UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)

x Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 (No fee required, effective October 7, 1996)

For Fiscal Year Ended: December 31, 2005 or

¨ Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 (No fee required)

For the transition period from              to             

Commission File Number: 333-25213

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

Saks Incorporated 401 (k) Retirement Plan

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Saks Incorporated

750 Lakeshore Parkway

Birmingham, Alabama 35211

Telephone No: (205) 940-4000

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

	Saks Incorporated 401(k) Retirement Plan
Date: June 26, 2006	/s/ Charles J. Hansen
	Charles J. Hansen Executive Vice President and General Counsel, Saks Incorporated

Saks Incorporated

401(k) Retirement Plan

Financial Statements and Supplemental Schedule

December 31, 2005

Saks Incorporated 401(k) Retirement Plan

Index

December 31, 2005 and 2004

	Page(s)
Report of Independent Registered Public Accounting Firm	1
Financial Statements
Statements of Net Assets Available for Benefits	2
Statement of Changes in Net Assets Available for Benefits	3
Notes to Financial Statements	4–8
Supplemental Schedule
Schedule of Assets (Held at End of Year) Form 5500 Schedule H line 4(i)	9

Note:  Other schedules required by 29 CFR 2520-103-10 of the Department of Labor’s Rules and Regulations for Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

Report of Independent Registered Public Accounting Firm

To the Participants and Administrator of

Saks Incorporated 401(k) Retirement Plan

In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of Saks Incorporated 401(k) Retirement Plan (the “Plan”) at December 31, 2005 and 2004, and the changes in net assets available for benefits for the year ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of Assets Held (at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole .

PricewaterhouseCoopers LLP

Birmingham, Alabama

June 26, 2006

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Saks Incorporated 401(k) Retirement Plan

Statements of Net Assets Available for Benefits

December 31, 2005 and 2004

	2005		2004
Assets
Investments, at market value	$	619,565,627	$	604,720,271
Participant contribution receivable		1,625,977		1,015,510
Employer contribution receivable		395,124		286,336
Interest and dividends receivable		31,912		13,592
Total assets		621,618,640		606,035,709
Liabilities and Net Assets Available for Benefits
Accrued administrative fees		48,102		22,107
Total liabilities		48,102		22,107
Net assets available for benefits	$	621,570,538	$	606,013,602

The accompanying notes are an integral part of these financial statements.

2

Saks Incorporated 401(k) Retirement Plan

Statement of Changes in Net Assets Available for Benefits

Year Ended December 31, 2005

Increase in net assets available for benefits
Interest and dividend income	$	15,885,898
Net appreciation in market value of investments		26,584,332
Contributions
Employer		10,879,925
Participant		42,533,189
Rollover		4,193,400
Total increases		100,076,744
Decrease in net assets available for benefits
Benefit payments		83,872,902
Administrative fees		646,906
Total decreases		84,519,808
Net increase		15,556,936
Net assets available for benefits, beginning of year		606,013,602
Net assets available for benefits, end of year	$	621,570,538

The accompanying notes are an integral part of these financial statements.

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Saks Incorporated 401(k) Retirement Plan

Notes to Financial Statements

December 31, 2005

1. Description of the Plan

The following description of the Saks Incorporated 401(k) Retirement Plan (the “Plan”) is for general information purposes only. Participants should refer to the plan agreement for a more complete description of the Plan’s provisions.

General

The Plan is a defined contribution plan covering all eligible employees of Saks Incorporated (the “Employer” or “Company”) and its subsidiaries who are a minimum of 21 years of age and have completed a minimum service hour requirement as provided for in the plan agreement. At December 31, 2005, the Company operated the Saks Department Store Group (“SDSG”), which consisted of the Northern Department Store Group (“NDSG”) (operating under the nameplates of Bergner’s, Boston Store, Carson Pirie Scott, Herberger’s and Younkers and sold to The Bon-Ton Stores, Inc. (“Bon-Ton”) in March 2006), Parisian and Club Libby Lu specialty stores. The Company also operated Saks Fifth Avenue Enterprises (“SFAE”), which consisted of Saks Fifth Avenue stores and Saks Off 5^th stores. The Company previously operated Proffitt’s and McRae’s as part of SDSG but this unit was sold to Belk Inc. (“Belk”) in July 2005. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974.

Contributions

The Plan allows for discretionary employer contributions, participant contributions and rollover contributions. The Employer contributes a discretionary amount of cash or employer stock to the Plan as approved by the Employer’s Board of Directors. The Employer’s contributions are not mandatory and are not based on the operations or net profits of the Employer. Employer contributions may be 0% or any positive percentage multiplied by matchable participant salary deferrals, as defined in the plan agreement. Employer contributions may not exceed 5% of the compensation of each participant making salary deferral contributions. For the 2005 plan year, the Employer’s matching contribution was 50% of the first 5% of total compensation that a participant elected to contribute.

Participants may elect regular payroll deductions of up to 90% of compensation, as defined in the plan agreement, to be contributed to the Plan on a before tax basis. No participant shall be permitted to elect before-tax contributions under the Plan during any calendar year in excess of the amount prescribed by the Internal Revenue Code (the “Code”) ($14,000 for 2005). Participants may also contribute amounts representing distributions from other qualified defined benefit or contribution plans (“rollover contributions”) provided such rollover contributions meet the requirements of the plan agreement. Participants may direct the investment of their contributions, as well as the Employer’s contributions, through various investment options offered by the Plan. The Plan currently offers twelve mutual funds and an Employer common stock fund as investment options for participants.

Participant Accounts

Each participant’s account is credited with the participant’s contribution, the Employer’s discretionary contribution, and an allocation of the Plan’s earnings or losses. Allocations are based on account balances as defined in the plan agreement.

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Saks Incorporated 401(k) Retirement Plan

Notes to Financial Statements

December 31, 2005

Vesting

All participants are at all times fully vested in their contributions, including rollover contributions, plus actual earnings thereon. The Plan participants vest in the Employer’s discretionary contributions in addition to actual earnings thereon, based on years of credited service in accordance with the following vesting schedule:

Years of Service	Vested Percentage
Less than 3	0	%
3 or more	100	%

The vested percentage shall be 100% for a participant on and after attainment of normal retirement age, death, or disability, as defined in the plan agreement.

Participant Loans

A participant may borrow a minimum of $1,000 up to a maximum of $50,000 or 50% of the vested value of his or her account less the outstanding principal balance of any other participant loans. The loans are collateralized by the balance in the participants’ accounts and bear interest at a rate commensurate with prevailing rates at the time of the loan, as determined quarterly. At December 31, 2005 and 2004, interest rates ranged from 5.00% to 10.50%. At December 31, 2005 and 2004, the total outstanding loan balance aggregated $19,555,840 and $19,191,791, respectively.

Forfeitures

Forfeitures occur when a nonvested participant receives a distribution of the vested value of his or her participant account or incurs five consecutive breaks in service, as defined in the plan agreement. Forfeitures may be used to reinstate previously forfeited amounts, provide funds necessary for the correction of errors, and to reduce future employer contributions. At December 31, 2005 and 2004, the Plan had $131,482 and $90,395 of unallocated forfeitures included in net assets available for plan benefits, respectively.

Distribution of Benefits

Vested plan benefits are distributed upon retirement, death, or termination of service. A participant may elect to receive a lump sum distribution equal to the vested balance of his/her account or periodic installments over a period of time not exceeding the participant’s life expectancy (or the joint life expectancy of the participant and his/her beneficiary).

Termination of the Plan

In the event of a termination of the plan, participants become fully vested in all individual account balances.

In conjunction with the sale of the Company’s Proffitt’s and McRae’s business operations to Belk on July 5, 2005, terminated employees became immediately vested in their accrued benefits. As a result, $18,223,572 was distributed to terminated employees who elected to receive a distribution of their balances, and is included on the Statement of Changes in Net Assets Available for Benefits as a component of benefit payments.

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Saks Incorporated 401(k) Retirement Plan

Notes to Financial Statements

December 31, 2005

2. Significant Accounting Policies

Basis of Accounting

The accounts of the Plan are maintained on the accrual basis of accounting and have been prepared in conformity with accounting principles generally accepted in the United States of America.

Risks and Uncertainties

The Plan provides for various investment options in any combination of Saks Incorporated common stock and mutual funds offered by the Plan. Generally all investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits.

Participants are exposed to credit loss in the event of non-performance by the trustee or non-performance by the companies in which the investments are placed.

Income Tax Status

The Internal Revenue Service has determined and informed the Employer by a letter dated September 7, 2001, that the Plan is designed in accordance with applicable sections of the Code. The Plan has been amended since receiving the determination letter. However, the plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the financial statements.

Valuation of Investments

Investments of the Plan, other than participant loans, are stated in the accompanying financial statements at market value as determined by the Plan’s trustee based on quoted market prices. Purchases and sales of investments are reflected as of the trade date. Investment income is recorded when earned.

Loans to participants are valued at cost, which approximates market value.

The Plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in the market value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments.

Contributions

Contributions receivable from the Employer are accrued based on amounts declared by the Employer’s Board of Directors. Contributions receivable from employees are accrued based on unremitted deductions from the participants payroll compensation.

Expenses of the Plan

Expenses of $646,906 incurred in the administration of the Plan during the 2005 plan year were paid by the Plan. The Plan funds payment of expenses by assessing a proportional annual charge on the market value of each fund. Certain plan expenses are paid by the Employer.

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Saks Incorporated 401(k) Retirement Plan

Notes to Financial Statements

December 31, 2005

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of additions and deductions during the reporting periods. Actual results could differ from those estimates.

3. Investments

Investment information as of December 31, 2005 and 2004 and for the year ended December 31, 2005 is as follows:

	2005		2004
Mutual funds:
Vanguard Institutional Index Fund	$	94,613,717	$	96,066,684
Dreyfus Intermediate Term Income Fund		—		32,016,871
PIMCO Total Return Fund		31,079,535		—
Dodge & Cox Balanced Fund		56,295,035		54,568,467
Neuberger & Berman Genesis Trust Fund		76,590,898		62,926,633
Franklin Templeton Fund		25,601,773		23,040,968
Wells Fargo Stable Return Fund		129,216,169		130,099,455
AIM Basic Value Fund		17,039,682		15,125,922
Fidelity Low-Priced Stock Fund		28,176,791		27,731,211
Wells Fargo Growth Balanced Fund		15,269,892		15,154,292
Federated Capital Appreciation Fund		56,036,755		60,547,556
Columbia Acorn Fund		38,915,988		35,553,427
American Fund AMCAP		11,819,580		7,749,837
Common stock:
Saks Incorporated Stock Fund (a)		19,353,972		24,947,157
Participant loans		19,555,840		19,191,791
	$	619,565,627	$	604,720,271
Interest and dividend income	$	15,885,898
Net appreciation in market value of investments	$	26,584,332

(a) The Saks Incorporated Stock Fund is measured in “units of participation” rather than in shares of Saks Incorporated common stock. In order to facilitate daily participant transactions of Saks, Inc. stock, a minimal daily cash balance is maintained in the Fund.

The Vanguard Institutional Index Fund, Neuberger & Berman Genesis Trust Fund, Wells Fargo Stable Return Fund, Federated Capital Appreciation Fund, Columbia Acorn Fund and Dodge & Cox Balanced Fund each exceeded 5% of the Plan’s net assets available for benefits at December 31, 2005 and 2004. The Dreyfus Intermediate Term Income Fund exceeded 5% of the Plan’s net assets available for plan benefits at December 31, 2004.

7

Saks Incorporated 401(k) Retirement Plan

Notes to Financial Statements

December 31, 2005

The Plan’s investments (including investments bought and sold, as well as those held during the year) had net appreciation in value of $26,584,332 during the year ended December 31, 2005, as follows:

Mutual funds	$	22,038,109
Common stock		4,546,223
	$	26,584,332

4. Related Party Transactions

The Plan allows for transactions with certain parties who may perform services or have fiduciary responsibilities to the Plan, including the Company. The Plan invests in common stock of the Company and issues loans to participants, which are secured by the balances in the participants’ accounts. During the year ended December 31, 2005, the Plan purchased 71,790 units of the Saks Incorporated Stock Fund for $1,227,998 and disposed of 607,550 units for $10,781,415. During the year ended December 31, 2004, the Plan purchased 524,718 units of the Saks Incorporated Stock Fund for $7,886,706 and disposed of 344,100 units for $4,978,075. Shareholders of record as of April 30, 2004 were paid a dividend of $2.00 per share on May 17, 2004. On the date of record, the Plan held the equivalent of 1,588,947 shares and received a dividend payment of $3,177,894. These transactions qualify as party-in-interest transactions.

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Supplemental Schedule

Saks Incorporated 401(k) Retirement Plan

Schedule of Assets (Held at End of Year) Form 5500 Schedule H line 4(i)

December 31, 2005

(a)	(b) Identity of issuer, borrower, lessor or similar party	(c) Description of investment including, maturity date, rate of interest, collateral par, or maturity value	(d) Cost**	(e) Current value
	Vanguard Institutional Index Fund	Mutual fund		$	94,613,717
	PIMCO Total Return Fund	Mutual fund			31,079,535
	Dodge & Cox Balanced Fund	Mutual fund			56,295,035
	Neuberger & Berman Genesis Trust Fund	Mutual fund			76,590,898
*	Wells Fargo Stable Return Fund	Mutual fund			129,216,169
	AIM Basic Value Fund	Mutual fund			17,039,682
	Fidelity Low-Priced Stock Fund	Mutual fund			28,176,791
	Columbia Acorn Fund	Mutual fund			38,915,988
*	Wells Fargo Growth Balanced Fund	Mutual fund			15,269,892
	Federated Capital Appreciation Fund	Mutual fund			56,036,755
	Franklin Templeton Fund	Mutual fund			25,601,773
	American Fund AMCAP	Mutual fund			11,819,580
*	Saks Incorporated Stock Fund	Common stock units			19,353,972
*	Participant loans	5.00% - 10.50%			19,555,840
				$	619,565,627

* Party-in-interest to the Plan.

** Cost information has not been disclosed as all investments are participant directed.

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