Sears to Exit Skin Care and Color Cosmetics Business As Part of Full-Line Store Repositioning

Business Strategy Move to Result in $53 Million Charge in Second Quarter

As part of a strategic review of its full-line stores, Sears, Roebuck and Co. will exit its skin care and color cosmetics business, including the proprietary Circle of Beauty brand. The products currently are sold in 450 full-line stores. In addition, Sears has reached agreement with Avon Products, Inc. not to proceed with the launch of Avon's new retail brand, beComing, in 125 Sears stores this fall.

Sears anticipates recording a pre-tax charge of approximately $80 million ($53 million after-tax) in the second quarter due to the exit.

"As work on improving the performance of full-line stores progresses, it has become clear that a broad cosmetics business no longer fits with our financial and strategic objectives for Sears full-line stores," said Alan J. Lacy, chairman and CEO.

Sears will continue to offer selected fragrances, bath and body products and candles, with an emphasis on gift and seasonal items. Those products are offered in most full-line Sears stores.

This release contains "forward-looking statements" that are based on assumptions concerning the costs associated with exiting the business above (and related quarter-end adjustments), as well as competitive conditions in the retail industry, consumer behavior, continuing developments in the company's strategic planning and similar uncertainties. While the company believes its forecasts and assumptions are reasonable, it cautions that actual results could differ materially. The company intends the forward-looking statements in this release to speak only as of the time of this release and does not undertake to update or revise these projections.

Sears, Roebuck and Co. is a leading U.S. retailer of apparel, home and automotive products and services, with annual revenue of more than $40 billion. The company serves families throughout the country through approximately 860 department stores, more than 2,100 specialized retail locations, and a variety of online offerings accessible through the company's Web site, .


SOURCE: Sears, Roebuck and Co.

Contact: Janice R. Drummond of Sears, Roebuck and Co., 847-286-8316


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