**  
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 SEPTEMBER30, 2000             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 October 28, 2000,the Registrant had 334,181,315 common shares, $.75 par value, outstanding.
  
SEARS, ROEBUCK AND CO.
INDEX TO QUARTERLY REPORTON FORM 10-Q13 AND 39 WEEKS ENDED SEPTEMBER30, 2000
PARTI - FINANCIAL INFORMATIONPageItem 1.FinancialStatements  CondensedConsolidated Statements of Income (Unaudited) 13 Weeks and 39 Weeks EndedSeptember 30, 2000 and October 2, 1999 1 CondensedConsolidated Balance Sheets September 30, 2000 (Unaudited),October 2, 1999 (Unaudited)and January 1, 2000 2 CondensedConsolidated Statements of Cash Flows (Unaudited) 39 Weeks Ended September30, 2000 and October 2, 1999 3 Notesto Condensed Consolidated Financial Statements (Unaudited)4 IndependentAccountants' Review Report9   Item 2.Management'sDiscussion and Analysis of Operations, Financial Condition and Liquidity10   PART II - OTHER INFORMATION Item 1.Legal Proceedings19Item 6.Exhibitsand Reports on Form 8-K20
  
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEARS, ROEBUCK AND CO.CONDENSED CONSOLIDATED STATEMENTSOF INCOME(Unaudited)
*(millions,except per share data)*13 Weeks Ended 39 Weeks Ended September 30, 2000 October 2, 1999 September 30, 2000 October 2,1999Merchandisesales and services$8,561$8,150$25,365$24,277Creditrevenues1,066 1,0483,311  3,213Total revenues9,6279,19828,67627,490Costsand expensesCost of sales, buying andoccupancy6,3695,99318,84417,922Selling and administrative2,1052,0736,1716,050Depreciation and amortization205205624629Provision for uncollectibleaccounts200190660696Interest305308931955Restructuring charge--46--46Total costs and expenses9,184  8,81527,230 26,298Operatingincome4433831,4461,192Otherincome  1 15 7 1Incomebefore income taxes and minority interest 4443981,4531,193Incometaxes(159)(151)(531)(452)Minorityinterest(7) (11)(21) (28)Netincome$278$236$901$713Earningsper share: Basic$0.82$0.62$2.58$1.87Diluted$0.81$0.62$2.57$1.86Cashdividends declared per share$0.23$0.23$0.69$0.69Averagecommon and common equivalent shares outstanding341.8381.5350.1383.4Seeaccompanying notes.              
SEARS, ROEBUCK AND CO.
CONDENSED CONSOLIDATED BALANCESHEETS
 
*(millions)*(Unaudited)   September 30, 2000October 2, 1999January 1, 2000   AssetsCurrentassets        Cashand cash equivalents$497 $281 $729Retainedinterest in transferred credit card receivables 3,741   3,153  3,144Creditcard receivables, net 15,899  16,879   18,033Otherreceivables 406  356  404Merchandiseinventories 6,323  5,556  5,069Prepaidexpenses, deferred charges and other assets613609579Deferredincome taxes 651  600  709Total current assets 28,130  27,434  28,667         Propertyand equipment, net 6,391  6,415  6,450Deferredincome taxes 352  517  367Otherassets 1,477  1,510  1,470Total assets$36,350 $35,876 $36,954      Liabilities        Currentliabilities        Short-termborrowings$4,238 $3,393 $2,989Currentportion of long-term debt and capitalized leases 2,490  1,393  2,165Accountspayable and other liabilities 6,736  6,443  6,992Unearnedrevenues 1,049  940  971Othertaxes 436  452  584Total current liabilities 14,949  12,621  13,701         Long-termdebt and capitalized leases 11,523  13,245  12,884Postretirementbenefits 2,017  2,216  2,180Minorityinterest and other liabilities 1,420  1,465  1,350Total liabilities 29,909  29,547  30,115         Commitmentsand Contingent Liabilities                 Shareholders'EquityCommonshares 323  323  323Capitalin excess of par value 3,540  3,563  3,554Retainedearnings  6,613  5,297  5,952Treasurystock - at cost (3,620)  (2,316)  (2,569)DeferredESOP expense (105)  (154)  (134)Accumulatedother comprehensive loss (310)  (384)  (287)Total shareholders' equity 6,441  6,329  6,839         Total liabilities and shareholders'equity$36,350 $35,876 $36,954      Total common shares outstanding  336.7  377.7  369.1                   Seeaccompanying notes.                   
SEARS, ROEBUCK AND CO.
CONDENSED CONSOLIDATED STATEMENTSOF CASH FLOWS
(Unaudited)
*(millions)*39 Weeks EndedSeptember 30,2000October 2, 1999CASHFLOWS FROM OPERATING ACTIVITIES:             NetIncome$901 $713 Adjustmentsto reconcile net income to net cash       providedby (used in) operating activities:      Depreciation, amortizationand other noncash items 691   681 Provision for uncollectibleaccounts 660  696 Restructuring charge --  46 Gain on sales of propertyand investments (1)  (8) Income tax benefit on nonqualifiedstock options36Change in (net of acquisitions):      Deferred income taxes 78  233 Retained interest in transferredcredit card receivables (597)  1,141 Credit card receivables 1,442  450 Merchandise inventories (1,268)  (793) Other operating assets (74)  (33) Other operating liabilities (437)  (347) Net cash provided by operatingactivities 1,398  2,785               CASHFLOWS FROM INVESTING ACTIVITIES:             Acquisitionof businesses, net of cash acquired --  (16) Proceedsfrom sales of property and investments 22  113 Purchasesof property and equipment (663)  (855) Purchasesof long-term investments (28)  (42) Net cash used in investingactivities (669)  (800)               CASHFLOWS FROM FINANCING ACTIVITIES:             Proceedsfrom long-term debt 376  999 Repaymentsof long-term debt (1,393)  (1,413) Increase/(decrease)in short term borrowings, primarily 90 days or less1,253(1,249)Repaymentsof ESOP note receivable 115  58 Commonshares purchased (1,109)  (298) Commonshares issued for employee stock plans 41  45 Dividendspaid to shareholders (243)  (345) Net cash used in financingactivities (960)  (2,203)        Effectof exchange rate on cash and invested cash (1)  4        Netdecrease in cash and cash equivalents  (232)  (214)        Balanceat beginning of year 729  495               Balanceat end of period$497 $281             Seeaccompanying notes.                   
SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS(Unaudited)

1. Condensed ConsolidatedFinancial Statements The Condensed ConsolidatedBalance Sheets as of September 30, 2000 and October 2, 1999, the relatedCondensed Consolidated Statements of Income for the 13 and 39 weeks endedSeptember 30, 2000 and October 2, 1999, and the Condensed ConsolidatedStatements of Cash Flows for the 39 weeks ended September 30, 2000 andOctober 2, 1999, are unaudited. The interim financial statements reflectall adjustments (consisting only of normal recurring accruals) which are,in the opinion of management, necessary for a fair statement of the resultsfor the interim periods presented. The condensed consolidated financialstatements should be read in conjunction with the consolidated financialstatements and notes thereto included in the Sears, Roebuck and Co. (the"Company" or "Sears") 1999 Annual Report to Shareholders and Annual Reporton Form 10-K. The results of operations for the interim periods shouldnot be considered indicative of results to be expected for the full year.
Certain reclassificationshave been made to the 1999 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 September 30, 2000, approximately $3.8 billion could be paid in dividendsto shareholders under the most restrictive indentures.
On March 10, 1999, the Boardof Directors approved a common share repurchase program to acquire up to$1.5 billion of the Company's common shares by December 31, 2001. Duringthe third quarter of 2000, the Company repurchased 4.3 million shares ata cost of $134 million under this program. The shares are purchased onthe open market or through privately negotiated transactions. As of September30, 2000, approximately 45.7 million common shares have been acquired underthis repurchase program at a cost of $1.5 billion. All shares authorizedto be repurchased under this program have been acquired.
On August 9, 2000, the Boardof Directors approved another common share repurchase program to acquire$1.0 billion of the Company's common shares by December 31, 2002. As ofSeptember 30, 2000, approximately 2.1 million common shares have been acquiredunder this repurchase program at a cost of approximately $73 million and$927 million is available for future repurchases.
In total, the Company repurchased6.4 million shares during the third quarter of 2000 at a total cost of$207 million.  
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 Ended39 Weeks EndedSeptember 30,2000October 2,1999September 30,2000October 2,1999Basic:Netincome$278$236$901$713Averageshares outstanding340.6379.8348.8381.3*Earningsper share - basic**$**0.82**$**0.62**$**2.58**$**1.87*Diluted:Netincome$278$236$901$713Averageshares outstanding340.6379.8348.8381.3Dilutiveeffect of stock options1.21.71.32.1Averageshares and equivalent sharesoutstanding341.8381.5350.1383.4*Earningsper share - diluted**$**0.81**$**0.62**$**2.57**$**1.86*
In each period, certain outstandingoptions were excluded from the computation of diluted earnings per sharebecause they would have been antidilutive. As of September 30, 2000, optionsto purchase 10.9 million shares of stock at prices ranging from $33 to$64 per share were excluded from the 13 and 39 week 2000 calculations.As of October 2, 1999, options to purchase 12.3 and 7.1 million sharesof stock at prices ranging from $39 to $64 and $43 to $64 per share wereexcluded from the 13 and 39 week 1999 calculations, respectively.4. Comprehensive Incomeand Accumulated Other Comprehensive LossThe following table showsthe computation of comprehensive income:*(millions)*13 Weeks Ended39 Weeks EndedSeptember 30, 2000October 2, 1999September 30, 2000October 2, 1999Netincome$278$236$901$713Othercomprehensive income (loss):Unrealizedgain (loss) on investments(5)(18)(14)24Foreigncurrency translation adjustments(6)(4)(9)16Totalother comprehensive income (loss)(11)(22)(23)40Totalcomprehensive income $267$214$878$753          
SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS
(Unaudited)
  The following table displaysthe components of accumulated other comprehensive loss:September 30, 2000October 2,1999January 1,2000Foreigncurrency translation adjustments$(121)$(109)$(112)Minimumpension liability (1)(194)(299)(194)Unrealizedgain on investments52419Accumulatedother comprehensive loss$(310)$(384)$(287)(1) Minimum pensionliability is calculated annually in the fourth quarter. Changes theretoare recorded at that time. 
5. Segment Disclosures The following tables setforth revenue, operating income (expense) and total assets by segment:For the 13 weeks ended September30, 2000 *millions*RetailServicesCreditCorporateInternationalConsolidatedRevenue$ 6,898$ 710$ 999$ --$ 1,020$ 9,627Operatingincome (expense)4480385(87)21443Totalassets11,0231,18319,0321,7443,36836,350
For the 13 weeks ended October2, 1999*millions*RetailServicesCreditCorporateInternationalConsolidatedRevenue$ 6,550$ 709$ 985$ --$ 954$ 9,198Operatingincome (expense)1887316(77)39383Totalassets10,5741,04619,2952,0232,93835,876
For the 39 weeks ended September30, 2000*millions*RetailServicesCreditCorporateInternationalConsolidatedRevenue$ 20,501$2,065$ 3,103$ --$ 3,007$28,676Operatingincome (expense)2372441,165(269)691,446Totalassets11,0231,18319,0321,7443,36836,350
For the 39 weeks ended October2, 1999 *millions*RetailServicesCreditCorporateInternationalConsolidatedRevenue$ 19,681$2,092$ 3,021$ --$ 2,696$ 27,490Operatingincome (expense)122256926(213)1011,192Totalassets10,5741,04619,2952,0232,93835,876        
SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS
(Unaudited)
  
6. Effect of New AccountingStandards and StatementsDerivatives and Hedging
Statement of Financial AccountingStandards ("SFAS") No. 133, "Accounting for Derivative Instruments andHedging Activities", as amended by SFAS No. 137, "Accounting for DerivativeInstruments and Hedging Activities - Deferral of the Effective Date ofFASB Statement No. 133 - An Amendment of FASB Statement No. 133" and SFASNo. 138, "Accounting for Certain Derivative Instruments and Certain HedgingActivities - an Amendment of FASB Statement No. 133", is effective forall fiscal quarters of all fiscal years beginning after June 15, 2000.The Company intends to adopt the standard at the beginning of the 2001fiscal year.
The standards expand thedefinition of a derivative to include embedded derivatives as well as manycommodity contracts and require all derivatives to be recorded on the balancesheet at fair value. Changes in the fair value of derivatives are to berecognized in earnings unless specific hedging criteria are met, in whichcase the changes in fair value that are effective in offsetting the hedgedrisk are recognized in stockholders' equity or offset by changes in thefair value of the hedged item. The Company has inventoried its derivativeinstruments, both freestanding and embedded. The only significant derivativeinstruments the Company holds are interest rate swaps which the Companyuses to reduce the interest rate risk associated with its borrowings andto manage the allocation of fixed and variable rate debt. The Company believesthat these swaps will qualify for hedge accounting under SFAS No. 133/138.Based on current economic conditions, the Company does not expect the adoptionof these standards to have a material impact to the Company's consolidatedfinancial position and results of operations.
The Company's assessmentof the impact of SFAS No. 133/138 upon adoption is based on economic conditionsand the Company's interpretations of the standards as of September 30,2000. Changes in interest rates, funding strategy, other economic changesand/or future guidance from the Financial Accounting Standards Board mayaffect the anticipated impact.
Transfers of FinancialAssets
In September 2000, the FASBissued SFAS No. 140, "Accounting for Transfers and Servicing of FinancialAssets and Extinguishments of Liabilities." The Guidance in SFAS No. 140supercedes SFAS No. 125. SFAS No. 140 requires additional disclosures relatingto securitized financial assets, retained interests in securitized financialassets, and collateral for fiscal years ending after December 15, 2000.In addition, SFAS No. 140 establishes new conditions for an entity to bea qualifying special purpose entity and clarifies under what conditionsa transferor has retained effective control over transferred assets. Theupdated rules for transfers of financial assets are effective for transfersoccurring after March 31, 2001 and generally do not affect the accountingfor previous transfers. Early adoption of the new rules is not allowed.The Company has not yet determined what impact SFAS No. 140 might haveon its consolidated financial position and results of operations.        
SEARS, ROEBUCK AND CO.
NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS
(Unaudited)
  
7. Effect of New SEC StaffGuidanceIn December 1999, the Securitiesand Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101,"Revenue Recognition in Financial Statements" ("SAB 101"), which effectivelychanges previous guidance related to the recording of licensed businessesrevenues for retail companies. As a result, the Company changed its methodof recording licensed business revenue in the first quarter of 2000. UnderSAB 101, the Company now recognizes as revenue only the commission receivedfrom the licensed business partner. Prior to implementation of SAB 101,the Company had recognized the gross revenues of licenses. This changein licensed businesses reporting reduces revenues and expenses by equalamounts and therefore does not have an impact on operating income. Prioryear financial statements have been restated to reflect the reclassificationunder SAB 101.
8. Restructuring Charge The Company implementedcertain cost-reduction strategies during the third quarter of 1999 resultingin a $46 million pretax restructuring charge. Of the $46 million charge,$25 million related to the closing of 33 automotive stores in three geographicmarkets and $21 million related to severance costs for headquarters staffreductions of approximately 450 employees. The staff reductions and theclosing of the 33 stores both occurred during the third quarter of 1999.
As of January 1, 2000 thereserve balance was $26 million. The Company incurred $6 million and $17million of restructuring costs during the 13 and 39 week periods endedSeptember 30, 2000, respectively. As of September 30, 2000 the reservebalance of $9 million primarily represents estimated future lease obligationsand estimated losses on properties which are being held for disposal.9. 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 January 1,2000.     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 September30, 2000 and October 2, 1999, and the related Condensed Consolidated Statementsof Income for the 13-week and 39-week periods ended September 30, 2000and October 2, 1999 and the Condensed Consolidated Statements of Cash Flowsfor the 39-week periods ended September 30, 2000 and October 2, 1999. Thesefinancial statements are the responsibility of the Company's management.
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 January 1, 2000, and the related Consolidated Statements of Income,Shareholders' Equity, and Cash Flows for the year then ended (not presentedherein); and in our report dated February 7, 2000, we expressed an unqualifiedopinion on those consolidated financial statements. In our opinion, theinformation set forth in the accompanying Condensed Consolidated BalanceSheet 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.      
Deloitte & Touche LLP
Chicago, IllinoisOctober 25, 2000  
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999
  
**Analysis of Operations**
Operating results for theCompany are reported for four domestic segments and one international segment.The domestic segments include the Company's operations in the United Statesand Puerto Rico. The Company's segments are defined as follows: - 
*Retail*consistingof:- Full-line stores*-* Specialty stores(Hardwarestores, Dealer stores, ContractSales, The Great Indoors and Auto stores)- 
*Corporate*consisting of administrative activities of a holding company nature, thecosts of which are not allocated to the Company's businesses (includesthe Company's On-line investments)- 
*Services*consistingof:- Home Services- Direct Response- 
*International*consistingof retail, services, credit, corporate and On-line operations conductedin Canada through Sears Canada, Inc. ("Sears Canada"), a 54.5% owned consolidatedsubsidiary- 
*Credit*whichmanages domestic credit card operations 
For the 13 weeks ended September30, 2000, net income was $278 million, or $0.81 per share, as comparedto $236 million, or $0.62 per share for the comparable 1999 period. Thirdquarter 1999 net income includes a pretax restructuring charge of $46 millionfor staff reductions and the exit of certain automotive retail markets,which reduced net income by $29 million, or $0.07 per share. Excludingnon-comparable items, earnings per share would have been $0.69 in the thirdquarter of 1999. The increase in earnings per share is primarily due toincreased operating income in the credit segment coupled with a reductionin outstanding shares due to the Company's share repurchase program.
For the 39 weeks ended September30, 2000, net income was $901 million, or $2.57 per share compared to $713million, or $1.86 per share for the comparable 1999 period. In 1999, netincome included non-comparable expenses of $29 million, or $0.07 per share.Excluding non-comparable items, earnings per share increased 33% over theprior year period. The increase in earnings per share is primarily dueto increased operating income in the Retail and Credit segments coupledwith a reduction in outstanding shares due to the Company's share repurchaseprogram.
Operating income (expense)by segment, which includes all non-comparable items, was as follows: *(millions)*13 Weeks Ended39 Weeks EndedSeptember 30,2000October 2, 1999September 30, 2000October 2,1999Retail$44$18$237$122Services8087244256Credit3853161,165926Corporate(87)(77)(269)(213)International213969101Totaloperating income$443$383$1,446$1,192           
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999

Operating income (expense)by segment, which excludes all non-comparable items, was as follows: *(millions)*13 Weeks Ended39 Weeks EndedSeptember 30, 2000October 2, 1999September 30, 2000October 2, 1999Retail$44$43$237$147Services8087244256Credit3853161,165926Corporate(87)(56)(269)(192)International213969101Totaloperating income$443$429$1,446$1,238
The Company's consolidatedeffective tax rate for the 13 weeks and 39 weeks ended September 30, 2000was 35.8% and 36.5% compared to 37.9% in the comparable prior year periods.The decrease in the consolidated effective tax rate is primarily due toa lower effective tax rate on Sears Canada income and the favorable resolutionof certain domestic tax audit issues.
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 and 39 weeks ended September 30, 2000 which is not necessarilyindicative of performance for the balance of the year. The Company makesavailable by phone a recorded message on the sales performance of its domesticstores. The message is updated weekly and can be heard by calling (847)286-6111.  
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999

**Retail**
Retail revenues increased5.3% to $6.9 billion and 4.2% to $20.5 billion for the 13 and 39 weeksended September 30, 2000, respectively, from the comparable 1999 period.Excluding the effect of the HomeLife divestiture in the first quarter of1999, retail revenues increased $868 million or 4.4% for the 39 week period.Retail revenues and related information are as follows:  (millions,except number of stores)13 Weeks Ended39 Weeks EndedSeptember 30, 2000October 2, 1999September 30,2000October 2, 1999ChangeChangeRevenues:Full-linestores$5,284$5,0784.1%$15,879$15,3103.7%Specialtystores1,6141,4729.6%4,6224,3715.7%TotalRetail revenues$6,898$6,5505.3%$20,501$19,6814.2%Numberof Full-line stores862852Numberof Specialty stores2,1802,109TotalRetail stores3,0422,961 Comparablestore sales percentage increase 3.5%  1.8%    2.9%  1.4%  
For the 13 week period, Full-linestores revenues increased 4.1% over the third quarter of 1999.Hardlines revenues increased5.5% in the third quarter of 2000. Strong sales increases in appliances,electronics, lawn and garden and sporting goods were partially offset bya decrease in home office sales.

Softlines revenues increased0.7% in the third quarter of 2000. Strong revenue increases in footwear,fine jewelry and cosmetics and fragrances, and solid increases in homefashions and intimate apparel, were offset by decreases in children's apparel,floor coverings, men's apparel, and women's apparel.

For the 39 week period, Full-linestore revenues increased 3.7% over 1999 with hardlines increasing 6.2%and softlines decreasing 0.1%.  
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999
For the 13 week periodended September 30, 2000, Specialty stores revenues increased 9.6% fromthe comparable 1999 period primarily due to comparable store sales increasesin Auto stores, Dealer stores, and Hardware stores. Sears Dealer storesrevenues also benefited from 68 net new store openings. The Great Indoorsalso produced strong comparable store revenue gains over the 1999 periodand added two new stores. Auto stores revenues were favorably affectedby the recall of certain Firestone tires.
Specialty stores revenuesincreased 5.7% for the 39 week period ended September 30, 2000 comparedto 1999. The prior year includes revenues from HomeLife which was soldon January 30, 1999. Excluding HomeLife revenues in the prior year, Specialtystores revenues increased 7.0% primarily due to new store growth and strongcomparable store sales increases in The Great Indoors stores and Dealerstores, and comparable store increases in the Auto stores and Hardwarestores.
Retail gross margin as apercentage of Retail revenues for the third quarter of 2000 declined 60basis points from the third quarter of 1999. The decline is primarily dueto increased markdown activity in the Full-line stores, particularly acrossthe softlines businesses, and a higher mix of hardlines products. For the39 week period, retail gross margin declined 20 basis points.
Retail selling and administrativeexpense as a percentage of Retail revenues for the third quarter of 2000improved 40 basis points from the third quarter of 1999. The improvementwas primarily due to increased marketing efficiency and payroll productivity.For the 39 week period, the selling and administrative expense rate improvedby 40 basis points.
Retail depreciation and amortizationexpense for the third quarter was flat with the comparable 1999 period.For the 39 week period, retail depreciation and amortization expense decreased$3 million, or 0.6%.
In the third quarter of 1999,the Retail segment operating income, as reported, included a $25 million(pretax) restructuring charge related to the closing of 33 auto storesin September 1999. The $25 million charge included the expected loss onthe disposition of the stores and related assets, as well as severancecosts for affected employees.
**Services**
Services revenues, whichare generated by the Home Services and Direct Response businesses, wereflat in the third quarter of 2000 versus the comparable 1999 period. TheDirect Response business posted higher revenues, which were largely offsetby a slight revenue decrease in Home Services which was impacted by significantlylower revenues from Sears Termite and Pest Control. For the 39 week period,Services revenues decreased 1.3%.
Services gross margin asa percentage of Services revenues for the third quarter of 2000 declined60 basis points. The decrease in gross margin rate is primarily due tolower margins in Sears Termite and Pest Control. Services selling and administrativeexpense as a percentage of Services revenues increased by 20 basis pointsin the third quarter of 2000 from the comparable 1999 period primarilydue to Home Services redesign costs. For the 39 week period, Services grossmargin rate decreased 60 basis points and selling and administrative expenseimproved 30 basis points.              SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999
  
**Credit**
Domestic Credit revenuesincreased 1.4% to $999 million and 2.7% to $3.1 billion, respectively forthe 13 and 39 weeks ended September 30, 2000 from the comparable prioryear periods. The increase in Credit revenues in the third quarter wasprimarily attributable to yield improvement on owned and securitized receivables.The yield improvement primarily reflects higher late fees and performancepricing. The improved yields on securitized balances also benefit fromfavorable charge-off experience. A summary of Credit information (for themanaged portfolio) is as follows:   13 Weeks Ended 39 Weeks EndedSeptember 30,2000October 2, 1999September 30, 2000October 2, 1999                   Searscredit cards as a % of sales(1) 48.9%  49.7%  47.5%  49.0% Averageaccount balance(as of September 30, 2000and October 2, 1999)      $1,175  $1,183               Averagemanaged credit card receivables (*millions*)$25,453 $25,992 $25,655 $26,707
 (1)1999Sears credit cards share has been restated to conform with the currentyear calculation which excludes HomeLife sales and now includes The GreatIndoors sales and Sears On-line sales. Sears credit cards include SearsCard, Premier Card, Sears Charge Plus, Sears Gold MasterCard, Sears MasterCard,Starter Card, Easy Pay, Commercial One Card, and Sears Home ImprovementPlan.

The percentage of merchandisesales and services transacted with Sears credit cards in the third quarterand first 39 weeks of 2000 declined to 48.9% and 47.5%, respectively, comparedto 49.7% and 49.0% a year ago due to greater consumer preference for theuse of cash, checks and third party credit cards. The payment rate during2000 was also higher than in the comparable prior year periods, contributingto the decrease in average managed receivables.
Credit selling and administrativeexpense as a percentage of Credit revenues improved 630 basis points inthe third quarter of 2000 and 390 basis points for the 39 week period fromthe comparable 1999 periods. The improvement was primarily due to lowermarketing, as well as lower recovery and collection expenses. The 1999periods also include investments in enhanced risk management systems andthe launch of the Sears Premier Card.  
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999
  
The domestic provision foruncollectible accounts and related information is as follows:   13 Weeks Ended 39 Weeks Ended*(millions)*September 30, 2000October 2, 1999September 30, 2000October 2, 1999                  Provisionfor uncollectible accounts$190$180$631$671 Netcredit charge-offs as a percentage ofaverage managed credit cardreceivables(1) (2)  4.97%  6.39%  5.24%  6.85%  20001999Sep. 30, 2000July 1, 2000Apr. 1, 2000Jan. 1, 1999Oct. 2, 1999Domesticmanaged credit card receivables - delinquencyrate (2)7.47%7.15%7.20%7.58%7.57%Allowancefor uncollectible accounts $624$725$725$725$773Allowance% of domestic owned credit card receivables4.18%4.46%4.48%4.26%4.78% (1) The 1999 domesticmanaged net-charge-off rate includes all of the accounts in the domesticportfolio. Twelve percent of the accounts wereconverted to the new TotalSystems Services, Inc. ("TSYS") account processing system in October 1998,38% were converted in March and 50% were converted in April 1999. Balancesare generally charged-off earlier under the TSYS system than under theproprietary system. For a description of the anticipated effects of theTSYS conversion, see Sears quarterly report on Form 10-Q dated May 14,1998.
(2) The net charge-offand delinquency rates are affected by seasonality, periodic sales of uncollectibleaccounts to third parties, bankruptcy trends and other general economictrends.
The domestic provision foruncollectible accounts increased 5.6% to $190 million for the 13 weeksended September 30, 2000 and decreased 6.0% to $631 million for the 39weeks ended September 30, 2000 from the comparable prior year periods.The domestic allowance for uncollectible accounts decreased to $624 millionfrom$725 million at year end 1999 and the first two quarters of 2000. The decreasein the allowance is primarily due to the transfer of $2.4 billion of creditcard receivables to the securitization Master Trust. The transferred receivablesand related $111 million allowance for uncollectible accounts have beenreclassified to retained interest in transferred credit card receivables.  
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999

Interest expense is discussedwithin the Credit segment since the majority of the Company's interestexpense is allocated to the Credit segment. Interest expense is combinedwith the funding costs on receivables sold through securitizations to representtotal funding costs as follows:  13 Weeks Ended 39 Weeks Ended*(millions)*September 30, 2000October 2,1999September 30, 2000October 2,1999                  Consolidatedinterest expense(1)$305$308$931$955Fundingcost on securitized receivables110102315314Totalfunding costs$415$410$1,246$1,269
 (1)Creditsegment interest expense was $270 and $276 for the third quarter of 2000and 1999, respectively, and $825 and $837 for the 39 weeks ended September30, 2000 and October 2, 1999, respectively. 
Consolidated interest expensedecreased in the third quarter of 2000 and year to date compared to 1999due to lower on-book debt levels caused primarily by a decrease in domesticowned credit card receivables. This decrease in debt levels was offsetby a higher average funding rate in the third quarter of 2000 versus 1999.The funding cost on securitized receivables was higher in the third quarterof 2000 primarily due to an increase in average securitized receivablessold versus 1999.
**Corporate**
Corporate expenses increased$10 million in the third quarter of 2000 and $56 million for the first39 weeks of 2000 compared to similar periods in 1999. Third quarter 1999corporate expenses included a $21 million pretax restructuring charge relatedto staff reductions made in the third quarter of 1999. Excluding restructuringcharges, corporate expenses increased by $31 million over third quarter1999 and $77 million over the first 39 weeks of 1999. The increases wereprimarily due to one time expenses related to management changes, a higherlevel of investment in Sears On-line initiatives and higher incentive accruals.
**International**
International revenues forthe third quarter of 2000 increased 6.9% from the same period a year ago.Sears Canada experienced strong increases in retail and credit revenues.For the 39 week period, International revenues increased 11.5%.
International gross marginas a percentage of International merchandise and services revenues decreased220 basis points in the third quarter of 2000 from the comparable prioryear quarter. For the 39 week period, International gross margin decreased150 basis points. These decreases are due to increased buying, occupancyand other costs incurred by Sears Canada, as result of the Eaton's acquisition.
International selling andadministrative expense as a percentage of total International revenuesincreased 10 basis points in the third quarter of 2000 from the third quarterof 1999. For the 39 week period, the International selling and administrativerate increased 20 basis points. These increases are the net result of favorabilityprovided by Sears Canada's revenue growth offset by costs associated withremodeling and relaunching stores acquired as part of the Eaton's acquisition.
  
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999

**Financial Condition**
The consolidated owned netcredit card receivables balances of $15.90 billion, $16.88 billion and$18.03 billion as of September 30, 2000, October 2, 1999 and January 1,2000, respectively, exclude credit card receivables transferred to a securitizationMaster Trust as follows:*(millions)*September 30, 2000October 2, 1999January 1, 2000DomesticManaged credit card receivables$25,825$25,860$26,785Securitized balances sold(7,054)(6,499)(6,579)Retained interest in transferredcreditcard receivables (1)(3,840)(3,203)(3,175)Other customer receivables495037Domesticowned credit card receivables14,98016,20817,068Internationalcredit card receivables1,5761,4791,725Consolidatedcredit card receivables16,55617,68718,793Less: Allowance for uncollectibleaccounts657808760Credit card receivables,net$15,899$16,879$18,033
(1) The retained interestamounts as of September 30, 2000, October 2, 1999 and January 1, 2000,are shown before reserves of $99 million, $50 million and $31 million,respectively, related to the transfer of credit card receivables into theMaster Trust in 1998 and July 2000.
Consolidated credit cardreceivables in the third quarter of 2000 (before allowance for uncollectibleaccounts) decreased $1.13 billion from the third quarter of 1999. Domesticmanaged credit card receivables are roughly flat with the third quarterof 1999 because growth of the Company's new Gold MasterCard product largelyoffset lower Sears Card receivables. The Gold MasterCard product, whichwas launched in the second quarter of 2000, had $1.1 billion in outstandingbalances at September 30, 2000. The lower Sears Card balances are primarilydue to declining market share of sales on the Sears Card and faster paymentrates. Domestic owned credit card receivables decreased $1.2 billion versusthe prior year due to increases in securitized balances sold as well ashigher retained interest in transferred credit card receivables. The domesticdecrease in owned credit card receivables was partially offset by an increasein International credit card receivables. Compared to 1999 year-end, consolidatedcredit card receivables (before allowance for uncollectible accounts) decreased$2.24 billion reflecting a $1.0 billion decline in domestic managed creditcard receivables, and increases in securitized balances sold and retainedinterest in transferred credit card receivables. The decline in managedcredit card receivables is due to the normal seasonal nature of the retailindustry as well as the aforementioned declining market share and fasterpayment rates partially offset by the Company's new Gold MasterCard product.
As of September 30, 2000,consolidated merchandise inventories on the first-in, first-out (FIFO)basis were $6.95 billion, compared with $6.25 billion at October 2, 1999and $5.66 billion at January 1, 2000. The majority of the increase in domesticinventory levels is due to increased investments in hardlines inventoriesin Full-line and Specialty stores to support revenue growth and new storeopenings. International inventory increases are due to the acquisitionof Eaton's stores and continued revenue growth.  
SEARS, ROEBUCK AND CO.
ITEM 2. MANAGEMENT'S DISCUSSIONAND ANALYSIS OFOPERATIONS, FINANCIAL CONDITIONAND LIQUIDITY FOR THE13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999
  
Total funding for the Companyat September 30, 2000 was $25.3 billion compared with $24.5 billion a yearearlier primarily resulting from an increase in consolidated merchandiseinventory levels. Total funding includes debt recorded on the balance sheetand investor certificates related to credit card receivables sold throughsecuritizations as follows:   September 30, 2000 October 2, 1999 January 1, 2000*(millions)*           Short-termborrowings$4,238$3,393$2,989Long-termdebt and capitalized lease obligations14,01314,63815,049Securitizedbalances sold7,0546,4996,579Total funding$25,305$24,530$24,617 
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 cash flowexpected to be generated from future operations and the Company's abilityto cost-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 in theforeseeable future.
**Cautionary StatementRegarding Forward-Looking Information**
Certain statements made inthis Report are forward-looking statements made in reliance on the safeharbor provisions of the Private Securities Litigation Reform Act of 1995.As such, they involve risks and uncertainties that could cause actual resultsto differ materially. The Company's forward-looking statements are basedon assumptions about many important factors, including ongoing competitivepressures in the retail industry, changes in consumer spending, delinquencyand charge-off trends in the credit card receivables portfolio, generalNorth American economic conditions (such as interest rates and consumerconfidence), anticipated cash flow, the Company's ability to cost-effectivelyaccess multiple sources of funding, the ability of the Company to implementits marketing plans and cost reduction efforts and normal business uncertainty.In addition, the Company typically earns a disproportionate share of itsoperating income in the fourth quarter due to holiday buying patterns,which are difficult to forecast with certainty. While the Company believesthat its assumptions are reasonable, it cautions that it is impossibleto predict the impact of certain factors, which could cause actual resultsto differ materially from expected results. The Company intends its forwardlooking statements to speak only as of the time of such statements, anddoes not undertake to update or revise them as more information becomesavailable.  
SEARS, ROEBUCK AND CO.
PART II. OTHER INFORMATION
  
Item 1. Legal Proceedings There 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 January 1,2000.SEARS, ROEBUCK AND CO.
PART II. OTHER INFORMATION
      Item6.Exhibitsand Reports on Form 8-K(a) Exhibits.    An Exhibit Index has been filed as part of this Report on Page E-1.(b) Reports on Form 8-K.    The Registrant filed a Current Report on Form 8-K dated July 21, 2000 toreport, under Item 5,     that the Registrant issued a press release to report its second quarterearnings and to furnish,     under Item 7, a copy of the press release.
    The Registrant filed a Current Report on Form 8-K dated August 9, 2000to report, under Item 5,    that the Registrant issued a press release announcing a new share repurchaseprogram and to    furnish, under Item 7, a copy of the press release.
    The Registrant filed a Current Report on Form 8-K dated September 10, 2000to report, under    Item 5, that the Registrant issued a press release announcing the appointmentof Alan J. Lacy    as the new President and Chief Executive Officer and to furnish, underItem 7, a copy of the     press release.    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)        November3, 2000By/s/Glenn R. RichterGlennR. RichterVice President and Controller(Principal Accounting Officerand duly authorized officer of Registrant)             
E-1
EXHIBIT INDEX
SEARS, ROEBUCK AND CO.13 AND 39 WEEKS ENDED SEPTEMBER30, 2000 AND OCTOBER 2, 1999
 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 1, 2000 (incorporated by reference to Exhibit 3.(ii)to Registrant's Annual Report on Form 10-K for the fiscal year ended January1, 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.*12(a).Computationof ratio of income to fixed charges for Sears and consolidated subsidiariesfor each of the five years ended January 1, 2000 and for nine- and twelve-monthperiods ended September 30, 2000.12(b).Computationof ratio of income to combined fixed charges and preferred share dividendsfor Sears and consolidated subsidiaries (incorporated by reference to Exhibit12.(b) to Registrant's Annual Report on Form 10-K for the fiscal year endedJanuary 1, 2000).*15.Acknowledgementof awareness from Deloitte & Touche LLP, dated October 25, 2000, concerningunaudited interim financial information.*27.FinancialData Schedule.*Filed herewith.

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