**
  
UNITED STATESSECURITIES AND EXCHANGECOMMISSION 
Washington, D.C. 20549  FORM 10-Q    X QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 FOR THEQUARTERLY PERIOD ENDED MARCH31, 2001             OR         TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE    SECURITIES EXCHANGEACT OF 1934 
Commission file number 1-416   
SEARS, ROEBUCK AND CO.(Exact name of registrantas specified in its charter)New York(State of Incorporation)36-1750680(I.R.S. Employer IdentificationNo.)  3333 Beverly Road, HoffmanEstates, Illinois(Address of principal executiveoffices)60179(Zip Code)Registrant's telephonenumber, including area code: (847) 286-2500

Registrant [1] has filedall reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months and [2] has been subjectto such filing requirements for the past 90 days.Yes XNo As of April 28, 2001,the Registrant had 328,510,790 common shares, $.75 par value, outstanding.
  
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SEARS, ROEBUCK AND CO.
INDEX TO QUARTERLY REPORTON FORM 10-Q13 WEEKS ENDED MARCH 31,2001
    PARTI - FINANCIAL INFORMATIONPageItem 1.FinancialStatements  CondensedConsolidated Statements of Income (Unaudited) 13 Weeks Ended March 31,2001 and April 1, 2000 1 CondensedConsolidated Balance Sheets March 31, 2001 (Unaudited),April 1, 2000 (Unaudited)and December 30, 20002 CondensedConsolidated Statements of Cash Flows (Unaudited) 13 Weeks Ended March 31,2001 and April 1, 2000 3 Notesto Condensed Consolidated Financial Statements (Unaudited)4 IndependentAccountants' Review Report10   Item 2.Management'sDiscussion and Analysis of Operations, FinancialConditionand Liquidity11   
PART II - OTHER INFORMATIONItem 1.LegalProceedings20Item 6.Exhibitsand Reports on Form 8-K21    
<PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEARS, ROEBUCK AND CO.CONDENSED CONSOLIDATED STATEMENTSOF INCOME(Unaudited)
*(millions,except per share data)*13 Weeks EndedMarch 31,April 1,20012000Merchandisesales and services$7,754$7,738Creditand financial products revenues1,1031,187Totalrevenues8,8578,925Costsand expensesCostof sales, buying and occupancy5,8365,783Sellingand administrative2,0311,989Depreciationand amortization215212Provisionfor uncollectible accounts191245Interest312316Totalcosts and expenses8,5858,545Operatingincome272380Otherincome 11Incomebefore income taxes and minority interest 273381Incometaxes(98)(140)Minorityinterest1(6)Netincome$176$235Earningsper share: Basic$0.53$0.65Diluted$0.53$0.65Cashdividends declared per share$0.23$0.23Averagecommon and common equivalent shares outstanding333.5360.0Seeaccompanying notes.
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SEARS, ROEBUCK AND CO.
CONDENSED CONSOLIDATED BALANCESHEETS
   *(millions)*(Unaudited)   March 31,April 1,December 30, 2001 2000 2000AssetsCurrentassets        Cashand cash equivalents$510 $449 $842Retainedinterest in transferred credit card receivables 3,863   3,036  3,105Creditcard receivables, net 14,730  17,049  17,317Otherreceivables 459  299  506Merchandiseinventories 6,019  5,738  5,618Prepaidexpenses and deferred charges 623553486Deferredincome taxes 981  716  920Totalcurrent assets 27,185  27,840  28,794         Propertyand equipment, net 6,499  6,361  6,653Deferredincome taxes 255  302  174Otherassets 967  1,463  1,278   Totalassets$34,906 $35,966 $36,899            Liabilities        Currentliabilities        Short-termborrowings$3,412 $3,027 $4,280Currentportion of long-term debt and capitalized lease
obligations  2,313  2,444  2,560Accountspayable and other liabilities 6,311  6,443  7,336Unearnedrevenues 1,079  1,007  1,058Othertaxes 446  420  562   Totalcurrent liabilities 13,561  13,341  15,796         Long-termdebt and capitalized lease obligations 11,623  12,614  11,020Post-retirementbenefits 1,913  2,135  1,951Minorityinterest and other liabilities 1,362  1,362  1,363   Totalliabilities 28,459  29,452  30,130         Commitmentsand Contingent Liabilities                 Shareholders'EquityCommonshares 323  323  323Capitalin excess of par value 3,528  3,549  3,538Retainedearnings  7,079  6,105  6,979Treasurystock - at cost (3,862)  (3,053)  (3,726)DeferredESOP expense (85)  (126)  (96)Accumulatedother comprehensive loss (536)  (284)  (249)   Totalshareholders' equity 6,447  6,514  6,769      Totalliabilities and shareholders' equity$34,906 $35,966 $36,899            Totalcommon shares outstanding  329.8  352.6  333.2                   Seeaccompanying notes.           
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SEARS, ROEBUCK AND CO.
CONDENSED CONSOLIDATED STATEMENTSOF CASH FLOWS
(Unaudited)
*(millions)*13 Weeks EndedMarch 31,April 1,20012000  CASHFLOWS FROM OPERATING ACTIVITIES:           NetIncome$176 $235Adjustmentsto reconcile net income to net cash      providedby operating activities:     Depreciation, amortizationand other non-cash items224  228Provision for uncollectibleaccounts 191  245Gain on sales of propertyand investments (1)  (1)Income tax benefit on nonqualifiedstock options41Change in (net of acquisitions):     Deferred income taxes 34  62Retained interest in transferredcredit card receivables (759)  175Credit card receivables 2,314  758Merchandise inventories (434)  (663)Other operating assets (107)  65Other operating liabilities (1,049)  (768)  Net cash provided by operatingactivities 593  337            CASHFLOWS FROM INVESTING ACTIVITIES:           Acquisitionof businesses, net of cash acquired --  (1)Proceedsfrom sales of property and investments 12  11Purchasesof property and equipment (249)  (158)Purchasesof long-term investments (42)  (5)  Netcash used in investing activities (279)  (153)            CASHFLOWS FROM FINANCING ACTIVITIES:           Proceedsfrom long-term debt 1,030  167Repaymentsof long-term debt (599)  (173)(Decrease)/increasein short term borrowings, primarily    90 days orless(853)35Repaymentsof ESOP note receivable 8  77Commonshares purchased (168)  (509)Commonshares issued for employee stock plans 17  20Dividendspaid to shareholders (77)  (82)  Netcash used in financing activities (642)  (465)      Effectof exchange rate on cash and invested cash (4)  1        Netdecrease in cash and cash equivalents  (332)  (280)      Balanceat beginning of year 842  729        Balanceat end of period$510 $449              Seeaccompanying notes.      
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SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS(Unaudited)

1. Condensed ConsolidatedFinancial Statements The Condensed ConsolidatedBalance Sheets as of March 31, 2001 and April 1, 2000, the related CondensedConsolidated Statements of Income for the 13 weeks ended March 31, 2001and April 1, 2000, and the Condensed Consolidated Statements of Cash Flowsfor the 13 weeks ended March 31, 2001 and April 1, 2000, are unaudited.The interim financial statements reflect all adjustments (consisting onlyof 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 conjunctionwith the consolidated financial statements and notes thereto included inthe Sears, Roebuck and Co. (the "Company" or "Sears") 2000 Annual Reportto Shareholders and Annual Report on Form 10-K. The results of operationsfor the interim periods should not be considered indicative of resultsto be expected for the full year.
Certain reclassificationshave been made to the 2000 financial statements to conform with the currentyear presentation.2. Shareholders' Equity andDividend RestrictionsUnder terms of indenturesentered into in 1981 and thereafter, Sears cannot take specified actions,including the declaration of cash dividends, which would cause its unencumberedassets, as defined, to fall below 150% of its liabilities, as defined.At March 31, 2001, approximately $4.4 billion could be paid in dividendsto shareholders under the most restrictive indentures.
On August 9, 2000, the Boardof Directors approved a common share repurchase program to acquire $1.0billion of the Company's common shares by December 31, 2002. During thefirst quarter of 2001, the Company repurchased 4.3 million shares at acost of $168 million under this program. The shares are purchased on theopen market or through privately negotiated transactions. As of March 31,2001, approximately 10.4 million common shares have been acquired underthis repurchase program at a cost of approximately $366 million and $634million is available for future repurchases.  
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SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS(Unaudited)
3. Earnings Per Share
The following table setsforth the computations of basic and diluted earnings per share:*(millions,except per share data)*13 Weeks EndedMarch 31,April 1,20012000Basic:Netincome$176$235Averageshares outstanding331.8359.2*Earningsper share - basic**$**0.53**$**0.65*Diluted:Netincome$176$235Averageshares outstanding331.8359.2Dilutiveeffect of stock options1.70.8Averageshares and equivalent shares outstanding333.5360.0*Earningsper share - diluted**$**0.53**$**0.65*   In each period, certainoutstanding options were excluded from the computation of diluted earningsper share because they would have been antidilutive. As of March 31, 2001,options to purchase 16.8 million shares of stock at prices ranging from$37 to $64 per share were excluded from the 13 week 2001 calculation. Asof April 1, 2000, options to purchase 17.8 million shares of stock at pricesranging from $31 to $64 per share were excluded from the 13 week 2000 calculation.4. Comprehensive Income (Loss)and Accumulated Other Comprehensive Loss The following table showsthe computation of comprehensive income (loss):13 Weeks Ended*(millions)*March 31,April 1,20012000Netincome$176$235Othercomprehensive income (loss):Aftertax cumulative effect of a change in accounting for derivatives (262)--Derivativelosses reclassified into interest expense from OCI4--Changein fair value of derivatives(4)--Unrealizedgain (loss) on investments2(4)Foreigncurrency translation adjustments(27)7Totalother comprehensive income (loss)(287)3Totalcomprehensive income (loss)$(111)$238
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SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS
(Unaudited)
The following table displaysthe components of accumulated other comprehensive loss:March 31,April 1,December 30,200120002000Accumulatedderivative loss$(262)$--$--Foreigncurrency translation adjustments(145)(104)(118)Minimumpension liability (1)(132)(195)(132)Unrealizedgain on investments3151Accumulatedother comprehensive loss$(536)$(284)$(249)  
(1) Minimum pensionliability is calculated annually in the fourth quarter. Changes theretoare recorded at that time.

5. Segment DisclosuresThe following tables setforth revenue, expenses, operating income (loss) and total assets by segment:
For the 13 weeks ended March31, 2001 *(millions)*Retail and Related Services Credit and FinancialProducts Corporate andOther Sears Canada Consolidated     Total Revenues$6,806 $1,025 $84 $942 $8,857Costs andexpenses              Costof sales, buying and occupancy 5,153  --  37  646  5,836Sellingand administrative 1,530  155  100  246  2,031Depreciationand amortization 176  5  14  20  215Provisionfor uncollectible accounts --  181  --  10  191Interest 3  279  --  30  312Totalcosts and expenses6,8626201519528,585Operatingincome (loss)$(56)$405$(67)$(10)$272Totalassets$11,440$17,918$2,171$3,377$34,906  
       For the 13 weeks ended April 1, 2000 *(millions)*Retail and Related Services Credit and FinancialProducts CorporateandOther Sears Canada ConsolidatedTotalrevenues$6,826$1,109$72$918$8,925Costsand expenses              Costsof sales, buying and occupancy 5,121  --  33  629  5,783Sellingand administrative 1,502  170  100  217  1,989Depreciationand amortization 179  4  12  17  212Provisionfor uncollectible accounts --  235  --  10  245Interest 3  286  --  27  316Totalcosts and expenses6,8056951459008,545Operatingincome (loss)$21$414$(73)$18$380Totalassets$11,186$19,524$1,928$3,328$35,966  
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SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS
(Unaudited)
 Effective in the first quarterof 2001, the Company modified its externally reported segments to reflectthe Company's integrated Retail and Related Services strategy and to alignexternally reported business segments with changes in the Company's internalstructure. Segmented financial data for the 13 weeks ended April 1, 2000has been restated to reflect the new segment reporting structure.6. Effect of New AccountingStandardsIn September 2000, theFASB issued Statement of Financial Accounting Standards ("SFAS") No. 140,"Accounting for Transfers and Servicing of Financial Assets and Extinguishmentsof Liabilities". The guidance in SFAS No. 140 supercedes SFAS No. 125.Under SFAS No. 125, the Company's securitization transactions were accountedfor as sales of receivables. SFAS No. 140 establishes new conditions fora securitization to be accounted for as a sale of receivables. Specifically,SFAS No. 140 changes the requirements for an entity to be a qualifyingspecial purpose entity and modifies under what conditions a transferorhas retained effective control over transferred assets. The updated rulesare effective for transfers occurring after March 31, 2001.
The Company disclosed inits 2000 Annual Report that unless it modified its existing securitizationstructure, SFAS No. 140 would result in the reinstatement of previouslysold accounts receivable and the establishment of a liability for securedborrowings. The Company determined that modifying the securitization structurewould place undue limitations on its ability to effectively manage itsportfolio of credit card receivables and the related market and interestrate risks.
The addition of previouslyuncommitted assets in April 2001 required the Company to consolidate thesecuritization structure for financial reporting purposes on a prospectivebasis. This resulted in approximately $8 billion of previously off-booksecuritized credit card receivables and $8 billion of related debt beingrecognized by the Company. In addition, approximately $4 billion of assetswere reclassified to credit card receivables from retained interest intransferred credit card receivables. All future securitization activitywill be accounted for as secured borrowings. This accounting will be reflectedin the Company's second quarter balance sheet.
In connection with the consolidationof the securitization structure, the Company's second quarter results willinclude a one-time, non-cash, pre-tax charge of approximately $520 millionto establish an allowance for uncollectible accounts related to the $8billion of previously sold receivables and the $4 billion of receivablesthat were previously accounted for as securities (retained interest).  
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              SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS
(Unaudited)

7. Implementation of NewAccounting StandardsEffective for the firstquarter of 2001, the Company adopted SFAS No. 133, "Accounting for DerivativeInstruments and Hedging Activities", as amended by SFAS No. 138, "Accountingfor Certain Derivative Instruments and Certain Hedging Activities". SFASNo. 133 sets forth accounting and reporting standards for derivative instrumentsand hedging activities, requiring the recognition of all derivative instruments(including certain derivatives embedded in other contracts) as either assetsor liabilities in the balance sheet measured at fair value. SFAS No. 133also establishes criteria for a derivative to qualify as a hedge for accountingpurposes.
The adoption of SFAS No.133 did not impact earnings. The after-tax cumulative effect of this changein accounting principle reduced other comprehensive income (OCI) by $262million. In accordance with the transition requirements of SFAS No.133,deferred losses from previously terminated interest rate swaps were reclassifiedfrom Other assets to OCI ($389 million, before tax of $161 million), andan existing cash flow hedging relationship was reflected on the balancesheet ($56 million, before tax of $22 million). Consistent with prior years,approximately $25 million (before tax of $9 million) of the deferred losseson the previously terminated swaps will be amortized into earnings during2001.
The only significant derivativeinstruments the Company holds are interest rate swaps, which the Companyuses as a cost effective means to manage the interest rate risk associatedwith its borrowings and to manage the Company's allocation of fixed andvariable-rate debt. As of March 31, 2001, the Company had a swap with afair value of $10 million, recorded within other long-term liabilities,designated and qualifying as a fair value hedge of certain of the Company'sfixed-rate debt instruments. As the terms of the swap match those of theunderlying hedged debt, the change in fair value of this swap was offsetby a corresponding change in fair value recorded on the hedged debt, andresulted in no net earnings impact.
As of March 31, 2001, theCompany also had a swap with a negative fair value of $63 million, recordedwithin OCI and other long-term liabilities, designated and qualifying asa cash flow hedge of forecasted cash flows associated with certain of theCompany's commercial paper borrowings. This swap hedges a series of forecastedtransactions through its maturity in 2017. Any hedge ineffectiveness isrecorded in current-period earnings as a component of interest expense.The change in fair value of this swap had no material impact on current-periodinterest expense or earnings.  
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              SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS
(Unaudited)
   
8. Store Closures In December 2000, the Companyannounced the planned closure of 89 under-performing stores consistingof 53 NTB, 30 Hardware and four Full-line stores (two include Sears AutoCenters). In connection with the store closings, the Company recognizeda special pretax charge of $150 million in the fourth quarter of 2000 whichrelated to asset impairments, goodwill impairments, lease and holding costs,inventory liquidation losses and severance costs. 
Following is a summary ofthe activity in the reserves established for the 2000 store closures:Beginning Reserve Balance12/30/00Other AdjustmentsCash PaymentsEnding Reserve Balance3/31/01Leaseand holding costs$57$3$(4)$56Inventoryliquidation losses14(14)----SeveranceCosts3--(3)--$74$(11)$(7)$56As of March 31, 2001, 87stores have been closed and approximately 1,000 employees have been terminated.Additional immaterial severance will be incurred as the remaining storesare closed.9. Commitments and ContingentLiabilitiesThe Company is subjectto various legal and governmental proceedings, many involving routine litigationincidental to the business. Other matters contain allegations that arenon-routine and involve compensatory, punitive or treble damage claimsin very large amounts, as well as other types of relief. The consequencesof these matters are not presently determinable but, in the opinion ofmanagement of the Company after consulting with legal counsel, the ultimateliability in excess of reserves currently recorded is not expected to havea material effect on annual results of operations, financial position,liquidity or capital resources of the Company.
The Company leases certainstores, office facilities, warehouses, computers and office equipment forwhich it has contractual obligations that span several years. Additionally,the Company has outstanding guarantees for certain store leases and otherindebtedness in conjunction with the sale of the Homelife Furniture businessin 1998. The Company also has secured interests in certain Homelife assets.The possibility of the Company having to honor its contingent obligationsis dependent upon the future operating results of Homelife. Should a reservebe required, it would be recorded at the time the obligation is determinedto be probable.  -9-      
SEARS, ROEBUCK AND CO.
INDEPENDENT ACCOUNTANTS'REVIEW REPORT
   
To the Shareholders and Boardof Directorsof Sears, Roebuck and Co.
We have reviewed the accompanyingCondensed Consolidated Balance Sheets of Sears, Roebuck and Co. as of March31, 2001 and April 1, 2000, and the related Condensed Consolidated Statementsof Income and of Cash Flows for the 13 week periods then ended. These condensedconsolidated financial statements are the responsibility of the Company'smanagement.
We conducted our reviewsin accordance with standards established by the American Institute of CertifiedPublic Accountants. A review of interim financial information consistsprincipally of applying analytical procedures to financial data and ofmaking inquiries of persons responsible for financial and accounting matters.It is substantially less in scope than an audit conducted in accordancewith auditing standards generally accepted in the United States of America,the objective of which is the expression of an opinion regarding the financialstatements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, weare not aware of any material modifications that should be made to suchcondensed consolidated financial statements for them to be in conformitywith accounting principles generally accepted in the United States of America.
We have previously audited,in accordance with auditing standards generally accepted in the UnitedStates of America, the Consolidated Balance Sheet of Sears, Roebuck andCo. as of December 30, 2000, and the related Consolidated Statements ofIncome, Shareholders' Equity, and Cash Flows for the year then ended (notpresented herein); and in our report dated February 12, 2001, we expressedan unqualified opinion on those consolidated financial statements. In ouropinion, the information set forth in the accompanying Condensed ConsolidatedBalance Sheet as of December 30, 2000, is fairly stated, in all materialrespects, in relation to the Consolidated Balance Sheet from which it hasbeen derived.  
Deloitte & Touche LLP
Chicago, IllinoisMay 4, 2001  
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SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000

**Analysis of Operations**
Operating results for theCompany are reported for three domestic segments and one internationalsegment. The domestic segments include the Company's operations in theUnited States and Puerto Rico. The Company's segments are defined as follows: -  
*Retailand Related Services* consisting of:-  Full-line stores (includes onlinerevenues of sears.com)  
-  Specialty stores (Hardware stores,Dealer stores, Commercial Sales, The Great Indoors, Automotive and Outletstores)  
-  Direct to Customer (catalog,proprietary clubs and services and online infrastructure)  
-  Sears Repair Services (Servicecontracts, product installation and repair, heating ventilation and airconditioning services)  
 
  
 -  
*Corporateand Other* consisting of:-  Administrative activities ofa holding company nature, the costs of which are not allocated to the Company'sbusinesses  
-  Home Improvement Services includingSears Termite and Pest Control  
-  
*SearsCanada* consisting of retail, services, credit, corporate and On-lineoperations conducted in Canada through Sears Canada, Inc. ("Sears Canada"),a 54.4% owned consolidated subsidiary-  
*Creditand Financial Products* includes domestic credit card operationsand related financial product offerings (credit protection and insuranceproducts).
For the 13 weeks ended March31, 2001, net income was $176 million or $0.53 per share, as compared to$235 million or $0.65 per share for the comparable 2000 period. The decreasein earnings per share is primarily due to decreased operating income partiallyoffset by a reduction in shares outstanding due to the Company's sharerepurchase program. First quarter 2001 net income includes after tax securitizationincome of $26 million or $0.08 per share as compared with $12 million or$0.03 per share in first quarter 2000. Effective in the second quarterof 2001, the Company will change its accounting for securitizations andwill cease recording securitization income.
Operating income (loss) bysegment was as follows:*(millions)*As Reported13 Weeks EndedExcluding SecuritizationIncome13 Weeks EndedMarch 31,April 1,March 31,April 1,2001200020012000Retailand Related Services$(56)$21$(56)$21Creditand Financial Products405414365395Corporateand Other(67)(73)(67)(73)SearsCanada(10)18(10)18Totaloperating income$272$380$232$361
The Company's consolidatedeffective tax rate for the 13 weeks ended March 31, 2001 was 35.9% comparedto 36.7% in the comparable prior year period. The decrease in the consolidatedeffective tax rate is primarily due to a lower effective tax rate on SearsCanada.

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SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000

Due to holiday buying patterns,merchandise sales are traditionally higher in the fourth quarter than otherquarterly periods and a disproportionate share of operating income is typicallyearned in the fourth quarter. This business seasonality results in performancefor the 13 weeks ended March 31, 2001 which is not necessarily indicativeof performance for the balance of the year. The Company makes availableby 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. 
**Retail and RelatedServices**
Retail and Related Servicesrevenues decreased 0.3% to $6.81 billion for the 13 weeks ended March 31,2001, from the comparable 2000 period. Retail and Related Services revenuesand related information are as follows: *(millions,except number of stores)*13 Weeks EndedMarch 31,April 1,20012000ChangeRevenues:Full-linestores (includes sears.com)$4,895$4,943-1.0%Specialtystores1,3931,3701.7%RepairServices and Direct to Customer5185131.0%TotalRetail and Related Services revenues$6,806$6,826-0.3%Numberof Full-line stores860858Numberof Specialty stores2,1272,167TotalRetail stores2,9873,025Comparablestore salespercentage increase/decrease-1.5%2.7%   
For the 13 week period, Full-linestores revenues decreased 1.0% over the first quarter of 2000.Hardlines revenues increased1.0% in the first quarter of 2001. Revenue increases in appliances andelectronics were partially offset by declines in home office and home improvementrevenues.

Softlines revenues decreased4.9% in the first quarter of 2001. Revenue increases in home fashions andfine jewelry were more than offset by decreases among the other softlinescategories.

For the 13 week periodended March 31, 2001, Specialty stores revenues increased 1.7% from thecomparable 2000 period primarily due to revenue increases in The GreatIndoors, Hardware stores and Dealer stores, which were partially offsetby revenue declines in Commercial Sales and Automotive stores. Sears Dealerstores revenues benefited from 32 net new store openings. The Great Indoorsalso produced comparable store revenue gains over the 2000 period and added2 new stores. Automotive stores revenues decreased due to 55 net storeclosings along with a slight comparable store sales decline.  -12-      
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000
   
Revenue increases in SearsRepair Services were partially offset by a decline in Direct to Customerrevenue.
Retail and Related Servicesgross margin as a percentage of Retail and Related Services revenues forthe first quarter of 2001 declined to 24.3%, a decrease of 70 basis pointsfrom the first quarter of 2000. The decline is primarily due to increasedpromotional markdown activity, particularly across the softlines businesses,as well as a balance of sale shift to hardlines products.
Retail and Related Servicesselling and administrative expense as a percentage of Retail and RelatedServices revenues for the first quarter of 2001 increased 50 basis pointsfrom the first quarter of 2000. The increase was primarily due to lowerthan anticipated revenues and increased investments in The Great Indoors.
Retail and Related Servicesdepreciation and amortization expense for the first quarter decreased 1.7%or $3 million from the comparable 2000 period.
Operating income declinedby $77 million primarily because of lower than anticipated revenues, pressureson margins and expenses, and investment in The Great Indoors. 
**Credit and FinancialProducts**
Credit and Financial Productsrevenues decreased 7.6% to $1.03 billion for the 13 weeks ended March 31,2001 from the comparable prior year period. The decrease in revenues inthe first quarter was primarily attributable to lower managed portfolioyields. The managed portfolio yield decline partly reflects promotionalintroductory rates and the lower annual percentage rate for the Sears GoldMasterCard product launched in the second half of 2000, as well as lowerlate fee revenue and increased use of zero percent financing. The Companyplans to change its terms on certain Sears Card and SearsCharge Plus accountseffective in the third quarter of 2001 and anticipates that the new termswill enhance portfolio yields. A summary of Credit information (for themanaged portfolio) is as follows:  13 Weeks EndedMarch 31,April 1, 2001 2000        Searscredit cards as a % of sales 47.1%  47.1%Averageaccount balance(as of March 31, 2001 andApril 1, 2000)$1,161 $1,164      Averagemanaged credit card receivables (*millions*)$26,340 $26,094  
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SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000

Credit and Financial Productsselling and administrative expense as a percentage of Credit and FinancialProducts revenues improved to 15.1%, a decrease of 20 basis points in thefirst quarter of 2001 from the comparable 2000 period. The improvementwas primarily due to lower marketing expenses and higher zero percent financingreimbursement from Retail and Related Services, partially offset by increasesin payroll and benefits and communication expenses.
The domestic provision foruncollectible accounts and related information is as follows:  13 Weeks Ended*(millions)*March 31,April 1, 2001 2000        Provisionfor uncollectible accounts$181$235Netcredit charge-offs as a percentage ofAverage managed credit cardreceivables (1) 5.07%  5.69%   20012000March 31,Dec. 30,Sep. 30,July 1,Apr. 1,2001
2000
2000
2000
2000
Domesticmanaged credit card receivables - delinquencyrate (1)7.50%7.56%7.47%7.15%7.20%Allowancefor uncollectible accounts $567$649$624$725$725Allowance% of domestic owned credit card receivables4.14%4.03%4.18%4.46%4.48%(1) The net charge-offand delinquency rates are affected by seasonality, periodic sales of uncollectibleaccounts    to third parties, bankruptcy trends and other general economic factors.The domestic provision for uncollectibleaccounts decreased by $54 million to $181 million for the 13 weeks endedMarch 31, 2001 from the comparable prior year period. The decrease in theprovision primarily reflects the continued strength of the managed creditportfolio. The domestic allowance for uncollectible accounts decreasedto $567 million from $649 million at year-end 2000. The $82 million reductionin the allowance since year-end represents the allowance on $2.0 billionof receivables transferred to the Master Trust in the first quarter of2001.  
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SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000

Interest expense is discussedwithin the Credit and Financial Products segment since the majority ofthe Company's interest expense is allocated to this segment. Interest expenseis combined with the funding costs on receivables sold through securitizationsto represent total funding costs as follows: 13 Weeks Ended  March 31, April 1, 2001 2000Consolidatedinterest expense (1)$312$316Fundingcost on securitized receivables124103Totalfunding costs$436$419
(1) Creditand Financial Products segment interest expense was $279 and $286 for thefirst quarter of 2001 and 2000, respectively. 
Total funding costs increasedby $17 million primarily due to an increase in total funding levels. Theaverage funding rate was relatively flat with last year's quarter. Thefunding cost on securitized receivables was higher in the first quarterof 2001 primarily due to an increase in average securitized receivablessold versus 2000.
Operating income from Creditand Financial Products declined by $9 million with lower revenues offsettingfavorable expense comparisons to last year. Operating income includes $40million of securitization income or 8 cents per share as compared with$19 million of securitization income or 3 cents per share in last year'sfirst quarter.
As discussed in the notesto the financial statements, the Company will adopt SFAS No. 140 in April2001. Under the provisions of SFAS No. 140, the Company's securitizationtransactions will be accounted for as secured borrowings. In addition,previously securitized receivables will be reinstated on the balance sheetas credit card receivables. The Company's second quarter results will includea one-time, non-cash, pre-tax charge of approximately $520 million to establishan allowance for uncollectible accounts related to previously securitizedreceivables. Also, future quarters will no longer include securitizationincome. The following table shows securitization income recorded in priorquarters:   Operating Income Earningsper ShareQuarter1, 2000$19$0.03Quarter2, 2000370.06Quarter3, 2000260.05Quarter4, 2000460.09FullYear 2000$128$0.24Quarter1, 2001$40$0.08    
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ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000
   
The impact of securitizationon the Credit and Financial Products income statement is shown in the followingtable:  As ReportedSecuritization ImpactExcluding Securitization13 Weeks Ended13 Weeks Ended13 Weeks EndedMarch 31,April 1,March 31,April 1,March 31,April 1,200120002001200020012000TotalRevenues$1,025$1,109$275$252$1,300$1,361Sellingand administrative1551703932194202Depreciationand amortization54----54Provisionfor uncollectible accounts181235153136334371Interest279286123103402389Totalcosts and expenses 620 695 315 271 935 966Operatingincome$405$414$(40)$(19)$365$395  
Prior to the adoption ofSFAS No. 140, securitization activity had been projected to add approximately$0.24 to 2001 full-year earnings per share. In 2000, securitization incomealso added $0.24 to earnings per share.  
**Corporate and Other**
Revenues from the home servicesbusinesses included in the Corporate and Other segment increased by almost17% to $84 million, while operating income improved $6 million. Corporateheadquarters spending was even with the prior year's first quarter.  
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ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000
   
**Sears Canada**
Sears Canada revenues forthe first quarter of 2001 increased 2.6% from the same period a year ago.This primarily reflects new store openings in 2000, as comparable storesales decreased 0.6%.
Sears Canada gross marginas a percentage of Canada merchandise and services revenues increased 10basis points in the first quarter of 2001 from the comparable prior yearquarter. This favorability is primarily due to the absence of Eatons integrationexpenses in 2001. Increased markdown activity in 2001 partially offsetthe favorable prior year comparison.
Sears Canada selling andadministrative expense as a percentage of total Canada revenues increased250 basis points in the first quarter of 2001 from the first quarter of2000. SG&A as a percent of revenues increased primarily due to costsassociated with re-opened stores acquired from Eaton's.
Operating income declinedby $28 million primarily due to increased selling and administrative expensesto support stores opened in 2000.  
**Financial Condition**
The consolidated owned netcredit card receivables balances of $14.73 billion, $17.05 billion and$17.32 billion as of March 31, 2001, April 1, 2000 and December 30, 2000,respectively, exclude domestic credit card receivables transferred to asecuritization Master Trust as follows:  *(millions)*March 31,April 1,December 30,200120002000DomesticManagedcredit card receivables$25,699$25,451$27,001Securitizedbalances sold(8,143)(6,301)(7,834)Retainedinterest in transferred creditcard receivables (1)(3,851)(2,981)(3,051)Othercustomer receivables835259Domesticowned credit card receivables13,78816,22116,175Internationalcredit card receivables1,5431,5881,828Consolidatedon-book credit card receivables15,33117,80918,003Less:Allowance for uncollectible accounts601760686Creditcard receivables, net$14,730$17,049$17,317 (1) The retained interestamounts as of March 31, 2001, April 1, 2000 and December 30, 2000, areshown before reserves of $142 million, $12 million and $82 million, respectively,and interest only strip balances of $154 million, $66 million and $136million, respectively.  
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ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000
   
Consolidated on-book creditcard receivables in the first quarter of 2001 decreased $2.5 billion fromthe first quarter of 2000 primarily due to increases in domestic securitization.Domestic managed credit card receivables are slightly higher than the firstquarter of 2000 as growth from the Company's new Gold MasterCard productwas largely offset by lower Sears Card receivables. The Gold MasterCardproduct, which was launched in the second quarter of 2000, had $1.4 billionin outstanding balances at March 31, 2001.
Compared to 2000 year-end,consolidated on-book credit card receivables decreased $2.7 billion reflectinga $1.3 billion decline in domestic managed credit card receivables, andincreases in securitized balances sold and retained interest in transferredcredit card receivables. The decrease in managed credit card receivablesis largely due to seasonal factors.
As of March 31, 2001, consolidatedmerchandise inventories on the first-in, first-out (FIFO) basis were $6.60billion, compared with $6.35 billion at April 1, 2000 and $6.18 billionat December 30, 2000. The majority of the increase in domestic inventorylevels as compared with last year's first quarter is due to increased investmentsin hardlines inventories in Full-line and Specialty stores to support revenuegrowth and new store openings. The majority of the increase in domesticinventories compared to 2000 year-end is due to a seasonal build-up ofsoftlines and lawn and garden inventories. Sears Canada inventory increasesare due to the acquisition of Eaton's stores and continued revenue growth.
Total funding for the Companyat March 31, 2001 was $25.5 billion compared with $24.4 billion a yearearlier primarily resulting from increases in consolidated merchandiseinventory levels and managed credit card receivable balances. Total fundingincludes debt recorded on the balance sheet and investor certificates relatedto credit card receivables sold through securitizations as follows:  March 31, April 1, December 30,*(millions)*2001 2000 2000            Short-termborrowings$3,412$3,027$4,280Long-termdebt and capitalized lease obligations13,93615,05813,580Securitizedbalances sold8,1436,3017,834Totalfunding$25,491$24,386$25,694
The Company accesses a varietyof 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.   
**Liquidity**
Based upon the expected cashflow to be generated from future operations and the Company's ability tocost-effectively access multiple sources of funding, the Company believessufficient resources will be available to maintain its planned level ofoperations, capital expenditures, dividends and share repurchases for theforeseeable future.  
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ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000
   
**Cautionary StatementRegarding Forward-Looking Information**
Certain statements made in this Reportare forward-looking statements based on assumptions about the future, whichare subject to risks and uncertainties, such as competitive conditionsin retail, changes in consumer confidence, changes in interest rates, delinquencyand charge-off trends in the credit card receivables portfolio, the paceof development of new sites for The Great Indoors, consumer acceptanceand use of the Sears Gold MasterCard, and normal business uncertainty.In addition, Sears typically earns a disproportionate share of its operatingincome in the fourth quarter due to seasonal buying patterns, which aredifficult to forecast with certainty. The company believes its forwardlooking statements are reasonable but cautions that actual results coulddiffer materially. The company intends these forward looking statementsto speak only at the time of this report and does not undertake to reviseor confirm them as more information becomes available.  
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PART II. OTHER INFORMATION
   
Item 1. Legal ProceedingsThere have been no materialdevelopments in any material legal proceedings since the Company's disclosurein its Annual Report on Form 10-K for the fiscal year ended December 30,2000. -20-           
SEARS, ROEBUCK AND CO.
PART II. OTHER INFORMATION
   
Item 6. Exhibits and Reportson Form 8-K.(a) Exhibits. An Exhibit Index has beenfiled as part of this Report on Page E-1.
(b) Reports on Form 8-K. The Registrant filed a CurrentReport on Form 8-K dated January 4, 2001 to report, under Item 5, thatthe Registrant issued a press release attached as Exhibit 99 thereto.
The Registrant filed a CurrentReport on Form 8-K dated January 18, 2001, to report, under Item 5, thatthe Registrant issued a press release attached as Exhibit 99 thereto. -21- 
SEARS, ROEBUCK AND CO.
SIGNATURE
 Pursuant to the requirementsof the Securities Exchange Act of 1934, the Registrant has duly causedthis report to be signed on its behalf by the undersigned thereunto dulyauthorized.  Sears,Roebuck and Co.(Registrant)  May11, 2001By/s/Glenn R. RichterGlennR. RichterVice President and Controller(Principal Accounting Officerand duly authorized officer of Registrant)   
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E-1
EXHIBIT INDEX
SEARS, ROEBUCK AND CO.13 WEEKS ENDED MARCH 31,2001 AND APRIL 1, 2000
   ExhibitNo. 3(a).RestatedCertificate of Incorporation as in effect on May 13, 1996 (incorporatedby reference to Exhibit 3(a) to Registrant's Statement No. 333-8141).3(b).By-laws,as amended to February 14, 2001 (incorporated by reference to Exhibit 3.(ii)to Registrant's Annual Report on Form 10-K for the fiscal year ended December30, 2000).4.Registranthereby agrees to furnish the Commission, upon request, with the instrumentsdefining the rights of holders of each issue of long-term debt of the Registrantand its consolidated subsidiaries.*10.Termsheet between the Registrant and Senior Vice President of Human Resources,Greg A. Lee dated December 8, 2000 and effective January 3, 2001.*12.Computationof ratio of income to fixed charges for Sears and consolidated subsidiariesfor each of the five years ended December 30, 2000 and for three- and twelve-monthperiods ended March 31, 2001.*15.Acknowledgementof awareness from Deloitte & Touche LLP, dated May 4, 2001, concerningunaudited interim financial information.    
*Filed herewith.

**