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Sears Reports Record 2002 Earnings Per Share Comparable EPS of $4.92 For Year; $2.11 For Fourth Quarter

Sears, Roebuck and Co. (NYSE: S) reported today net income, excluding noncomparable items of $1.6 billion, or $4.92 per share for 2002 as compared to $4.22 in 2001, a 17 percent per share increase. On a reported basis, net income was $1.4 billion or $4.29 per share for 2002 as compared to $2.24 last year. Non-comparable items are detailed in a schedule at the end of this release.

"2002 was a year of tremendous change for Sears," said Chairman and Chief Executive Officer Alan J. Lacy. "We made significant progress in repositioning and restructuring our core retail business, full-line stores, resulting in improved earnings for Sears. 2002 was a record year for Sears in terms of earnings per share."

Fourth Quarter Earnings

The company also reported fourth quarter 2002 net income, excluding non- comparable items, of $669 million, or $2.11 per share compared to $657 million, or $2.02 per share in 2001, a 4.5 percent per share increase. The increase is due to improved profitability in the company's Retail and Related Services segment as well as a decrease in the number of shares outstanding, partially offset by a decline in the Credit and Financial Products segment.

"Despite a challenging retail environment and soft sales, we made strong progress in improving our core retail operations," said Lacy. "The acquisition of Lands' End, continued improvement in merchandise assortments, inventory management and vendor sourcing, and an improvement in the cost structure of the full-line stores all contributed to increased profitability."

Fourth quarter of 2002 was affected by one non-comparable item - the gain on the sale of the company's remaining investment in Advance Auto Parts, Inc. The sale resulted in an after-tax gain of $179 million, or $0.56 per share and generated after-tax cash proceeds of $335 million. Non-comparable items affecting the fourth quarter of 2001 consisted of charges relating to implementation of productivity initiatives, product category exits, and the Exide battery litigation settlement. These non-comparable items, on an after- tax basis, were $163 million, or $0.50 per share.

Reported fourth quarter 2002 net income, including the non-comparable items, was $848 million or $2.67 per share, compared with $494 million, or $1.52 per share in the fourth quarter of 2001.

Retail and Related Services

Retail and Related Services segment operating income for the fourth quarter, excluding non-comparable items, increased 9.7 percent to $726 million due to improvements in margin, as well as the addition of Lands' End. "We are pleased by our strong profit performance in retail in the fourth quarter especially in light of the challenging retail environment during the holiday selling season," said Lacy.

Retail and Related Services revenues for the fourth quarter of 2002 of $9.7 billion were 2.8 percent above last year's fourth quarter revenues of $9.5 billion. Increased revenues due to the acquisition of Lands' End, and the addition of seven new The Great Indoors stores were partially offset by declines in full-line stores revenues. In hardlines, revenue declined in big- ticket categories such as home appliances, home electronics and lawn and garden. Softline sales declined compared to the prior year, however, sales improved over the prior quarter's performance.

Retail and Related Services gross margin rate improved by 140 basis points to 29.4 percent. The improvement in margin was due to the inclusion of Lands' End and improved inventory management and product sourcing in full-line stores.

Selling and administrative spending was 7.5 percent higher than fourth quarter 2001. The increase was due to additional expense related to the inclusion of Lands' End and higher investment in The Great Indoors, partially offset by a reduction in operating costs for full-line stores. Selling and administrative expenses were 19.9 percent of sales compared with 19.0 percent last year.

Credit and Financial Products

Operating income decreased by $63 million or 14.8 percent from the prior year as favorable funding costs and higher revenues were more than offset by a higher provision for uncollectible accounts.

Fourth quarter domestic Credit and Financial Products revenues increased 4.4 percent from a year ago, to $1.4 billion due to higher average receivable balances. Credit receivables at the end of the fourth quarter grew 11.5 percent over the prior year to $30.8 billion.

Funding costs declined by $43 million or 15.1 percent from last year's quarter due to a favorable interest rate environment.

The domestic provision for uncollectible accounts increased by $160 million or 40.9 percent over last year's period due to higher charge-offs and a $150 million increase to the allowance for uncollectible accounts. The allowance increase reflects the growth in Sears Gold MasterCard receivables, as well as increases in the net charge-off rate and delinquencies. The net charge-off rate for the fourth quarter increased to 5.40 percent from 5.23 percent last year primarily due to increased customer bankruptcy filings over last year. Delinquencies for the quarter increased to 7.69 percent compared to 7.58 percent last year. The domestic allowance for uncollectible accounts of $1.8 billion is 5.79 percent of ending credit receivables as of the end of the fourth quarter of 2002 compared to 5.57 percent at the end of last quarter.

2003 Outlook

The company's preliminary outlook for 2003 is for comparable earnings per share to increase in the low- to mid- single digits. The Retail and Related Services business is expected to grow operating income in the mid-teens, while operating income for the Credit and Financial Products segment is expected to decline at a low- to mid-single-digit rate. Sears Canada is anticipated to post increased year- over-year profitability, and the Corporate and Other segment is expected to remain relatively flat with productivity savings being offset by higher benefit and insurance costs.

Forward-Looking Statements

This release contains guidance on 2003 comparable earnings per share, which is a forward-looking statement based on assumptions about the future that are subject to risks and uncertainties, such as competitive conditions in retail; changes in consumer confidence and spending; changes in interest rates; delinquency and charge-off trends in the credit card receivables portfolio; continued consumer acceptance of the Sears Gold MasterCard Program; the successful execution of and customer reactions to Sears' Full-line store strategy and other performance improvement initiatives; Sears' ability to integrate and operate Lands' End successfully; anticipated cash flow; the possibility of increased hostilities in the Middle East; general economic conditions and normal business uncertainty. In addition, Sears typically earns a disproportionate share of its operating income in the fourth quarter due to seasonal buying patterns, which are difficult to forecast with certainty. While the company believes its forecasts and assumptions are reasonable, it cautions that actual results may differ materially. The company intends these forward-looking statements to speak only as of the time of this presentation and does not undertake to update or revise them as more information becomes available.

About Sears

Sears, Roebuck and Co. is a broadline retailer with significant service and credit businesses. In 2002, the company's annual revenue was more than $41 billion. The company offers its wide range of apparel, home and automotive products and services to families in the U.S. through Sears stores nationwide, including approximately 870 full-line stores. Sears also offers a variety of merchandise and services through its Web site, www.sears.com. In June 2002, Sears acquired Lands' End, a direct merchant of traditionally styled, classic Lands' End clothing offered to customers around the world through regular mailings of its specialty catalogs and online at www.landsend.com .

  SEARS, ROEBUCK AND CO.
  CONSOLIDATED INCOME

                              For the 13 Weeks Ended  For the 52 Weeks Ended
                                 December 28, 2002       December 28, 2002
                               and December 29, 2001   and December 29, 2001

   (millions, except earnings per
    common share)                  2002        2001         2002     2001

   REVENUES
     Merchandise sales
      and services               $11,059      $10,819     $35,698  $35,755
     Credit and financial products
      revenues                     1,459        1,401       5,668    5,235
           Total revenues         12,518       12,220      41,366   40,990

   COSTS AND EXPENSES
     Cost of sales, buying and
      occupancy                    7,744        7,781      25,646   26,234
     Selling and administrative    2,612        2,408       9,249    8,892
     Provision for uncollectible
      accounts                       576          415       2,261    1,344
     Provision for previously
      securitized receivables          -            -           -      522
     Depreciation and amortization   225          214         875      863
     Interest                        277          321       1,143    1,415
     Special charges and
      impairments                      -          255         111      542
            Total costs and
             expenses             11,434       11,394      39,285   39,812

  Operating income                 1,084          826       2,081    1,178
  Other income, net                  274           15         372       45

  Income before income taxes and
   minority interest               1,358          841       2,453    1,223

  Income taxes                      (476)        (331)       (858)    (467)

  Minority interest                  (34)         (16)        (11)     (21)

  Income before cumulative effect
   of accounting change              848          494       1,584      735

  Cumulative effect of change in
   accounting for goodwill             -            -        (208)       -

  NET INCOME                        $848         $494      $1,376     $735

  EARNINGS PER COMMON SHARE

    Basic
      Earnings per share before
      cumulative effect of a change
      in accounting principle      $2.67        $1.53       $4.99    $2.25

      Cumulative effect of change
      in accounting for goodwill      $-           $-      $(0.65)      $-

      Earning per share            $2.67        $1.53       $4.34    $2.25

    Diluted
      Earnings per share before
       cumulative effect of a change
       in accounting principle     $2.67        $1.52       $4.94    $2.24

      Cumulative effect of change
       in accounting for goodwill     $-           $-      $(0.65)      $-

      Earning per share            $2.67        $1.52       $4.29    $2.24

      Average common and dilutive
       common equivalent shares
       outstanding                 317.6        325.5       320.7    328.5



  SEARS, ROEBUCK AND CO.

  Segment Income Statements

  (millions)

  For the 13 Weeks Ended December 28, 2002 and December 29, 2001

        Excluding Non-Comparable Items and Securitization Income

                                                        Credit & Financial
                           Retail & Related Services         Products
                               2002          2001         2002         2001

  Merchandise sales and
   services                   $9,731        $9,470          $-           $-
  Credit and financial
   products revenues               -             -       1,390        1,331

  Total Revenues               9,731         9,470       1,390        1,331

  Costs and expenses
     Cost of sales, buying
      and occupancy            6,870         6,822           -            -
     Selling and
      administrative           1,936         1,801         230          225
     Provision for
      uncollectible accounts       -             -         551          391
     Provision for previously
      securitized receivables      -             -           -            -
     Depreciation and
      amortization               186           174           4            4
     Interest                     13            11         242          285
     Special charges and
      impairments                  -             -           -            -
            Total costs and
             expenses          9,005         8,808       1,027          905

  Operating income              $726          $662        $363         $426

  Net Income before
   cumulative effect of
   change in accounting

  Cumulative effect of
   change in accounting

  Net Income

  EPS - Diluted

     Average shares o/s



  SEARS, ROEBUCK AND CO.

  Segment Income Statements

  (millions)

  For the 13 Weeks Ended December 28, 2002 and December 29, 2001

         Excluding Non-Comparable Items and Securitization Income

                                     Corporate & Other      Sears Canada
                                       2002      2001      2002        2001

  Merchandise sales and services       $85       $74     $1,243      $1,275
  Credit and financial products
   revenues                              -         -         69          70

  Total Revenues                        85        74      1,312       1,345

  Costs and expenses
     Cost of sales, buying and
      occupancy                         32        28        842         931
     Selling and administrative        132       126        314         256
     Provision for uncollectible
      accounts                           -         -         25          24
     Provision for previously
      securitized receivables            -         -          -           -
     Depreciation and amortization      16        14         19          22
     Interest                            -         -         22          25
     Special charges and
      impairments                        -         -          -           -
            Total costs and expenses   180       168      1,222       1,258

  Operating income                    $(95)     $(94)       $90         $87

  Net Income before cumulative
   effect of change in accounting

  Cumulative effect of change in
   accounting

  Net Income

  EPS - Diluted

     Average shares o/s



  SEARS, ROEBUCK AND CO.

  Segment Income Statements

  (millions)

  For the 13 Weeks Ended December 28, 2002 and December 29, 2001

                            Reconciling Items

                                                           Securitization
                                              Total            Impact
                                          2002      2001    2002    2001

  Merchandise sales and services        $11,059   $10,819     $-      $-
  Credit and financial products
   revenues                               1,459     1,401      -       -

  Total Revenues                         12,518    12,220      -       -

  Costs and expenses
     Cost of sales, buying and
      occupancy                           7,744     7,781      -       -
     Selling and administrative           2,612     2,408      -       -
     Provision for uncollectible
      accounts                              576       415      -       -
     Provision for previously
      securitized receivables                 -         -              -
     Depreciation and amortization          225       214      -       -
     Interest                               277       321      -       -
     Special charges and impairments          -         -      -       -
            Total costs and expenses     11,434    11,139      -       -

  Operating income                       $1,084    $1,081     $-      $-

  Net Income before cumulative effect
   of change in accounting                 $669      $657     $-      $-

  Cumulative effect of change in
   accounting                                $-        $-     $-      $-

  Net Income                               $669      $657     $-      $-

  EPS - Diluted                           $2.11     $2.02     $-      $-

     Average shares o/s                   317.6     325.5  317.6   325.5



  SEARS, ROEBUCK AND CO.

  Segment Income Statements

  (millions)

  For the 13 Weeks Ended December 28, 2002 and December 29, 2001

                            Reconciling Items

                                   Non-comparable items   Consolidated GAAP
                                      2002       2001     2002        2001

  Merchandise sales and services       $-         $-    $11,059     $10,819
  Credit and financial products
   revenues                             -          -      1,459       1,401

  Total Revenues                        -          -     12,518      12,220

  Costs and expenses
     Cost of sales, buying and
      occupancy                         -          -      7,744       7,781
     Selling and administrative         -          -      2,612       2,408
     Provision for uncollectible
      accounts                          -          -        576         415
     Provision for previously
      securitized receivables           -          -          -           -
     Depreciation and
      amortization                      -          -        225         214
     Interest                           -          -        277         321
     Special charges and
      impairments                       -        255          -         255
            Total costs and
             expenses                   -        255     11,434      11,394

  Operating income                     $-      $(255)    $1,084        $826

  Net Income before cumulative
   effect of change in accounting    $179      $(163)      $848        $494

  Cumulative effect of change in
   accounting                                     $-         $-          $-

  Net Income                         $179      $(163)      $848        $494

  EPS - Diluted                     $0.56     $(0.50)     $2.67       $1.52

     Average shares o/s             317.6      325.5      317.6       325.5



  For the 52 Weeks Ended December 28, 2002 and December 29, 2001

         Excluding Non-Comparable Items and Securitization Income

                                                                 Credit &
                                         Retail & Related        Financial
                                             Products             Services
                                          2002      2001     2002     2001

  Merchandise sales and services         $31,459   $31,346      $-       $-
  Credit and financial products revenues       -         -   5,392    5,216

  Total Revenues                          31,459    31,346   5,392    5,216

  Costs and expenses
     Cost of sales, buying and occupancy  22,743    23,081       -        -
     Selling and administrative            6,816     6,628     955      833
     Provision for uncollectible
      accounts                                 -         -   1,903    1,441
     Provision for previously
      securitized receivables                  -         -       -        -
     Depreciation and amortization           710       704      18       18
     Interest                                 35        32   1,014    1,395
     Special charges and impairments           -         -       -        -
            Total costs and expenses      30,304    30,445   3,890    3,687

  Operating income                        $1,155      $901  $1,502   $1,529

  Net Income before cumulative effect of
   change in accounting

  Cumulative effect of change in
   accounting

  Net Income

  EPS - Diluted

     Average shares o/s


  For the 52 Weeks Ended December 28, 2002 and December 29, 2001

         Excluding Non-Comparable Items and Securitization Income

                                      Corporate & Other    Sears Canada
                                         2002     2001    2002      2001

  Merchandise sales and services         $326     $378   $3,913    $4,031
  Credit and financial products
   revenues                                 -        -      276       294

  Total Revenues                          326      378    4,189     4,325

  Costs and expenses
     Cost of sales, buying and
      occupancy                           121      159    2,782     2,994
     Selling and administrative           442      473    1,036       997
     Provision for uncollectible
      accounts                              -        -       58        56
     Provision for previously
      securitized receivables               -        -        -         -
     Depreciation and amortization         55       58       92        83
     Interest                               -        -       94       111
     Special charges and impairments        -        -        -         -
            Total costs and expenses      618      690    4,062     4,241

  Operating income                      $(292)   $(312)    $127       $84

  Net Income before cumulative effect
   of change in accounting

  Cumulative effect of change in
   accounting

  Net Income

  EPS - Diluted

     Average shares o/s


  For the 52 Weeks Ended December 28, 2002 and December 29, 2001

                            Reconciling Items

                                                          Securitization
                                              Total           Impact
                                          2002      2001    2002    2001

  Merchandise sales and services        $35,698   $35,755     $-      $-
  Credit and financial products
   revenues                               5,668     5,510      -    (275)

  Total Revenues                         41,366    41,265      -    (275)

  Costs and expenses
     Cost of sales, buying and
      occupancy                          25,646    26,234      -       -
     Selling and administrative           9,249     8,931      -     (39)
     Provision for uncollectible
      accounts                            1,961     1,497      -    (153)
     Provision for previously
      securitized receivables                 -         -              -
     Depreciation and amortization          875       863      -       -
     Interest                             1,143     1,538      -    (123)
     Special charges and impairments          -         -      -       -
            Total costs and expenses     38,874    39,063      -    (315)

  Operating income                       $2,492    $2,202     $-     $40

  Net Income before cumulative effect
   of change in accounting               $1,578    $1,385     $-     $26

  Cumulative effect of change in
   accounting                                $-        $-     $-      $-

  Net Income                             $1,578    $1,385     $-     $26

  EPS - Diluted                           $4.92     $4.22     $-   $0.08

     Average shares o/s                   320.7     328.5  320.7   328.5


  For the 52 Weeks Ended December 28, 2002 and December 29, 2001

                            Reconciling Items

                                          Non-comparable   Consolidated
                                              items            GAAP
                                          2002     2001     2002      2001

  Merchandise sales and services           $-        $-  $35,698   $35,755
  Credit and financial products
   revenues                                 -         -    5,668     5,235

  Total Revenues                            -         -   41,366    40,990

  Costs and expenses
     Cost of sales, buying and
      occupancy                             -         -   25,646    26,234
     Selling and administrative             -         -    9,249     8,892
     Provision for uncollectible
      accounts                            300         -    2,261     1,344
     Provision for previously
      securitized receivables               -       522        -       522
     Depreciation and amortization          -         -      875       863
     Interest                               -         -    1,143     1,415
     Special charges and impairments      111       542      111       542
            Total costs and expenses      411     1,064   39,285    39,812

  Operating income                      $(411)  $(1,064)  $2,081    $1,178

  Net Income before cumulative effect
   of change in accounting                 $6     $(676)  $1,584      $735

  Cumulative effect of change in
   accounting                           $(208)       $-    $(208)       $-

  Net Income                            $(202)    $(676)  $1,376      $735

  EPS - Diluted                        $(0.63)   $(2.06)   $4.29     $2.24

     Average shares o/s                 320.7     328.5    320.7     328.5



  SEARS, ROEBUCK AND CO.

  SUPPLEMENTAL INFORMATION - DOMESTIC CREDIT CARD RECEIVABLES, INVENTORY
  AND STORE COUNT

  (millions)

                                          Average Balance

                           For the 13 Weeks Ended   For the 52 Weeks Ended
                            December 28, 2002 and    December 28, 2002 and
                               December 29, 2001        December 29, 2001
                              2002          2001       2002          2001

  Sears Card credit card
   receivables              $18,372       $22,804    $19,868       $23,828
  Sears Gold MasterCard
   credit card receivables   11,357         3,950      8,504         2,490
  Managed domestic credit
   card receivables         $29,729       $26,754    $28,372       $26,318



                                                  Ending Balance

                                               December 28,     December 29,
                                                   2002               2001

  Sears Card credit card receivables              $18,444           $22,342
  Sears Gold MasterCard credit card
   receivables                                     12,322             5,257
  Managed domestic credit card receivables        $30,766           $27,599



                          For the 13 Weeks Ended   For the 52 Weeks Ended
                           December 28, 2002 and    December 28, 2002 and
                             December 29, 2001        December 29, 2001
  Domestic managed credit
   card receivables-           2002          2001       2002          2001
  Net interest margin:
  Portfolio yield            17.91%        19.17%     18.29%        19.14%
  Effective financing
   rate                       3.24%         4.21%      3.55%         5.25%
  Net interest margin        14.67%        14.96%     14.74%        13.89%

  Total domestic managed
   net charge-off rate        5.40%         5.23%      5.42%         5.32%
    Sears Card managed
     net charge-off rate      6.36%         5.77%      6.28%         5.70%
    Sears Gold MasterCard
     managed net charge-
     off rate                 3.86%         2.10%      3.41%         1.65%


                                                 2002

                            Dec. 28,      Sep. 28,    Jun. 29,      Mar. 30,
                              2002          2002        2002          2002

  Domestic managed credit
   card receivables-
  Delinquency rate            7.69%         7.24%      6.87%        7.31%
    Sears Card
     delinquency rate        10.31%         9.71%      8.73%        8.75%
    Sears Gold MasterCard
     delinquency rate         3.78%         3.00%      2.58%        2.56%

  Allowance for
   uncollectible accounts    $1,780        $1,630     $1,441       $1,115

  Allowance % of domestic
   on-book credit
       card receivables       5.79%         5.57%      5.10%        4.13%


                                                  2001
                                             Dec. 29, 2001

  Domestic managed credit card receivables-
  Delinquency rate                                  7.58%
     Sears Card delinquency rate                    8.90%
     Sears Gold MasterCard delinquency rate         1.98%

  Allowance for uncollectible accounts             $1,115

  Allowance % of domestic on-book
   credit card receivables                          4.04%


                        December 28,  December 29,
                                2002           2001

  Domestic
   inventories   -LIFO        $4,635         $4,372
                 -FIFO        $5,237         $4,962


                        For the 13 Weeks Ended      For the 52 Weeks Ended
                          December 28, 2002           December 28, 2002
                        and December 29, 2001       and December 29, 2001

  Pretax LIFO charge
   (credit)              $(19)           $(5)         $11           $25


                           December 29,                        December 28,
  Domestic retail stores:       2001      Opened     Closed        2002

    Full-line stores             867         15       (10)          872
    Specialty formats          1,318         28       (41)        1,305
            Total              2,185         43       (51)        2,177

    Gross square feet          148.9        3.2      (2.2)        149.9



                                      Operating
    (millions, except per share data)  Income              Per Share

    13 Weeks Ended December 28,
     2002 and December 29, 2001       2002    2001       2002        2001
    Special charges and
     impairments:
       Home office and store
        operations initiatives        $-      $123       $-         $0.25
       Product category exits          -        69        -          0.13
       Exide battery litigation
        settlement                     -        63        -          0.12
    Total special charges and
     impairments                       -       255        -          0.50

      Non-comparable items in
       operating income               $-      $255        -          0.50
    Advance Auto Parts gain                             (0.56)        -

     Total effect on earnings per
      share                                            $(0.56)      $0.50



                                   Operating Income         Per Share

    52 Weeks Ended December 28,
     2002 and December 29, 2001       2002    2001       2002        2001
    Special charges  and
     impairments:
       Eaton's store conversions      $111    $-        $0.13        $-
       Home office and store
        operations initiatives         -       123        -          0.24
       Product category exits          -        69        -          0.14
       Exide battery litigation
        settlement                     -        63        -          0.12
       HomeLife closure and other      -       205        -          0.39
       Exit of cosmetics business      -        82        -          0.16
    Total special charges and
     impairments                       111     542       0.13        1.05

       Effect of change in
        estimate for the allowance
        for uncollectible accounts     300     -         0.59
    Provision for previously
     securitized receivables           -       522        -          1.01
    Net securitization income          -       (40)       -         (0.08)

      Non-comparable items in
       operating income               $411  $1,024       0.72        1.98
    Advance Auto Parts gain                             (0.74)        -
    Effect of change in accounting
     for goodwill                                        0.65         -

     Total effect on earnings per share                 $0.63       $1.98

SOURCE: Sears, Roebuck and Co.

CONTACT: Peggy A. Palter, +1-847-286-8361, or investor relations, Pam
White, +1-847-286-1468, both of Sears Roebuck and Co.

Web site:








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