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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________

FORM 10-Q

Commission file number    000-26207

BELK, INC.

Indicate by check þ whether the 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 þ   No o

Indicate by check þ whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ   No o

At September 1, 2003, the registrant had issued and outstanding 51,112,987 shares of class A common stock and 909,028 shares of class B common stock.

BELK, INC.
Index to Form 10-Q

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This Report Contains Forward-Looking Statements

     Certain statements made in this report, and other written or oral statements made by or on behalf of Belk, Inc. and its subsidiaries (“the Company”), may constitute “forward-looking statements” within the meaning of the federal securities laws. Statements regarding future events and developments and the Company’s future performance, as well as our expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. You can identify these forward-looking statements through our use of words such as “may,“will,” “intend,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “continue” or other similar words. Forward-looking statements include information concerning possible or assumed future results from merchandising, marketing and advertising in our stores and through the Internet; our ability to be competitive in the retail industry; our ability to execute profitability and efficiency strategies; our ability to execute our growth strategies; anticipated benefits from the consolidation of our operating divisions and distribution facilities; the expected benefit of our new systems and technology; the expected increase in revenues generated through our proprietary charge card program, seasonal fluctuations in sales and net income and the anticipated benefits from the consolidation of our merchandising and sales promotions functions (“Merchandising Restructuring”). These forward-looking statements are subject to certain risks and uncertainties that may cause our actual results to differ significantly from the results we discuss in such forward-looking statements. We believe that these forward-looking statements are reasonable. However, you should not place undue reliance on such statements.

     For a detailed description of the risks and uncertainties that might cause our results to differ from those we project in our forward-looking statements, we refer you to the section captioned “This Report Contains Forward-Looking Statements” in our Annual Report on Form 10-K for the fiscal year ended February 1, 2003 that we filed with the Securities and Exchange Commission (“SEC”) on April 23, 2003. Our other filings with the SEC may contain additional information concerning the risks and uncertainties listed above, and other factors you may wish to consider. Upon request, we will provide copies of these filings to you free of charge.

     Our forward-looking statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement, even if future events or new information may impact the validity of such statements.

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BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)

See accompanying notes to consolidated financial statements.

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BELK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)

See accompanying notes to consolidated financial statements.

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BELK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
(dollars in thousands)

See accompanying notes to consolidated financial statements.

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BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)

See accompanying notes to consolidated financial statements.

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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

(1) Basis of Presentation

     The accompanying unaudited consolidated financial statements of Belk, Inc. and subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10-Q promulgated by the Securities and Exchange Commission and should be read in conjunction with the Notes to Consolidated Financial Statements (pages 26-42) in our Annual Report on Form 10-K for the fiscal year ended February 1, 2003. In the opinion of management, this information is fairly presented and all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods have been included; however, certain items are included in these statements based on estimates for the entire year. Also, operating results in periods which exclude the Christmas season may not be indicative of the operating results that may be expected for the full fiscal year.

     Certain prior period amounts have been reclassified to conform with current presentation.

(2) Comprehensive Income (Loss)

     The following table sets forth the computation of comprehensive income (loss):

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BELK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

(3) Accumulated Other Comprehensive Loss

The following table sets forth the components of accumulated other comprehensive loss:

(4) Accounts Receivable, Net

     Customer receivables arise primarily under open-end revolving credit accounts used to finance purchases of merchandise from the Company. These accounts have various billing and payment structures, including varying minimum payment levels. Installments of deferred payment accounts receivable maturing after one year are included in current assets in accordance with industry practice.

     Accounts receivable, net consists of:

(5) Note Payable

     The Company’s note purchase agreement among the Company, the Belk Center, Inc., Enterprise Funding Corporation and Bank of America, as amended, (the “Note Payable”) expires on April 24, 2004 and, accordingly, the outstanding balance as of August 2, 2003 of $175,062 has been included in current liabilities. However, the Note Payable may be renewed by mutual consent of the parties, and it is the Company’s intent to renew the facility and utilize it as long-term financing.

(6) Implementation of New Accounting Standards

     In April 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 149 (“SFAS No. 149”), “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The provisions of SFAS No. 149 are effective for the Company for all derivatives and hedging activity entered into after June 30, 2003. The adoption of SFAS No. 149 had no impact on the Company’s consolidated financial position or results of operations.

     In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150 (“SFAS No. 150”) “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. The provisions of this Statement are effective for financial instruments entered into or modified after May 31, 2003. The adoption of SFAS No. 150 had no impact on the Company’s consolidated financial position or results of operations.

(7) Stock Repurchase

     On May 21, 2003 the Company completed the self-tender offer authorized by the Board of Directors on March 13, 2003 and repurchased 2,808,998 shares of outstanding Class A and Class B common stock at a cost of $26.7 million.

(8) Subsequent Event

     On August 26, 2003 the Company completed the sale of property located in Charlotte, NC for a net purchase price of approximately $21.6 million. The Company expects to recognize a gain from this transaction of approximately $19.2 million ($12.1 million net of tax) in the third quarter of fiscal year 2004.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations

     The following table sets forth, for the periods indicated, the percentage relationship to revenues of certain items in the Company’s condensed consolidated statements of income, as well as a period comparison of changes in comparable store net revenue.

Comparison of the Three and Six Months Ended August 2, 2003 and August 3, 2002

     Revenues. The Company’s revenues for the three months ended August 2, 2003 decreased 0.7%, or $3.2 million, to $492.1 million from $495.3 million over the same period in fiscal year 2003. The decrease is attributable to a 2.7% decrease in revenues from comparable stores, partially offset by $5.4 million of additional sales from new, expanded and remodeled stores.

     The Company’s revenues for the six months ended August 2, 2003 decreased 3.1% or $31.6 million, to $994.8 million from $1,026.4 million over the same period in fiscal year 2003. The decrease is attributable to a 5.1% decrease in net revenues from comparable stores, partially offset by $15.3 million of additional sales from new, expanded and remodeled stores.

     Expansion and replacement stores are excluded from the comparable store net revenue decrease disclosed above. Including the expansion and replacement stores as comparable stores, the comparable store net revenue decrease was 2.4% and 4.6% for the three and six months ended August 2, 2003, respectively.

     Cost of goods sold. As a percentage of revenues, cost of goods sold decreased to 67.8% and 67.5% for the three and six months ended August 2, 2003, respectively, compared to 68.6% and 68.2% for the same periods in fiscal year 2003. The decrease is primarily attributable to improved operating efficiencies resulting from the Company’s Merchandise Restructuring completed during fiscal year 2003.

     Selling, general and administrative expenses. As a percent of revenues, SG&A expense increased to 27.4% for the three months ended August 2, 2003 compared to 27.3% for the same period in fiscal year 2003. This increase was primarily attributable to increases in medical, casualty insurance and bad debt expenses. These increases were partially offset by an increase in finance charge income from the Company’s proprietary credit card and increased depreciation expense in the prior year comparable period due to accelerated amortization over the remaining useful life of abandoned leasehold improvements in division offices that were closed due to the Merchandising Restructuring.

     As a percentage of revenues, SG&A expense increased to 26.9% from 26.4% for the six months ended August 2, 2003. The increase in expenses as a percentage of sales resulted from selling payroll and other store operating costs that did not decrease to the same extent as revenues, increases in casualty insurance expense and additional depreciation related to new stores and store expansions, partially offset by

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finance charge income from the Company’s proprietary credit card and decreased depreciation expense in the prior year comparable period due to accelerated amortization over the remaining useful life of abandoned leasehold improvements in division offices that were closed due to the Merchandising Restructuring.

     Interest Expense, net. Interest expense increased $1.7 million and $2.8 million for the three and six months ended August 2, 2003, respectively, compared to the same periods in fiscal year 2003. The increase in interest expense is primarily attributable to the decrease in the fair market value of the options associated with the Company’s interest rate swaps, which accounted for $1.7 million and $2.0 million of the increase for the three and six months ended August 2, 2003. Interest expense for the six months ended August 2, 2003 was also negatively impacted by a decrease in capitalized interest of $1.4 million, partially offset by an increase in interest income generated from the Company’s short-term investments.

     Net income. As a percentage of revenues, net income increased to 1.8% and 2.3% for the three and six months ended August 2, 2003, respectively, compared to 0.8% and 2.1% for the same periods in fiscal year 2003. The increase was primarily due to the changes in cost of goods sold, SG&A, and interest expense, as discussed above. Net income for the three and six months ended August 3, 2002 were negatively impacted by a $4.6 million restructuring charge, net of $2.6 million tax benefit.

Seasonality and Quarterly Fluctuations

     The retail business is highly seasonal with approximately one-third of annual revenues being generated in the fourth quarter, which includes the Christmas selling season. As a result, a disproportionate amount of the Company’s operating and net income is realized during the fourth quarter and significant variations can occur when comparing the Company’s financial condition between quarters.

Liquidity and Capital Resources

     The Company’s primary sources of liquidity are cash on hand, cash flow from operations, and borrowings under debt facilities. The debt facilities consist of a $275 million variable rate note, a $125 million ten-year variable rate bond facility, a $200 million revolving line of credit and a $127 million standby letter of credit.

     The $275 million variable rate note is governed by a note payable agreement that expires on April 24, 2004 and, accordingly, the outstanding balance as of August 2, 2003 of $175.1 million has been included in current liabilities. However, the note payable agreement is renewable by mutual consent of the parties and the Company intends to renew the facility and utilize it as long-term financing.

     Net cash provided by operating activities increased $39.2 million, or 42.8%, to $130.7 million for the six months ended August 2, 2003 from $91.5 million for the six months ended August 3, 2002. The increase in cash provided by operating activities for the first six months of fiscal year 2004 was principally due to lower inventory levels as compared to the same time period in fiscal year 2003.

     Expenditures for property and equipment decreased $11.5 million, or 24.7%, to $35.0 million for the six months ended August 2, 2003 from $46.5 million for the same time period in fiscal year 2003.

     During the six months ended August 2, 2003, the Company opened one new store in Gulfport, Mississippi.

     Net cash used by financing activities increased $13 million, or 37.7%, to $47.5 million for the six months ended August 2, 2003 from $34.5 million for the six months ended August 3, 2002. This increase resulted from decreases in borrowings funded with cash flows from operations and the repurchase of 2,808,998 shares of common stock at a cost of $26.7 million.

     Management of the Company believes that cash flows from operations and the existing credit facilities will be sufficient to cover working capital needs, capital expenditures and debt service requirements for at least the next twelve months.

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Contractual Obligations and Commercial Commitments

     To facilitate an understanding of the Company’s commercial commitments, the following data has been updated:

*     Standby letters of credit includes a $126.8 million facility that supports the ten-year bonds (accrued principal and interest) due July 2008.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     There have been no material changes to the Company’s quantitative and qualitative market risk disclosures during the six months ended August 2, 2003.

Item 4. Controls and Procedures

     Disclosure controls and procedures are the Company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

     As of the end of the period covered by this report , the Company has evaluated under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-14 and 15d-14 under the Exchange Act). Based on the evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

     During the period covered by this report, there were no significant changes or corrective actions in the Company’s internal controls that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION

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

     The Company’s annual meeting of stockholders was held on May 28, 2003. The only matter submitted to a vote of the stockholders was the election of directors. At the meeting in person or by proxy, there were stockholders holding an aggregate of 51,039,428 shares of common stock. There were no broker-non votes with respect to any proposal. The voting results were as follows:

Election of Directors

Accordingly, H.W. McKay Belk, B. Frank Mathews, II and Thomas C. Nelson were elected as directors for terms expiring in 2006. Thomas M. Belk, Jr., Sara Belk Gambrell and J. Kirk Glenn, Jr. continue to serve as directors for terms expiring in 2005, and John M. Belk, John R. Belk and John A. Kuhne continue to serve as directors for terms expiring in 2004.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

(b)  Reports on Form 8-K

     None.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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