Belk Inc. and Dillard's Inc. Agree to Exchange Stores.

CHARLOTTE, N.C.--(BUSINESS WIRE)--July 14, 1998--Belk, Inc., and Dillard's, Inc. (NYSE: DDS), have signed a letter of intent agreeing to a transaction involving the exchange of seven Mercantile, Inc., stores located in Florida and South Carolina for nine Belk stores - eight located in Virginia and one in Tennessee. The transaction is scheduled to close by late summer. The deal is contingent upon the completion of Dillard's acquisition of Mercantile Stores, Inc., a transaction which is expected to close in early August. Belk, Inc., will acquire four Gayfer's stores in Jacksonville, Florida, and three J.B.White stores in Columbia, South Carolina. All of these stores are currently being operated by Mercantile Stores, Inc., a transaction which is expected to close in early August.

Belk, Inc., will acquire four Gayfer's stores in Jacksonville, Florida, and three J.B. White stores in Columbia, South Carolina. All of these stores are currently being operated by Mercantile Stores, Inc.

In exchange for the stores Belk receives, Dillard's will acquire eight Belk stores in Virginia - located in Chesapeake (Chesapeake Square and Breenbriar Mall), Colonial Heights (Southpark Mall), Newport News (Patrick Henry Mall), Richmond (Chesterfield Towne Center, Virginia Center Commons and The Shops at Willow Lawn) and Virginia Beach (Lynnhaven Mall) - and one store in Chattanooga, Tennessee (Hamilton Place). In addition, Belk has approved the construction of new Dillard's stores in existing centers in Wilmington and Hickory, North Carolina.

The transaction will give Belk a strong first-time presence in the Jacksonville, Florida, market with stores located at Regency Square Mall (which has an expansion underway), Roosevelt Mall, Orange Park Mall and The Avenues. It will also enable Belk to re-enter the Columbia, South Carolina, market with three stores at Columbiana Centre, Dutch Square Mall and Richland Fashion Mall.

The transaction represents Dillard's first entry into the Chattanooga, Tennessee, and Wilmington and Hickory, North Carolina, markets and will increase Dillard's presence in the Richmond and Tidewater markets. "It's rare that we can make a deal that so clearly benefits both parties," said Bill Dillard, chief executive officer of Dillard's, Inc. "When we add the Belk stores to our existing stores, we will be able for the first time to offer our Virginia customers a full assortment of Dillard's merchandise in competitively sized stores. Chattanooga is a long sought-after addition to our already strong Tennessee stores, and Hickory and Wilmington will enable us to continue our aggressive growth stategy in North Carolina. On the other side of the coin, Jacksonville and Columbia fit naturally into Belk's geographic strategy, and we welcome them to these markets.

"This transaction is advantageous for both parties - it is a significant growth opportunity for Belk that will enable us to increase our total size and sales base, while Dillard's will improve its presentation in Virginia and develop other new opportunities," said John M. Belk of Charlotte, chairman of the board and chief executive officer of Belk, Inc. "The transaction allows us to enter important core markets in Florida and South Carolina where we have operated in nearby locations for many years. The Jacksonville and Columbia locations will give us a strong base for continued sales and earnings growth in these markets.

"Belk will also continue to have a strong presence in Virginia, and we are committed to serving customers in the Belk locations in these markets." Belk will continue to operate 19 Belk stores in Virginia subsequent to the transaction with Dillard's. Dillard's will continue operating the three existing Dillard's stores in each of Columbia and Jacksonville.

Belk, Inc., with headquarters in Charlotte, N.C., is the largest privately-owned department store company in the United States with more than 200 department stores in 13 states. Dillard's, Inc., with headquarters in Little Rock, Arkansas, operates 265 full-line, traditional stores and seven clearance centers in 27 states.

    CONTACT:  Belk Stores Services Inc.
               Steve Pernotto, 704/357-1064 ext. 3618
               or
               Dillard's Inc.
               Julie Bull, 501/376-5965