Statement From Sears Holdings Following Fitch Ratings Announcement

Today Fitch Ratings ("Fitch") issued a press release in which it downgraded the ratings associated with certain of Sears Holdings Corporation's ("SHC") outstanding debt obligations. SHC does not agree with Fitch's action given our current liquidity position, reduced debt levels, demonstrated history of cash flow generation and available assets. We believe that we are being unfairly treated, as many of our biggest competitors have dramatically increased debt levels over the past several years with little or no consequence to their ratings.

SHC has consistently maintained a strong capital structure and generated significant cash flow from operations. In fact, SHC has generated $5.2 billion of operating cash since the merger and $1.5 billion last year. The $4 billion credit facility entered into at the time of the Sears/Kmart merger was structured to provide significantly more liquidity than Sears Holdings anticipated requiring in order to provide flexibility to fund our working capital needs and to pursue a variety of value creating strategies. Since the merger in March 2005, the largest amount outstanding under the facility at any time to date has been $1.8 billion, of which $1 billon represented standby letters of credit issued primarily to support our insurance programs. Over this same period, SHC has paid down approximately $2 billion of the outstanding debt assumed from Sears at the time of the merger. SHC has also made contributions of approximately $1 billion to fund the frozen pension plans of its predecessor companies. This credit facility, by its terms, continues through March 2010 and carries no financial ratio covenants that are applicable (the financial ratio covenants contained in the agreement are only applicable at SHC's election).

SHC has significant assets, including cash of $1.5 billion, owned and attractive long-term leased real estate, a stable of nationally recognized proprietary brands (Kenmore, Craftsman, Lands' End and DieHard) and a 70% equity interest in Sears Canada. In addition, SHC has $9 billion of inventory that currently secures the $4 billion credit facility.

We wish to thank Fitch for retracting the incorrect statement that appeared in its Retail Register Report published on September 17, 2008 in which reference was made to concerns stemming from the elimination of the Bank of America cash-backed letter of credit facility. As noted in the correction issued today by Fitch, that facility did not provide incremental liquidity over and above the existing $4 billion credit facility. The Bank of America facility was designed as a less expensive means for Sears Holdings to issue letters of credit at a time when we had several billions of dollars of excess cash with which to collateralize the facility. With lower cash levels, the facility no longer made economic or operational sense and was significantly reduced, with a small amount retained to continue certain outstanding international letters of credit. Bank of America continues to hold one of the largest commitments in our existing $4 billion credit agreement.

Given that Fitch's rating change utilizes mid-year debt levels and credit metrics, we have requested that Fitch monitor our credit rating for upgrade as soon as the calculations on which their decision is based no longer govern. At a time when many companies are suffering from excessive leverage undertaken over the past several years, Sears Holdings is well positioned from decisions we made to reduce our leverage since the merger and to allow for the inevitable cycles that tend to occur in the retail business.

Forward-Looking Statements

This press release contains forward-looking statements about our financial condition. Forward-looking statements are subject to risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: our ability to offer merchandise and services that our customers want, including our proprietary brand products; our ability to successfully implement initiatives to improve inventory management and other capabilities; competitive conditions in the retail and related services industries; the impact of seasonal buying patterns, including seasonal fluctuations due to weather conditions, which are difficult to forecast with certainty; general economic conditions and normal business uncertainty, changes in consumer confidence, tastes, preferences and spending, including the impact of fuel costs and spending patterns, the availability and level of consumer debt, and unanticipated increases in our costs; our dependence on sources outside the United States for significant amounts of our merchandise; our extensive reliance on computer systems to process transactions, summarize results and manage our business; our reliance on third parties to provide us with services in connection with the administration of certain aspects of our business; our ability to properly implement and realize the expected benefits from our new organizational structure and operating model; our ability to attract, motivate and retain key executives and other associates; the outcome of pending and/or future legal proceedings, including product liability claims and bankruptcy claims, including proceedings with respect to which the parties have reached a preliminary settlement; and our ability to successfully invest available capital. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available.

About Sears Holdings Corporation

Sears Holdings Corporation is the nation's fourth largest broadline retailer, with over $50 billion in annual revenues, and approximately 3,900 full-line and specialty retail stores in the United States and Canada. Sears Holdings is 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 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. We also have Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. We are the nation's largest provider of home services, with more than 13 million service calls made annually. For more information, visit Sears Holdings' website at

First Call Analyst:
FCMN Contact:

SOURCE: Sears Holdings Corporation

CONTACT: Sears Holdings Public Relations, +1-847-286-8371

Web site:

© Transform SR Brands, LLC