Sears Holdings Conference Call Highlights

reported its Q3 earnings on Thursday. Shares of the company are down 4 percent. Below are some key highlights from its conference call.

• We remain highly focused on restoring our company to profitability and believe we have a framework and path to do so. • We have a number of different levers at our disposal that will enable a company of our size and scope to deliver value to our many stakeholders.

• First, our transformation continues as we leverage Shop Your Way and Integrated Retail. • For all of the focus on crowds in stores, most people, and especially our Shop Your Way Members, are buying gifts on multiple platforms, at all hours. • Adapting for the future has been the major focus of our Sears and Kmart formats and there is a fundamental shift in how Sears and Kmart are interacting with members. • We have put an enormous amount of work into understanding how, where and when our members want to shop. • We are using this additional data to adapt our platforms and enhance the integrated retail experience for our members. • As we leverage Shop Your Way and Integrated Retail, we will continue to right-size, redeploy and highlight the value of our assets, including our substantial real estate portfolio, as we transition from an asset-intensive, store-focused retailer to an asset-light, integrated retailer. • In addition, we are partnering with other retailers, brands and service providers to leverage our brick and mortar stores and at the same time offer an enhanced shopping experience to our members through one-stop shopping. • Second, we are taking steps to restore profitability to our company. We have taken and will continue to take actions to address our performance on several levels focusing on three key areas. • The first is improving our pricing and promotional design to yield higher gross margins. • Second, rationalizing our physical footprint to focus on our better performing stores. • We have more than 1,800 Sears and Kmart stores combined, about 700 of which are owned. • Few companies have this scale and reach. • Of our leased stores, most are in a five year option period, providing us with significant flexibility as we continue to evaluate our store network in the context of our business model. • The board and management assess our physical footprint on a regular basis. • Finally, reducing costs. • Our reported expenses were down approximately $250 million year-over-year in our third quarter, and about $550 million year-to-date. • While a portion of this reduction is related to store closure activity and the spinoff of Lands' End. • We have also made material reductions in our ongoing business cost structure with approximately $70 million in year-over-year reductions for Q3 and $155 million year-to-date. • Areas of focus include fixed to digital marketing changes, lean process engineering and leveraging technology to improve existing business processes. • We have reduced expenses on a net basis, at the same time, we continue to invest in our business transformation. • Third, we have taken actions to significantly enhance our financial flexibility and plan to take additional actions with a goal of enhancing long-term flexibility. • Since September, we have generated $1.4 billion in liquidity and $2.2 billion year to date. • As a result of these actions, we have increased our liquidity and reduced our debt. • We intend to continue to evaluate and evolve Sears Holdings' capital structure with a goal of utilizing our rich portfolio of assets to achieve more long-term financial flexibility. • The actions we have taken over the past few months are tangible steps towards this end.

• Consolidated results with $7.2 billion of revenue in the third quarter. • Sears Domestic comparable store sales would have experienced a positive comparable store sales increase of 1%. • Taken together, we had about $4.6 billion of liquidity or liquid assets, which could be converted into cash in the near-term. • On our Q4 and full year 2013 earnings call in February of this year, we disclosed that we intended to generate cash proceeds to the company in excess of $1 billion in 2014. • We have substantially exceeded that objective having generated approximately $2.2 billion of liquidity from financing and asset reconfiguration activities.