Full Description

Sears Holdings Corporation (Holdings) is the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears). The Company is a broadline retailer with 2,297 full-line and 1,233 specialty retail stores in the United States operating through Kmart and Sears and 388 full-line and specialty retail stores in Canada operating through Sears Canada Inc. (Sears Canada), a 73%-owned subsidiary. During the fiscal year ended January 31, 2009 (fiscal 2008), Sears Holdings Corporation operated three business segments: Kmart, Sears Domestic and Sears Canada.

Kmart

As of January 31, 2009, Holdings operated a total of 1,368 Kmart stores across 49 states, Guam, Puerto Rico, and the United States Virgin Islands. The store count consists of 1,321 discount stores, averaging 92,000 square feet, and 47 Super Centers, averaging 166,000 square feet, and includes 16 Kmart stores. Most Kmart stores are one-floor, free-standing units that carry an assortment of general merchandise, including products sold under such labels as Jaclyn Smith, Joe Boxer and Martha Stewart Everyday, and certain Sears brand products, such as Kenmore, Craftsman, and DieHard brand products, and services. As of January 31, 2009, approximately 290 Kmart stores were selling an assortment of major home appliances, including Kenmore-branded products. Kmart began operating its own footwear business, which had previously been operated by a third party, in January 2009. There are 1,025 Kmart stores, which also operate in-store pharmacies. The Super Centers generally operate around-the-clock and combine a full-service grocery along with the general merchandise selection of a discount store. There are also 20 Sears Auto Centers operating in Kmart stores. Sears Auto Centers offer a variety of professional automotive repair and maintenance services, as well as a full assortment of automotive accessories. Kmart also sells its products through its kmart.com Website.

Sears Domestic

As of February 2, 2008, Sears Domestic operations consisted of full-line stores, specialty stores, commercial sales and home services. Full-line stores consists of 929 broadline stores, of which 856 are full-line stores located across all 50 states and Puerto Rico, primarily mall-based locations averaging 133,000 square feet. Full-line stores offer an array of products across many merchandise categories, including home appliances, consumer electronics, tools, fitness, lawn and garden equipment, certain automotive services and products, such as tires and batteries, home fashion products, as well as apparel, footwear and accessories for the whole family. The Company’s product offerings include its Kenmore, Craftsman, DieHard, Lands’ End, Covington, Apostrophe, and Canyon River Blues brand merchandise. Also, as of January 31, 2009, Holdings operated 73 Sears Essentials/Grand stores located in 26 states. These stores are primarily free-standing units averaging 115,000 square feet and offering health and beauty products, pantry goods, household products and toys in addition to the offerings of the typical mall-based store. There are 41 Sears Essentials/Grand stores, which operate in-store pharmacies. Also, 782 Sears Auto Centers are operated in association with full-line stores and 27 Sears Auto Centers are operated out of Sears Essentials/ Grand stores. In addition, there are 30 free standing Sears Auto Centers that operate independently of full-line stores. Sears also extends the availability of its product selection through the use of its sears.com Website, which offers an assortment of home, apparel and accessory merchandise and provides customers the option of buying through the Internet and picking up their merchandise in one of its full-line and specialty stores.

Specialty stores includes 1,233 specialty stores located across all 50 states and Puerto Rico, located primarily in free-standing, off-mall locations or high-traffic neighborhood shopping centers. Specialty store operations primarily consist of 872 Sears Hometown Stores (formerly known as Dealer Stores), primarily independently owned stores, predominantly located in smaller communities and averaging 8,700 square feet offering appliances, consumer electronics, lawn and garden equipment, hardware and automotive batteries. Most of Holdings’ hometown stores carry Sears brands, such as Kenmore, Craftsman, and DieHard, as well as an assortment of national brands. It also includes 49 Sears Home Appliance Showrooms, 110 Sears Hardware Stores and 86 Orchard Supply Hardware Stores, 16 The Great Indoors Stores and 82 Outlet Stores.

Lands’ End, Inc. (Lands’ End) is a direct merchant of traditionally-styled casual clothing, accessories and footwear for men, women and children, as well as home products and soft luggage. The Company sells Sears merchandise, parts, and services to commercial customers through its business-to-business Sears Commercial Sales and Appliance Builder/Distributor businesses. Product Repair Services, a product repair service provider, is an element in its active relationship with more than 38 million households.

Sears Canada

Sears Canada, a consolidated, 73%-owned subsidiary of Sears, conducts retail operations in Canada similar to those conducted by Sears Domestic, with emphasis on apparel and other softlines than in the United States stores. As of January 31, 2009, Sears Canada operated a total of 122 full-line stores, 266 specialty stores (including 48 furniture and appliance stores, 171 dealer stores operated under independent local ownership, five appliances and mattresses stores, 30 Corbeil stores, one Lands’ End store and 11 outlet stores), 30 floor covering stores, 1,858 catalog pick-up locations and 106 travel offices. Sears Canada also conducts business over the Internet through its Website, sears.ca.

The Company competes with Wal-Mart, Target, Kohl’s, JC Penney, Home Depot, Lowe’s, Best Buy and Hudson’s Bay Company.