"We believe we have positioned ourselves well for a difficult holidayshopping season. We have reduced our inventory levels, cut expenses, andannounced the closing of select underperforming stores as part of our ongoingreview. We are offering differentiated solutions for our customers to helpthem meet their holiday needs, through programs like our successful layawayprogram at Kmart, which we have recently expanded to Sears, and our Heroes atHome Military Wish Registry, which enables Americans to help make the wishesof military members and their families come true," said W. Bruce Johnson,Sears Holdings' interim chief executive officer and president. "As a result ofsevere conditions in the economy, our EBITDA forecast mentioned in the August28, 2008 press release is no longer relevant given its assumption of flat tomodest comparable store sales declines in the third and fourth quarters."

In addition to the 14 store closings noted above, we are closing eightadditional underperforming stores. We expect to record a pre-tax charge of upto $21 million related to these closures in the fourth quarter of 2008. Weexpect that these store closings will be additive to earnings, given that theclosure of these stores eliminates negative cash flows incurred from theiroperations, and will generate cash from the liquidation of inventory and fromother proceeds. Mr. Johnson further noted, "Given the current economic andretail environment, we will carefully evaluate alternatives that providefinancial flexibility in the near-term, while enhancing shareholder value inthe long-term. These actions may include additional store closings ordivestitures, remodels or repositioning of existing stores, acquisitions, andrepurchases of our debt and common stock."

Revenues and Comparable Store Sales

For the quarter, our total revenues declined approximately $0.9 billion to$10.7 billion in fiscal 2008, as compared to $11.6 billion for the thirdquarter of fiscal 2007. The decrease in revenue primarily reflects the impactof lower domestic comparable store sales.

For the quarter, Sears Domestic's comparable store sales declined 10.6%while Kmart's comparable store sales declined 7.0%. Total domestic comparablestore sales declined 9.0%. The comparable store sales declines at SearsDomestic were more pronounced in the month of October as conditions in thegeneral economy deteriorated further. Comparable store sales declined for thequarter across most major categories at both Kmart and Sears Domestic.Comparable store sales declines continue to be driven by categories directlyimpacted by housing market conditions (including home appliances at SearsDomestic), a slowdown in consumers' discretionary spending (including home andhousehold goods and apparel at both Sears Domestic and Kmart and lawn andgarden at Sears Domestic), as well as a shift in our promotional strategy forfood and consumables at Kmart and tools at Sears Domestic.

November 2008 Comparable Store Sales

Our domestic comparable store sales declined 8.7% during the month ofNovember 2008. This decline includes a decline in comparable store sales of7.8% at Sears Domestic and 10.0% at Kmart. The month of November 2008 includestwo days of the holiday shopping season compared to the month of November 2007which included nine days due to a one-week shift in the Thanksgiving holiday.

The November Kmart comparable store sales also do not reflect sales madethrough our layaway program. Initial usage of the program has beenencouraging, and these sales are not recognized until after merchandise isboth paid for and picked up by customers using the program, which will bepredominantly in December 2008.

Comparable store sales declines not attributed to the holiday shift aremainly the result of external economic factors discussed previously. Novembercomparable store sales declines continue to be driven by categories directlyimpacted by a slowdown in consumers' discretionary spending (including homeand household goods at both Sears Domestic and Kmart and apparel and lawn andgarden at Sears Domestic). Declines at Sears Domestic were partially offset byincreases in home appliances.

Operating Income

For the third quarter 2008, we reported an operating loss of $202 million,as compared to operating income of $51 million in the third quarter of fiscal2007. Our operating loss of $202 million was mainly due to the $101 million ofabove-noted charges, as well as lower gross margin generated at both Kmart andSears Domestic. We generated $2.9 billion in total gross margin in the thirdquarter as compared to $3.2 billion in the third quarter last year. Theabove-noted $101 million charge included a charge to cost of goods sold of $10million for inventory reserves recorded in connection with store closings.Our gross margin rate decreased by approximately 60 basis points to 26.8% andmainly reflects a rate decline of 150 basis points at Sears Domestic due toincreased markdown activity. The decline at Sears Domestic was partiallyoffset by increases of 40 basis points at both Kmart and Sears Canada. If theoverall retail environment continues to be impacted by unfavorable economicfactors, our sales and gross margin would likely continue to be pressured forthe balance of fiscal 2008.

Declines in sales and gross margin were partially offset by a decline of$153 million in selling and administrative expenses for the quarter. Thedecline includes decreases in domestic expenses of $129 million as compared tothe third quarter of fiscal 2007. Depreciation expense increased $71 millionand includes a non-cash fixed asset impairment charge of $76 million.

Financial Position

We had cash and cash equivalents of $1.2 billion at November 1, 2008 (ofwhich $502 million was domestic and $670 million was at Sears Canada) ascompared to $1.5 billion at November 3, 2007 and $1.6 billion at February 2,2008. The November 1, 2008 cash balance excludes $94 million on deposit withThe Reserve Primary Fund, a money market fund which has temporarily suspendedwithdrawals while it liquidates its holdings to generate cash to distribute.As a result, we reclassified $94 million from cash to the prepaid expenses andother current assets line within our Condensed Consolidated Balance Sheet atNovember 1, 2008. We recorded a $3 million loss ($2 million after tax or $0.01per diluted share) during the third quarter of 2008 in connection with ourinvestment in The Reserve Primary Fund. Subsequently on November 21, 2008, wereceived notice from The Reserve Primary Fund that it expects to make anadditional distribution on or about December 5, 2008 and we estimate our prorata share to be approximately $54 million.

During the first three quarters of 2008, significant uses of cash includedshare repurchases of $558 million (as discussed further below), capitalexpenditures of $395 million, pension contributions of $204 million, netlong-term debt repayments of $196 million and payments on commercial paperborrowings of $129 million. These amounts were offset by a $1.9 billionincrease in short-term borrowings, primarily through borrowing on our $4billion credit facility. Had $94 million of our short-term investment in TheReserve Primary Fund been available short-term borrowings would have increasedby $1.8 billion.

Merchandise inventories at November 1, 2008 were $11.4 billion, ascompared to $12.1 billion at November 3, 2007. Domestic inventory declined$575 million from $11.0 billion at November 3, 2007 to approximately $10.5billion at November 1, 2008, reflecting the effectiveness of our efforts tocontrol inventory levels. Sears Canada's inventory levels decreasedapproximately $189 million from November 3, 2007 to $898 million at November1, 2008. The decrease in Sears Canada's inventory is primarily due to thechange in exchange rates. As we expect difficult economic conditions topersist in the near term, we intend to tightly manage inventory levels withthe goal of reducing domestic inventory levels below last year's in the fourthquarter.

Resources and Liquidity

Holdings has significant assets, including cash of $1.2 billion, a largenumber of owned real estate properties, a stable of nationally recognizedproprietary brands including Kenmore, Craftsman, Lands' End and DieHard, ourwholly-owned Lands' End subsidiary and a 72% equity interest in Sears Canada.In addition, on a consolidated basis Holdings has $11.4 billion of inventory,or $7 billion of inventory net of $4.4 billion of accounts payable.

Since the merger of Kmart and Sears created Holdings in 2005, we haveconsistently generated cash flow from operations. In its first three years(from 2005 to 2007) Holdings generated $5.2 billion of operating cash, and weexpect to generate significant cash from operations in fiscal 2008 as well.This strong cash flow has enabled us to reduce our obligations, as we have wepaid down approximately $2 billion of the debt assumed in the merger and madecontributions of approximately $1 billion to fund the frozen pension plans ofour predecessor companies.

Holdings has consistently maintained a strong capital structure withexcess liquidity even during the holiday peak. Our revolving credit facility,which matures in March of 2010, is used to issue standby letters of credit tosupport our insurance programs (currently approximately $1 billionoutstanding) and to fund seasonal working capital needs (currentlyapproximately $2 billion in borrowings outstanding excluding our standbyletters of credit). As we reach our peak working capital need early in thefourth quarter, we expect to repay the entire $2 billion of borrowings inDecember (although we do expect to borrow on the revolver again in the monthof January 2009). An affiliate of Lehman Brothers has a $207 million totalcommitment in the $4 billion revolving credit facility, but since September17, 2008 has not funded its proportionate share of our borrowings under thefacility.

Share Repurchase

The Company also announced today that its Board of Directors has approvedthe repurchase of up to an additional $500 million of the Company's commonshares. This authorization is in addition to the $72 million worth of sharesthat currently remain available for repurchase under the Company's existingrepurchase program. Share repurchases may be implemented using a variety ofmethods, which may include open market purchases, privately negotiatedtransactions, block trades, accelerated share repurchase transactions, thepurchase of call options, the sale of put options or otherwise, or by anycombination of such methods. Timing of repurchases is dependent on prevailingmarket conditions, alternative uses of capital and other factors.

Bruce Johnson commented, "After careful consideration and a review of thecompany's valuation, prospects, cash flow and liquidity, we believe that ourshares represent an attractive investment for our shareholders. Given thedifficult retail environment and its effect on our free cash flow, we havereduced our rate of repurchases throughout 2008 as we worked to retainflexibility to pursue opportunities and address contingencies. Withsignificant assets and cash flow, we believe Sears Holdings has theflexibility to continue to invest in our business, repay debt, and consideracquisitions opportunities as well."

During the 13- and 39- week periods ended November 1, 2008, we repurchased1.4 million and 7.4 million of our common shares at a total cost of $81million and $558 million, respectively, under our share repurchase program.During the 4-week period from November 2, 2008 to November 29, 2008 theCompany repurchased 1.2 million common shares at a total cost of $53 million.Since the third quarter of fiscal 2005, when our repurchase plan was firstapproved, we have repurchased approximately 41.4 million of our common sharesat a total cost of $4.9 billion pursuant to the program. As of November 28,2008, we had approximately 123.6 million common shares outstanding.

Adjusted EBITDA

For purposes of evaluating operating performance, we use an AdjustedEarnings Before Interest, Taxes, Depreciation and Amortization ("AdjustedEBITDA") measurement computed as operating income appearing on the statementof operations less depreciation and amortization and gains/(losses) on salesof assets. In addition, it is adjusted to exclude certain nonrecurringgains/(losses). Adjusted EBITDA is used by management to evaluate theoperating performance of our businesses for comparable periods. AdjustedEBITDA should not be used by investors or other third parties as the solebasis for formulating investment decisions as it excludes a number ofimportant cash and non-cash recurring items. Management compensates for thislimitation by using GAAP financial measures as well in managing ourbusinesses.

While Adjusted EBITDA is a non-GAAP measurement, management believes thatit is an important indicator of operating performance because:

-- EBITDA excludes the effects of financing and investing activities by eliminating the effects of interest and depreciation costs; -- Management considers gains/(losses) on the sale of assets to result from investing decisions rather than ongoing operations; and -- Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects the comparability of results. Adjusted EBITDA was determined as follows: 13 Weeks Ended 39 Weeks Ended November November November November 1, 2008 3, 2007 1, 2008 3, 2007 Operating income (loss) per statement of operations $(202) $51 $(23) $792 Plus depreciation and amortization(1) 326 255 821 779 Less gain on sales of assets (1) -- (39) (10) Before excluded items 123 306 759 1,561 Closed store reserve 25 -- 25 -- Legal matter reserve -- -- (62) -- Sears Canada post-retirement benefit plans curtailment gain -- -- -- (27) Hurricane related recoveries -- (1) -- (19) Adjusted EBITDA as defined $148 $305 $722 $1,515 % to revenues 1.4% 2.6% 2.2% 4.3% (1) Depreciation and amortization for the 13- and 39-week periods ended November 1, 2008 includes the $76 million of above-noted fixed asset impairment charges recorded during the third quarter of fiscal 2008. Adjusted EBITDA for our domestic (United States operations) and SearsCanada operations are as follows:

13 Weeks Ended Adjusted EBITDA % To Revenues November 1, November 3, November 1, November 3, 2008 2007 2008 2007 Domestic operations $33 $197 0.4% 1.9% Sears Canada 115 108 8.8% 7.9% Total Adjusted EBITDA $148 $305 1.4% 2.6% 39 Weeks Ended Adjusted EBITDA % To Revenues November 1, November 3, November 1, November 3, 2008 2007 2008 2007 Domestic operations $407 $1,244 1.4% 3.9% Sears Canada 315 271 8.0% 7.2% Total Adjusted EBITDA $722 $1,515 2.2% 4.3% Quarterly Report on Form 10-Q

For a detailed discussion of the Company's financial results, please seethe Company's Quarterly Report on Form 10-Q, which will be filed with theSecurities and Exchange Commission and posted to the Company's website athttp://www.searsholdings.com on December 2, 2008.

Forward-Looking Statements

Results are unaudited. This press release contains forward-lookingstatements about our expectations regarding our performance, resources andfinancial position. Forward-looking statements are subject to risks anduncertainties that may cause our actual results, performance or achievementsto be materially different from any future results, performance orachievements expressed or implied by these forward-looking statements. Suchstatements are based upon the current beliefs and expectations of ourmanagement and are subject to significant risks and uncertainties. Thefollowing factors, among others, could cause actual results to differ fromthose set forth in the forward-looking statements: our ability to offermerchandise and services that our customers want, including our proprietarybrand products; our ability to successfully implement initiatives to improveinventory management and other capabilities; competitive conditions in theretail and related services industries; the impact of seasonal buyingpatterns, including seasonal fluctuations due to weather conditions, which aredifficult to forecast with certainty; general economic conditions and normalbusiness uncertainty, changes in consumer confidence, tastes, preferences andspending, including the impact of fuel costs and spending patterns, theavailability and level of consumer debt, and unanticipated increases in ourcosts; our dependence on sources outside the United States for significantamounts of our merchandise; our extensive reliance on computer systems toprocess transactions, summarize results and manage our business; our relianceon third parties to provide us with services in connection with theadministration of certain aspects of our business; our ability to properlyimplement and realize the expected benefits from our new organizationalstructure and operating model; our ability to attract, motivate and retain keyexecutives and other associates; the outcome of pending and/or future legalproceedings, including product liability claims and bankruptcy claims,including proceedings with respect to which the parties have reached apreliminary settlement; and our ability to successfully invest availablecapital. We intend the forward-looking statements to speak only as of the timemade and do not undertake to update or revise them as more information becomesavailable.

About Sears Holdings Corporation

Sears Holdings Corporation is the nation's fourth largest broadlineretailer, with over $50 billion in annual revenues, and approximately 3,900full-line and specialty retail stores in the United States and Canada. SearsHoldings is the leading home appliance retailer as well as a leader in tools,lawn and garden, home electronics and automotive repair and maintenance. Keyproprietary brands include Kenmore, Craftsman and DieHard, and a broad appareloffering, including such well-known labels as Lands' End, Jaclyn Smith and JoeBoxer, as well as the Apostrophe and Covington brands. We also have MarthaStewart Everyday products, which are offered exclusively in the U.S. by Kmartand in Canada by Sears Canada. We are the nation's largest provider of homeservices, with more than 13 million service calls made annually. For moreinformation, visit Sears Holdings' website at http://www.searsholdings.com.

* * * * *

During the fourth quarter of fiscal 2007, Sears Canada changed its fiscalyear end from the Saturday nearest December 31st to the Saturday nearestJanuary 31st. Prior to this change, Sears Canada's results were consolidatedinto Holdings' results on a one-month lag. With the change, Sears Canada'sfiscal year end is now aligned with the fiscal year end of Holdings. Asrequired by accounting standards, this change has been retrospectively appliedto all prior year amounts included in the following Condensed ConsolidatedStatements of Operations, Condensed Consolidated Balance Sheets, SegmentResults and Adjusted EBITDA.

Sears Holdings Corporation Condensed Consolidated Statements of Operations (Unaudited) 13 Weeks Ended 39 Weeks Ended November November November November millions, except per share data 1, 3, 1, 3, 2008 2007 2008 2007 REVENUES Merchandise sales and services $10,660 $11,622 $33,490 $35,629 COSTS AND EXPENSES Cost of sales, buying and occupancy 7,806 8,432 24,491 25,738 Gross margin dollars 2,854 3,190 8,999 9,891 Gross margin rate 26.8% 27.4% 26.9% 27.8% Selling and administrative 2,731 2,884 8,240 8,330 Selling and administrative expense as a percentage of total revenues 25.6% 24.8% 24.6% 23.4% Depreciation and amortization 326 255 821 779 Gain on sales of assets (1) - (39) (10) Total costs and expenses 10,862 11,571 33,513 34,837 Operating income (loss) (202) 51 (23) 792 Interest and investment income (9) (31) (40) (113) Interest expense 71 67 202 211 Other income (80) - (78) (17) Income (loss) before income taxes and minority interest (184) 15 (107) 711 Income taxes expense (benefit) (73) (4) (45) 272 Minority interest 35 15 75 39 NET INCOME (LOSS) $(146) $4 $(137) $400 EARNINGS (LOSS) PER COMMON SHARE Diluted earnings (loss) per share $(1.16) $0.03 $(1.07) $2.70 Diluted weighted average common shares outstanding 125.5 139.9 128.5 148.2 Sears Holdings Corporation Condensed Consolidated Balance Sheets (Unaudited) millions November 1, November 3, February 2, 2008 2007 2008 ASSETS Current assets Cash and cash equivalents $1,172 $1,535 $1,622 Receivables 1,195 977 744 Merchandise inventories 11,364 12,128 9,963 Prepaid expenses and other current assets 616 730 473 Total current assets 14,347 15,370 12,802 Property and equipment, net 8,265 8,873 8,863 Goodwill 1,658 1,691 1,686 Trade names and other intangible assets 3,302 3,370 3,353 Other assets 382 476 693 TOTAL ASSETS $27,954 $29,780 $27,397 LIABILITIES Current liabilities Short-term borrowings and current portion of long-term debt $2,306 $1,379 $404 Merchandise payables 4,414 4,512 3,487 Unearned revenues 1,074 1,128 1,121 Accrued expenses and other current liabilities 3,880 4,452 4,550 Total current liabilities 11,674 11,471 9,562 Long-term debt and capitalized lease obligations 2,175 2,657 2,606 Pension and post-retirement benefits 1,014 1,420 1,258 Minority interest and other liabilities 3,221 3,489 3,304 Total Liabilities 18,084 19,037 16,730 Total Shareholders' Equity 9,870 10,743 10,667 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $27,954 $29,780 $27,397 Total common shares outstanding 124.9 137.7 132.4 Sears Holdings Corporation Segment Results (Unaudited) 13 Weeks Ended November 1, 2008 millions, except for number of stores Sears Sears Kmart Domestic Canada Holdings Merchandise sales and services $3,532 $5,827 $1,301 $10,660 Cost of sales, buying and occupancy 2,753 4,171 882 7,806 Gross margin dollars 779 1,656 419 2,854 Gross margin rate 22.1% 28.4% 32.2% 26.8% Selling and administrative 828 1,599 304 2,731 Selling and administrative expense as a percentage of total revenues 23.4% 27.4% 23.4% 25.6% Depreciation and amortization 54 242 30 326 (Gain) loss on sales of assets - (2) 1 (1) Total costs and expenses 3,635 6,010 1,217 10,862 Operating income (loss) $(103) $(183) $84 $(202) Number of: Kmart Stores 1,378 - - 1,378 Full-Line Stores - 933 122 1,055 Specialty Stores - 1,198 263 1,461 Total Stores 1,378 2,131 385 3,894 13 Weeks Ended November 3, 2007 millions, except for number of stores Sears Sears Kmart Domestic Canada Holdings Merchandise sales and services $3,803 $6,449 $1,370 $11,622 Cost of sales, buying and occupancy 2,979 4,519 934 8,432 Gross margin dollars 824 1,930 436 3,190 Gross margin rate 21.7% 29.9% 31.8% 27.4% Selling and administrative 855 1,701 328 2,884 Selling and administrative expense as a percentage of total revenues 22.5% 26.4% 23.9% 24.8% Depreciation and amortization 28 193 34 255 Total costs and expenses 3,862 6,413 1,296 11,571 Operating income (loss) $(59) $36 $74 $51 Number of: Kmart Stores 1,387 - - 1,387 Full-Line Stores - 934 123 1,057 Specialty Stores - 1,124 255 1,379 Total Stores 1,387 2,058 378 3,823 39 Weeks Ended November 1, 2008 millions, except for number of stores Sears Sears Kmart Domestic Canada Holdings Merchandise sales and services $11,270 $18,294 $3,926 $33,490 Cost of sales, buying and occupancy 8,706 13,090 2,695 24,491 Gross margin dollars 2,564 5,204 1,231 8,999 Gross margin rate 22.8% 28.4% 31.4% 26.9% Selling and administrative 2,547 4,777 916 8,240 Selling and administrative expense as a percentage of total revenues 22.6% 26.1% 23.3% 24.6% Depreciation and amortization 121 606 94 821 Gain on sales of assets (2) (6) (31) (39) Total costs and expenses 11,372 18,467 3,674 33,513 Operating income (loss) $(102) $(173) $252 $(23) Number of: Kmart Stores 1,378 - - 1,378 Full-Line Stores - 933 122 1,055 Specialty Stores - 1,198 263 1,461 Total Stores 1,378 2,131 385 3,894 39 Weeks Ended November 3, 2007 millions, except for number of stores Sears Sears Kmart Domestic Canada Holdings Merchandise sales and services $12,046 $19,815 $3,768 $35,629 Cost of sales, buying and occupancy 9,237 13,884 2,617 25,738 Gross margin dollars 2,809 5,931 1,151 9,891 Gross margin rate 23.3% 29.9% 30.5% 27.8% Selling and administrative 2,564 4,913 853 8,330 Selling and administrative expense as a percentage of total revenues 21.3% 24.8% 22.6% 23.4% Depreciation and amortization 81 601 97 779 Gain on sales of assets (1) (1) (8) (10) Total costs and expenses 11,881 19,397 3,559 34,837 Operating income $165 $418 $209 $792 Number of: Kmart Stores 1,387 - - 1,387 Full-Line Stores - 934 123 1,057 Specialty Stores - 1,124 255 1,379 Total Stores 1,387 2,058 378 3,823 Sears Holdings Corporation Adjusted EBITDA 13 Weeks Ended millions November 1, 2008 November 3, 2007 Domestic Sears Domestic Sears Operations Sears Holdings Operations Sears Holdings Canada Canada Operating income (loss) per statement of operations $(286) $84 $(202) $(23) $74 $51 Plus depreciation and amortization 296 30 326 221 34 255 Less (gain) loss on sales of assets (2) 1 (1) - - - Before excluded items 8 115 123 198 108 306 Closed store reserve 25 - 25 - - - Hurricane related recoveries - - - (1) - (1) Adjusted EBITDA as defined $33 $115 $148 $197 $108 $305 % to revenues 0.4% 8.8% 1.4% 1.9% 7.9% 2.6% 39 Weeks Ended millions November 1, 2008 November 3, 2007 Domestic Sears Domestic Sears Operations Sears Holdings Operations Sears Holdings Canada Canada Operating income (loss) per statement of operations $(275) $252 $(23) $583 $209 $792 Plus depreciation and amortization 727 94 821 682 97 779 Less gain on sales of assets (8) (31) (39) (2) (8) (10) Before excluded items 444 315 759 1,263 298 1,561 Closed store reserve 25 - 25 - - - Legal matter (62) - (62) - - - Hurricane related recoveries - - - (19) - (19) Sears Canada post-retirement benefit plans curtailment gain - - - - (27) (27) Adjusted EBITDA as defined $407 $315 $722 $1,244 $271 $1,515 % to revenues 1.4% 8.0% 2.2% 3.9% 7.2% 4.3%SOURCE Sears Holdings Corporation