES SALES MANAGERS INCLUDING HOW THEY DRIVE BUSINESS, MANAGE STRESS AND BALANCE MULTIPLE RESPONSIBILITIES. THIS ISSUE ALSO OFFERS ORGANIZATIONAL AND MOTIVATIONAL TIPS FOR ENHANCING PRODUCTIVITY. AND FINALLY, THE JULY ISSUE ANNOUNCES THE WINNER OF THE $250 “CORNERSTONE” SURVEY CONTEST. (SWING) SAKS INCORPORATED HAS SIGNED AN AGREEMENT TO BUILD A 180,000 SQUARE FOOT STATE-OF-THE-ART DISTRIBUTION FACILITY IN STEELE, ALABAMA. CONSTRUCTION OF THE APPROXIMATELY $30 MILLION CENTER IS EXPECTED TO BEGIN LATER THIS YEAR. THE FACILITY SHOULD TO BE OPERATIONAL BY MID-YEAR 2001. THE NEW D.C. WILL EMPLOY APPROXIMATELY 220 PEOPLE AND WILL SUPPORT THE PARISIAN, PROFFITT’S AND MCRAE’S DIVISIONS (SWING) WE END THIS EDITION OF “NEWS FLASH” WITH ANNOUNCEMENTS ABOUT GREAT SAKS INCORPORATED LEADERS. SENIOR VICE PRESIDENT OF PRIVATE LABEL AND BRAND DEVELOPMENT PEGGY ESKENASI WAS RECENTLY HONORED BY THE UNITED JEWISH APPAREL FEDERATION AS THE CHILDREN’S RETAILER OF THE YEAR. ESKENASI WAS SIGHTED FOR HER PROFESSIONALISM, DEDICATION AND COMPASSION. SAKS INCORPORATED CHAIRMAN AND C.E.O. BRAD MARTIN WAS HONORED RECENTLY AS WELL. MARTIN RECEIVED THE MASTER

ENTREPRENEUR AWARD OF THE YEAR FROM THE SOCIETY OF ENTREPRENEURS AND JUNIOR ACHIEVEMENT OF MEMPHIS. THE ANNUAL AWARD RECOGNIZES A PERSON WHO BEST SHOWS THE VALUES OF ENTREPRENERIALSHIP BOTH DURING THE YEAR AND THROUGHOUT THEIR CAREER. CONGRATULATIONS TO BOTH OF OUR HONOREES. (SWING) IT’S NOW TIME TO OPEN OUR PHONE LINES FOR YOUR QUESTIONS AND COMMENTS REGARDING I.T. INITIATIVES INCLUDING ANY Y2K CONCERNS YOU MIGHT HAVE. THE NUMBER IS 800-249-7259. I’LL BE BACK WITH OUR GUESTS WHO WILL ANSWER YOUR CALLS, BUT FIRST, IN KEEPING WITH OUR THEME, LET’S TAKE A LOOK AT SOME WAYS TO STAY HEALTHY WHEN DEALING WITH TECHNOLOGY IN THIS MONTH’S EDITION OF “FROM THE EXPERTS.” *** TAPE (FROM THE EXPERTS) ***

*** DENISE *** I’VE BEEN JOINED IN THE STUDIO BY BARB DE YOUNG, DIRECTOR OF SYSTEMS ASSURANCE FOR I.T., AND JOINING US LIVE VIA SATELLITE VIDEO CONFERENCE IS E.V.P./C.I.O. DAN SMITH. THESE FOLKS ARE HERE TO TAKE YOUR COMMENTS AND QUESTIONS REGARDING I.T. THE NUMBER IS 800-249-7259.

DAN WHILE WE’RE WAITING FOR CALLS - I KNOW YOU AND THE TEAM HAVE BEEN ON AN INCREDIBLE JOURNEY IN TERMS OF CONVERSIONS AND UPGRADES - TELL US ABOUT THE STRENGTH OF YOUR TEAM AND HOW THE COMPANY WILL BENEFIT FROM THEIR DILIGENCE. *** LIVE CALLERS *** *** DENISE *** THAT’S ALL THE TIME WE HAVE FOR TODAY - MARK YOUR CALENDARS FOR THE JULY 29 CORPORATE SHOW FEATURING SOME EXCITING INFORMATION FROM BRAD MARTIN. I’LL SEE YOU NEXT TIME ON SAKS TV. *** TAPE (CLOSE) ***

TITLE: 1999 Saks Incorporated Initiatives LENGTH: 10 minutes EDIT DATE: Feb. 18 - 24 AIR DATE: Feb. 25 Corporate show

VIDEO DISSOLVE FROM BRAD’S 1999 SPEECH TO: Scott in Saks TV studio

Dip from Scott to black and then first images while GFX crawls accross right to left

1999 FORECAST FOR SUCCESS GFX (Provided by Casey)

C1 DC footage

C2 Showtime image

C3 Showtime

C4 DC footage half dissolve over Private brand images (C5, C6,)

AUDIO

SCOTT: As we move aggressively into 1999, it’s important to remember that our company’s success is dependent on a number of factors: solid growth in our existing stores, successful openings of new units, improved merchandise margins and lower operating costs. And no matter where we work in this company, customer service is everyone’s job. Embracing that philosophy, teams throughout our various corporate offices are continually planning ways to make our company more successful as we head into the millennium.

MUSIC UP AND UNDER

B1 V/O We begin our forecast for success with Operations and Logistics.

In 1998, the Operations and Logistics division made great strides in keeping things moving throughout the company.

The Operations division fine tuned the process of moving merchandise from our vendors to our customers, With the development and implementation of “Showtime” in the Proffitt’s, McRae’s, Younkers and Parisian divisions last year,

TIME

GFX Float over above listed shots GFX : “ negotiating ocean and air transportation rates” GFX “customs and clearing agents”

Scott walks in the DC

Scott in DC

C7 Man in store planning GFX “13 new stores” floats over footage

C8 various construction footage half dissolved over store front shots (Milw has these) Younkers McRae’s Carson’s Parisian Saks

C9 Shot of drawing board with store plans

CU of plans, Scott pulls them away and begins to talk

B2 This year, a major effort of Operations and Logistics will be to support the delivery of our private brand products from manufacturers located around the world. This endeavor includes negotiating ocean and air transportation rates, and working through customs and clearing agents ‐

A8 SCOTT (on camera) all so that merchandise is moved swiftly through the distribution centers to our stores.

A9 Another division on the move is store planning.

B3 V/O: Laying the ground work for an expansive year for our company, Store Planning initiatives for 1999 include the design and construction of 13 new stores.

B4 A sampling of new locations includes a Younkers in Grandville, Michigan; a new McRae’s for McComb, Mississippi; three new Herberger’s locations Minnesota; Carson’s will add a new store and furniture gallery; the Parisian division will see new stores in Georgia and South Carolina; and Saks Fifth Avenue will new open stores in California, Illinois and New York.

In addition to the new stores, expansions and remodels of 12 existing locations are on the drawing board.

C10 garden shop sales floor

Shot of a visual presentation in the store pulls out to reveal Scott

C11 Shot of Better dept.

GFX “Better & Moderate fixtures for Carson’s” floats over images GFX “Ready‐to‐wear” fixtures at Parisian” floats over images

Scott walking down the isle of the store

Scott stays in the same place but the shot is now in the LP monitor room and we tape Scott’s image on the TV half dissolved over C12 LP books GFX “mini‐workshops” floats over images GFX “monthly meetings” floats over images

A10 SCOTT (on camera) These plans will not only create new employment opportunities within the company, but will help to boost sales by attracting new customers to convenient, quality shopping environments.

B5 V/O: Visual Merchandising is another division keen on creating quality shopping environments for our customers.

A1 SCOTT (on camera) The mission of Visual Merchandising is to act as liaison between the merchants and the stores in order to provide consistent, focused and well‐executed visual presentations.

In 1999, Visual Merchandising plans to meet our customer’s expectations and provide Saks Incorporated stores with a visual edge over our competition.

B6 V/O: Plans include rolling out Better and Moderate fixture packages in the Carson’s division, rolling out ready to wear fixtures at Parisian and developing and executing private brand fixturing and brand identification collateral throughout the company.

A4 SCOTT (on camera) A number of support divisions have initiatives going on “behind the scenes” in order to make 1999 a successful year for our company. For example, one major

C14 LP monitor room half dissolved over C13 customer service footage.

LP monitor room shot pulls out to reveal Scott sitting there, he gets up and leaves the room.

C15 CU of stacks of clothing on sales floor this image is half dissolved over C16 computer screens with inventory numbers

GFX: “establish dedicated replenishment resources” floats over images

GFX: “state‐of‐the‐art system” floats over images

Shot of product being placed on table pans over to reveal Scott talking as he stocks.

C18 advertising dept. sign half dissolved over C17 Images of customers shopping half dissolved over

C19 advertising associates/over shoppers C18 C20 advertising associates/over

goal for Loss Prevention is to have all Saks Incorporated associates more involved in preventing loss.

A5 By conducting daily inspections and audits, providing weekly mini‐ workshops and monthly shortage and safety meetings Loss Prevention hopes to reduce cash and merchandise shortages as well as prevent associate and customer accidents.

B7 V/O: Reducing shortage increases the merchandise selection for our customers which ultimately means a more profitable year for both associates and the company as a whole.

A6 SCOTT (on camera) Working behind the scenes by producing merchandise plans that advance the strategic objective of the corporation, the Merchandise Planning and Inventory control team works to insure that the proper amount of inventory is invested in relation to planned and projected sales.

B8 V/O: This year the team has aggressive plans to improve store‐by‐ store inventory allocation by developing a framework to determine proper inventory allocation and then monitoring the store’s progress. In the works for 1999: establishing dedicated replenishment resources in the McRae’s and Herberger’s divisions; and implementation of a state‐of‐the‐art replenishment system throughout the company.

shoppers C18

GFX: “Loyalty Program” “McRae’s” “Younkers” “Proffitt’s” “Parisian” floats over above images

Scott walks into the shot

C21 Shot of working on computer half dissolved over elevator, assocate, tape roll, computers (C22, C41, C42, C23)

GFX: “elevators” floats over above images GFX: “personal computers” floats over above images GFX: “security cameras” floats over above images

above images carry out until the end of this passage

Scott’ at computers in IT

C24 CU of “Cornerstone” pages flipping half dissolved over Saks TV show. (GRAB IN MILW)

A2 SCOTT: (on camera) These initiatives maximize customer service and sales opportunities by steadily improving our in stock‐levels on basic replenishment merchandise.

B9 V/O: Throughout 1998, Marketing and Sales Promotion shifted its focus from efficiency to effectiveness. By continually researching customer’s spending habits, in 1999 the division will use data to focus on customer loyalty.

While constantly analyzing and developing print and broadcast material to draw shoppers to our stores, in 1999 Marketing will implement the “Loyalty Program” at Proffitt’s, McRae’s, Younkers and Parisian in order to attract and retain top‐dollar customers.

A3 SCOTT: (On camera) We can’t have a discussion about heading into the millennium without discussing the Information Technology Division.

B10 V/O: Year 2000 compliance has been and will continue to be a major focus of IT throughout the year. Many systems have already been assess by IT and the team will continue to look at the technology of everything from elevators to security systems within the company.

B11 The team is also looking at systems used by our outside vendors as well.

B12 Because year 2000 problems effect associates throughout Saks Incorporated, I.T. stress the importance of everyone taking a pro‐

C25CU of Webpage on screen half dissolved over C26 hand clicking a mouse

GFX: “internal Intranet” floats over images GFX: “Internet redesign” floats over images

Scott at a computer screen looking at the Saks page.

C27 Shots of credit associates half dissolved over Saks store front (MILW. HAS SHOT) half dissolved over C28 Saks credit card.

C29 Shots of credit dept. half dissolved over

C30 various CU of credit cards. half dissolved over C31 Shots of credit dept

Shot of Scott handing a sales associate a card as if to make a purchase

active approach in looking for, and working through year 2000 issues.

A11 SCOTT: (on camera) Pro‐active is the buzz word of the communications Division in 1999 as well. Exciting new initiatives are planned by the division for the year. Content of the Cornerstone and Saks TV will be formatted to fit associates ever changing needs and busy lifestyles.

B13 V/O: Programs and articles will feature information associates ask for.

Articles will be short and succinct and shows will never exceed 30 minutes.

B14 New initiatives for communications include development of the company’s internal website commonly known as an Intranet. The Intranet will allow associates throughout the company to access information about various company programs, policies and best practice.

A total redesign of the Saks Incorporate Internet website is underway as well.

A13 SCOTT (on camera) Corporate credit has aggressive plans for 1999 as well with the conversion of the Saks Fifth Avenue card from an outside company to our in‐house credit department toping the list.

B15 V/O: This initiative is important for a number of reasons: not only will the Saks Fifth Avenue conversion save the company more than ten million dollars, by managing the process internally we have greater control

C32Shots of customers shopping half dissolved over CU’s of various apparel labels and products C33,C34,C35, C37

Above these images continue

GFX: “10% private brand penetration” floats over images GFX: “designers, technicians, planners” floats over images

CU of HR door sign pans over to reveal Scott

C38 visual merchandising half dissolved over C39 DC associates half dissolved over C40 cosmetic associates half dissolved over C43 office assocates half dissolved over C44 store meeting half dissolved over C45 shot of cornerstones: GFX: “Style” “Quality” “Service” “Integrity” float over shots ‐

over how we deal with customers.

Another significant initiative is the instillation of a new telephone switch in the Jackson credit office, providing more stability and greater flexibility than the existing system. And in 1999 we’ll see the launch of the Herberger’s loyalty program ‐ a program similar to the McRae’s and Proffitt’s First Place program, the Younkers gold card, the Parisian Signature Gold program and the Saks First program. The Credit division hopes to begin a similar program for the Carson’s division in 1999 as well.

A7 SCOTT: (on camera) Once customers have “our” credit card in hand, the Proffitt’s Merchandising Group has great plans to ensure customers are purchasing our private brand merchandise.

B16 V/O: PMG builds equity brands for the Proffit’s, McRae’s, Younkers, Parisian, Herberger’s and Carson Pirie Scott divisions. The PMG strategy is to build equity brands targeted to specific customer profiles in order to differentiate our stores from our competitors.

B17 The Saks Fifth Avenue division also has its own unique private brands in a variety of departments and styles.

In 1999 the PMG team hopes to achieve 10% private brand penetration by closely monitoring product design and quality; responding to seasonal and emerging

enough pad of b‐roll to run in the TV set GFX “1999” still

Scott on monitor set of Saks TV, with pervious shots in the TV monitor.

Swing

opportunities; and finally, building a team of designers, technicians and planners to focus specifically on private brand development.

A12 SCOTT: (on camera) Finally, Human Resources will be here to provide associates with the training tools and benefits that will help Saks Incorporated be the kind of company we want it to be.

B18 V/O: In 1999, Human Resources’ major thrust is to build the company’s unique culture. Realizing that most people don’t want to commit their precious time and energy to working for “just any old company,” H.R. has dozens of projects in the works this year which allow associates to create and be a part of our unique culture.

Through H.R., Saks Incorporated will make a meaningful recommitment to the four cornerstones ‐ service, style. quality, integrity ‐giving the company a strong point of view and meaningful set of values.

B19After all, Saks Incorporated is the kind of place worthy of associate and customer loyalty.

**** SHOT LIVE IN STUDIO ON FEB 24

SCOTT: (on camera) By staying focused on achieving our business plans, by executing these strategic initiatives and by continuing to seek out and build relationships with customers and with each other, we can all take an active roll in making 1999 an outstanding year for Saks

Incorporated.

Now let’s focus our forecast for success in a different direction by learning how the folks in the fashion office forecast the season ‐ here’s Arlene Goldstein with this month’s edition of Fashion Buzz.