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Sears Holdings Corporation (the "Company" or "Holdings") (NASDAQ: SHLD) today announced domestic comparable store sales for its second quarter, the thirteen-week period ended August 4, 2007, for its Kmart and Sears stores. For the second quarter, Kmart comparable store sales decreased by 3.8 percent, with declines across most categories. Sears domestic comparable store sales decreased by 4.3 percent, with declines across most categories partially offset by increases in consumer electronics, women's apparel and footwear.

The Company currently expects second quarter net income to be between $170 million and $185 million, or between $1.13 and $1.23 per fully diluted share. Since providing an estimated range of $160 million to $200 million on July 10, 2007, the Company has experienced higher markdowns, most notably within seasonal apparel categories that were largely offset by lower payroll expense, including performance-based compensation, and favorable inventory shrink experience. For the second quarter last year, the Company reported net income of $294 million, or $1.88 per fully diluted share. The current year second quarter estimate includes a combined pre-tax gain of $15 million ($9 million after-tax or $0.06 per diluted share) resulting from gains from bankruptcy- related settlements, insurance recoveries on claims filed for certain Holdings' property damaged by hurricanes during fiscal 2005 and total return swap investing activities. The second quarter 2006 results included a $36 million pre-tax gain ($22 million after-tax or $0.14 per diluted share) representing the Company's portion of proceeds received during the second quarter of 2006 related to the settlement of Visa/MasterCard antitrust litigation. Excluding the impact of this gain, second quarter 2006 net income was $272 million, or $1.74 per diluted share.

Sears Holdings' Chief Executive Officer Aylwin Lewis stated, "While we recognize the housing market slowdown and other economic pressures have presented a noticeable headwind to the business, we are disappointed with our second quarter results. We will work hard to improve our financial performance going forward."

The Company expects to report approximately $2.0 billion in cash and cash equivalents at the end of the second quarter, excluding Sears Canada. The Company had announced on July 10, 2007, that it expected to end the second quarter with approximately $2.8 billion in cash and cash equivalents, excluding Sears Canada, not including any share repurchases after July 7, 2007. The difference resulted primarily from share repurchases subsequent to July 7, 2007 through the end of the second quarter.

The expected results are preliminary and subject to change based on quarter-end adjustments that may be required. Holdings expects to release its second quarter financial results on or before August 30, 2007 and does not intend to update this information prior to that date.

The Company also announced today that its Board of Directors has approved the repurchase of up to an additional $1.5 billion of the Company's common shares. This authorization when added to the $19 million remaining under previous authorizations provides the Company with a current aggregate authorization of $1.519 billion. As of August 10, 2007, Holdings had approximately 143.6 million common shares outstanding. The share repurchases may be implemented using a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, the purchase of call options, the sale of put options or otherwise, or by any combination of such methods. Timing will be dependent on prevailing market conditions, alternative uses of capital and other factors.

Aylwin Lewis added, "The Company has a strong balance sheet and generates significant free cash flow, allowing us to invest in our business, consider other alternative investment opportunities, pay down debt, and repurchase our shares, each as appropriate given our objective of increasing shareholder value."

In addition to the 9.6 million shares that the Company repurchased during its second quarter at a total cost of $1.5 billion, or an average price of $153.50 per share, the Company repurchased approximately 0.8 million of the Company's common shares at a total cost of $105 million since the end of the second quarter (for the period from August 5, 2007 through August 10, 2007). Since the third quarter of fiscal 2005, when Holdings' repurchase plan was first approved, the Company has repurchased 21.5 million of its common shares at a total cost of $3.0 billion pursuant to the program.

Forward-Looking Statements

This release contains statements concerning the Company's expected second quarter 2007 net income, earnings per share and cash position. These forward- looking statements are subject to risks and uncertainties that may cause the Company's 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 the Company's management and are subject to significant risks and uncertainties. Risks and uncertainties include competitive conditions in the retail and related services industries; changes in consumer confidence, tastes, preferences and spending; the Company's ability to successfully implement initiatives to improve sales and profitability; marketplace demand for the Company's proprietary brand products and the products of the Company's key brand licensors; the impact of seasonal fluctuations due to weather conditions; the Company's ability to successfully invest available capital; the outcome of pending and/or future legal proceedings and bankruptcy claims; social and political conditions such as war, political unrest and terrorism or natural disasters; volatility in financial markets; general economic conditions and normal business uncertainty; and other factors outside the control of Holdings. Actual results may differ materially from those set forth in the forward-looking statements. The Company intends the forward-looking statements to speak only as of the time made and does not undertake to update or revise them as more information becomes available.

Certain of these and other factors are discussed in more detail in Holdings' filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K of Holdings for the fiscal year ended February 3, 2007, which may be accessed through the Commission's website at www.sec.gov

About Sears Holdings Corporation

Sears Holdings Corporation is the nation's fourth largest broadline retailer, with approximately $50 billion in annual revenues, and with approximately 3,800 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. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. The Company is 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

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SOURCE: Sears Holdings Corporation

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

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