UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                                        to                                        

Commission file number 000-26207

BELK, INC.

(Exact Name of Registrant as Specified In Its Charter)

Delaware		56-2058574
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
2801 West Tyvola Road, Charlotte, NC		28217-4500
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, including Area Code (704) 357-1000

N/A

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.

     Indicate by check mark 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. þ Yes o No

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

At May 30, 2011, the registrant had issued and outstanding 44,054,661 shares of class A common stock and 843,886 shares of class B common stock.

 

 

BELK, INC.
Index to Form 10-Q

		Page
		Number
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Statements of Income for the Three Months Ended April 30, 2011 and May 1, 2010			5
Condensed Consolidated Balance Sheets as of April 30, 2011 and January 29, 2011			6
Condensed Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income for the Three Months Ended April 30, 2011			7
Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2011 and May 1, 2010			8
Notes to Unaudited Condensed Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 3. Quantitative and Qualitative Disclosures about Market Risk			17
Item 4. Controls and Procedures			17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			19
Item 1A. Risk Factors			19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			19
Item 3. Defaults upon Senior Securities			19
Item 4. Reserved			19
Item 5. Other Information			19
Item 6. Exhibits			19

This Report Contains Forward-Looking Statements

     Certain statements made in this report, and other written or oral statements made by or on behalf of 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, general economic conditions, the success of our re-branding, our ability to be competitive in the retail industry, our ability to execute profitability and efficiency strategies, our ability to execute growth strategies, anticipated benefits from our strategic initiative to strengthen our merchandising and planning organizations, anticipated benefits from the redesign of our belk.com website and our eCommerce fulfillment center, the expected benefit of new systems and technology, anticipated benefits from our acquisitions and the anticipated benefit under our Program Agreement with GE. 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. Any such forward-looking statements are qualified by the following important risk factors and other risks which may be disclosed from time to time in our filings that could cause actual results to differ materially from those predicted by the forward-looking statements. Forward-looking statements relate to the date initially made.

     Risks and uncertainties that might cause our results to differ from those we project in our forward-looking statements include, but are not limited to:

•		Economic, political and business conditions, nationally and in our market areas, including rates of economic growth, interest rates, inflation or deflation, consumer credit availability, levels of consumer debt and bankruptcies, tax rates and policy, unemployment trends, potential acts of terrorism and threats of such acts and other matters that influence consumer confidence and spending;
•		The customer response to our re-branding initiative;
•		Our ability to anticipate the demands of our customers for a wide variety of merchandise and services, including our predictions about the merchandise mix, quality, style, service, convenience and credit availability of our customers;
•		Unseasonable and extreme weather conditions in our market areas;
•		Seasonal fluctuations in quarterly net income due to the significant portion of our revenues generated during the holiday season in the fourth fiscal quarter and the significant amount of inventory we carry during that time;
•		Competition from other department and specialty stores and other retailers, including luxury goods retailers, general merchandise stores, Internet retailers, mail order retailers and off-price and discount stores, in the areas of price, merchandise mix, quality, style, service, convenience, credit availability and advertising;
•		Our ability to effectively use advertising, marketing and promotional campaigns to generate high customer traffic in our stores and, to a lesser degree, through on-line sales;
•		Variations in the amount of vendor allowances;
•		Our ability to expand our eCommerce business through our updated and redesigned belk.com website, including our ability to meet the systems challenges of operating the website consistently and our ability to efficiently operate our eCommerce fulfillment facility;
•		Our ability to find qualified vendors from which to source our merchandise and our ability to access products in a timely and efficient manner from a wide variety of domestic and international vendors;
•		Increases in the price of merchandise, raw materials, fuel and labor or their reduced availability;
•		The income we receive from, and the timing of receipt of, payments from GE, the operator of our private label credit card business, which depends upon the amount of purchases made through the proprietary credit cards, the level of finance charge income generated from the credit card portfolio, the number of new accounts generated, changes in customers’ credit card use, and GE’s ability to extend credit to our customers;
•		Our ability to manage our expense structure;
•		Our ability to continue to open new stores, or to remodel or expand existing stores, including the availability of existing retail stores or store sites on acceptable terms and our ability to successfully execute the Company’s retailing concept in new markets and geographic regions;
•		The efficient and effective operation of our distribution network and information systems to manage sales, distribution, merchandise planning and allocation functions;
•		The effectiveness of third parties in managing our outsourced business;
•		Loss of qualified employees or an inability to attract, retain and motivate additional highly skilled employees;
•		Changes in federal, state or local laws and regulations;
•		Our ability to comply with debt covenants, which could adversely affect our capital resources, financial condition and liquidity; and
•		Our ability to realize the planned efficiencies from our acquisitions and effectively integrate and operate the acquired stores and businesses, including our fiscal year 2007 acquisition of Parisian stores and our fiscal year 2007 acquisition of the assets of Migerobe and commencement of our owned fine jewelry business.

     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 “Risk Factors” in our annual report on Form 10-K for the fiscal year ended January 29, 2011 that we filed with the SEC on April 12, 2011. 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.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share and per share amounts)
(unaudited)

		Three Months Ended
		April 30,				May 1,
		2011				2010
Revenues		$	848,587			$	803,913
Cost of goods sold (including occupancy, distribution and buying expenses)			562,386				536,551
Selling, general and administrative expenses			229,560				218,018
Gain on sale of property and equipment			663				808
Asset impairment and exit costs			116				219
Operating income			57,188				49,933
Interest expense, net			(12,526	)			(12,934	)
Income before income taxes			44,662				36,999
Income tax expense			12,794				12,656
Net income		$	31,868			$	24,343
Basic net income per share		$	0.69			$	0.50
Diluted net income per share		$	0.68			$	0.50
Weighted average shares outstanding:
Basic			46,411,586				48,295,137
Diluted			46,683,452				48,295,137

See accompanying notes to unaudited condensed consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)

		April 30,				January 29,
		2011				2011
Assets
Current assets:
Cash and cash equivalents		$	434,709			$	453,403
Short-term investments			—				6,150
Accounts receivable, net			37,372				31,119
Merchandise inventory			928,901				808,503
Prepaid income taxes, expenses and other current assets			26,609				18,869
Total current assets			1,427,591				1,318,044
Property and equipment, net of accumulated depreciation and amortization of $1,384,069 and $1,354,425 as of April 30, 2011 and January 29, 2011, respectively			948,726				951,120
Deferred income taxes			76,756				83,698
Other assets			39,462				36,769
Total assets		$	2,492,535			$	2,389,631
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	285,802			$	196,622
Accrued liabilities			186,354				161,844
Accrued income taxes			8,889				10,926
Deferred income taxes			19,450				19,776
Current installments of long-term debt and capital lease obligations			4,741				4,426
Total current liabilities			505,236				393,594
Long-term debt and capital lease obligations, excluding current installments			535,939				534,813
Interest rate swap liability			4,575				5,388
Retirement obligations and other noncurrent liabilities			282,140				299,564
Total liabilities			1,327,890				1,233,359
Stockholders’ equity:
Preferred stock			—				—
Common stock, 400 million shares authorized and 46.5 and 46.3 million shares issued and outstanding as of April 30, 2011 and January 29, 2011, respectively			465				463
Paid-in capital			409,493				409,201
Retained earnings			894,229				887,953
Accumulated other comprehensive loss			(139,542	)			(141,345	)
Total stockholders’ equity			1,164,645				1,156,272
Total liabilities and stockholders’ equity		$	2,492,535			$	2,389,631

See accompanying notes to unaudited condensed consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
(in thousands)
(unaudited)

																		Accumulated
																		Other
		Common Stock								Paid-in				Retained				Comprehensive
		Shares				Amount				Capital				Earnings				Income (Loss)				Total
Balance at January 29, 2011			46,344			$	463			$	409,201			$	887,953			$	(141,345	)		$	1,156,272
Comprehensive income:
Net income			—				—				—				31,868				—				31,868
Unrealized gain on interest rate swaps, net of $303 income taxes			—				—				—				—				510				510
Defined benefit plan adjustments, net of $768 income taxes			—				—				—				—				1,293				1,293
Total comprehensive income																							33,671
Cash dividends			—				—				—				(25,592	)			—				(25,592	)
Issuance of stock-based compensation			—				—				(2,212	)			—				—				(2,212	)
Stock-based compensation expense			—				—				2,504				—				—				2,504
Common stock issued			187				2				—				—				—				2
Balance at April 30, 2011			46,531			$	465			$	409,493			$	894,229			$	(139,542	)		$	1,164,645

See accompanying notes to unaudited condensed consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)

		Three Months Ended
		April 30,				May 1,
		2011				2010
Cash flows from operating activities:
Net income		$	31,868			$	24,343
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Asset impairment and exit costs			116				219
Deferred income tax expense			5,560				1,093
Depreciation and amortization expense			30,133				36,803
Stock-based compensation expense			3,585				692
Gain on sale of property and equipment			(6	)			(151	)
Amortization of deferred gain on sale and leaseback			(657	)			(657	)
Amortization of deferred debt issuance costs			256				—
Increase in:
Accounts receivable, net			(6,253	)			(20,769	)
Merchandise inventory			(120,398	)			(99,513	)
Prepaid income taxes, expenses and other assets			(11,303	)			(6,308	)
Increase (decrease) in:
Accounts payable and accrued liabilities			107,343				74,435
Accrued income taxes			(2,037	)			(24,321	)
Retirement obligations and other liabilities			(15,315	)			(12,236	)
Net cash provided (used) by operating activities			22,892				(26,370	)
Cash flows from investing activities:
Purchases of property and equipment			(19,518	)			(9,980	)
Proceeds from sales of property and equipment			991				8
Proceeds from sales of short-term investments			6,150				2,500
Net cash used by investing activities			(12,377	)			(7,472	)
Cash flows from financing activities:
Principal payments on long-term debt and capital lease obligations			(1,132	)			(76,156	)
Dividends paid			(25,592	)			(38,638	)
Stock compensation tax benefit			816				41
Cash paid for withholding taxes in lieu of stock-based compensation shares			(3,301	)			(42	)
Net cash used by financing activities			(29,209	)			(114,795	)
Net decrease in cash and cash equivalents			(18,694	)			(148,637	)
Cash and cash equivalents at beginning of period			453,403				585,930
Cash and cash equivalents at end of period		$	434,709			$	437,293
Supplemental schedule of noncash investing activities:
Increase in property and equipment through accrued purchases		$	7,466			$	51
Increase in property and equipment through assumption of capital leases			1,637				4,045

See accompanying notes to unaudited condensed consolidated financial statements.

BELK, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

     The accompanying unaudited condensed 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 United States Securities and Exchange Commission and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 29, 2011. 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 for the three months ended April 30, 2011 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 year presentation. Previously, the Company presented gift card liability amounts within accounts payable as presented on the consolidated balance sheet. In the current year, the Company has presented the gift card liability in accrued liabilities, and revised amounts presented for the three months ended May 1, 2010 on the cash flow statement for comparability purposes. The revision had no impact on net income, total current liabilities, cash flows from operating activities, or stockholders’ equity for the three months ended May 1, 2010.

(2) Comprehensive Income

     The following table sets forth the computation of comprehensive income:

		Three Months Ended
		April 30,				May 1,
		2011				2010
		(dollars in thousands)
Net income		$	31,868			$	24,343
Other comprehensive income:
Unrealized gain on interest rate swaps, net of $303 and $203 income taxes for the three months ended April 30, 2011 and May 1, 2010, respectively.			510				341
Defined benefit plan adjustments, net of $768 and $688 income taxes for the three months ended April 30, 2011 and May 1, 2010, respectively.			1,293				1,159
Other comprehensive income			1,803				1,500
Total comprehensive income		$	33,671			$	25,843

(3) Accumulated Other Comprehensive Loss

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

		April 30,				January 29,
		2011				2011
		(dollars in thousands)
Unrealized loss on interest rate swap, net of $1,816 and $2,119 income taxes as of April 30, 2011 and January 29, 2011, respectively.		$	(2,758	)		$	(3,268	)
Defined benefit plans, net of $82,580 and $83,348 income taxes as of April 30, 2011 and January 29, 2011, respectively.			(136,784	)			(138,077	)
Accumulated other comprehensive loss		$	(139,542	)		$	(141,345	)

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(4) Fair Value Measurements

     Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

     As of April 30, 2011, the Company held an interest rate swap that is required to be measured at fair value on a recurring basis. The Company has entered into interest rate swap agreements with financial institutions to manage the exposure to changes in interest rates. The fair value of interest rate swap agreements is the estimated amount that the Company would pay or receive to terminate the swap agreement, taking into account the current creditworthiness of the swap counterparties. The fair values of swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Company has consistently applied these valuation techniques in all periods presented. Additionally, the change in the fair value of a swap designated as a cash flow hedge is marked to market through accumulated other comprehensive income.

     The Company’s interest rate swap measured at fair value on a recurring basis was $4.6 million and $5.4 million at April 30, 2011 and January 29, 2011, respectively. The Company classifies these measurements as Level 2.

     Certain long-lived assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). The fair value measurements related to long-lived assets are determined using expected future cash flow analyses. The Company classifies these measurements as Level 3. There were no significant impairments of long-lived assets for the three months ended April 30, 2011 and May 1, 2010.

     The following table presents the carrying amounts and estimated fair values of financial instruments not recorded at fair value in the consolidated balance sheets. These included the Company’s auction rate security (“ARS”) and fixed rate long-term debt.

		April 30, 2011								January 29, 2011
		Carrying				Fair				Carrying				Fair
		Value				Value				Value				Value
						(dollars in thousands)
Financial assets
Auction rate security		$	—			$	—			$	6,150			$	6,150
Financial liabilities
Long-term debt (excluding capitalized leases)		$	517,780			$	526,912			$	517,780			$	520,036

     As of January 29, 2011, the par value of the ARS was $6.2 million and the estimated fair value was $6.2 million based on the amount received upon call by the issuer in the first quarter of fiscal year 2012. The fair value of the Company’s fixed rate long-term debt is estimated based on the current rates offered to the Company for debt of the same remaining maturities.

(5) Income Taxes

     Income tax expense for the three months ended April 30, 2011 was $12.8 million, or 28.6%, compared to $12.7 million, or 34.2%, for the three months ended May 1, 2010. The decrease in the rate was due primarily to a $2.3 million reduction in the accrual for uncertain tax reserves, which was the result of expired state related statutes of limitations during the three months ended April 30, 2011.

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(6) Pension and Postretirement Benefits

     The Company has a defined benefit pension plan, the Belk Pension Plan, which prior to fiscal year 2010 had been partially frozen and closed to new participants. Pension benefits were suspended for fiscal year 2010, and effective December 31, 2009, the Pension Plan was frozen for those remaining participants whose benefits were not previously frozen in fiscal year 2006.

     The Company has a non-qualified defined benefit Supplemental Executive Retirement Plan, (“Old SERP”), which provides retirement and death benefits to certain qualified executives. Old SERP has been closed to new executives and has been replaced by the 2004 Supplemental Executive Retirement Plan (“2004 SERP”), a non-qualified defined contribution plan.

     The Company also provides postretirement medical and life insurance benefits to certain retired full-time employees.

     The components of net periodic benefit expense for these plans are as follows:

		Three Months Ended
		Pension Plan								Old SERP Plan								Postretirement Plan
		April 30,				May 1,				April 30,				May 1,				April 30,				May 1,
		2011				2010				2011				2010				2011				2010
		(dollars in thousands)
Service cost		$	—			$	—			$	26			$	18			$	27			$	37
Interest cost			6,373				6,517				155				155				300				340
Expected return on plan assets			(7,017	)			(6,550	)			—				—				—				—
Amortization of transition obligation			—				—				—				—				65				66
Amortization of prior service cost			—				—				—				—				—				—
Amortization of net loss (gain)			1,967				1,753				63				36				(34	)			(8	)
Net periodic benefit expense		$	1,323			$	1,720			$	244			$	209			$	358			$	435

     The Company made a $4.5 million discretionary contribution to its Pension Plan on April 15, 2011 and an $11.7 million discretionary contribution on April 26, 2011. The Company expects to make additional contributions totaling approximately $40.0 million to the Pension Plan before fiscal year end.

(7) Earnings per Share

     Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. The diluted EPS calculation includes the effect of contingently issuable stock-based compensation awards with performance vesting conditions as being outstanding at the beginning of the period in which all vesting conditions are met.

     If all necessary conditions have not been satisfied by the end of the period, the contingently issuable shares included in diluted EPS are based on the number of dilutive shares that would be issuable if the end of the reporting period were the end of the contingency period. Contingently-issuable non-vested share awards are included in the diluted EPS calculation as of the beginning of the period (or as of the date of the contingent share agreement, if later).

     The reconciliation of basic and diluted shares for the three months ended April 30, 2011 and May 1, 2010, are as follows:

		Three Months Ended				Three Months Ended
		April 30,				May 1,
		2011				2010
Basic Shares			46,411,586				48,295,137
Dilutive contingently-issuable non-vested share awards			266,963				—
Dilutive contingently-issuable vested share awards			4,903				—
Diluted Shares			46,683,452				48,295,137

BELK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(8) Repurchase of Common Stock

     On March 30, 2011, the Company’s Board of Directors approved a self-tender offer to purchase up to 2,200,000 shares of common stock at a price of $33.70 per share. The tender offer was initiated on April 18, 2011 and completed on May 16, 2011 when the Company accepted for purchase 1,353,607 shares of Class A and 278,335 shares of Class B common stock for $55.0 million.

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

Overview

     Belk, Inc., together with its subsidiaries (collectively, the “Company” or “Belk”), is the largest privately owned mainline department store business in the United States. As of April 30, 2011, the Company had 304 stores in 16 states, located primarily in the southern United States. The Company generated revenues of $3.5 billion for the fiscal year ended January 29, 2011, and together with its predecessors, has been successfully operating department stores since 1888 by seeking to provide superior service and merchandise that meets customers’ needs for fashion, value and quality.

     The following discussion, which presents the results of the Company, should be read in conjunction with the Company’s consolidated financial statements as of January 29, 2011, and for the year then ended, and related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, all contained in the Company’s Annual Report on Form 10-K for the year ended January 29, 2011.

     The Company’s fiscal year ends on the Saturday closest to each January 31. All references to “fiscal year 2013” refer to the fiscal year that will end February 2, 2013, all references to “fiscal year 2012” refer to the fiscal year that will end January 28, 2012 and all references to “fiscal year 2011” refer to the fiscal year ended January 29, 2011.

     The Company’s revenues increased 5.6% in the first quarter of fiscal year 2012 to $848.6 million due primarily to a continuation of improved sales trends and a significant year-over-year increase in eCommerce sales. Comparable store revenues increased 5.7%. Comparable store revenue includes stores that have reached the one-year anniversary of their opening as of the beginning of the fiscal year and eCommerce revenues, but excludes closed stores. Operating income increased to $57.2 million in the first quarter of fiscal year 2012 compared to $49.9 million during the same period in fiscal year 2011. Net income increased to $31.9 million or $0.69 per basic share and $0.68 per diluted share in the first quarter of fiscal year 2012 compared to $24.3 million or $0.50 per basic and diluted share during the same period in fiscal year 2011. The increase in net income was due primarily to continued positive results from corporate initiatives focused on sales and margin performance.

     Management believes that consumers will remain focused on value in fiscal year 2012. The Company intends to continue to be flexible in sales and inventory planning and in expense management in order to react to changes in consumer demand. Additionally, merchandise costs in apparel categories are expected to have low double-digit increases in the second half of fiscal year 2012 due to inflation in the cost of raw materials, labor and fuel. Specific increases are dependent on the category and the related fabric content. The Company has been preparing for these cost increases for some time and is working diligently to minimize the impact of these higher costs on a consumer that is still buying cautiously and, therefore, less open to paying higher prices for discretionary goods.

     Belk stores seek to provide customers the convenience of one-stop shopping, with an appealing merchandise mix and extensive offerings of brands, styles, assortments and sizes. Belk stores sell top national brands of fashion apparel, shoes and accessories for women, men and children, as well as cosmetics, home furnishings, housewares, fine jewelry, gifts and other types of quality merchandise. The Company also sells exclusive private label brands, which offer customers differentiated merchandise selections. Larger Belk stores may include hair salons, spas, restaurants, optical centers and other amenities.

     The Company seeks to be the leading department store in its markets by selling merchandise to customers that meets their needs for fashion, selection, value, quality and service. To achieve this goal, Belk’s business strategy focuses on quality merchandise assortments, effective marketing and sales promotional strategies, attracting and retaining talented, well-qualified associates to deliver superior customer service, and operating efficiently with investments in information technology and process improvement.

     The Company operates department stores in the highly competitive retail industry. Management believes that the principal competitive factors for retail department store operations include merchandise selection, quality, value, customer service and convenience. The Company believes its stores are strong competitors in all of these areas. The

Company’s primary competitors are traditional department stores, mass merchandisers, national apparel chains, individual specialty apparel stores and direct merchant firms, including J.C. Penney Company, Inc., Dillard’s, Inc., Kohl’s Corporation, Macy’s, Inc., Sears Holding Corporation, Target Corporation and Wal-Mart Stores, Inc.

     In response to recent economic conditions and the significant decline in the number of new retail centers being developed over the last several years, the Company has focused its growth strategy on remodeling and expanding existing stores, developing new merchandising concepts in targeted demand centers and enhancing the eCommerce business and website. The Company will, however, continue to explore new store opportunities in markets where the Belk name and reputation are well known and where Belk can distinguish its stores from the competition. The Company will also consider closing stores in markets where more attractive locations become available or where the Company does not believe there is potential for long term growth and success. In addition, the Company periodically reviews and adjusts its space requirements to create greater operating efficiencies and convenience for the customer.

Results of Operations

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

		Three Months Ended
		April 30,				May 1,
		2011				2010
SELECTED FINANCIAL DATA
Revenues			100.0	%			100.0	%
Cost of goods sold (including occupancy, distribution and buying expenses)			66.3				66.7
Selling, general and administrative expenses			27.1				27.1
Gain on sale of property and equipment			0.1				0.1
Asset impairment and exit costs			—				—
Operating income			6.7				6.2
Interest expense, net			1.5				1.6
Income before income taxes			5.3				4.6
Income tax expense			1.5				1.6
Net income			3.8				3.0
Comparable store net revenue increase			5.7				6.4

Revenues

     The following table gives information regarding the percentage of revenues contributed by each merchandise area for each of the respective periods. There were no material changes for the periods as reflected in the table below.

		Three Months Ended
		April 30,				May 1,
Merchandise Areas		2011				2010
Women’s			37	%			38	%
Cosmetics, Shoes and Accessories			34				33
Men’s			15				15
Home			7				7
Children’s			7				7
Total			100	%			100	%

Comparison of the Three Months Ended April 30, 2011 and May 1, 2010

     Revenues. The Company’s revenues for the three months ended April 30, 2011 increased 5.6%, or $44.7 million, to $848.6 million from $803.9 million during the same period in fiscal year 2011. The increase is primarily attributable to a 5.7% increase in revenues from comparable stores and a $0.1 million increase in revenues due to new stores, partially offset by a decrease in revenues from closed stores of $0.2 million.

     Cost of goods sold. Cost of goods sold was $562.4 million, or 66.3% of revenues, for the three months ended April 30, 2011 compared to $536.6 million, or 66.7% of revenues, for the same period in fiscal year 2011. The decrease in cost of goods sold as a percentage of revenues was primarily attributable to reduced net markdown activity for the three months ended April 30, 2011.

     Merchandise costs across apparel categories are expected to have low double-digit increases for the second half of fiscal year 2012 due to inflation in the cost of raw materials, labor and fuel. Specific increases are dependent on the category and the related fabric content. The Company has been preparing for these cost increases for some time and is working diligently to minimize the impact of these higher costs on a consumer that is still buying cautiously and, therefore, less open to paying higher prices for discretionary goods.

     Selling, general and administrative expenses. Selling, general and administrative (“SG&A”) expenses were $229.6 million, or 27.1% of revenues for the three months ended April 30, 2011, compared to $218.0 million, or 27.1% of revenues for the same period in fiscal year 2011. The increase in SG&A expenses was primarily due to an increase in advertising expenses, payroll, and employee benefits, partially offset by a reduction in depreciation expense for the three months ended April 30, 2011.

     Income tax expense. Income tax expense for the three months ended April 30, 2011 was $12.8 million, or 28.6%, compared to $12.7 million, or 34.2%, for the three months ended May 1, 2010. The decrease in the rate was due primarily to a $2.3 million reduction in the accrual for uncertain tax reserves, which was the result of expired state related statutes of limitations during the three months ended April 30, 2011.

Seasonality and Quarterly Fluctuations

     The Company has historically experienced and expects to continue to experience seasonal fluctuations in its revenues, operating income and net income due to the seasonal nature of the retail business. The highest revenue period for the Company is the fourth quarter, which includes the holiday selling season. A disproportionate amount of the Company’s revenues and a substantial amount of the Company’s operating and net income are realized during the fourth quarter. If for any reason the Company’s revenues were below seasonal norms during the fourth quarter, the Company’s annual results of operations could be adversely affected. The Company’s inventory levels generally reach their highest levels in anticipation of increased revenues during these months. The Company’s quarterly results of operations could also fluctuate significantly as a result of a variety of factors, including the timing of new store openings.

Liquidity and Capital Resources

     The Company’s primary sources of liquidity are cash on hand of $434.7 million as of April 30, 2011, cash flows from operations, and borrowings under debt facilities, which consist of a $475.0 million credit facility that matures in November 2015 and $375.0 million in senior notes. As of April 30, 2011, the credit facility was comprised of an outstanding $125.0 million term loan and a $350.0 million revolving line of credit.

     The credit facility allows for up to $250.0 million of outstanding letters of credit. The credit facility charges interest based upon certain Company financial ratios and the interest spread was calculated at April 30, 2011 using LIBOR plus 150 basis points, or 1.72%. The credit facility contains restrictive financial covenants including leverage and fixed charge coverage ratios. The Company’s calculated leverage ratio dictates the LIBOR spread that will be charged on outstanding borrowings in the subsequent quarter. The leverage ratio is calculated by dividing adjusted debt, which is the sum of the Company’s outstanding debt and rent expense multiplied by a factor of eight, by pre-tax income plus net interest

expense and non-cash items, such as depreciation, amortization, and impairment expense. At April 30, 2011, the maximum leverage ratio allowed under the credit facility was 4.0, and the calculated leverage ratio was 2.35. The Company was in compliance with all covenants as of April 30, 2011 and expects to remain in compliance with all debt covenants for the next twelve months. As of April 30, 2011, the Company had $36.6 million of standby letters of credit outstanding under the credit facility, and availability under the credit facility was $313.4 million.

     The senior notes are comprised of an $80.0 million floating rate senior note that has a stated variable interest rate based on three-month LIBOR plus 80.0 basis points, or 1.09% at April 30, 2011, that matures in July 2012. This $80.0 million notional amount has an associated interest rate swap with a fixed interest rate of 5.2%. Additionally, a $20.0 million fixed rate senior note that bears interest of 5.05% matures in July 2012, a $100.0 million fixed rate senior note that bears interest of 5.31% matures in July 2015, a $125.0 million fixed rate senior note that bears interest of 6.2% matures in August 2017, and a $50.0 million fixed rate senior note that bears interest of 5.70% matures in November 2020. The senior notes have restrictive covenants that are similar to the Company’s credit facility. Additionally, the Company has a $17.8 million, 20-year variable rate, 0.21% at April 30, 2011, state bond facility which matures in October 2025.

     The debt facilities place certain restrictions on mergers, consolidations, acquisitions, sales of assets, indebtedness, transactions with affiliates, leases, liens, investments, dividends and distributions, exchange and issuance of capital stock and guarantees, and require maintenance of minimum financial ratios, which include a leverage ratio, consolidated debt to consolidated capitalization ratio and a fixed charge coverage ratio. These ratios are calculated exclusive of non-cash charges, such as fixed asset, goodwill and other intangible asset impairments.

     The Company utilizes derivative financial instruments (interest rate swap agreements) to manage the interest rate risk associated with its borrowings. The Company has not historically traded, and does not anticipate prospectively trading, in derivatives. These swap agreements are used to reduce the potential impact of increases in interest rates on variable rate debt. The difference between the fixed rate leg and the variable rate leg of the swap, to be paid or received, is accrued and recognized as an adjustment to interest expense. Additionally, the change in the fair value of a swap designated as a cash flow hedge is marked to market through accumulated other comprehensive income.

     The Company’s exposure to derivative instruments was limited to one interest rate swap as of April 30, 2011, an $80.0 million notional amount swap, which has a fixed interest rate of 5.2% and expires in fiscal year 2013. It has been designated as a cash flow hedge against variability in future interest rate payments on the $80.0 million floating rate senior note.

     Management believes that cash flows from operations and existing credit facilities will be sufficient to cover working capital needs, common stock repurchases, dividends, capital expenditures, pension contributions and debt service requirements for the next twelve months and foreseeable future.

     The Company plans to invest approximately $500 million over the next several years in the following areas: store remodeling projects, upgrading and modernization of our information technology infrastructure, re-branding and marketing, and enhancements to the eCommerce business and website.

     Net cash provided by operating activities was $22.9 million for the three months ended April 30, 2011 compared to net cash used of $26.4 million for the same period in fiscal year 2011. The increase in cash flows from operating activities for the three months ended April 30, 2011 was principally due to a $23.2 million decrease in income taxes paid in fiscal year 2012 primarily as a result of higher estimated tax payments made during fiscal year 2011, a $14.5 million increase from accounts receivable due to the timing of promotional events, and a $7.5 million increase in net income for the current period.

     Net cash used by investing activities was $12.4 million for the three months ended April 30, 2011 compared to $7.5 million for the same period in fiscal year 2011. The increase in cash used by investing activities primarily resulted from increased purchases of property and equipment primarily for store remodeling projects for the three months ended April 30, 2011.

     Net cash used by financing activities was $29.2 million for the three months ended April 30, 2011 compared to $114.8 million for the same period in fiscal year 2011. The decrease in cash used by financing activities was primarily

due to the $75.0 million discretionary payment on the credit facility term loan made in the first three months of fiscal year 2011 and a $13.0 million decrease in dividends paid in the first three months of fiscal year 2012 compared to the same period in fiscal year 2011.

Contractual Obligations and Commercial Commitments

     A table representing the scheduled maturities of the Company’s contractual obligations and commercial commitments as of January 29, 2011 was included under the heading “Contractual Obligations and Commercial Commitments” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2011. There have been no material changes from the information included in the Form 10-K.

Off-Balance Sheet Arrangements

     The Company has not created, and is not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating the Company’s business. The Company does not have any arrangements or relationships with entities that are not consolidated into the financial statements that are reasonably likely to materially affect the Company’s liquidity or the availability of capital resources.

New Accounting Pronouncements

     In May 2011, the Financial Accounting Standards Board issued Accounting Standards Update 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS,” which amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This guidance will be effective at the beginning of fiscal year 2013. The Company does not expect the adoption to have a material impact on the consolidated financial statements.

Impact of Inflation or Deflation

     Although the Company expects that operations will be influenced by general economic conditions, including rising fuel and energy prices, management does not believe that inflation has had a material effect on the Company’s results of operations. However, there can be no assurance that our business will not be affected by such factors in the future.

     The Company is beginning to experience inflation in merchandise cost due to increases in raw material, labor and fuel costs. Such cost increases were not significant in fiscal year 2011, but the Company expects low to mid single-digit cost increases in the first half of fiscal year 2012 and low double-digit increases in the second half of fiscal year 2012. In private and exclusive brands, where the Company has more control over the production and manufacture of the merchandise, the Company has historically been able to minimize inflationary pressures through measures such as committing earlier for merchandise and shifting sourcing to lower cost markets. Belk’s third-party brand vendors are also facing the same inflationary pressures. Management plans to continue to work with these vendors in efforts to minimize the impact of inflation on merchandise costs and selling prices.

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 three months ended April 30, 2011 from the disclosures contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2011.

Item 4. Controls and Procedures

     The Company’s management conducted an evaluation pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and

forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

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

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     In the ordinary course of business, the Company is subject to various legal proceedings and claims. The Company believes that the ultimate outcome of these matters will not have a material adverse effect on its consolidated financial position or results of operations.

Item 1A. Risk Factors

     There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K filed on April 12, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     Not applicable.

Item 3. Defaults Upon Senior Securities

     Not applicable.

Item 4. Reserved

Item 5. Other Information

     Not applicable.

Item 6. Exhibits

(a) Exhibits

	3.1		Form of Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to pages B-24 to B-33 of the Company’s Registration Statement on Form S-4/A, filed on March 5, 1998 (File No. 333-42935)).
	3.2		Form of Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004).
	4.1		Articles Fourth, Fifth and Seventh of the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to pages B-24 to B-33 of the Company’s Registration Statement on Form S-4/A, filed on March 5, 1998 (File No. 333-42935)).
	4.2		Articles I and IV of the Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004).
	10.1		Belk, Inc. Amended and Restated Annual Incentive Plan.
	31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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