a June 2015 2015 Q1 Results Financial & Update Transformation Agenda

Introduction

Opening Remarks

Financial Results

Funding Our Transformation

Progress On Our Transformation

2 Cautionary Statement Regarding Forward-Looking Information

This presentation contains forward-looking statements, including statements about our transformation through our integrated strategy, the opportunities, some of which are quantified, presented by a framework for profit, our plans to redeploy and reconfigure our assets, our liquidity and ability to exercise financial flexibility as we meet our obligations and possible strategic transactions. Forward-looking statements, including these, are based on the current beliefs and expectations of our management and are subject to significant risks, assumptions and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. In addition, the framework for profit is not intended to provide guidance or predict results; instead, it is intended to provide dimensional context for the potential opportunities for increasing profitability if we are successful in achieving the potential results outlined, which is subject to significant assumptions, uncertainties and risks, including those identified in the presentation relating to maintaining, reversing or otherwise improving or achieving certain performance metrics, including member penetration, level of member engagement and retention rates. There can be no assurance that any of these efforts will be successful. The statements concerning the amendment and extension of our ABL credit facility and our evaluation of strategic alternatives, including with respect to the sale-leaseback/real estate investment trust transaction regarding certain owned real estate, also are subject to risks and uncertainties, including our ability to enter into or complete any such transactions on acceptable terms, on intended timetables or at all, the forms or terms and conditions of any such transactions, and the impact of the evaluation and/or completion of (or failure to complete) any such transactions on our other businesses. There can be no assurance that any of these efforts will be successful. The following additional factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: our ability to offer merchandise and services that our customers want, including our proprietary brand products; our ability to successfully implement our integrated retail strategy to transform our business; our ability to successfully manage our inventory levels; initiatives to improve our liquidity through inventory management and other actions; competitive conditions in the retail and related services industries; worldwide economic conditions and business uncertainty, including the availability of consumer and commercial credit, changes in consumer confidence and spending, the impact of rising fuel prices, and changes in vendor relationships; vendors’ lack of willingness to provide acceptable payment terms or otherwise restricting financing to purchase inventory or services; possible limits on our access to our domestic credit facility, which is subject to a borrowing base limitation and a springing fixed charge coverage ratio covenant, capital markets and other financing sources, including additional second lien financings, with respect to which we do not have commitments from lenders; our ability to successfully achieve our plans to generate liquidity through potential transactions or otherwise; potential liabilities in connection with the separation of Lands’ End, Inc. and disposition of a portion of our ownership interest in Canada Inc.; our extensive reliance on computer systems, including legacy systems, to implement our integrated retail strategy, process transactions, summarize results, maintain customer, member, associate and Company data, and otherwise manage our business, which may be subject to disruptions or security breaches; the impact of seasonal buying patterns, including seasonal fluctuations due to weather conditions, which are difficult to forecast with certainty; our dependence on sources outside the United States for significant amounts of our merchandise; our reliance on third parties to provide us with services in connection with the administration of certain aspects of our business and the transfer of significant internal historical knowledge to such parties; impairment charges for goodwill and intangible assets or fixed-asset impairment for long-lived assets; our ability to attract, motivate and retain key executives and other associates; our ability to protect or preserve the image of our brands; the outcome of pending and/or future legal proceedings, including product liability and qui tam claims and proceedings with respect to which the parties have reached a preliminary settlement; and the timing and amount of required pension plan funding. Certain of these and other factors are discussed in more detail in our filings with the Securities and Exchange Commission and our Annual Report on Form 10-K for the fiscal year ended January 31, 2015, which may be accessed through the Commission’s website at www.sec.gov. While we believe that our forecasts and assumptions are reasonable, we caution that actual results may differ materially. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available, except as required by law.

3 Non-GAAP Financial Measures

For purposes of evaluating operating performance, we use an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") measurement. Adjusted EBITDA is computed as net loss attributable to Corporation appearing on the statements of operations excluding loss attributable to noncontrolling interests, income tax (expense) benefit, interest expense, interest and investment income (loss), other income (loss), depreciation and amortization and gain on sales of assets. In addition, it is adjusted to exclude certain significant items as set forth below. Our management uses Adjusted EBITDA to evaluate the operating performance of our businesses, as well as executive compensation metrics, for comparable periods. Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items. While Adjusted EBITDA and Domestic Adjusted EBITDA are non-GAAP measurements, management believes that they are an important indicator of ongoing operating performance and useful to investors because:

• Adjusted EBITDA and Domestic Adjusted EBITDA excludes the effects of financing and investing activities by eliminating the effects of interest and depreciation costs; • Management considers gains/(losses) on the sale of assets to result from investing decisions rather than ongoing operations; and • Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects the comparability of results, including impairment charges related to fixed assets and intangible assets, closed store and severance charges, domestic pension expense, one-time credits from vendors, expenses associated with legal matters, transaction costs associated with strategic initiatives and other expenses, the Lands’ End separation and the Sears Canada de-consolidation. We have adjusted our results for these items to make our statements more comparable and therefore more useful to investors as the items are not representative of our ongoing operations and reflect past investment decisions.

See appendix for reconciliations of the differences between the non-GAAP financial measures used in this presentation with the most comparable financial measures calculated in accordance with GAAP.

4 Opening Remarks

1 Restoring Profitability To Our Company

2 Funding Our Transformation

3 Transforming Into A Member Focused Company

5 Financial Results Q1 2015

6 Domestic Adjusted EBITDA Results

Meaningful improvement in year-over-year Domestic Adjusted EBITDA trend

($ in millions) Q2 2014 Q3 2014 Q4 2014 Q1 2015 TTM

Current Year $(298) $(296) $125 $(141) $(610)

Prior Year $(73) $(310) $(92) $(178) $(653)

YoY Change $(225) $14 $217 $37 $43

7 First Quarter Year-Over-Year Revenue Changes

71% of revenue decline was due to non-comp items related to asset reconfiguration activity

$7,879 millions in ($697) Revenue declined 8.9% on a comparable basis, 1

Amount ($222) including the impact of both store and non-store sales

$6,459 ($501)

$5,882 ($558) ($19)

Q1 2014 Sears Canada Lands' End Closed Q1 2014 Comp Store Comp Q1 2015 As Reported Stores Comp Basis Sales Non-Store Sales 1 As Reported

(1) Comp Non-Store Sales represents revenue from ongoing business operations not directly associated with a store such as Home Services revenue, as well as revenue from our ongoing relationships with Sears Hometown and Outlet Stores, Inc. and Lands’ End.

8 First Quarter Comparable Store Sales

Experienced comparable store sales declines as we focus on improving profitability

Format Q1 2015 Driving Categories Sales EBITDA Appliances Consumer Electronics -7.0% Grocery & Household Apparel Increased focus on profitable Drug Store sales lead to higher year-over- year margin rate and EBITDA Appliances

Consumer Electronics Port delays on the West Coast Sears impacted our apparel business -14.5% Sears Auto Centers Domestic Apparel Sales decline outpaced margin rate improvement and reduction Lawn & Garden in expenses EBITDA decline primarily related Mattresses to timing of resets Total -10.9% Domestic

9 First Quarter Year-Over-Year Gross Margin Changes

A majority of the margin decline was due to non-comp items related to asset reconfiguration activity

$1,828

On a comparable basis, gross margin decreased $47M, or 3.0%, millions in but gross margin rate increased by 160 bps ($164) $94 $1,565 Amount ($87) $93 $1,518

($106) ($140)

Q1 2014 Sears Canada Lands' End Closed Store Other 1 Q1 2014 Volume Rate Q1 2015 As Reported Impact Comp Basis As Reported

$93M Favorable Gross Margin Rate Impact Driven By Product Margin Rate Increase: • Decreased overall promotional depth • Reduced Shop Your Way points expense by $40M through more efficient use of Points as a promotional vehicle

(1) Consists of non-cash reserves and one-time credits from vendors in Q1 2015.

10 First Quarter Year-Over-Year Expense Changes

$218M of the expense reduction was due to non-comp items related to asset reconfiguration activity

On a comparable basis, $2,089 we reduced expenses by $190M – since 2012 we have reduced our comparable annual expenses by $830M

$85 $1,871

in millions ($226) ($77) $1,681 ($124)

Amount Amount ($54) ($12)

Q1 2014 Sears Lands' End Non- Q1 2014 Payroll & Advertising Other Q1 2015 As Reported Canada Operating1 Comp Basis Benefits As Reported Expense Increase Expense Decrease

(1) Consists of closed store reserves, domestic pension expense, legal expenses, transaction costs and other expenses.

11 De-risking the Business Model First Quarter Net Inventory

We are running our business with less inventory on an absolute and seasonal basis

~$1.7B inventory reduction due to inventory productivity improvements & closed stores Reduced net inventory investment by $873M $6,731 Payable reduction of $804M further $6,071 de-risks our business model $5,054 $4,242 $3,731 $3,369 $2,489 $2,340 Amount in millions in Amount $1,685

2013 2014 2015 2013 2014 2015 2013 2014 2015 Inventory Payables Net Inventory1

While we do not expect the same levels of reduction in the future, by reducing our net inventory investment and our payables, we have decreased the level of vendor support needed to run our business, de-risking our business model in a way that benefits us and our vendor-partners

12 Financial Position & Liquid Assets

We have substantial resources to fund our transformation and to invest in our best stores, our best members and our best categories

Amounts in millions Q1 2015 Assuming the Seritage REIT transaction had Cash $ 286 closed prior to the end of the first quarter, the pro forma impact would have resulted in: Availability on Credit Facility1 726 . $2.3B of Cash 2 Availability on Secured Short-term Loan 196 . $1.1B of Availability on Credit Facility, and Total Liquid Availability $ 1,208 . $7.2B of Total Liquidity & Liquid Assets Equity in Inventory 3,369 Pro forma impact shown in detail on slide 20 Total Liquidity & Liquid Assets $ 4,577

SHC Domestic Credit Facility . $3.275B revolving credit facility3 through April 2016 secured by domestic inventory, credit card & pharmacy receivables . Permitted to raise up to $500M of short-term debt maturing before April 2016, $304M outstanding at the end of Q1 . Permitted to raise up to a maximum of $760M in additional 2nd lien debt, subject to borrowing base requirements4

Secured Short Term Loan . Repaid $200M of the $400M loan on March 2 and repaid the remaining $200M on June 1

SHC Real Estate Portfolio . Substantial real estate portfolio including approximately 650 owned and 1,065 leased locations at end of Q1

(1) Reflects effect of springing fixed charge coverage ratio covenant and borrowing base requirement. (2) There were $200M of lender commitments under the short-term secured loan; however, at the end of Q1 the amount we were permitted to borrow was limited to $196M by the $500M short-term debt basket in our SHC domestic credit facility. (3) Availability to borrow subject to the springing fixed charge coverage ratio covenant and borrowing base requirement. (4) The amount of permitted second lien debt will vary throughout the year depending on our inventory and associated borrowing base.

13 De-risking the Balance Sheet Domestic Adjusted Net Debt Position1

Including changes in the Unfunded Pension, Total Net Debt declines by $1.7 billion when adjusted as if the Seritage REIT transaction had occurred prior to the end of Q1 Total Net Debt $114 $767 $5,860 $320 $4,979 $5,093 $3,602 ($206) $3,488 $3,602

Increase in Unfunded Pension Obligation Driven By: $3,260 • 90 bps Drop in Interest Rates as Required by GAAP2

• New Society of Actuaries Mortality Tables ($2,600) $1,002 Note: FY15 pension contribution will decline to $291M vs. $417M in FY14

$2,258 Amounts in Amounts millions $1,491 $1,491 $2,258

Q1 2014 Change in Change in Q1 2015 Change in Q1 2015 Change in Net Q1 2015 Adjusted Net Long-term Net Short-term Adj. Net Debt Unfunded Adjusted Net Debt Due to Adjusted Net Debt Debt Debt Excl. Change in Pension Debt REIT3 Debt Pro Forma Pension Obligation for REIT Unfunded Pension Obligation Increase Decrease Net Debt (1) Defined as total net debt plus unfunded pension obligation. (2) GAAP interest rate required to be used in measuring funding levels. (3) No assurances can be given that the Seritage REIT transaction will be completed.

14 Funding Our Transformation

15 Funding Our Transformation Financing & Asset Reconfiguration Activities

We have taken significant actions over the past two years to generate liquidity, reduce our dependence on inventory as collateral and increase our long term financial flexibility

Fiscal 2014 Fiscal 2015 • Lands’ End Spin-Off • Secured Short-Term Loan • $500M in cash proceeds • Repaid loan on June 1, 2015 • Secured Short-Term Loan • JV with General Growth Properties • $400M in cash proceeds • $165M in cash proceeds1 • Rights Offering for 40M Common • JV with Simon Properties Shares in Sears Canada • $114M in cash proceeds1 • $380M in cash proceeds • JV with The Macerich Company • $150M in cash proceeds1 • Rights Offering for Senior Unsecured Notes with Warrants • Real Estate Investment Trust (REIT) • $625M in cash proceeds • Expect $2.6B in cash proceeds • Real Estate Transactions • Credit Agreement Amend & Extend nd • $358M in cash proceeds • Expect to close refinancing in our 2 quarter

(1) Before closing costs.

16

Funding Our Transformation Joint Ventures with Leading Shopping Mall Owners

• Entered into 50/50 real estate JV with General Growth Properties on 4/1/2015 • SHC contributed 12 properties located at GGP malls, valued at $330M, and received $165M1 in cash proceeds in exchange for a 50% interest in the JV • GGP contributed $165M of cash to the JV in exchange for a 50% interest in the JV

• Entered into 50/50 real estate JV with Simon Property Group on 4/13/2015 • SHC contributed 10 properties located at Simon malls, valued at $228M, and received $114M1 in cash proceeds in exchange for a 50% interest in the JV • Simon contributed $114M of cash to the JV in exchange for a 50% interest in the JV

• Entered into 50/50 real estate JV with The Macerich Company on 4/30/2015 • SHC contributed 9 properties located at Macerich malls, valued at $300M, and received $150M1 in cash proceeds in exchange for 50% interest in the JV • Macerich contributed $150M of cash to the JV in exchange for a 50% interest in the JV

In all cases, the JV entered into lease agreements with SHC to allow Sears & Kmart to continue to operate stores in the contributed locations

(1) Cash proceeds shown are before closing costs. In total, SHC received $426M net of closing costs.

17 Funding Our Transformation Sale-Leaseback to Real Estate Investment Trust

On June 12th, we expect to commence a rights offering related to the formation of Seritage Growth Properties and the subsequent purchase of properties from Sears Holdings

. Seritage Growth Properties (“Seritage”) is a newly formed Real Estate Investment Trust (“REIT”) that will become a separate publicly traded company upon the successful completion of the rights offering. . Seritage will purchase 235 real properties and SHC’s interests in the 3 Real Estate JV’s from SHC for $2.6B which will be funded by proceeds of approximately $1.6 billion from the Sears Holdings rights offering and $1.2 billion in debt issued by Seritage. . Under the rights offering, every shareholder of Sears Holdings will have the opportunity and choice to participate to the extent of their pro rata equity interest in Sears Holdings. . ESL has indicated its current intent to participate to the full extent of its pro rata equity interest in Sears Holdings. . Our other large shareholder, Fairholme Capital, has stated that it anticipates that certain of its clients, subject to the final terms of the offering and other considerations, are likely to exchange a portion of their subscription rights for certain non-voting shares, and that certain other clients currently intend to exercise their subscription rights to purchase common shares in the Seritage rights offering. . Seritage will enter into a master lease with SHC allowing Sears and Kmart to continue to operate in these locations with key features of the lease affording substantial flexibility to Sears Holdings to manage its real estate configuration and aligning the interests of Sears Holdings and Seritage: . Seritage can recapture up to 50% of the space in up to 50 properties per year . Seritage can recapture the remaining 50% of the space in 21 “development” properties at a price agreed to in the master lease . Sears Holdings can terminate and exit properties in an amount up to 20% of the aggregate annual rent obligation each year . The rights offering is expected to close in early July

18 Funding Our Transformation Credit Agreement Amendment & Extension

Continuing our moves to be less reliant on working capital based financing as we transform the business, we are working with our lenders to amend the ABL accordingly

• Reached agreement with our three existing co-agents, representing $1.175B of commitments, on terms pursuant to which they would be willing to amend and extend, to 2020, our $3.275B revolving credit facility currently expiring in April of 2016. • Seeking a smaller facility, consistent with lower inventory levels associated with our transformed business, with fewer stores, a greater online presence, and a more flexible capital structure. • The ABL credit facility will have 2 tranches after the amendment and extension: 1. Targeting an extending tranche of about $2.0 billion maturing in 2020 2. Targeting a non-extending tranche of $1.275 billion maturing in April 2016 • Terms of the amendment will provide us flexibility to raise additional capital: – $1.0B Accordion Feature – $500M First-In Last-Out Facility – $250M increase in Short-term debt basket from $500M to $750M • Expect to close the refinancing during our second quarter

19 Financial Position & Liquid Assets Pro Forma Adjustments for REIT Rights Offering

Actions currently underway are expected to significantly enhance our financial flexibility

Pro Forma Adjustments for Seritage REIT Transaction

Amounts in millions Q1 2015 Adjustments Pro Forma Cash $ 286 $ 1,990 $ 2,276 Availability on Credit Facility1 726 410 1,136 Availability on Secured Short-term Loan 196 (196) - Committed Liquid Availability $ 1,208 $ 2,204 $ 3,412 Uncommitted Short-term Borrowing Capacity - 396 396 Total Liquid Availability $ 1,208 $ 2,600 $ 3,808 Equity in Inventory 3,369 - 3,369 Total $ 4,577 $ 2,600 $ 7,177

. $2.6B of net cash proceeds from the sale of 235 properties and our remaining 50% interests in the 3 JV’s to the REIT . $410M used to pay down the revolver . $200M used to pay back Secured Short-term Loan2 as the REIT transaction closing triggers maturity of the debt . Repayment of loan frees up $200M of uncommitted availability . Additional $196M of lender commitments available at end of Q1 is eliminated at maturity; however, this also frees up an additional $196M of uncommitted availability . Remaining $1,990M is reflected as an increase in cash3

(1) Reflects effect of springing fixed charge coverage ratio covenant and borrowing base requirement. (2) The Secured Short-term Loan was extended to mature at the earlier of the June 1, 2015 or the closing of the REIT transaction. (3) Increase in cash does not reflect the use of proceeds to potentially reduce other outstanding debt, which we may determine is appropriate from time to time following the closing of the Seritage REIT transaction.

20 Recapitalization Of Our Balance Sheet Pro Forma Adjustments for REIT Rights Offering

Completion of the Seritage REIT transaction would substantially increase cash, reducing net debt and significantly deleveraging our balance sheet

Pro Forma Pro Forma $ in Milions Q1 2015 Adjustments for % Change Adjusted REIT Transaction S/T Debt Obligations $ 714 $ (610) $ 104 -85% L/T Debt Obligations (1) (2) 3,174 - 3,174 0% Total Balance Sheet Debt $ 3,888 $ (610) $ 3,278 -16% Unfunded Pension Obligations 2,258 - 2,258 0% Adjusted Debt $ 6,146 $ (610) $ 5,536 -10% Fully Loaded Debt $ 6,146 $ (610) $ 5,536 -10% Cash 286 1,990 2,276 696% Fully Loaded Net Debt $ 5,860 $ (2,600) $ 3,260 -44%

Market Capitalization (3) $ 4,318 $ - $ 4,318 0% Enterprise Value $ 10,178 $ (2,600) $ 7,578 -26%

Debt / Enterprise Value 0.58x 0.43x -25%

(1) Includes 8% Senior Unsecured Notes of $625M, carried at $360M per GAAP (2) Consists of $3,101M long-term debt and $73M of current portion of long-term debt (3) As of 5/1/2015

21 Progress On Our Transformation

22 Our Transformation Is Underway

23 We Are Focused On The Future

As we transform our business we are focused on three areas:

Our Best Our Best Our Best Members Stores Categories

24 Focused on Our Best Members Building Relationships Through Personalization

~50% of our Marketing Communications are now personalized

Mass vs. Personalized Interactions Benefits of Personalized Interactions

Increased Relevance

Increased Engagement

Higher Retention

Increased Visit Frequency

Q4 2014 Q1 2015 Personalized Traditional Larger Share of Member’s Wallet

25 Focused on Sears Holdings’ Best Stores by Optimizing our Real Estate REIT Transaction Structured to Accelerate Our Transformation

REIT transaction is structured to achieve three main objectives:

1 Raises $2.6B of capital to fund our transformation

2 Enables continued operation of Sears & Kmart in these stores

3 Accelerates the reduction of store space to improve productivity

26 Focused on Sears Holdings’ Best Stores by Optimizing our Real Estate REIT Transaction Structured to Accelerate Our Transformation

Sale-leaseback allows Sears & Kmart to retain a strong presence in top malls in U.S.

REIT Non-REIT 63 60

43 41 41 38 36 34

27 26 23 21 # of locations 27 26 16 15 18 17

2007 2015 2007 2015 2007 2015 Top 100 Malls in America Top 100 Fashion Malls in America Top 149 Malls in America (Goldman Sachs 2013) (Morgan Stanley 2009) (Combined Lists)

• Seritage will lease stores back to SHC allowing Sears & Kmart to continue to maintain a retail presence in locations sold to the REIT, including a majority of top malls in the country. • The lease provides SHC with termination rights on locations in which EBITDAR is less than Rent, providing SHC the flexibility to make strategic business decisions should these locations prove unprofitable in the future. • Sears Holdings will continue to own approximately 425 properties upon the closing of the REIT

27 Focused on Sears Holdings’ Best Stores by Optimizing our Real Estate REIT Transaction Structured to Accelerate Our Transformation

Lease terms designed to provide catalyst for right-sizing Sears & Kmart store space

Sears & on Shared Footprint Sears & Whole Foods on Shared Footprint Costa Mesa, California Clearwater, Florida

Seritage Recapture Right • Seritage may recapture up to 50% of the SHC space in up to 50 stores per year

Seritage Buyout Right • Seritage may acquire the remaining 50% of the space not already entitled to be recaptured in 21 stores by making a lease termination payment

28 Focused on Our Best Categories Leading Categories

We continue to invest in Our Best Categories Home Appliances

• Reinforcing our position as #1 appliance retailer in the U.S. • Introduced industry-leading capacity to laundry line • Investing in digital sign technology to enhance in-store member experience

Home Services

• Reinforcing our position as #1 national service provider • Leveraging advanced diagnostics to increase first time completes • Investing in people and technology with opening of Seattle Development Center

Apparel

• Elevating style and quality of our proprietary branded product assortments • Reducing lead times to improve in-season responsiveness • Improving assortment planning process across all categories

29 Closing Remarks

1 Restoring Profitability To Our Company . 3 Consecutive Quarters of Improved Year-Over-Year EBITDA Performance

2 Funding Our Transformation . Assuming Closure of the REIT Transaction We Will Have Realized $3 billion in Cash Proceeds

3 Transforming Into A Member Focused Company . Leveraging Shop Your Way Platform and Integrated Retail Initiatives

30

a Appendix First Quarter Adjusted Domestic Net Debt Position

Amounts in USD millions 13 Weeks Ended May 3, 2014 May 2, 2015 Unsecured Commercial Paper $ 159 $ 104 Secured Borrowings 1,071 410 Secured Short-term Loan - 200 Total Short-Term Borrowings $ 1,230 $ 714 Less: Cash (596) (286) Net Short-Term Borrowings $ 634 $ 428

Senior Secured Notes $ 1,238 $ 1,238 Senior Unsecured Notes1 - 360 SRAC Notes 327 327 Term Loan 989 981 Other Notes/Mortgages 15 13 SHC Borrowings $ 2,569 $ 2,919 Domestic Capital Lease Obligations 285 255

Total Domestic Long-Term Debt $ 2,854 $ 3,174

Total Domestic Net Debt $ 3,488 $ 3,602

Adjustments Add: Unfunded Pension - Domestic2 $ 1,491 $ 2,258 Adjusted Domestic Net Debt Position $ 4,979 $ 5,860

Q1 Pension Contributions - Domestic $ 98 $ 64

(1) 8% Senior Unsecured Notes of $625M, carried at $360M per GAAP (2) As of fiscal year end

32 Legacy Pension Obligation History

We continue to honor our legacy pension obligations while de-risking this liability

Sears Holdings has a frozen pension plan which provides benefits for past services

The pension obligation increased in 2014 due to a decrease in the discount rate and new mortality rates used to compute the liability

Amounts in millions Year-End Balances (1) 2014 2013 2012 2011 2010 2009 Assets $3,616 $3,490 $3,221 $4,051 $4,054 $3,633 Liability 5,874 4,981 5,311 6,109 5,623 5,435 Unfunded ($2,258) ($1,491) ($2,090) ($2,058) ($1,569) ($1,802) Discount Rate 3.70% 4.60% 4.25% 4.90% 5.75% 6.00%

. Note: A 100 bps increase in the discount rate would reduce the pension liability by approximately $600 million

(1) In 2012, the Company offered a voluntary lump sum to certain plan participants and paid $1.5 billion in settlements thereby reducing pension risk.

33 Domestic Pension Contributions

Historically, pension contributions have been We expect contributions to decline after 2014, providing relief from a significant use of our cash funding pressure created by artificially low interest rates 3 $1.6 Billion $1.5 Billion

1 $516 $ in millions $417 $360 $352 $324 $291 $304 $298 $239

2 2011 2012 2013 2014 2015 2016 2017 2018 2019 Actual Contributions Estimated Contributions

(1) In order to reduce the risks of gross pension obligations, the Company elected to contribute an additional $203M to the domestic pension plan in fiscal 2012, which is included in the amount shown. (2) The Company offered a voluntary lump sum to certain plan participants and paid $1.5 billion in settlements thereby reducing pension risk. (3) Projected contributions include provision for future strengthening of the mortality tables by the IRS.

34 First Quarter Sears Holdings Consolidated Results

Amounts in millions First Quarter 2015 2014 Revenues $ 5,882 $ 7,657

Margin 1,431 1,748 Margin rate 24.3% 22.8%

Expenses 1,572 1,969

Adjusted EBITDA (1) $ (141) $ (221)

By Segment: Kmart $ (61) $ (87) Sears Domestic (80) (91) Sears Canada — (43) $ (141) $ (221)

(1) Adjusted for the results of the Lands' End business which were included in our results prior to the separation.

35 First Quarter Significant Items

Amounts in millions First Quarter 2015 2014 Net loss as reported $ (303) $ (402)

Domestic pension expense 36 14

Domestic closed store/store impairments/severance 24 9

Domestic gain on sales of assets (60) (8)

Mark-to-market adjustments 12 —

Other(1) (46) —

Domestic tax matters 124 133

Sears Canada segment — 42

Lands' End separation — (4)

Adjusted net loss (2) $ (213) $ (216)

(1) Includes one-time credits from vendors, expenses associated with legal matters, transaction costs related to strategic initiatives and other expenses. (2) Adjusted for the results of the Lands' End and Sears Canada businesses which were included in our results prior to the separation/disposition.

36 First Quarter Consolidated Adjusted EBITDA

Amounts in millions First Quarter 2015 2014 Net loss attributable to SHC per statement of operations $ (303) $ (402) Loss attributable to noncontrolling interests — (40) Income tax expense (benefit) 18 (3) Interest expense 90 71 Interest and investment (income) loss 18 (4) Other (income) loss (1) 3 Operating loss (178) (375) Depreciation and amortization 122 155 Gain on sales of assets (107) (46) Before excluded items (163) (266)

Closed store reserve and severance 39 28 Domestic pension expense 57 22 Other(1) (74) — Impairment charges — 5 Adjusted EBITDA (141) (211)

Lands' End separation — (10) Adjusted EBITDA as defined(2) $ (141) $ (221)

Sears Canada segment — 43 Domestic Adjusted EBITDA as defined (2) $ (141) $ (178)

(1) Includes one-time credits from vendors, expenses associated with legal matters, transaction costs related to strategic initiatives and other expenses. (2) Adjusted for the results of the Lands' End and Sears Canada businesses which were included in our results prior to the separation/disposition.

37 First Quarter Adjusted Segment Results

Quarter Ended millions Kmart Sears Domestic Sears Canada Sears Holdings 2015 2014 2015 2014 2015 2014 2015 2014 Revenue $ 2,356 $ 2,897 $ 3,526 $ 4,063 $ - $ 697 $ 5,882 $ 7,657

Gross margin dollars 523 600 908 984 - 164 1,431 1,748

Gross margin rate 22.2% 20.7% 25.8% 24.2% 0.0% 23.5% 24.3% 22.8%

Selling and administrative 584 687 988 1,075 - 207 1,572 1,969

Selling and administrative expense as a percentage of total revenues 24.8% 23.7% 28.0% 26.5% 0.0% 29.7% 26.7% 25.7%

Adjusted EBITDA(1) (61) (87) (80) (91) - (43) (141) (221)

Depreciation and amortization (20) (23) (102) (114) - (18) (122) (155)

Gain on sales of assets 18 21 89 26 - (1) 107 46

Special items: Closed store reserve and severance (36) (9) (3) - - (19) (39) (28) Domestic pension expense - - (57) (22) - - (57) (22) Other(2) (8) - 82 - - - 74 - Impairment charges - - - (5) - - - (5) Lands' End separation - - - 10 - - - 10

Operating loss $ (107) $ (98) $ (71) $ (196) $ - $ (81) $ (178) $ (375)

(1) Adjusted for the results of the Lands' End business which were included in our results prior to the separation. (2) Consists of one-time credits from vendors, expenses associated with legal matters, transaction costs related to strategic initiatives and other expenses.

38 First Quarter Reconciliation to GAAP

Quarter Ended May 2, 2015 Adjustments Domestic Domestic Domestic Closed Store Gain on Domestic Pension Reserve and Sales of Mark-to-Market Tax As millions, except per share data GAAP Expense Severance Assets Adjustments Othe r 1 Matters Adjusted Gross margin impact $ 1,518 $ — $ 6 $ — $ — $ (93) $ — $ 1,431 Selling and administrative impact 1,681 (57) (33) — — (19) — 1,572 Gain on sales of assets impact (107) — — 96 — — — (11) Operating loss impact (178) 57 39 (96) — (74) — (252) Interest and investment loss impact (18) — — — 19 — — 1 Income tax benefit impact (18) (21) (15) 36 (7) 28 124 127 After tax and noncontrolling interest impact (303) 36 24 (60) 12 (46) 124 (213) Diluted loss per share impact $ (2.85) $ 0.34 $ 0.23 $ (0.56) $ 0.11 $ (0.43) $ 1.16 $ (2.00)

Quarter Ended May 3, 2014 Adjustments

Domestic Closed Store Domestic Domestic Reserve, Store Gain on Sears Pension Impairments and Sales of Domestic Tax Canada Lands' End As millions, except per share data GAAP Expense Severance Assets Matters Segment Separation Adjusted(2) Gross margin impact $ 1,828 $ — $ 7 $ — $ — $ (164) $ (87) $ 1,584 Selling and administrative impact 2,089 (22) (2) — — (226) (77) 1,762 Depreciation and amortization impact 155 — — — — (18) (3) 134 Impairment charges impact 5 — (5) — — — — — Gain on sales of assets impact (46) — — 13 — (1) — (34) Operating loss impact (375) 22 14 (13) — 81 (7) (278) Interest expense impact (71) — — — — 2 — (69) Interest and investment income impact 4 — — — — (2) — 2 Other loss impact (3) — — — — 3 — — Income tax benefit impact 3 (8) (5) 5 133 (2) 3 129 Loss attributable to noncontrolling interest impact 40 — — — — (40) — — After tax and noncontrolling interest impact (402) 14 9 (8) 133 42 (4) (216) Diluted loss per share impact $ (3.79) $ 0.13 $ 0.08 $ (0.07) $ 1.25 $ 0.40 $ (0.03) $ (2.03)

(2) Includes one-time credits from vendors, expenses associated w ith legal matters, transaction costs related to strategic initiatives and other expenses. (2) Adjusted for the results of the Lands' End and Sears Canada businesses w hich w ere included in our results prior to the separation/disposition.

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