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   <TITLE>10Q</TITLE>
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<center><font face="Arial,Helvetica"><font size=+1>UNITED STATES</font></font></center>
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<center><font face="Arial,Helvetica"><font size=+1>SECURITIES AND EXCHANGE
COMMISSION</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>Washington, D.C. 20549</font></font></center>
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<center><font face="Arial,Helvetica"><font size=+3>FORM 10-Q</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-2>X</font></font></center>
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<td VALIGN=CENTER WIDTH="5%"> </td>

<td VALIGN=CENTER WIDTH="78%">
<center><font face="Arial,Helvetica"><font size=-1>QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE </font></font></center>
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<td VALIGN=BOTTOM WIDTH="7%"> </td>
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<center><font face="Arial,Helvetica"><font size=-1>SECURITIES EXCHANGE
ACT OF 1934 FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>QUARTERLY PERIOD ENDED APRIL
1, 2000</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>OR</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>SECURITIES EXCHANGE
ACT OF 1934</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-2>Commission file number
1-416</font></font></center>
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<center><font face="Arial,Helvetica"><font size=+3>SEARS, ROEBUCK AND CO.</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-2>(Exact name of registrant
as specified in its charter)</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>New York</font></font>
<br><font face="Arial,Helvetica"><font size=-2>(State of Incorporation)</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>36-1750680</font></font>
<br><font face="Arial,Helvetica"><font size=-2>(I.R.S. Employer Identification
No.)</font></font></center>
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<td VALIGN=TOP COLSPAN="7" WIDTH="50%"> </td>

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<center><font face="Arial,Helvetica"><font size=-1>3333 Beverly Road, Hoffman
Estates, Illinois</font></font>
<br><font face="Arial,Helvetica"><font size=-2>(Address of principal executive
offices)</font></font></center>
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<td VALIGN=TOP COLSPAN="5" WIDTH="50%">
<center><font face="Arial,Helvetica"><font size=-1>60179</font></font>
<br><font face="Arial,Helvetica"><font size=-2>(Zip Code)</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>Registrant's telephone
number, including area code: (847) 286-2500</font></font></center>
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<td VALIGN=TOP COLSPAN="12"> </td>
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<center><font face="Arial,Helvetica"><font size=-1>Registrant [1] has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>1934 during the preceding
12 months and [2] has been subject to such filing requirements for the
past 90 days.</font></font></center>
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<td VALIGN=CENTER COLSPAN="3" WIDTH="21%" HEIGHT="25"></td>

<td VALIGN=CENTER COLSPAN="2" WIDTH="15%" HEIGHT="25"></td>

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<td VALIGN=CENTER COLSPAN="2" WIDTH="14%" HEIGHT="25"></td>

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<td VALIGN=CENTER COLSPAN="3" WIDTH="21%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>Yes</font></font></td>

<td VALIGN=CENTER COLSPAN="2" WIDTH="15%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>X</font></font></td>

<td VALIGN=CENTER WIDTH="11%" HEIGHT="16"></td>

<td VALIGN=CENTER COLSPAN="2" WIDTH="14%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>No</font></font></td>

<td VALIGN=CENTER WIDTH="19%" HEIGHT="16"></td>
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<td VALIGN=CENTER COLSPAN="2" WIDTH="15%" HEIGHT="23"></td>

<td VALIGN=CENTER WIDTH="11%" HEIGHT="23"></td>

<td VALIGN=CENTER COLSPAN="2" WIDTH="14%" HEIGHT="23"></td>

<td VALIGN=CENTER WIDTH="19%" HEIGHT="23"></td>
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<center><font face="Arial,Helvetica"><font size=-1>As of March 31, 2000,
the Registrant had 352,554,501 common shares, $.75 par value, outstanding.</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
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<center><font face="Arial,Helvetica"><font size=-1>INDEX TO QUARTERLY REPORT
ON FORM 10-Q</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000</font></font></center>
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<div align=right><u><font face="Arial,Helvetica"><font size=-1>Page</font></font></u></div>
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<td VALIGN=TOP COLSPAN="12"><font face="Arial,Helvetica"><font size=-1>PART
I - FINANCIAL INFORMATION</font></font></td>
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<td VALIGN=TOP COLSPAN="8" WIDTH="86%"> </td>

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<div align=right> <font face="Arial,Helvetica"><font size=-1>Item
1.</font></font></div>
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<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>Financial
Statements</font></font></td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"> </td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>Condensed
Consolidated Statements of Income (Unaudited) </font></font></td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>13
Weeks Ended April 1, 2000 and April 3, 1999</font></font></td>

<td VALIGN=TOP WIDTH="10%">
<div align=right><font face="Arial,Helvetica"><font size=-1>1</font></font></div>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"> </td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>Condensed
Consolidated Balance Sheets </font></font></td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>April
1, 2000 (Unaudited), April 3, 1999 (Unaudited)</font></font></td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>and
January 1, 2000</font></font></td>

<td VALIGN=TOP WIDTH="10%">
<div align=right><font face="Arial,Helvetica"><font size=-1>2</font></font></div>
</td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"> </td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>Condensed
Consolidated Statements of Cash Flows (Unaudited) </font></font></td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>13
Weeks Ended April 1, 2000 and April 3, 1999</font></font></td>

<td VALIGN=TOP WIDTH="10%">
<div align=right><font face="Arial,Helvetica"><font size=-1>3</font></font></div>
</td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"> </td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>Notes
to Condensed Consolidated Financial Statements (Unaudited)</font></font></td>

<td VALIGN=TOP WIDTH="10%">
<div align=right><font face="Arial,Helvetica"><font size=-1>4</font></font></div>
</td>
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<tr>
<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"> </td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>Independent
Accountants' Review Report</font></font></td>

<td VALIGN=TOP WIDTH="10%">
<div align=right><font face="Arial,Helvetica"><font size=-1>8</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"> </td>

<td VALIGN=TOP WIDTH="10%"> </td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%">
<div align=right> <font face="Arial,Helvetica"><font size=-1>Item
2.</font></font></div>
</td>

<td VALIGN=TOP COLSPAN="6" WIDTH="90%"><font face="Arial,Helvetica"><font size=-1>Management's
Discussion and Analysis of Operations, Financial</font></font></td>
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<td VALIGN=TOP COLSPAN="6" WIDTH="10%"> </td>

<td VALIGN=TOP COLSPAN="5" WIDTH="80%"><font face="Arial,Helvetica"><font size=-1>Condition
and Liquidity</font></font></td>

<td VALIGN=TOP WIDTH="10%">
<div align=right><font face="Arial,Helvetica"><font size=-1>9</font></font></div>
</td>
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<td></td>

<td></td>

<td></td>
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<td></td>

<td></td>

<td></td>
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<td></td>

<td></td>

<td></td>
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</TABLE></center>

<center><table WIDTH="662" >
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<td WIDTH="662">
<br><font face="Arial,Helvetica"><font size=-1>PART II- OTHER INFORMATION</font></font></td>
</tr>

<tr>
<td></td>
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<td>         <font face="Arial,Helvetica"><font size=-1>Item
1.  Legal Proceedings                                      
                                          
                              
17</font></font></td>
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<td></td>
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<td>         <font face="Arial,Helvetica"><font size=-1>Item
6.  Exhibits and Reports on Form 8-K                                   
                                          
           
18</font></font></td>
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</TABLE></center>

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<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>PART I. FINANCIAL INFORMATION</font></font></center>
</td>
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<center><font face="Arial,Helvetica"><font size=-1>ITEM 1. FINANCIAL STATEMENTS</font></font></center>
</td>
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<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font>
<br><font face="Arial,Helvetica"><font size=-1>CONDENSED CONSOLIDATED STATEMENTS
OF INCOME</font></font>
<br><font face="Arial,Helvetica"><font size=-1>(Unaudited)</font></font></center>
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</TABLE>

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<td VALIGN=TOP WIDTH="8%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="10"><i><font face="Arial,Helvetica"><font size=-2>(millions,
except per share data)</font></font></i></td>

<td VALIGN=CENTER COLSPAN="5" WIDTH="22%" HEIGHT="10">
<center><u><font face="Arial,Helvetica"><font size=-2>13 Weeks Ended</font></font></u></center>
</td>

<td VALIGN=CENTER WIDTH="9%" HEIGHT="10"></td>
</tr>

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<td VALIGN=TOP WIDTH="8%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="19"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="19">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="19">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="19"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="10"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="10">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="10"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="10">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="10"></td>
</tr>

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<td VALIGN=TOP WIDTH="8%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="23"><font face="Arial,Helvetica"><font size=-2>Merchandise
sales and services</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>7,829</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>7,528</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="23"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Credit
revenues</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,144</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,128</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

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<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Total
revenues</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>8,973</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>8,656</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="8"></td>
</tr>

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<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Costs
and expenses</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Cost
of sales, buying and occupancy</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>5,869</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>5,658</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Selling
and administrative</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>1,954</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>1,919</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Depreciation
and amortization</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>209</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>209</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="17"><font face="Arial,Helvetica"><font size=-2>Provision
for uncollectible accounts</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="17">
<div align=right><font face="Arial,Helvetica"><font size=-2>245</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="17">
<div align=right><font face="Arial,Helvetica"><font size=-2>291</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Interest</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>316</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>334</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="21"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="21"><font face="Arial,Helvetica"><font size=-2>Total
costs and expenses</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="21"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="21">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>8,593</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="21"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="21"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="21">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>8,411</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="21"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="10"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="10"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Operating
income</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>380</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>245</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="21"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="21"><font face="Arial,Helvetica"><font size=-2>Other
income (expense)</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="21"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="21">
<div align=right><font face="Arial,Helvetica"><font size=-2>     <u>     
1</u></font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="21"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="21"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="21">
<div align=right><font face="Arial,Helvetica"><font size=-2>    <u>   
(2)</u></font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="21"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="33"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="33"><font face="Arial,Helvetica"><font size=-2>Income
before income taxes and minority interest </font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="33"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="33">
<div align=right><font face="Arial,Helvetica"><font size=-2>381</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="33"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="33"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="33">
<div align=right><font face="Arial,Helvetica"><font size=-2>243</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="33"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="24"><font face="Arial,Helvetica"><font size=-2>Income
taxes</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="24">
<div align=right><font face="Arial,Helvetica"><font size=-2>(140)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="24">
<div align=right><font face="Arial,Helvetica"><font size=-2>(92)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="24"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="24"><font face="Arial,Helvetica"><font size=-2>Minority
interest</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="24">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>    
(6)</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="24">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>    
(5)</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="24"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="23"><font face="Arial,Helvetica"><font size=-2>Net
income</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>235</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>146</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="23"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="19"><font face="Arial,Helvetica"><font size=-2>Earnings
per share: </font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="19">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="19">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="19"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="19"><font face="Arial,Helvetica"><font size=-2>Basic</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"><font face="Arial,Helvetica"><font size=-2>$</font></font>
<p> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>0.65</font></font>
<br>
<hr WIDTH="100%"></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"><font face="Arial,Helvetica"><font size=-2>$</font></font>
<p> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>0.38</font></font>
<br>
<hr WIDTH="100%"></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="19"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Diluted</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$</font></font>
<p> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>0.65</font></font>
<br>
<hr WIDTH="100%"></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$</font></font>
<p> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>0.38</font></font>
<br>
<hr WIDTH="100%"></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="33"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="33"><font face="Arial,Helvetica"><font size=-2>Cash
dividends declared per share</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="33"><font face="Arial,Helvetica"><font size=-2>$</font></font>
<p> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="33">
<div align=right><font face="Arial,Helvetica"><font size=-2>0.23</font></font>
<br>
<hr WIDTH="100%"></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="33"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="33"><font face="Arial,Helvetica"><font size=-2>$</font></font>
<p> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="33">
<div align=right><font face="Arial,Helvetica"><font size=-2>0.23</font></font>
<br>
<hr WIDTH="100%"></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="33"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Average
common and common equivalent shares outstanding</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>360.0</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>385.1</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="9"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="61%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>See
accompanying notes.</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-1-</font></font>
<p>
<hr>
<br> 
<br> 
<br> 
<br> 
<p><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font>
<p><font face="Arial,Helvetica"><font size=-1>CONDENSED CONSOLIDATED BALANCE
SHEETS</font></font></center>

<hr SIZE=4>
<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 WIDTH="625" >
<tr>
<td VALIGN=BOTTOM WIDTH="58%" HEIGHT="13"><i><font face="Arial,Helvetica"><font size=-2>(millions)</font></font></i></td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="28%" HEIGHT="13">
<center><u><font face="Arial,Helvetica"><font size=-2>(Unaudited)</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="13"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="13"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="13"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%" HEIGHT="17"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="17">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="17"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="17">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="17"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%" HEIGHT="17">
<center><font face="Arial,Helvetica"><font size=-2>January 1,</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%" HEIGHT="12"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="12">
<center><b><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></b></center>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="12"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="12">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="12"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%" HEIGHT="12">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Assets</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Current
assets</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Cash
and cash equivalents</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>449</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>371</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>729</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Retained
interest in transferred credit card receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>2,969</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>3,633</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>3,144</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Credit
card receivables, net</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>17,049</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>16,843</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>18,033</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Other
receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>299</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>357</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>404</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Merchandise
inventories</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>5,738</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>5,177</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>5,069</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%" HEIGHT="12"><font face="Arial,Helvetica"><font size=-2>Prepaid
expenses, deferred charges and other assets</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="12"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="12">
<div align=right><font face="Arial,Helvetica"><font size=-2>620</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="12"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="12"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="12">
<div align=right><font face="Arial,Helvetica"><font size=-2>642</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="12"> </td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="12"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="12">
<div align=right><font face="Arial,Helvetica"><font size=-2>579</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Deferred
income taxes</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>716</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>746</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>709</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Total
current assets</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>27,840</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>27,769</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>28,667</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Property
and equipment, net</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,361</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,266</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,450</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Deferred
income taxes</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>302</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>562</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>367</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Other
assets</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,463</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,493</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,470</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Total
assets</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>35,966</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>36,090</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>36,954</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<hr WIDTH="100%"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Liabilities</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Current
liabilities</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Short-term
borrowings</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>3,027</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>4,502</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>2,989</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Current
portion of long-term debt and capitalized leases</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>2,444</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>936</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>2,165</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Accounts
payable and other liabilities</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,443</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,078</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,992</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Unearned
revenues</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>1,007</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>932</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>971</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Other
taxes</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>420</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>397</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>584</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Total
current liabilities</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>13,341</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>12,845</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>13,701</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Long-term
debt and capitalized leases</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>12,614</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>13,457</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>12,884</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Postretirement
benefits</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>2,135</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>2,302</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>2,180</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Minority
interest and other liabilities</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,362</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,383</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,350</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Total
liabilities</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>29,452</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>29,987</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>30,115</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Commitments
and Contingent Liabilities</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Shareholders'
Equity</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Common
shares</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>323</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>323</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>323</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Capital
in excess of par value</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>3,549</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>3,575</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>3,554</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Retained
earnings </font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,105</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>4,906</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>5,952</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Treasury
stock  at cost</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(3,053)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(2,199)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(2,569)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Deferred
ESOP expense</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(126)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(167)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(134)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Accumulated
other comprehensive income (loss)</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(284)</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(335)</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(287)</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Total
shareholders' equity</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>6,514</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>6,103</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>6,839</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Total
liabilities and shareholders' equity</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>35,966</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>36,090</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>36,954</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<hr WIDTH="100%"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%"><font face="Arial,Helvetica"><font size=-2>Total
common shares outstanding </font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>352.6</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>381.0</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>369.1</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="58%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="6%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="58%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="6%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="58%" HEIGHT="22"><font face="Arial,Helvetica"><font size=-2>See
accompanying notes.</font></font></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="22"></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="22"></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="22"></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="22"></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="22"></td>

<td VALIGN=TOP WIDTH="6%" HEIGHT="22"></td>

<td VALIGN=TOP WIDTH="1%" HEIGHT="22"></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="22"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="58%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="6%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-2-</font></font>
<br>
<hr WIDTH="100%">
<br> 
<br> 
<br> 
<br> 
<p><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font>
<p><u><font face="Arial,Helvetica"><font size=-1>CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS</font></font></u>
<br><u><font face="Arial,Helvetica"><font size=-1>(Unaudited)</font></font></u></center>

<hr SIZE=4>
<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 WIDTH="566" >
<tr>
<td VALIGN=BOTTOM WIDTH="73%"><i><font face="Arial,Helvetica"><font size=-2>(millions)</font></font></i></td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="29%">
<center><u><font face="Arial,Helvetica"><font size=-2>13 Weeks Ended</font></font></u></center>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>CASH
FLOWS FROM OPERATING ACTIVITIES:</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="20"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Net
income</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>235</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>146</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Adjustments
to reconcile net income to net cash</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>provided
by (used in) operating activities:</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Depreciation,
amortization and other noncash items</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>228</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>214</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Provision
for uncollectible accounts</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>245</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>291</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%" HEIGHT="12"><font face="Arial,Helvetica"><font size=-2>Gain
on sales of property and investments</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="12"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="12">
<div align=right><font face="Arial,Helvetica"><font size=-2>(1)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="12"> </td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="12"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="12">
<div align=right><font face="Arial,Helvetica"><font size=-2>--</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Change
in (net of acquisitions):</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Deferred
income taxes</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>62</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>10</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Retained
interest in transferred credit card receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>175</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>661</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Credit
card receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>758</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>858</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Merchandise
inventories</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(663)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(426)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Other
operating assets</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>61</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>29</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Other
operating liabilities</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(768)</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(725)</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Net
cash provided by operating activities </font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>332</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>1,058</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="9"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="9"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>CASH
FLOWS FROM INVESTING ACTIVITIES:</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%" HEIGHT="6"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="6"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="6"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="6"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="6"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="6"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Acquisition
of businesses, net of cash acquired</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(1)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(16)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Proceeds
from sales of property and investments</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>11</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>100</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Purchases
of property and equipment</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(158)</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(269)</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Net
cash used in investing activities</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(148)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(185)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>CASH
FLOWS FROM FINANCING ACTIVITIES:</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Proceeds
from long-term debt</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>167</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>28</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Repayments
of long-term debt</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(173)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(664)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Increase
(decrease) in short-term borrowings, primarily 90 days or less</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>35</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(133)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Repayments
of ESOP note receivable</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>77</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>58</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Common
shares purchased</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(509)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(141)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Common
shares issued for employee stock plans</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>20</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>23</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Dividends
paid to shareholders</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(82)</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>(170)</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Net
cash used in financing activities</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(465)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(999)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Effect
of exchange rate on cash and invested cash</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>     
1</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>     
2</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Net
decrease in cash and cash equivalents</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(280)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>(124)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Balance
at beginning of year</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>729</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>495</font></font></u></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>Balance
at end of period</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>449</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>371</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%">
<hr WIDTH="100%"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="73%"><font face="Arial,Helvetica"><font size=-2>See
accompanying notes.</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="3%"> </td>

<td VALIGN=BOTTOM WIDTH="8%"> </td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-3-</font></font>
<br>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP COLSPAN="2">
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2">
<center><u><font face="Arial,Helvetica"><font size=-1>NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS</font></font></u>
<br><u><font face="Arial,Helvetica"><font size=-1>(Unaudited)</font></font></u></center>
</td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2">
<hr SIZE=4></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"><font face="Arial,Helvetica"><font size=-1>1.</font></font></td>

<td VALIGN=TOP WIDTH="95%"><u><font face="Arial,Helvetica"><font size=-1>Condensed
Consolidated Financial Statements</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"><font face="Arial,Helvetica"><font size=-1>The
Condensed Consolidated Balance Sheets as of April 1, 2000 and April 3,
1999, the related Condensed Consolidated Statements of Income and the Condensed
Consolidated Statements of Cash Flows for the 13 weeks then ended are unaudited.
The interim financial statements reflect all adjustments (consisting only
of normal recurring accruals) which are, in the opinion of management,
necessary for a fair statement of the results for the interim periods presented.
The condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in
the Sears, Roebuck and Co. (the "Company" or "Sears") 1999 Annual Report
to Shareholders and Annual Report on Form 10-K. The results of operations
for the interim periods should not be considered indicative of results
to be expected for the full year.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"><font face="Arial,Helvetica"><font size=-1>Certain
reclassifications have been made to the 1999 financial statements to conform
with the current year presentation.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%" HEIGHT="17"></td>

<td VALIGN=TOP WIDTH="95%" HEIGHT="17"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="95%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"><font face="Arial,Helvetica"><font size=-1>2.</font></font></td>

<td VALIGN=TOP WIDTH="95%"><u><font face="Arial,Helvetica"><font size=-1>Shareholders'
Equity and Dividend Restrictions</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"><font face="Arial,Helvetica"><font size=-1>Under
terms of indentures entered into in 1981 and thereafter, Sears cannot take
specified actions, including the declaration of cash dividends, which would
cause its unencumbered assets, as defined, to fall below 150% of its liabilities,
as defined. At April 1, 2000, approximately $4.6 billion could be paid
in dividends to shareholders under the most restrictive indentures.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"><font face="Arial,Helvetica"><font size=-1>On
February 3, 1998, the Board of Directors extended, for an additional two
years, the common share repurchase program which was used to acquire shares
for distribution in connection with the expected exercise of stock options,
the grant of restricted shares and the exchange of deferred shares under
the Company's stock plans. The program authorized the Company to acquire
up to 20 million Sears common shares on the open market. By the end of
the first quarter of 1999, all 20 million common shares authorized to be
purchased under this repurchase program had been acquired.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"><font face="Arial,Helvetica"><font size=-1>.</font></font></td>

<td VALIGN=TOP WIDTH="95%"><font face="Arial,Helvetica"><font size=-1>On
March 10, 1999, the Board of Directors approved a common share repurchase
program to acquire up to $1.5 billion of the Company's common shares by
December 31, 2001. The shares are purchased on the open market or through
privately negotiated transactions. As of April 1, 2000, approximately 31.2
million common shares have been acquired under this repurchase program
at a cost of approximately $973 million. During the first quarter of 2000,
the Company repurchased 17.2 million shares at a cost of $509 million.</font></font></td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-4-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="714" >
<tr>
<td VALIGN=TOP COLSPAN="2">
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2">
<center><u><font face="Arial,Helvetica"><font size=-1>NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS</font></font></u>
<br><u><font face="Arial,Helvetica"><font size=-1>(Unaudited)</font></font></u></center>
</td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2">
<hr SIZE=4></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"><font face="Arial,Helvetica"><font size=-1>3. </font></font></td>

<td VALIGN=TOP WIDTH="96%"><font face="Arial,Helvetica"><font size=-1>Earnings
Per Share</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="96%"><font face="Arial,Helvetica"><font size=-1>The
following table sets forth the computations of basic and diluted earnings
per share:</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>
</TABLE>

<table BORDER=0 CELLSPACING=0 WIDTH="580" >
<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="16"><i><font face="Arial,Helvetica"><font size=-2>(millions,
except per share data)</font></font></i></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="24%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>13 Weeks Ended</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="22"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="22"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="22"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="22">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="22"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="22">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="22"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Basic:</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Net
income</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>235</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>146</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="18"><u><font face="Arial,Helvetica"><font size=-2>Average
shares outstanding</font></font></u></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>359.2</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>382.9</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="8"><i><u><font face="Arial,Helvetica"><font size=-2>Earnings
per share  basic</font></font></u></i></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="8"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="8"><i><u><font face="Arial,Helvetica"><font size=-2>$</font></font></u></i></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="8">
<div align=right><i><u><font face="Arial,Helvetica"><font size=-2>0.65</font></font></u></i></div>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="8"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="8">
<div align=right><i><u><font face="Arial,Helvetica"><font size=-2>$</font></font></u></i></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="8">
<div align=right><i><u><font face="Arial,Helvetica"><font size=-2>0.38</font></font></u></i></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="8"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Diluted:</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Net
income</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>235</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>146</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Average
shares outstanding</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>359.2</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>382.9</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Dilutive
effect of stock options</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>0.8</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>2.2</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="14"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="14"><u><font face="Arial,Helvetica"><font size=-2>Average
shares and equivalent shares outstanding</font></font></u></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="14"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="14"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="14">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>360.0</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="14"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="14"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="14">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>385.1</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="14"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="56%" HEIGHT="7"><i><u><font face="Arial,Helvetica"><font size=-2>Earnings
per share  diluted</font></font></u></i></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="7"><i><u><font face="Arial,Helvetica"><font size=-2>$</font></font></u></i></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="7">
<div align=right><i><u><font face="Arial,Helvetica"><font size=-2>0.65</font></font></u></i></div>
</td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="7"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="7">
<div align=right><i><u><font face="Arial,Helvetica"><font size=-2>$</font></font></u></i></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="7">
<div align=right><i><u><font face="Arial,Helvetica"><font size=-2>0.38</font></font></u></i></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="7"></td>
</tr>
</TABLE>

<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="631" >
<tr>
<td VALIGN=TOP COLSPAN="2" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="6%" HEIGHT="38"></td>

<td VALIGN=TOP WIDTH="94%" HEIGHT="38"><font face="Arial,Helvetica"><font size=-1>In
each period, certain outstanding options were excluded from the computation
of diluted earnings per share because they would have been antidilutive.
As of April 1, 2000, options to purchase 17.8 million shares of stock at
prices ranging from $31 to $64 per share were excluded from the 13 week
2000 calculation. As of April 3, 1999, options to purchase 7.5 million
shares of stock at prices ranging from $43 to $64 per share were excluded
from the 13 week 1999 calculation.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="6%"><font face="Arial,Helvetica"><font size=-1>4. </font></font></td>

<td VALIGN=TOP WIDTH="94%"><u><font face="Arial,Helvetica"><font size=-1>Comprehensive
Income</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="6%"> </td>

<td VALIGN=TOP WIDTH="94%"><font face="Arial,Helvetica"><font size=-1>The
following table sets forth the computation of comprehensive income:</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>
</TABLE>

<center><table BORDER=0 CELLSPACING=0 WIDTH="632" >
<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="44%" HEIGHT="16"><i><font face="Arial,Helvetica"><font size=-2>(millions)</font></font></i></td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="23%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>13 Weeks Ended</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="20"></td>

<td VALIGN=TOP WIDTH="44%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="20"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="44%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="5"></td>

<td VALIGN=TOP WIDTH="44%" HEIGHT="5"></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="5"></td>

<td VALIGN=TOP WIDTH="24%" HEIGHT="5"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Net
income</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>235</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>146</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Other
comprehensive income (loss):</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Unrealized
gain (loss) on investments</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>(4)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>83</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Foreign
currency translation adjustments</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>     
7</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>     
6</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Total
other comprehensive income</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>     
3</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>    
89</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Total
comprehensive income</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>238</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>235</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="24%" HEIGHT="16"></td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-5-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP>
<center><u><font face="Arial,Helvetica"><font size=-1>NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS</font></font></u>
<br><u><font face="Arial,Helvetica"><font size=-1>(Unaudited)</font></font></u></center>
</td>
</tr>
</TABLE></center>

<hr SIZE=4>
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Accumulated other
comprehensive income (loss) is comprised of foreign currency translation
charges of $105, $119 and $112 million as of April 1, 2000, April 3, 1999
and January 1, 2000, respectively; the Company's minimum pension liability
(net of tax) of $194, $299 and $194 million as of April 1, 2000, April
3, 1999 and January 1, 2000, respectively; and an unrealized gain on investments
(net of tax) of $15, $83 and $19 million as of April 1, 2000, April 3,
1999 and January 1, 2000, respectively.</font></font></td>
</tr>
</TABLE>

<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP COLSPAN="13" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>5.
<u>Segment
Disclosures</u></font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP COLSPAN="12" WIDTH="96%"><font face="Arial,Helvetica"><font size=-1>The
following table sets forth revenue, operating income (expense) and total
assets by segment:</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="13"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP COLSPAN="12" WIDTH="96%"><b><font face="Arial,Helvetica"><font size=-2>For
the 13 weeks ended April 1, 2000</font></font></b></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="24%"><i><font face="Arial,Helvetica"><font size=-2>millions</font></font></i></td>

<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial,Helvetica"><font size=-2>Retail</font></font></div>
</td>

<td VALIGN=TOP COLSPAN="2" WIDTH="12%">
<center><font face="Arial,Helvetica"><font size=-2>Services</font></font></center>
</td>

<td VALIGN=TOP WIDTH="9%">
<center><font face="Arial,Helvetica"><font size=-2>Credit</font></font></center>
</td>

<td VALIGN=TOP WIDTH="12%">
<center><font face="Arial,Helvetica"><font size=-2>Corporate</font></font></center>
</td>

<td VALIGN=TOP WIDTH="13%">
<center><font face="Arial,Helvetica"><font size=-2>International</font></font></center>
</td>

<td VALIGN=TOP WIDTH="16%">
<center><font face="Arial,Helvetica"><font size=-2>Consolidated</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="24%"><font face="Arial,Helvetica"><font size=-2>Revenue </font></font>
<br><font face="Arial,Helvetica"><font size=-2>Operating income (expense)</font></font>
<br><font face="Arial,Helvetica"><font size=-2>Total assets</font></font></td>

<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 6,313</font></font>
<p><font face="Arial,Helvetica"><font size=-2>3</font></font>
<br><font face="Arial,Helvetica"><font size=-2>10,541</font></font></div>
</td>

<td VALIGN=TOP WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 623</font></font>
<p><font face="Arial,Helvetica"><font size=-2>65</font></font>
<br><font face="Arial,Helvetica"><font size=-2>1,107</font></font></div>
</td>

<td VALIGN=TOP COLSPAN="2" WIDTH="13%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 1,071</font></font>
<p><font face="Arial,Helvetica"><font size=-2>382</font></font>
<br><font face="Arial,Helvetica"><font size=-2>19,264 </font></font></div>
</td>

<td VALIGN=TOP WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ --</font></font>
<p><font face="Arial,Helvetica"><font size=-2>(88)</font></font>
<br><font face="Arial,Helvetica"><font size=-2>1,718</font></font></div>
</td>

<td VALIGN=TOP WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 966</font></font>
<p><font face="Arial,Helvetica"><font size=-2>18</font></font>
<br><font face="Arial,Helvetica"><font size=-2>3,336</font></font></div>
</td>

<td VALIGN=TOP WIDTH="16%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 8,973</font></font>
<p><font face="Arial,Helvetica"><font size=-2>380</font></font>
<br><font face="Arial,Helvetica"><font size=-2>35,966</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"><font face="Arial,Helvetica"> </font></td>

<td VALIGN=TOP COLSPAN="12" WIDTH="96%"><b><font face="Arial,Helvetica"><font size=-2>For
the 13 weeks ended April 3, 1999</font></font></b></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="24%"><i><font face="Arial,Helvetica"><font size=-2>millions</font></font></i></td>

<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial,Helvetica"><font size=-2>Retail</font></font></div>
</td>

<td VALIGN=TOP COLSPAN="2" WIDTH="12%"><font face="Arial,Helvetica"><font size=-2>Services</font></font></td>

<td VALIGN=TOP WIDTH="13%">
<center><font face="Arial,Helvetica"><font size=-2>Credit</font></font></center>
</td>

<td VALIGN=TOP WIDTH="8%"><font face="Arial,Helvetica"><font size=-2>Corporate</font></font></td>

<td VALIGN=TOP WIDTH="8%"><font face="Arial,Helvetica"><font size=-2>International</font></font></td>

<td VALIGN=TOP WIDTH="21%">
<center><font face="Arial,Helvetica"><font size=-2>Consolidated</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="24%"><font face="Arial,Helvetica"><font size=-2>Revenue </font></font>
<br><font face="Arial,Helvetica"><font size=-2>Operating income (expense) </font></font>
<br><font face="Arial,Helvetica"><font size=-2>Total assets</font></font></td>

<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 6,134</font></font><br>
<BR>
<br><font face="Arial,Helvetica"><font size=-2>(69)</font></font>
<br><font face="Arial,Helvetica"><font size=-2>10,222</font></font></div>
</td>

<td VALIGN=TOP WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 647</font></font><br>
<BR>
<br><font face="Arial,Helvetica"><font size=-2>75</font></font>
<br><font face="Arial,Helvetica"><font size=-2>1,027</font></font></div>
</td>

<td VALIGN=TOP COLSPAN="2" WIDTH="13%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 1,063</font></font><br>
<BR>
<br><font face="Arial,Helvetica"><font size=-2>295</font></font>
<br><font face="Arial,Helvetica"><font size=-2>19,862</font></font></div>
</td>

<td VALIGN=TOP WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ --</font></font><br>
<BR>
<br><font face="Arial,Helvetica"><font size=-2>(73)</font></font>
<br><font face="Arial,Helvetica"><font size=-2>2,346</font></font></div>
</td>

<td VALIGN=TOP WIDTH="8%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 812</font></font><br>
<BR>
<br><font face="Arial,Helvetica"><font size=-2>17</font></font>
<br><font face="Arial,Helvetica"><font size=-2>2,633</font></font></div>
</td>

<td VALIGN=TOP WIDTH="25%">
<div align=right><font face="Arial,Helvetica"><font size=-2>$ 8,656</font></font><br>
<BR>
<br><font face="Arial,Helvetica"><font size=-2>245</font></font>
<br><font face="Arial,Helvetica"><font size=-2>36,090</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP COLSPAN="12" WIDTH="96%"> </td>
</tr>
</TABLE>

<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP WIDTH="5%"><font face="Arial,Helvetica"><font size=-1>6.</font></font></td>

<td VALIGN=TOP WIDTH="95%"><u><font face="Arial,Helvetica"><font size=-1>Effect
of New Accounting Standards and Statements</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"><font face="Arial,Helvetica"><font size=-1>In
June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement (as amended) is now
required to be adopted in years beginning after June 15, 2000. The Company
is currently evaluating this statement's provisions and has not yet determined
what effect it might have on the consolidated financial position and results
of operations of the Company. The Company intends to adopt the standard
for the fiscal year beginning December 31, 2000.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"><font face="Arial,Helvetica"><font size=-1>7.</font></font></td>

<td VALIGN=TOP WIDTH="95%"><u><font face="Arial,Helvetica"><font size=-1>Effect
of New SEC Staff Guidance</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="5%"> </td>

<td VALIGN=TOP WIDTH="95%"><font face="Arial,Helvetica"><font size=-1>In
December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements,"
("SAB 101") which effectively changes previous guidance related to the
recording of licensed business revenues for retail companies. As a result,
the Company changed its method of recording licensed business revenue in
the first quarter of 2000. Under SAB 101, the Company now recognizes as
revenue only the commission received from the licensed business partner.
Prior to implementation of SAB 101, the Company had recognized the gross
revenues of licensees. This change in licensed business reporting reduces
revenues and expenses by equal amounts and therefore does not have an impact
on operating income. Prior year financial statements have been restated
to reflect the reclassification under SAB 101.</font></font></td>
</tr>
</TABLE>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-6-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="31">
<center><font face="Arial,Helvetica"><font size=-1>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</font></font>
<br><font face="Arial,Helvetica"><font size=-1>(Unaudited)</font></font></center>
</td>
</tr>
</TABLE>

<hr SIZE=4>
<br> 
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP WIDTH="6%"><font face="Arial,Helvetica"><font size=-1>8.</font></font></td>

<td VALIGN=TOP WIDTH="94%"><u><font face="Arial,Helvetica"><font size=-1>Disposition
of Business</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="6%"> </td>

<td VALIGN=TOP WIDTH="94%"><font face="Arial,Helvetica"><font size=-1>On
January 30, 1999, the Company completed the sale of its HomeLife furniture
business. On November 18, 1998, the Company had entered into an agreement
to exchange its interest in the HomeLife furniture business for $100 million
in cash, a $10 million note receivable and a 19% equity ownership in the
new HomeLife business. The Company recorded a pre-tax charge of $33 million
($21 million after-tax) in the fourth quarter of 1998 related to this transaction.
The completion of the sale did not have a material effect on the first
quarter 1999 results of operations or financial condition<font color="#000080">.</font></font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="6%"><font face="Arial,Helvetica"><font color="#000000"><font size=-1>9. </font></font></font></td>

<td VALIGN=TOP WIDTH="94%"><u><font face="Arial,Helvetica"><font color="#000000"><font size=-1>Restructuring
Charge</font></font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="6%"><font color="#000000"> </font></td>

<td VALIGN=TOP WIDTH="94%"><font face="Arial,Helvetica"><font color="#000000"><font size=-1>The
Company implemented certain cost-reduction strategies during the third
quarter of 1999 resulting in a $46 million pre-tax restructuring charge.
Of the $46 million charge, $25 million related to the closing of 33 automotive
stores in three geographic markets and $21 million related to severance
costs for headquarters staff reductions of approximately 450 employees.
The staff reductions and the closing of the 33 stores both occurred during
the third quarter of 1999. Of the $25 million charge for the 33 closed
stores, approximately $3 million related to severance costs, $21 million
was to reduce the carrying value of the closed store assets to their estimated
fair value, less costs to sell and $1 million was for other related costs.
At January 1, 2000 the balance in the restructuring reserve was $26 million.
During the first quarter of 2000, the Company paid $8 million of the restructuring
costs resulting in a restructuring reserve balance of $18 million as of
April 1, 2000. As of April 1, 2000, future cash payments to settle restructuring
obligations approximate $8 million, which is expected to be paid primarily
in the remainder of the year 2000.</font></font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="6%"><font face="Arial,Helvetica"><font size=-1>10. </font></font></td>

<td VALIGN=TOP WIDTH="94%"><u><font face="Arial,Helvetica"><font size=-1>Legal
Proceedings</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="6%"> </td>

<td VALIGN=TOP WIDTH="94%"><font face="Arial,Helvetica"><font color="#000000"><font size=-1>There
have been no material developments in any material legal proceedings since
the Company's disclosure in its Annual Report on Form 10-K for the fiscal
year ended January 1, 2000.</font></font></font></td>
</tr>
</TABLE>

<center>
<p><font face="Arial,Helvetica"><font color="#000000"><font size=-1>-7-</font></font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1><font color="#000000">SEARS,
ROEBUCK</font> AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>INDEPENDENT ACCOUNTANTS'
REVIEW REPORT</font></font></center>
</td>
</tr>
</TABLE>

<hr SIZE=4>
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>To the Shareholders
and Board of Directors of Sears, Roebuck and Co.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>We have reviewed
the accompanying Condensed Consolidated Balance Sheets of Sears, Roebuck
and Co. as of April 1, 2000 and April 3, 1999, and the related Condensed
Consolidated Statements of Income and of Cash Flows for the 13-week periods
ended April 1, 2000 and April 3, 1999. These financial statements are the
responsibility of the Company's management.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>We conducted
our reviews in accordance with standards established by the American Institute
of Certified Public Accountants. A review of interim financial information
consists principally of applying analytical procedures to financial data
and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Based on our
reviews, we are not aware of any material modifications that should be
made to such condensed consolidated financial statements for them to be
in conformity with accounting principles generally accepted in the United
States of America.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>We have previously
audited, in accordance with auditing standards generally accepted in the
United States of America, the Consolidated Balance Sheet of Sears, Roebuck
and Co. as of January 1, 2000, and the related Consolidated Statements
of Income, Shareholders' Equity, and Cash Flows for the year then ended
(not presented herein); and in our report dated February 7, 2000, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying Condensed Consolidated
Balance Sheet as of January 1, 2000, is fairly stated, in all material
respects, in relation to the Consolidated Balance Sheet from which it has
been derived.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Deloitte &
Touche LLP</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="30"><font face="Arial,Helvetica"><font size=-1>Chicago,
Illinois</font></font>
<br><font face="Arial,Helvetica"><font size=-1>April 27, 2000</font></font></td>
</tr>
</TABLE>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-8-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="47">
<center><font face="Arial,Helvetica"><font size=-1>ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF</font></font>
<br><font face="Arial,Helvetica"><font size=-1>OPERATIONS, FINANCIAL CONDITION
AND LIQUIDITY FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000 AND APRIL 3, 1999</font></font></center>
</td>
</tr>
</TABLE>

<hr SIZE=4>
<br> 
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><b><u><font face="Arial,Helvetica"><font size=-1>Analysis
of Operations</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Operating results
for the Company are reported for four domestic segments and one international
segment. The domestic segments include the Company's operations in the
United States and Puerto Rico. The Company's segments are defined as follows:</font></font></td>
</tr>
</TABLE>

<center><table CELLSPACING=0 WIDTH="618" >
<tr>
<td VALIGN=TOP WIDTH="2%" HEIGHT="168">
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<p> </td>

<td VALIGN=TOP WIDTH="47%" HEIGHT="168">
<li>
<font face="Arial,Helvetica"><font size=-1><i><u>Retail</u></i>consisting
of:</font></font></li>

<ul>
<li>
<font face="Arial,Helvetica"><font size=-1>Full-line stores</font></font> </li>

<li>
<font face="Arial,Helvetica"><font size=-1>Specialty stores (Hardware stores,
Dealer stores, Contract Sales, The Great Indoors and Auto stores)</font></font> </li>
</ul>

<li>
<i><font face="Arial,Helvetica"><font size=-1><u>Services</u> </font></font></i><font face="Arial,Helvetica"><font size=-1>consisting
of:</font></font></li>

<ul>
<li>
<font face="Arial,Helvetica"><font size=-1>Home Services</font></font></li>

<li>
<font face="Arial,Helvetica"><font size=-1>Direct Response</font></font></li>
</ul>

<li>
<i><font face="Arial,Helvetica"><font size=-1><u>Credit</u> </font></font></i><font face="Arial,Helvetica"><font size=-1>which
manages domestic Credit</font></font></li>

<br><font face="Arial,Helvetica"><font size=-1>  Card operations</font></font></td>

<td VALIGN=TOP WIDTH="5%" HEIGHT="168"></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="168">
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<p> </td>

<td VALIGN=TOP WIDTH="45%" HEIGHT="168">
<li>
<font face="Arial,Helvetica"><font size=-1><i><u>Corporate</u></i>consisting
of administrative</font></font></li>

<br><font face="Arial,Helvetica"><font size=-1>   activities
of a holding company nature,</font></font>
<br><font face="Arial,Helvetica"><font size=-1>   the costs of
which are not allocated to</font></font>
<br><font face="Arial,Helvetica"><font size=-1>   the Company's
businesses (includes</font></font>
<br><font face="Arial,Helvetica"><font size=-1>   the Company's
e-commerce investments)</font></font>
<br> 
<li>
<i><font face="Arial,Helvetica"><font size=-1><u>International</u> </font></font></i><font face="Arial,Helvetica"><font size=-1>consisting
of retail,</font></font></li>

<br><font face="Arial,Helvetica"><font size=-1>  services, credit
and corporate</font></font>
<br><font face="Arial,Helvetica"><font size=-1>  operations conducted
in Canada</font></font>
<br><font face="Arial,Helvetica"><font size=-1>  through Sears Canada,
Inc. ("Sears</font></font>
<br><font face="Arial,Helvetica"><font size=-1>  Canada"), a 54.6%
owned</font></font>
<br><font face="Arial,Helvetica"><font size=-1>  consolidated subsidiary</font></font></td>
</tr>
</TABLE></center>

<br> 
<center><table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>For the 13 weeks
ended April 1, 2000, net income was $235 million or $0.65 per share, as
compared to $146 million, or $0.38 per share for the comparable 1999 period.
The increase in earnings per share was primarily due to increased operating
income in the Retail and Credit segments coupled with a reduction in outstanding
shares due to the Company's share repurchase program.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Operating income
(expense) by segment was as follows:</font></font></td>
</tr>
</TABLE></center>

<center><table BORDER=0 CELLSPACING=0 WIDTH="518" >
<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="6"><i><font face="Arial,Helvetica"><font size=-2>(millions)</font></font></i></td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="26%" HEIGHT="6">
<center><u><font face="Arial,Helvetica"><font size=-2>13 Weeks Ended</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="6"></td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="26%" HEIGHT="6"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="20"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="24"><font face="Arial,Helvetica"><font size=-2>Retail</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="24">
<div align=right><font face="Arial,Helvetica"><font size=-2>3</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="24"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="24">
<div align=right><font face="Arial,Helvetica"><font size=-2>(69)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="24"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="24"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Services</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>65</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>75</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Credit</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>382</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>295</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Corporate</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>(88)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>(73)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="17"><font face="Arial,Helvetica"><font size=-2>International</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>18</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="17"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>17</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="39%" HEIGHT="17"><font face="Arial,Helvetica"><font size=-2>Total
operating income</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17">
<div align=right><font face="Arial,Helvetica"><font size=-2>380</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="17"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17">
<div align=right><font face="Arial,Helvetica"><font size=-2>245</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="17"></td>
</tr>

<tr>
<td></td>

<td></td>

<td>
<hr WIDTH="100%"></td>

<td></td>

<td></td>

<td>
<hr WIDTH="100%"></td>

<td></td>

<td></td>

<td></td>

<td></td>

<td></td>

<td></td>
</tr>
</TABLE></center>

<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>The Company's
consolidated effective tax rate for the 13 weeks ended April 1, 2000 was
36.7% compared to 37.9% in the prior year period. The decrease in the effective
tax rate was primarily due to the favorable resolution of certain domestic
tax audit issues.</font></font></td>
</tr>
</TABLE>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-9-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="47">
<center><font face="Arial,Helvetica"><font size=-1>ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF</font></font>
<br><font face="Arial,Helvetica"><font size=-1>OPERATIONS, FINANCIAL CONDITION
AND LIQUIDITY FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000 AND APRIL 3, 1999</font></font></center>
</td>
</tr>
</TABLE>

<hr SIZE=4>
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Due to holiday
buying patterns, merchandise sales are traditionally higher in the fourth
quarter than other quarterly periods and a disproportionate share of operating
income is typically earned in the fourth quarter. This business seasonality
results in performance for the 13 weeks ended April 1, 2000 which is not
necessarily indicative of performance for the balance of the year. The
Company makes available by phone a recorded message on the sales performance
of its domestic stores. The message is updated weekly and can be heard
by calling (847) 286-6111.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><b><u><font face="Arial,Helvetica"><font size=-1>Retail</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Retail revenues
increased 2.9% to $6.3 billion for the 13 weeks ended April 1, 2000 from
the comparable 1999 period. Excluding the effect of the HomeLife divestiture
in 1999, retail revenues increased $227 million or 3.7% for the 13 week
period. Retail revenues and related information are as follows:</font></font></td>
</tr>
</TABLE>

<table BORDER=0 CELLSPACING=0 WIDTH="740" >
<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="20"><font face="Arial,Helvetica"><font size=-2>(millions,
except number of stores)</font></font></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="20"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%"> </td>

<td VALIGN=BOTTOM WIDTH="32%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="6%">
<center><u><font face="Arial,Helvetica"><font size=-2>Change</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="5%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="4"><font face="Arial,Helvetica"><font size=-2>Revenues:</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="4"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Full-line
stores</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>4,943</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>4,795</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>3.1%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Specialty
stores</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,370</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>1,339</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>2.3%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Total
Retail revenues</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,313</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>6,134</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>2.9%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="7">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="7">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="7"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="7"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Number
of Full-line stores</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>  
858</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>  
847</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Number
of Specialty stores</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>2,167</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>2,104</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="18"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="4"><font face="Arial,Helvetica"><font size=-2>Total
Retail stores</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="4">
<div align=right><font face="Arial,Helvetica"><font size=-2>3,025</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="4">
<div align=right><font face="Arial,Helvetica"><font size=-2>2,951</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="4"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="4"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="32%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="5">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="5">
<hr WIDTH="100%"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="5%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="5"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="10%"> </td>

<td VALIGN=BOTTOM WIDTH="32%"><font face="Arial,Helvetica"><font size=-2>Comparable
store sales</font></font>
<br><font face="Arial,Helvetica"><font size=-2>percentage increase</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"><font face="Arial,Helvetica"><font size=-2>2.7%</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM COLSPAN="11" WIDTH="46%"><font face="Arial,Helvetica"><font size=-2>1.8%</font></font></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="10%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="16" WIDTH="90%" HEIGHT="16"></td>
</tr>
</TABLE>

<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>For the 13 week
period, Full-line stores revenues increased 3.1% over the first quarter
of 1999.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP>
<ul>
<li>
<font face="Arial,Helvetica"><font size=-1>Hardlines revenues increased
7.5% in the first quarter of 2000. Gains occurred across all categories
including home appliances, home improvement, home electronics and home
office sales.</font></font> </li>
</ul>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP>
<ul>
<li>
<font face="Arial,Helvetica"><font size=-1>Apparel revenues decreased 2.4%
in the first quarter, in part, due to the later Easter in 2000. Decreases
in junior's, dresses, intimate apparel, men's apparel, children's apparel,
men's shoes and floor coverings were partially offset by revenue improvements
in women's sportswear, special sizes, athletic and women's shoes, cosmetics,
fragrances, fine jewelry and home fashions. </font></font> </li>
</ul>
</td>
</tr>
</TABLE>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-10-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="47">
<center><font face="Arial,Helvetica"><font size=-1>ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF</font></font>
<br><font face="Arial,Helvetica"><font size=-1>OPERATIONS, FINANCIAL CONDITION
AND LIQUIDITY FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000 AND APRIL 3, 1999</font></font></center>
</td>
</tr>
</TABLE>

<hr SIZE=4>
<br> 
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>For the 13 week
period ended April 1, 2000, Specialty stores revenues increased 2.3% from
the comparable 1999 period. The prior year includes revenues from HomeLife
which was sold on January 30, 1999. Excluding HomeLife revenues in the
prior year, Specialty stores revenues increased 6.1% primarily due to strong
comparable store sales increases in Sears Dealer stores. Sears Dealer store
revenues also benefited from 87 net new store openings. The Great Indoors
also produced strong revenue gains over the comparable 1999 period. Auto
stores revenues decreased 3.3% from the comparable 1999 period due to the
closure of 33 NTB stores in the third quarter of 1999 and continued weak
comparable store sales.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Retail gross
margin as a percentage of Retail revenues for the first quarter of 2000
improved 60 basis points from the first quarter of 1999. The improvement
is primarily due to a more aggressive clearance markdown strategy initiated
during December 1999.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Retail selling
and administrative expense as a percentage of Retail revenues for the first
quarter of 2000 improved 20 basis points from the first quarter of 1999.
The improvement was primarily due to decreased marketing expense partially
offset by higher payroll and benefits expense.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Retail depreciation
and amortization expense for the first quarter of 2000 was flat versus
first quarter of 1999.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><b><u><font face="Arial,Helvetica"><font size=-1>Services</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Services revenues,
which are generated by the Home Services and Direct Response businesses,
decreased 3.7% in the first quarter of 2000 versus the comparable 1999
period. Both Home Services and Direct Response businesses showed revenue
decreases. </font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Services gross
margin as a percentage of Services revenues for the first quarter of 2000
declined 180 basis points. The decrease in gross margin rate is primarily
due to the lower margin rate in Sears Home Improvement business. Services
selling and administrative expense as a percentage of Services revenues
decreased 70 basis points in the first quarter of 2000 from the comparable
1999 period. The decreased selling and administrative expense ratio was
primarily due to productivity initiatives in Home Services that reduced
payroll, benefits and marketing costs.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Services depreciation
and amortization increased 4.3% in the first quarter of 2000 from the comparable
1999 period primarily due to depreciation of new product repair trucks
put into service since the first quarter of 1999.</font></font></td>
</tr>
</TABLE>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-11-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="47">
<center><font face="Arial,Helvetica"><font size=-1>ITEM 2. MANAGEMENTS
DISCUSSION AND ANALYSIS OF</font></font>
<br><font face="Arial,Helvetica"><font size=-1>OPERATIONS, FINANCIAL CONDITION
AND LIQUIDITY FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000 AND APRIL 3, 1999</font></font></center>
</td>
</tr>
</TABLE>

<hr SIZE=4>
<br> 
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><b><u><font face="Arial,Helvetica"><font size=-1>Credit</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Domestic Credit
revenues increased 0.8% to $1.1 billion for the 13 weeks ended April 1,
2000 from the comparable prior year period. The slight increase in Credit
revenues was primarily attributable to yield improvement from performance
pricing and higher late fees partially offset by a lower average level
of owned credit card receivables and retained interest assets. A summary
of Credit information (for the managed portfolio) is as follows:</font></font></td>
</tr>
</TABLE>

<center><table BORDER=0 CELLSPACING=0 WIDTH="722" >
<tr>
<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="48%"> </td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="18%">
<center><u><font face="Arial,Helvetica"><font size=-2>13 Weeks Ended</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="19%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%" HEIGHT="20"></td>

<td VALIGN=TOP WIDTH="48%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%" HEIGHT="20">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%" HEIGHT="20"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="20"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%" HEIGHT="20"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="48%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="48%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>

<td VALIGN=TOP WIDTH="6%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="9%"> </td>

<td VALIGN=BOTTOM WIDTH="48%"><font face="Arial,Helvetica"><font size=-2>Sears
Card as a % of sales<sup>(1)</sup></font></font></td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="7%">
<div align=right><font face="Arial,Helvetica"><font size=-2>47.2%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="7%">
<div align=right><font face="Arial,Helvetica"><font size=-2>49.0%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="48%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="5"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="5"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="9%"> </td>

<td VALIGN=BOTTOM WIDTH="48%"><font face="Arial,Helvetica"><font size=-2>Average
account balance <sup>(2)</sup></font></font>
<br><font face="Arial,Helvetica"><font size=-2>(as of April 1, 2000 and
April 3, 1999)</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="7%">
<div align=right><font face="Arial,Helvetica"><font size=-2>  1,164 </font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="7%">
<div align=right><font face="Arial,Helvetica"><font size=-2>  1,159 </font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="9%"> </td>

<td VALIGN=BOTTOM WIDTH="48%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="9%"> </td>

<td VALIGN=BOTTOM WIDTH="48%"><font face="Arial,Helvetica"><font size=-2>Average
managed credit card receivables (<i>millions</i>)</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="7%">
<div align=right><font face="Arial,Helvetica"><font size=-2>26,090</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="7%">
<div align=right><font face="Arial,Helvetica"><font size=-2>27,540</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>
</tr>
</TABLE></center>

<p>
<hr WIDTH="91%" SIZE=0>
<center><table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="600" >
<tr>
<td VALIGN=TOP HEIGHT="17">
<hr WIDTH="91%" SIZE=0>
<dir><sup><font face="Arial,Helvetica"><font size=-2>(1) 1999 Sears Card
share has been restated to conform with the current year calculation which
excludes HomeLife sales and now includes The Great Indoors sales and Sears
On-line sales.</font></font></sup>
<p><sup><font face="Arial,Helvetica"><font size=-2>(2) The April 3, 1999
average account balance was calculated using only the 50% of accounts that
had been converted to the new credit system ("TSYS"). Under TSYS, only
accounts with balances are included in the calculation of average account
balance. Therefore, the average account balance statistic is higher under
TSYS than it was under the Company's proprietary credit system.</font></font></sup>
<br> </dir>
</td>
</tr>
</TABLE></center>

<br> 
<br> 
<br> 
<center><table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>The percentage
of merchandise sales and services transacted with the Sears Card in the
first quarter of 2000 declined to 47.2% compared to 49.0% a year ago due
to greater consumer preference for the use of cash, checks and third party
credit cards. The payment rate during the first quarter of 2000 was also
higher than in the comparable prior year quarter, contributing to the decrease
in average managed receivables.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Credit selling
and administrative expense as a percentage of Credit revenues improved
260 basis points in the first quarter of 2000 from the comparable 1999
period. The improvement was primarily due to reductions in legal expenses
and lower collection costs. </font></font></td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-12-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"> </font></td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="47">
<center><font face="Arial,Helvetica"><font size=-1>ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF</font></font>
<br><font face="Arial,Helvetica"><font size=-1>OPERATIONS, FINANCIAL CONDITION
AND LIQUIDITY FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000 AND APRIL 3, 1999</font></font></center>
</td>
</tr>
</TABLE></center>

<hr SIZE=4>
<p><font face="Arial,Helvetica"><font size=-1>The domestic provision for
uncollectible accounts and related information is as follows:</font></font>
<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 WIDTH="631" >
<tr>
<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="49%"> </td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="22%">
<center><u><font face="Arial,Helvetica"><font size=-2>13 Weeks Ended</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="21%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="2%" HEIGHT="22"></td>

<td VALIGN=BOTTOM WIDTH="49%" HEIGHT="22"><i><font face="Arial,Helvetica"><font size=-2>(millions)</font></font></i></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="22">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="22"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="22">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="22"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="22"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="22"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="22"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=BOTTOM WIDTH="49%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%"> </td>

<td VALIGN=BOTTOM WIDTH="1%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="49%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="49%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Provision
for uncollectible accounts</font></font></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>235</font></font></div>
</td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>284</font></font></div>
</td>

<td VALIGN=TOP WIDTH="7%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="1%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="8%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="49%"><font face="Arial,Helvetica"><font size=-2>Net
credit charge-offs as a percentage of average managed credit card receivables<sup>(1)</sup></font></font></td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%">
<div align=right><br>
<font face="Arial,Helvetica"><font size=-2>5.69%</font></font></div>
</td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%">
<div align=right><br>
<font face="Arial,Helvetica"><font size=-2>7.08%</font></font></div>
</td>

<td VALIGN=TOP WIDTH="7%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>
</tr>
</TABLE></center>

<br> 
<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 WIDTH="624" >
<tr>
<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="35%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="11" WIDTH="50%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="35%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>Apr. 1, 2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>Jan. 1, 2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>Oct. 2, 1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial,Helvetica"><font size=-2>July 3, 1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="10%" HEIGHT="16"><u><font face="Arial,Helvetica"><font size=-2>Apr.
3, 1999</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="35%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Domestic
managed credit card </font></font>
<br><font face="Arial,Helvetica"><font size=-2>receivables  delinquency
rate <sup>(2)</sup></font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>7.20%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>7.58%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>7.57%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>7.29%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>8.07%</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="35%" HEIGHT="19"><font face="Arial,Helvetica"><font size=-2>Allowance
for uncollectible accounts </font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>725</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>725</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>773</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>850</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>932</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="2%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="35%" HEIGHT="23"><font face="Arial,Helvetica"><font size=-2>Allowance
% of domestic owned</font></font>
<br><font face="Arial,Helvetica"><font size=-2>credit card receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>4.48%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>4.26%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>4.78%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>5.27%</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>5.72%</font></font></div>
</td>
</tr>
</TABLE></center>

<center><table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="588" >
<tr>
<td VALIGN=TOP HEIGHT="34"><sup><font face="Arial,Helvetica"><font size=-2>(1)
The 1999 domestic managed net charge-off rate includes all of the accounts
in the domestic portfolio. Twelve percent of the accounts were converted
to the new TSYS account processing system in October 1998, 38% were converted
in March 1999 and 50% were converted in April 1999. Therefore, 50% had
not yet been converted as of April 3, 1999 and charge-offs on these accounts
occurred on the Company's proprietary (pre-TSYS) system. For a description
of the anticipated effects of the TSYS conversion, see Sears Quarterly
Report on Form 10-Q dated May 14, 1998.</font></font></sup>
<p><sup><font face="Arial,Helvetica"><font size=-2>(2) In mid-April 1999,
Sears completed the conversion to the TSYS accounting system. Therefore,
the April 1, 2000, January 1, 2000, October 2, 1999 and July 3, 1999 delinquency
rates reflect 100% of the domestic managed credit card accounts. At April
3, 1999, there were 50% of the managed credit card accounts on the TSYS
system and the delinquency rate at this date reflects only that portion
of the portfolio. Delinquency rates calculated on the Company's pre-TSYS
proprietary system are not comparable to delinquencies calculated on the
TSYS system due to differences in methodology. For a description of the
anticipated effects of the TSYS conversion, see Sears Quarterly Report
on Form 10-Q dated May 14, 1998.</font></font></sup></td>
</tr>
</TABLE></center>

<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP HEIGHT="92"><font face="Arial,Helvetica"><font size=-1>The
domestic provision for uncollectible accounts decreased 17.3% to $235 million
for the 13 weeks ended April 1, 2000 from the comparable prior year period.
The decrease was attributable to lower average owned credit card receivable
balances and improvement in portfolio quality as charge-offs declined from
the comparable prior year period and delinquencies have continued to show
favorable trends. There was no change to the allowance for uncollectible
accounts from year-end 1999 to the end of first quarter 2000.</font></font></td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-13-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<center><table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="47">
<center><font face="Arial,Helvetica"><font size=-1>ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF</font></font>
<br><font face="Arial,Helvetica"><font size=-1>OPERATIONS, FINANCIAL CONDITION
AND LIQUIDITY FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000 AND APRIL 3, 1999</font></font></center>
</td>
</tr>
</TABLE></center>

<hr SIZE=10 WIDTH="100%">
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Interest expense
is discussed within the Credit segment since the majority of the Company's
interest expense is allocated to the Credit segment. Interest expense is
combined with the funding costs on receivables sold through securitizations
to represent total funding costs as follows:</font></font></td>
</tr>
</TABLE>

<center><table BORDER=0 CELLSPACING=0 WIDTH="705" >
<tr>
<td VALIGN=TOP WIDTH="12%"> </td>

<td VALIGN=TOP WIDTH="44%"> </td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="18%">
<center><u><font face="Arial,Helvetica"><font size=-2>13 Weeks Ended</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM COLSPAN="5" WIDTH="20%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="12%" HEIGHT="22"></td>

<td VALIGN=TOP WIDTH="44%" HEIGHT="22"><i><font face="Arial,Helvetica"><font size=-2>(millions)</font></font></i></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%" HEIGHT="22">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="22"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%" HEIGHT="22">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="22"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%" HEIGHT="22"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="22"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%" HEIGHT="22"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="12%"> </td>

<td VALIGN=TOP WIDTH="44%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="8%">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="7%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%"> </td>

<td VALIGN=BOTTOM WIDTH="2%"> </td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="9%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="12%"> </td>

<td VALIGN=TOP WIDTH="44%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="6%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="2%"> </td>

<td VALIGN=TOP WIDTH="7%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="12%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="19"><font face="Arial,Helvetica"><font size=-2>Consolidated
interest expense<sup>(1)</sup></font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>316</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"> </td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="19">
<div align=right><font face="Arial,Helvetica"><font size=-2>334</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="19"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="19"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="19"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="17"><font face="Arial,Helvetica"><font size=-2>Funding
cost on securitized receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="17">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>103</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"> </td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="17"> </td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="17">
<div align=right><u><font face="Arial,Helvetica"><font size=-2>106</font></font></u></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="17"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="17"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="17"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="12%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="44%" HEIGHT="23"><font face="Arial,Helvetica"><font size=-2>Total
funding costs</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="6%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>419</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="23">
<div align=right><font face="Arial,Helvetica"><font size=-2>440</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="23"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="23"></td>

<td VALIGN=BOTTOM WIDTH="7%" HEIGHT="23"></td>
</tr>

<tr>
<td></td>

<td></td>

<td>
<hr WIDTH="100%"></td>

<td>
<hr WIDTH="100%"></td>

<td></td>

<td>
<hr WIDTH="100%"></td>

<td>
<hr WIDTH="100%"></td>

<td></td>

<td></td>

<td></td>

<td></td>

<td></td>

<td></td>
</tr>
</TABLE></center>

<p>
<hr WIDTH="91%" SIZE=0>
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><sup><font face="Arial,Helvetica"><font size=-2>(1)Credit segment
interest expense was $284 and $288 for the first quarter of 2000 and 1999,
respectively.</font></font></sup></center>
</td>
</tr>

<tr>
<td VALIGN=TOP>
<hr WIDTH="91%" SIZE=0></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Consolidated
interest expense decreased in the first quarter of 2000 compared to the
first quarter of 1999 due to lower on-book debt levels caused primarily
by a decrease in domestic owned credit card receivables and retained interest
assets. This decrease in interest expense was partially offset by a higher
funding rate in the first quarter of 2000 versus 1999. The funding cost
on securitized receivables was slightly lower in the first quarter of 2000
due to lower levels of average securitized balances.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><b><u><font face="Arial,Helvetica"><font size=-1>Corporate</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Corporate expenses
increased $15 million in the first quarter of 2000 compared to the first
quarter of 1999. The increase was primarily due to higher e-commerce costs
which were partially offset by reductions in other general corporate expenses.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><b><u><font face="Arial,Helvetica"><font size=-1>International</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>International
revenues for the first quarter of 2000 increased 19.0% from the same period
a year ago. Sears Canada enjoyed strong increases in retail revenues in
part due to the acquisition of Eatons as well as strong catalog and credit
revenue growth. </font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>International
gross margin as a percentage of International merchandise and services
revenues was flat in the first quarter of 2000 from the comparable prior
year quarter.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>International
selling and administrative expense as a percentage of total International
revenues increased 80 basis points in the first quarter of 2000 from the
first quarter of 1999. The increase was primarily due to employee related
payroll and benefit costs, certain Eaton's integration costs and increased
advertising expenses.</font></font></td>
</tr>
</TABLE>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-14-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="45">
<center><font face="Arial,Helvetica"><font size=-1>ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF</font></font>
<br><font face="Arial,Helvetica"><font size=-1>OPERATIONS, FINANCIAL CONDITION
AND LIQUIDITY FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000 AND APRIL 3, 1999</font></font></center>
</td>
</tr>
</TABLE>

<hr SIZE=4>
<br> 
<table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><b><u><font face="Arial,Helvetica"><font size=-1>Financial
Condition</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>The consolidated
owned net credit card receivables balances of $17.05 billion, $16.84 billion
and $18.03 billion as of April 1, 2000, April 3, 1999 and January 1, 2000,
respectively, exclude credit card receivables transferred to a securitization
Master Trust as follows:</font></font></td>
</tr>
</TABLE>

<br> 
<center><table BORDER=0 CELLSPACING=0 WIDTH="556" >
<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="1"><i><font face="Arial,Helvetica"><font size=-2>(millions)</font></font></i></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="1">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="1">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="1">
<center><font face="Arial,Helvetica"><font size=-2>Jan. 1,</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="1"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="1">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="1">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>

<td VALIGN=BOTTOM COLSPAN="2" WIDTH="11%" HEIGHT="1">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="1"><font face="Arial,Helvetica"><font size=-2>Domestic</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="1"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="1"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="1"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="1"><font face="Arial,Helvetica"><font size=-2>Managed
credit card receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="1"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1">
<div align=right><font face="Arial,Helvetica"><font size=-2>25,439</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="1">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1">
<div align=right><font face="Arial,Helvetica"><font size=-2>26,681</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="1">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="1">
<div align=right><font face="Arial,Helvetica"><font size=-2>26,754</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2>Securitized
balances sold</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>(6,301)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>(6,744)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="16"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16">
<div align=right><font face="Arial,Helvetica"><font size=-2>(6,579)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Retained
interest in transferred credit</font></font>
<br><font face="Arial,Helvetica"><font size=-2>card receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>(2,969)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>(3,633)</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>(3,144)</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Other
customer receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>   

<u>52</u></font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2> 
<u>142</u></font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>   

<u>37</u></font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Domestic
owned credit card receivables </font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>16,221</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>16,446</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>17,068</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>International
credit card receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>  <u>1,588</u></font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>  <u>1,362</u></font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>  <u>1,725</u></font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Consolidated
credit card receivables</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>17,809</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>17,808</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2>18,793</font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Less:
Allowance for uncollectible accounts</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2> 
<u>760</u></font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2> 
<u>965</u></font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"> </td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18">
<div align=right><font face="Arial,Helvetica"><font size=-2> 
<u>760</u></font></font></div>
</td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="52%" HEIGHT="26"><font face="Arial,Helvetica"><font size=-2>Credit
card receivables, net</font></font></td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26">
<div align=right><font face="Arial,Helvetica"><font size=-2>17,049</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26">
<div align=right><font face="Arial,Helvetica"><font size=-2>16,843</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26"> </td>

<td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26">
<div align=right><font face="Arial,Helvetica"><font size=-2>$</font></font></div>
</td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26">
<div align=right><font face="Arial,Helvetica"><font size=-2>18,033</font></font></div>
</td>
</tr>

<tr>
<td></td>

<td>
<hr WIDTH="100%"></td>

<td>
<hr WIDTH="100%"></td>

<td></td>

<td>
<hr WIDTH="100%"></td>

<td>
<hr WIDTH="100%"></td>

<td></td>

<td>
<hr WIDTH="100%"></td>

<td>
<hr WIDTH="100%"></td>
</tr>
</TABLE></center>

<center><table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Consolidated
credit card receivables in the first quarter of 2000 (before allowance
for uncollectible accounts) were flat with the first quarter of 1999. Domestic
managed credit card receivables decreased from the first quarter of 1999
primarily due to declining market share of sales on the Sears Card and
faster payment rates. The domestic decrease in owned credit card receivables
was offset by an increase in International credit card receivables. Compared
to 1999 year-end, consolidated credit card receivables (before allowance
for uncollectible accounts) decreased $984 million due to the normal seasonal
nature of the retail industry as well as the aforementioned declining market
share.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>As of April 1,
2000, consolidated merchandise inventories on the first-in, first-out (FIFO)
basis were $6.35 billion, compared with $5.86 billion at April 3, 1999
and $5.66 billion at January 1, 2000. The increase in inventory levels
from the first quarter of 1999 and January 1, 2000 is due to the build
up of apparel inventories due to the Easter shift to late April in the
current year, increased hardlines inventories to support revenue growth
and additional International inventory from the Eaton's acquisition in
December 1999 and continued Sears Canada revenue growth.</font></font></td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-15-</font></font>
<hr WIDTH="100%"></center>

<p><br>
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<br> 
<center><table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="45">
<center><font face="Arial,Helvetica"><font size=-1>ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF</font></font>
<br><font face="Arial,Helvetica"><font size=-1>OPERATIONS, FINANCIAL CONDITION
AND LIQUIDITY FOR THE</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000 AND APRIL 3, 1999</font></font></center>
</td>
</tr>
</TABLE></center>

<hr SIZE=4>
<br> 
<table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Total funding
for the Company at April 1, 2000 was $24.4 billion compared with $25.6
billion a year earlier. The decrease in funding is primarily due to a decrease
in short-term borrowings resulting from a decline in the domestic managed
credit card receivables portfolio. Total funding includes debt recorded
on the balance sheet and investor certificates related to credit card receivables
sold through securitizations as follows:</font></font></td>
</tr>
</TABLE>

<br> 
<center><table CELLSPACING=0 WIDTH="645" >
<tr>
<td VALIGN=TOP WIDTH="45%"> </td>

<td VALIGN=TOP COLSPAN="2" WIDTH="10%">
<center><font face="Arial,Helvetica"><font size=-2>April 1,</font></font></center>
</td>

<td VALIGN=TOP WIDTH="3%"> </td>

<td VALIGN=TOP COLSPAN="2" WIDTH="9%">
<center><font face="Arial,Helvetica"><font size=-2>April 3,</font></font></center>
</td>

<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP COLSPAN="2" WIDTH="5%"><font face="Arial,Helvetica"><font size=-2>January
1,</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="100%"><i><font face="Arial,Helvetica"><font size=-2>(millions)</font></font></i></td>

<td VALIGN=TOP COLSPAN="2" WIDTH="10%">
<center><u><font face="Arial,Helvetica"><font size=-2>2000</font></font></u></center>
</td>

<td VALIGN=TOP WIDTH="3%"> </td>

<td VALIGN=TOP COLSPAN="2" WIDTH="9%">
<center><u><font face="Arial,Helvetica"><font size=-2>1999</font></font></u></center>
</td>

<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP COLSPAN="2" WIDTH="10%"><font face="Arial,Helvetica"><font size=-2>   
<u>2000</u></font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="45%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="3%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="8%"> </td>

<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="1%"> </td>

<td VALIGN=TOP WIDTH="27%"> </td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="45%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Short-term
borrowings</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$ </font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2> 
3,027</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2> 
4,502</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2> 
2,989</font></font></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="45%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Long-term
debt and capitalized lease obligations</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>15,058</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>14,393</font></font></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>15,049</font></font></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="45%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Securitized
balances sold</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2> 
<u>6,301</u></font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2> 
<u>6,744</u></font></font></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2> 
<u>6,579</u></font></font></td>
</tr>

<tr>
<td VALIGN=BOTTOM WIDTH="45%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>Total
funding</font></font></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>24,386</font></font></td>

<td VALIGN=BOTTOM WIDTH="3%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>25,639</font></font></td>

<td VALIGN=BOTTOM WIDTH="4%" HEIGHT="18"></td>

<td VALIGN=BOTTOM WIDTH="1%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>$</font></font></td>

<td VALIGN=BOTTOM WIDTH="8%" HEIGHT="18"><font face="Arial,Helvetica"><font size=-2>24,617</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"><font face="Arial,Helvetica"><font size=-1>The
Company accesses a variety of capital markets to preserve flexibility and
diversify its funding sources. The primary funding sources utilized include
unsecured commercial paper, medium term notes, senior debt and securitization.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"><b><u><font face="Arial,Helvetica"><font size=-1>Liquidity</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"><font face="Arial,Helvetica"><font size=-1>Based
upon the cash flow expected to be generated from future operations and
the Company's ability to cost-effectively access multiple sources of funding,
the Company believes sufficient resources will be available to maintain
its planned level of operations, capital expenditures, dividends and share
repurchases in the foreseeable future.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"><b><u><font face="Arial,Helvetica"><font size=-1>Cautionary
Statement Regarding Forward-Looking Information</font></font></u></b></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"><font face="Arial,Helvetica"><font size=-1>Certain
statements made in this Report are forward-looking statements made in reliance
on the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. As such, they involve risks and uncertainties that could cause
actual results to differ materially. The Company's forward-looking statements
are based on assumptions about many important factors, including ongoing
competitive pressures in the retail industry, changes in consumer spending,
delinquency and charge-off trends in the credit card receivables portfolio,
general North American economic conditions (such as interest rates and
consumer confidence), anticipated cash flow, the Company's ability to cost-effectively
access multiple sources of funding, the ability of the Company to implement
its new marketing plan and cost reduction efforts and normal business uncertainty.
While the Company believes that its assumptions are reasonable, it cautions
that it is impossible to predict the impact of certain factors which could
cause actual results to differ materially from expected results.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="9"> </td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-16-</font></font>
<hr WIDTH="100%"></center>

<p><br>
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<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>PART II. OTHER INFORMATION</font></font></center>
</td>
</tr>
</TABLE></center>

<hr SIZE=4>
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<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font size=-1>Item 1. Legal
Proceedings</font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP><font face="Arial,Helvetica"><font color="#000000"><font size=-1>There
have been no material developments in any material legal proceedings since
the Company's disclosure in its Annual Report on Form 10-K for the fiscal
year ended January 1, 2000.</font></font></font></td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-17-</font></font>
<hr WIDTH="100%"></center>

<p><br>
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<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>PART II. OTHER INFORMATION</font></font></center>
</td>
</tr>
</TABLE></center>

<hr SIZE=4>
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<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%"><font face="Arial,Helvetica"><font size=-1>Item
6.</font></font></td>

<td VALIGN=TOP COLSPAN="2" WIDTH="92%"><font face="Arial,Helvetica"><font size=-1>Exhibits
and Reports on Form 8-K.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-2> </font></font></td>

<td VALIGN=TOP WIDTH="6%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>(a)</font></font></td>

<td VALIGN=TOP WIDTH="86%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>Exhibits. </font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="6%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="86%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>An
Exhibit Index has been filed as part of this Report on Page E-1.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="6%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="86%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="6%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>(b)</font></font></td>

<td VALIGN=TOP WIDTH="86%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>Reports
on Form 8-K.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="9%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="6%" HEIGHT="16"></td>

<td VALIGN=TOP WIDTH="86%" HEIGHT="16"></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>

<td VALIGN=TOP WIDTH="86%"><font face="Arial,Helvetica"><font size=-1>A
Current Report on Form 8-K was filed by the Registrant on January 4, 2000
to report, under Item 5, that the Registrant issued a press release announcing
a revised earnings outlook and to file, under Item 7, a copy of such press
release.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>

<td VALIGN=TOP WIDTH="86%"><font face="Arial,Helvetica"><font size=-1>A
Current Report on Form 8-K was filed by the Registrant on January 21, 2000
to report, under Item 5, that the Registrant issued a press release to
report its fourth quarter earnings and to file, under Item 7, a copy of
such press release.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"><font face="Arial,Helvetica"><font size=-1>.</font></font></td>
</tr>
</TABLE></center>

<center>
<p><font face="Arial,Helvetica"><font size=-1>-18-</font></font>
<hr WIDTH="100%"></center>

<p><br>
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<center><table CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>SIGNATURE</font></font></center>
</td>
</tr>
</TABLE></center>

<hr SIZE=4>
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<br> 
<br> 
<center><table BORDER=0 CELLSPACING=0 CELLPADDING=7 WIDTH="645" >
<tr>
<td VALIGN=TOP WIDTH="26%" HEIGHT="60"></td>

<td VALIGN=TOP COLSPAN="3" WIDTH="46%" HEIGHT="60"><font face="Arial,Helvetica"><font size=-1>Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.</font></font></td>

<td VALIGN=TOP WIDTH="28%" HEIGHT="60"></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="5"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="5"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2" WIDTH="38%" HEIGHT="30"></td>

<td VALIGN=TOP COLSPAN="2" WIDTH="34%" HEIGHT="30"><font face="Arial,Helvetica"><font size=-1>         
Sears, Roebuck and Co.</font></font>
<br><font face="Arial,Helvetica"><font size=-1>                 
(Registrant)</font></font></td>

<td VALIGN=TOP WIDTH="28%" HEIGHT="30"></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="5"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="5"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="2" ROWSPAN="2" WIDTH="38%" HEIGHT="53"><font face="Arial,Helvetica"><font size=-1>May
12, 2000</font></font></td>

<td VALIGN=TOP COLSPAN="3" WIDTH="62%" HEIGHT="53"><font face="Arial,Helvetica"><font size=-1>        
By /s/ Glenn R. Richter</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="19%" HEIGHT="53"><font face="Arial,Helvetica"><font size=-1>               
Glenn R. Richter </font></font>
<br><font face="Arial,Helvetica"><font size=-1>               
Vice President and Controller</font></font>
<p><font face="Arial,Helvetica"><font size=-1>               
(Principal Accounting Officer</font></font>
<br><font face="Arial,Helvetica"><font size=-1>                
and duly authorized officer of </font></font>
<br><font face="Arial,Helvetica"><font size=-1>                
Registrant)</font></font></td>

<td VALIGN=TOP COLSPAN="2" WIDTH="43%" HEIGHT="53"></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="5">
<center> <font face="Arial,Helvetica"><font size=-1>-19-</font></font>
<hr WIDTH="100%"></center>
</td>
</tr>
</TABLE></center>

<br> 
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<center><table CELLSPACING=0 CELLPADDING=7 WIDTH="663" >
<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>E-1</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP>
<center><font face="Arial,Helvetica"><font size=-1>EXHIBIT INDEX</font></font></center>
</td>
</tr>

<tr>
<td VALIGN=TOP> </td>
</tr>

<tr>
<td VALIGN=TOP HEIGHT="36">
<center><font face="Arial,Helvetica"><font size=-1>SEARS, ROEBUCK AND CO.</font></font>
<br><font face="Arial,Helvetica"><font size=-1>13 WEEKS ENDED APRIL 1,
2000</font></font></center>
</td>
</tr>
</TABLE></center>

<hr SIZE=4>
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<table CELLSPACING=0 CELLPADDING=7 WIDTH="663" >
<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"><u><font face="Arial,Helvetica"><font size=-1>Exhibit
No.</font></font></u></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"><font face="Arial,Helvetica"><font size=-1>3(a).</font></font></td>

<td VALIGN=TOP WIDTH="87%"><font face="Arial,Helvetica"><font size=-1>Restated
Certificate of Incorporation as in effect on May 13, 1996 (incorporated
by reference to Exhibit 3(a) to Registrant's Statement No. 333-8141).</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"><font face="Arial,Helvetica"><font size=-1> </font></font></td>

<td VALIGN=TOP WIDTH="9%"><font face="Arial,Helvetica"><font size=-1>3(b). </font></font></td>

<td VALIGN=TOP WIDTH="87%"><font face="Arial,Helvetica"><font size=-1>By-laws,
as amended to February 1, 2000 (incorporated by reference to Exhibit 3.(ii)
to Registrant's Annual Report on Form 10-K for the fiscal year ended January
1, 2000).</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="87%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"><font face="Arial,Helvetica"><font size=-1>4.</font></font></td>

<td VALIGN=TOP WIDTH="87%"><font face="Arial,Helvetica"><font size=-1>Registrant
hereby agrees to furnish the Commission, upon request, with the instruments
defining the rights of holders of each issue of long-term debt of the Registrant
and its consolidated subsidiaries.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="87%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"><font face="Arial,Helvetica"><font size=-1>*12(a).</font></font></td>

<td VALIGN=TOP WIDTH="87%"><font face="Arial,Helvetica"><font size=-1>Computation
of ratio of income to fixed charges for Sears and consolidated subsidiaries
for each of the five years ended January 1, 2000 and for the three- and
twelve-month periods ended April 1, 2000.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="87%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"><font face="Arial,Helvetica"><font size=-1>12(b).</font></font></td>

<td VALIGN=TOP WIDTH="87%"><font face="Arial,Helvetica"><font size=-1>Computation
of ratio of income to combined fixed charges and preferred share dividends
for Sears and consolidated subsidiaries (incorporated by reference to Exhibit
12.(b) to Registrant's Annual Report on Form 10-K for the fiscal year ended
January 1, 2000).</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="87%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"><font face="Arial,Helvetica"><font size=-1> </font></font></td>

<td VALIGN=TOP WIDTH="9%"><font face="Arial,Helvetica"><font size=-1>*15.</font></font></td>

<td VALIGN=TOP WIDTH="87%"><font face="Arial,Helvetica"><font size=-1>Acknowledgement
of awareness from Deloitte & Touche LLP, dated May 9, 2000, concerning
unaudited interim financial information.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"> </td>

<td VALIGN=TOP WIDTH="87%"> </td>
</tr>

<tr>
<td VALIGN=TOP WIDTH="4%"> </td>

<td VALIGN=TOP WIDTH="9%"><font face="Arial,Helvetica"><font size=-1>*27.</font></font></td>

<td VALIGN=TOP WIDTH="87%"><font face="Arial,Helvetica"><font size=-1>Financial
Data Schedule.</font></font></td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3"> </td>
</tr>

<tr>
<td VALIGN=TOP COLSPAN="3">
<dir>
<dir>
<dir><font face="Arial,Helvetica"><font size=-1>* Filed herewith.</font></font></dir>
</dir>
</dir>
</td>
</tr>
</TABLE>

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