AMENDMENT LETTER

Exhibit 10.3

AMENDMENT LETTER

May 2, 2002

Saks Incorporated

750 Lakeshore Parkway

Birmingham, Alabama 35211

Each of the Lenders Party

to the Credit Agreement

Referenced Below

Amendment No. 2 to Credit Agreement

Reference is hereby made to that certain Credit Agreement dated as of November 20, 2001 among Saks Incorporated, a Tennessee corporation (the “Borrower”), Bank of America, N.A., as Agent (the “Agent”), and the Lenders party thereto (the “Lenders”) (as from time to time amended, modified, supplemented, amended and restated, or refinanced, the “Credit Agreement”)). Capitalized terms not defined herein shall have the meanings given such terms in the Credit Agreement.

The Borrower has requested permission to prepay Debt consisting of the 2004 Notes in excess of the amount of such prepayment permitted under Section 7.9 of the Credit Agreement. The Agent and the Lenders desire to permit such additional prepayment and amend the Credit Agreement accordingly.

The Agent, the Borrower, and the Lenders party hereto have agreed to amend the Credit Agreement to permit the Borrower to prepay, in addition to its existing rights in Section 7.9 of the Credit Agreement to prepay Debt, additional amounts of the 2004 Notes.

The Agent, the Borrower, and the Lenders party hereto hereby agree that clause (b) of Section 7.9 of the Credit Agreement is amended and restated as follows:

(b)    so long as no Default or Event of Default exists at the time thereof or would result therefrom and Availability shall not be less than $150,000,000 immediately after giving effect thereto, (i) acquisitions by the Borrower or any Subsidiary of capital stock or other equity interest of the Borrower, (ii) prepayments of Debt, collectively in an aggregate amount for all such acquisitions or prepayments not to exceed (A) $25,000,000 in the aggregate for the period beginning on the Closing Date and ending April 29, 2002, (B) $25,000,000 in the aggregate for period beginning April 30, 2002 and ending January 31, 2003, and (C) for each Fiscal Year thereafter the sum of (x) the amount available for such acquisitions and prepayments in the immediately preceding Fiscal Year plus (y) 50% of Excess Cash Flow for the immediately preceding Fiscal Year less the aggregate

amount of such acquisitions and prepayments made during the immediately preceding Fiscal Year, and (iii) prepayments of the 2004 Notes, collectively in an aggregate amount for all such acquisitions or prepayments in accordance with this subclause (iii) not to exceed $75,000,000 during the term of this Agreement and”

Each of the Guarantors joins in the execution of this Letter for the purposes of consenting to the amendments to the Credit Agreement contained herein.

This letter may be executed in any number of counterparts and all the counterparts taken together shall be deemed to constitute one and the same instrument.

BANK OF AMERICA, N.A., as Agent

This Letter is hereby agreed to by the parties signatory below:

GUARANTORS:

CARSON PIRIE HOLDINGS, INC.

MCRAE’S, INC.

MCRAE’S OF ALABAMA, INC.

PARISIAN, INC.

SAKS & COMPANY

SAKS DIRECT, INC.

SAKS DISTRIBUTION CENTERS, INC.

SAKS FIFTH AVENUE DISTRIBUTION COMPANY

SAKS FIFTH AVENUE, INC.

SAKS WHOLESALERS, INC.

SAKS FIFTH AVENUE OF TEXAS, INC.

SAKS HOLDINGS, INC.

TEX SFA, INC.

SCCA STORE HOLDINGS, INC.

SCIL STORE HOLDINGS, INC.

HERBERGER’S DEPARTMENT STORES, LLC

JACKSON LEASING, LLC

MCRIL, LLC

NEW YORK CITY SAKS, LLC

SCCA, LLC

SCIL, LLC

SFAILA, LLC

SAKS FIFTH AVENUE TEXAS, L.P.

PMIN GENERAL PARTNERSHIP

    BY: Parisian, Inc., a General Partner

MCRAE’S STORES PARTNERSHIP

    BY: McRae’s, Inc., a General Partner