Sears Holdings adopt new steps for financial flexibility

Regarding Sears Auto Centers, we believe that SAC has a unique national footprint that can be leveraged to create significant value. We have begun the repositioning of the business around non-tire related services as tire margins have been compressed industry-wide over the past several years, leveraging the store footprint, the number of service bays and our auto technicians.  We are in the process of evaluating strategic alternatives for the business to maximize its value for our shareholders.

Finally, Sears Holdings announced an update regarding its operating performance for the third quarter ending November 2, 2013.  Comparable store sales for the twelve-week period ended October 26, 2013 declined 3.7%, with a decline of 4.8% for Sears Domestic stores and 2.6% for Kmart stores.

Reflecting the challenging overall economic and highly competitive environment, and higher Shop Your Way ("SYW") Rewards expense similar to our experience in the second quarter ended on August 3, 2013 (as we accelerate our SYW promotional activity to increase engagement with our members), the Company expects third quarter Adjusted EBITDA to be in an approximate range of between negative $250 million to $300 million versus the prior year's quarter Adjusted EBITDA of negative $156 million, which consisted of negative $164 million for SHC Domestic and positive $8 million for Sears Canada. 

Despite the increased operating loss, we have managed our inventory levels and capital expenditures more efficiently to mitigate the impact of this loss on our cash flow.  We continue to see improvement in our SYW Rewards member performance metrics, including higher member penetration, higher points redemptions and our more engaged members shopping more frequently. 

With respect to our previously announced objectives, as of this update, we have generated approximately $700 million of asset monetization proceeds and are on track to reduce inventory at peak, year over year, by $500 million as well as reduce fixed expenses by $200 million for the full year.  In addition, we successfully completed a $1.0 billion, 5-year term loan.

About Sears Holdings Corporation

Sears Holdings Corporation is a leading integrated retailer with almost 2,500 full-line and specialty retail stores in the United States and Canada and the home of Shop Your Way, a social shopping experience where members have the ability to earn points and receive benefits across a wide variety of physical and digital formats through ShopYourWay.com. 

Sears Holdings Corporation