Sears Announces New Store Format - Sears Essentials

Twenty-five Previously Acquired Kmart and Wal-Mart Stores to Open in Spring

Sears, Roebuck and Co. (NYSE: S) announced today the launch of the company's newest off-mall format - Sears Essentials. This new mid-sized store format, which will leverage the best of Sears along with convenience-inspired items, is a result of the acquisition of 50 Kmart and six Wal-Mart stores finalized in the third quarter of 2004. The first 25 Sears Essentials stores are scheduled to open this spring (see list below).

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"Sears Essentials will lead the way as we embark on the most aggressive growth initiative in company history," said Sears Chairman and CEO, Alan Lacy. "This new store format enables Sears to grow its brand off-mall and better meet the everyday needs of our customers."

Based on customer response to the merchandise assortments at Sears Grand, Sears Essentials will offer Sears' product categories that are integral to home and family life, such as appliances, lawn and garden, tools, electronics, apparel, and home fashions along with routinely purchased convenience items, such as health and beauty, pantry, household and paper products, pet supplies, and toys. The name Sears Essentials, which resonated with customers in research conducted during the name selection process, conveys the important role that Sears plays in homes and families across the country, as well as the everyday solutions the store will provide.

Following the proposed business combination with Kmart, Sears expects that the new off-mall stores will leverage Kmart's strengths including the retailer's experience, knowledge, infrastructure and scale, particularly in such categories as pantry, health and beauty, household goods, and pharmacy. Sears Essentials will also leverage Sears' strengths including expertise in appliances, lawn and garden, tools and apparel and strong brands like Kenmore, Craftsman and Apostrophe.

Upon the business combination's finalization, Sears Essentials will offer customers the "best of both," meeting the everyday needs of our customers as Kmart does now, while offering more destination-focused purchase categories that Sears traditionally offers. Sears Essentials will be a one-stop shopping destination for home and family needs from everything from back-to-school, backyard living and birthdays to appliances, apparel and soft drinks.

Retaining several off-mall attributes, the stores will feature a one-level racetrack design, exit cashiering and a centralized customer service center. The stores are primarily located in large, densely populated markets with home, family and income demographics that are attractive to Sears.

The stores expected to undergo the transition over the coming weeks and months, will remain open during the process to best serve customers and will convert to the Sears Essentials nameplate this spring.

  Store Locations
  10140 N. 91st Ave.             Peoria                        AZ

  3610 Peck Rd.                  El Monte                      CA
  2505 El Camino Real            Tustin                        CA
  12080 Carmel Mountain          San Diego                     CA
  5405 University Ave.           San Diego                     CA
  7655 Clairemont Mesa           San Diego                     CA
  935 Sweetwater Rd.             Spring Valley                 CA

  1363 NW St. Lucie W B          Port St Lucie                 FL
  3020 SE Federal Hwy.           Stuart                        FL
  5750 NW 183rd St.              Hialeah                       FL
  4560 Forest Hill Blvd.         Rd. Palm Beach                FL
  9500 9th St. N.                St Petersburg                 FL

  13200 S. Cicero                Crestwood                     IL
  537 N. Hicks Rd.               Palatine                      IL
  840 Plainfield                 Willowbrook                   IL

  4915 Dixie Hwy.                Louisville                    KY

  8827 Woodyard Rd.              Clinton                       MD
  6411 Riggs Rd.                 Hyattsville                   MD

  1100 Rochester Rd. S.          Rochester                     MI

  New Hampshire
  375 Amherst St.                Nashua                        NH

  New Jersey
  6801 Hadley Rd.                South Plainfield              NJ
  235 Prospect Ave.              West Orange                   NJ

  3843 Linden St.                Bethlehem                     PA

  482 McBrien Rd.                East Ridge                    TN

  141 West Lee Hwy.              Warrenton                     VA

  About Sears, Roebuck and Co.

Sears, Roebuck and Co. ("Sears") is a leading broadline retailer providing merchandise and related services. With revenues in 2004 of $36.1 billion, Sears offers its wide range of home merchandise, apparel and automotive products and services through more than 2,300 Sears-branded and affiliated stores in the U.S. and Canada, which includes approximately 870 full-line and 1,100 specialty stores in the U.S. Sears also offers a variety of merchandise and services through,, and specialty catalogs. Sears is the only retailer where consumers can find each of the Kenmore, Craftsman, DieHard and Lands' End brands together -- among the most trusted and preferred brands in the U.S. Sears is the largest provider of product repair services with more than 14 million service calls made annually. For more information, visit Sears' website at .

About Kmart Holding Corporation

Kmart Holding Corporation and its subsidiaries (together, "Kmart") is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Martha Stewart Everyday and Route 66. For more information visit Kmart's website at .

About Sears Holdings Corporation

Created in connection with the proposed merger of Kmart and Sears announced on Nov. 17, 2004, and subject to the receipt of shareholder and regulatory approvals and the satisfaction or waiver of other conditions, upon close of the merger, Sears Holdings Corporation is expected to be the third largest retailer in the United States, with approximately $55 billion in annual revenues and approximately 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is expected to be the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands are expected to include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It is also expected to have Martha Stewart Everyday products, which are now offered exclusively in the U.S. by Kmart and in Canada by Sears Canada.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the conversion and opening of Sears Essentials stores, the company's strategy for growth, the expected benefits of the pending business combination transaction with Kmart Holding Corporation, and future operating results. Such statements are based upon the current beliefs and expectations of Kmart's and Sears' management and are subject to significant risks and uncertainties such as the following: the timing of receipt of regulatory approvals in connection with the transaction; the failure of Kmart and Sears stockholders to approve the transaction; the risk that the businesses will not be integrated successfully; failure to quickly realize synergies and cost-savings from the transaction as a result of technical, logistical, competitive and other factors; disruption from the transaction and store conversions, making it more difficult to maintain relationships with clients, employees or suppliers; competitive conditions in retail and related services industries; changes in consumer confidence, tastes, preferences and spending; the availability and level of consumer debt; the successful execution of, and customer response to, strategic initiatives, including the full-line store strategy and the conversion and integration of the Sears Essentials stores and other new store locations; the ability to integrate and operate the Sears Essentials stores successfully, which involves leveraging the supply chain and consolidating expenses; the ability to successfully merchandise the Sears Essentials stores with Sears and Kmart branded merchandise and services; the pace of growth in store locations, which may be higher or lower than anticipated; the possibility that new business and strategic options for one or more business segments will be identified, potentially including selective acquisitions, dispositions, restructurings, joint ventures and partnerships; trade restrictions, tariffs, and other factors potentially affecting the ability to find qualified vendors and access products in an efficient manner; the ability to successfully implement initiatives to improve inventory management capabilities; anticipated cash flow; changes in interest rates; the outcome of pending legal proceedings and bankruptcy claims; social and political conditions such as war, political unrest and terrorism or natural disasters; volatility in financial markets; the terms and availability of debt financing; changes in debt ratings, credit spreads and the cost of funds; the possibility of interruptions in systematically accessing the public debt markets; the impact of seasonal buying patterns, which are difficult to forecast with certainty; and general economic conditions and normal business uncertainty. These forward-looking statements speak only as of the time first made, and no undertaking has been made to update or revise them as more information becomes available. Additional factors that could cause Kmart's and Sears' results to differ materially from those described in the forward-looking statements can be found in the 2003 Annual Reports on Forms 10-K of Kmart and Sears filed with the SEC and available at the SEC's Internet site ( ).

Registration Statement

Sears Holdings Corporation has filed a Registration Statement on Form S-4 with the SEC (Registration No. 333-120954) containing a preliminary joint proxy statement-prospectus regarding the proposed transaction involving Kmart Holding Corporation and Sears, Roebuck and Co. Investors are urged to read the definitive joint proxy statement-prospectus regarding the proposed transaction when it becomes available, because it will contain important information. Stockholders will be able to obtain a free copy of the definitive joint proxy statement-prospectus, as well as other filings containing information about Sears Holdings Corporation, Kmart Holding Corporation and Sears, Roebuck and Co., without charge, at the SEC's Internet site ( ). Copies of the definitive joint proxy statement- prospectus and the SEC filings that will be incorporated by reference in the definitive joint proxy statement- prospectus can also be obtained, without charge, by directing a request to Kmart Holding Corporation, 3100 West Big Beaver Road, Troy, Michigan, 48084, Attention: Office of the Secretary, or to Sears, Roebuck and Co., 3333 Beverly Road, Hoffman Estates, Illinois, 60179, Attention: Office of the Secretary. Information regarding Sears Holdings' proposed directors and executive officers, Kmart's and Sears, Roebuck's directors and executive officers and other participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is available in the preliminary joint proxy statement-prospectus contained in the above-referenced Registration Statement on Form S-4.

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SOURCE: Sears, Roebuck and Co.

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