8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 29, 2007

SEARS HOLDINGS CORPORATION

(Exact name of registrant as specified in charter)

Delaware	000-51217	20-1920798
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3333 Beverly Road Hoffman Estates, Illinois	60179
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (847) 286-2500

(Former name or former address, if changed since last report): Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 - Financial Information

Item 2.02.  Results of Operations and Financial Condition.

On November 29, 2007, the Registrant issued a press release regarding its third quarter 2007 earnings. The press release is attached hereto as Exhibit 99.1.

Section 9 - Financial Statements and Exhibits

Item 9.01   Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1 – Press release dated November 29, 2007, furnished pursuant to Item 2.02.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SEARS HOLDINGS CORPORATION
By:	/s/ William K. Phelan
	William K. Phelan
	Senior Vice President and Controller

Date: November 29, 2007

Exhibit Index

99.1 Press release dated November 29, 2007.

EX-99.1

EXHIBIT 99.1

NEWS MEDIA CONTACT:

Sears Holdings Public Relations

(847) 286-8371

FOR IMMEDIATE RELEASE:

November 29, 2007

SEARS HOLDINGS REPORTS THIRD QUARTER RESULTS

HOFFMAN ESTATES, Ill. – Sears Holdings Corporation (“Holdings,” “we,” “us,” “our” or the “Company”) (NASDAQ: SHLD) today reported net income of $2 million, or $0.01 per diluted share, for the third quarter ended November 3, 2007, compared with net income of $196 million, or $1.27 per diluted share, for the third quarter ended October 28, 2006. The third quarter 2006 results included $101 million in pre-tax gains ($64 million after tax or $0.42 per diluted share) on total return swap investments outstanding during that period. Excluding these gains, earnings per diluted share were $0.85 for the third quarter of fiscal 2006. The year-over-year decline in income is primarily the result of a $223 million decline in gross margin, reflecting both sales declines, as well as an overall decline in our gross margin rate for the quarter.

“We are very disappointed in our performance for the third quarter. We cannot blame our results entirely on the retail and macro-economic environments. We have much on which to improve and are working hard to do so.” said Aylwin Lewis, Sears Holdings’ chief executive officer and president. “Nevertheless, the Company continues to generate cash, and we continue to invest in our customer relationships, our multi-channel experience, and our information technology systems. Importantly, we believe that our stores and websites are ready to serve our customers and provide them more reasons to shop with us.”

Revenues and Comparable Store Sales

Sears Domestic’s comparable store sales declined 4.2% for the quarter, while Kmart’s comparable store sales declined 5.0%. Total domestic comparable store sales declined 4.6%. We experienced lower sales across most merchandise categories at both Kmart and Sears Domestic, with notable declines in apparel and lawn and garden at both formats, partially offset by increased sales within home electronics, notably at Sears Domestic. We believe the overall comparable store sales results reflect increased competition, the negative impact of unfavorable economic conditions, such as a weak housing market and growing consumer credit concerns, as well as the unfavorable impact of unseasonably warm weather, prevalent during much of the third quarter, on sales of apparel and other seasonal merchandise. For the quarter, our total revenues declined $0.4 billion to $11.5 billion in fiscal 2007, as compared to $11.9 billion for the third quarter of fiscal 2006.

For our fiscal November month-to-date period (Sunday, November 4, 2007 through Tuesday, November 27, 2007), our domestic comparable store sales have declined 0.4%, with Sears Domestic’s comparable store sales increasing 1.9% and Kmart’s comparable store sales declining 3.3%. While we have experienced higher sales at Sears Domestic for this period, the increase in comparable store sales was driven by sales of home electronics which generally have a lower margin rate than other categories.

Operating Income

Our operating income for the quarter decreased $230 million to $46 million in fiscal 2007, as compared to $276 million in the third quarter of fiscal 2006, mainly due to lower gross margin generated at both Kmart and Sears Domestic. For the quarter, we generated $3.2 billion in total gross margin as compared to $3.4 billion in the third quarter last year. The $0.2 billion decline was made up of separate $0.1 billion declines at both Kmart and Sears Domestic. Our gross margin rate decreased by approximately 90 basis points to 27.4% and was impacted by incremental markdowns taken to clear seasonal merchandise and higher inventory levels due to lower sales. Given that we do not expect any significant near-term improvement in the overall retail environment, we believe that our sales and gross margin for the balance of fiscal 2007 will likely continue to be pressured by the above-noted unfavorable economic factors.

Financial Position

We had cash and cash equivalents of $1.5 billion at November 3, 2007 (of which $0.8 billion was domestic and $0.7 billion was at Sears Canada) as compared to $2.1 billion at October 28, 2006 and $4.0 billion at February 3, 2007. During the third quarter, cash and cash equivalents declined $1.1 billion from the $2.6 billion balance at the end of the second quarter. The $1.1 billion net decline in cash and cash equivalents for the quarter primarily reflects $0.9 billion used for share repurchases (as detailed below) and $0.9 billion used to build inventories for the holiday selling season (net of merchandise payables), partially offset by $0.6 billion of cash generated through short-term borrowings. The $0.6 billion in short-term borrowings under our five-year revolving credit facility has been repaid as of November 27, 2007.

Merchandise inventories at November 3, 2007 were $12.0 billion, as compared to $11.5 billion as of October 28, 2006. The increase reflects the addition of $0.2 billion of previously consigned pharmacy inventory, an increase in Sears Canada inventory primarily due to the change in exchange rates, increased home electronics inventory at Sears Domestic and the effect of lower than expected sales levels. As we expect difficult economic conditions to persist in the near term, we intend to manage our inventories in the fourth quarter with the goal of reducing our fiscal year-end domestic merchandise inventories to levels below last year-end’s levels.

Share Repurchase

We repurchased 6.7 million common shares at a total cost of $0.9 billion (or $131.72 per share) under our share repurchase program during the third quarter of fiscal 2007. As previously announced on August 13, 2007, our Board of Directors approved the repurchase of up to an additional $1.5 billion of our common shares. The share repurchases may be implemented using a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, the purchase of call options, the sale of put options or otherwise, or by any combination of such methods. Timing will be dependent on prevailing market conditions, alternative uses of capital and other factors. As of November 27, 2007, we had remaining authorization to repurchase $736 million of common shares under the share repurchase program.

Adjusted EBITDA

For purposes of evaluating operating performance, we use an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) measurement computed as operating income appearing on the statement of income less depreciation and amortization and gains/(losses) on sales of assets. In addition, it is adjusted to exclude certain nonrecurring gains/(losses) and restructuring charges. Adjusted EBITDA is used by management to evaluate the operating performance of our businesses 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. Management compensates for this limitation by using GAAP financial measures as well in managing our businesses.

While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance because:

• 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

• Restructuring activities 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;

2

Adjusted EBITDA was determined as follows:

	13 Weeks Ended						39 Weeks Ended
	November 3, 2007			October 28, 2006			November 3, 2007			October 28, 2006
Operating income per statement of income	$	46		$	276		$	778		$	1,124
Plus depreciation and amortization		255			278			779			843
Less gain on sale of assets		—			(8	)		(10	)		(32	)
Before excluded items		301			546			1,547			1,935
Sears Canada post-retirement benefit plans curtailment gain		—			—			(27	)		—
Hurricane related recoveries		(1	)		—			(19	)		—
Vice Chairman separation expense		—			—			—			8
Visa/MasterCard settlement		—			—			—			(36	)
Restructuring charges		—			4			—			27
Adjusted EBITDA as defined	$	300		$	550		$	1,501		$	1,934
% to revenues		2.6	%		4.6	%		4.2	%		5.3	%

Adjusted EBITDA for our domestic (United States operations) and Sears Canada operations are as follows:

	13 Weeks Ended								39 Weeks Ended
	Adjusted EBITDA				% To Revenues				Adjusted EBITDA				% To Revenues
	November 3, 2007		October 28, 2006		November 3, 2007		October 28, 2006		November 3, 2007		October 28, 2006		November 3, 2007		October 28, 2006
Domestic operations	$	197	$	439	1.9	%	4.1	%	$	1,244	$	1,692	3.9	%	5.1	%
Sears Canada		103		111	7.9	%	8.9	%		257		242	7.1	%	6.8	%
Adjusted EBITDA	$	300	$	550	2.6	%	4.6	%	$	1,501	$	1,934	4.2	%	5.3	%

Quarterly Report on Form 10-Q

We plan to file our Quarterly Report on Form 10-Q for the third quarter 2007 with the SEC on November 30, 2007.

Forward-Looking Statements

Results are unaudited. This press release contains forward-looking statements about our expectations. Forward-looking statements are subject to risks 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. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. Risks and uncertainties include the possibility that we fail to offer products and services that satisfy the desires of our customers, whose preferences may change in the future, or other factors outside the control of Holdings. Actual results may differ materially from those set forth in the forward-looking statements. We intend the forward-looking statements to speak only as of the time made and does not undertake to update or revise them as more information becomes available.

3

About Sears Holdings Corporation

Sears Holdings Corporation is the nation’s fourth largest broadline retailer, with over $50 billion in annual revenues, and approximately 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands’ End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. We also have Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. We are the nation’s largest provider of home services, with more than 13 million service calls made annually. For more information, visit Sears Holdings’ website at www.searsholdings.com.

4

Sears Holdings Corporation

Condensed Consolidated Statements of Income

(Unaudited)

	13 Weeks Ended						39 Weeks Ended
millions, except per share data	November 3, 2007			October 28, 2006			November 3, 2007			October 28, 2006
REVENUES
Merchandise sales and services	$	11,548		$	11,941		$	35,489		$	36,724
COSTS AND EXPENSES
Cost of sales, buying and occupancy		8,387			8,557			25,649			26,380
Gross margin dollars		3,161			3,384			9,840			10,344
Gross margin rate		27.4	%		28.3	%		27.7	%		28.2	%
Selling and administrative		2,860			2,834			8,293			8,382
Selling and administrative expense as a percentage of total revenues		24.8	%		23.7	%		23.4	%		22.8	%
Depreciation and amortization		255			278			779			843
Gain on sales of assets		—			(8	)		(10	)		(32	)
Restructuring charges		—			4			—			27
Total costs and expenses		11,502			11,665			34,711			35,600
Operating income		46			276			778			1,124
Interest and investment income		(30	)		(140	)		(112	)		(241	)
Interest expense		66			89			210			255
Other income		(1	)		—			(17	)		(15	)
Income before income taxes and minority interest		11			327			697			1,125
Income taxes (benefit) expense		(5	)		119			267			438
Minority interest		14			12			36			17
NET INCOME	$	2		$	196		$	394		$	670
EARNINGS PER COMMON SHARE
Diluted earnings per share	$	0.01		$	1.27		$	2.66		$	4.29
Diluted weighted average common shares outstanding		139.9			154.4			148.2			156.3

5

Sears Holdings Corporation

Condensed Consolidated Balance Sheets

	(Unaudited)
millions	November 3, 2007		October 28, 2006		February 3, 2007
ASSETS
Current assets
Cash and cash equivalents	$	1,475	$	2,096	$	3,968
Receivables		963		909		847
Merchandise inventories		12,030		11,508		9,907
Other current assets		717		902		684
Total current assets		15,185		15,415		15,406
Property and equipment, net		8,855		9,247		9,132
Goodwill		1,691		1,880		1,692
Tradenames and other intangible assets		3,370		3,467		3,437
Other assets		467		460		399
TOTAL ASSETS	$	29,568	$	30,469	$	30,066
LIABILITIES
Current liabilities
Short-term borrowings and current portion of long-term debt	$	1,374	$	618	$	707
Merchandise payables		4,437		4,195		3,312
Unearned revenues		1,126		1,078		1,073
Other current liabilities		4,389		5,098		4,960
Total current liabilities		11,326		10,989		10,052
Long-term debt and capitalized lease obligations		2,643		2,914		2,849
Pension and postretirement benefits		1,414		2,092		1,648
Minority interest and other liabilities		3,471		2,850		2,803
Total Liabilities		18,854		18,845		17,352
Total Shareholders’ Equity		10,714		11,624		12,714
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	29,568	$	30,469	$	30,066
Total common shares outstanding		137.7		153.9		153.8

6

Sears Holdings Corporation

Segment Results

(Unaudited)

	13 Weeks Ended November 3, 2007
millions				Sears
	Kmart			Domestic			Canada			Sears Holdings
Merchandise sales and services	$	3,803		$	6,449		$	1,296		$	11,548
Cost of sales, buying and occupancy		2,979			4,519			889			8,387
Gross margin dollars		824			1,930			407			3,161
Gross margin rate		21.7	%		29.9	%		31.4	%		27.4	%
Selling and administrative		855			1,701			304			2,860
Selling and administrative expense as a percentage of total revenues		22.5	%		26.4	%		23.5	%		24.8	%
Depreciation and amortization		28			193			34			255
Total costs and expenses		3,862			6,413			1,227			11,502
Operating (loss) income	$	(59	)	$	36		$	69		$	46
Number of:
Kmart Stores		1,387			—			—			1,387
Full-Line Stores		—			934			123			1,057
Specialty Stores		—			1,124			255			1,379
Total Stores		1,387			2,058			378			3,823
	13 Weeks Ended October 28, 2006
millions				Sears
	Kmart			Domestic			Canada			Sears Holdings
Merchandise sales and services	$	4,042		$	6,655		$	1,244		$	11,941
Cost of sales, buying and occupancy		3,096			4,611			850			8,557
Gross margin dollars		946			2,044			394			3,384
Gross margin rate		23.4	%		30.7	%		31.7	%		28.3	%
Selling and administrative		889			1,662			283			2,834
Selling and administrative expense as a percentage of total revenues		22.0	%		25.0	%		22.7	%		23.7	%
Depreciation and amortization		22			223			33			278
(Gain) loss on sales of assets		(9	)		1			—			(8	)
Restructuring charges		4			—			—			4
Total costs and expenses		4,002			6,497			1,166			11,665
Operating income	$	40		$	158		$	78		$	276
Number of:
Kmart Stores		1,394			—			—			1,394
Full-Line Stores		—			933			123			1,056
Specialty Stores		—			1,083			252			1,335
Total Stores		1,394			2,016			375			3,785

7

Sears Holdings Corporation

Segment Results

(Unaudited)

	39 Weeks Ended November 3, 2007
millions				Sears
	Kmart			Domestic			Canada			Sears Holdings
Merchandise sales and services	$	12,046		$	19,815		$	3,628		$	35,489
Cost of sales, buying and occupancy		9,237			13,884			2,528			25,649
Gross margin dollars		2,809			5,931			1,100			9,840
Gross margin rate		23.3	%		29.9	%		30.3	%		27.7	%
Selling and administrative		2,564			4,913			816			8,293
Selling and administrative expense as a percentage of total revenues		21.3	%		24.8	%		22.5	%		23.4	%
Depreciation and amortization		81			601			97			779
Gain on sales of assets		(1	)		(1	)		(8	)		(10	)
Total costs and expenses		11,881			19,397			3,433			34,711
Operating income	$	165		$	418		$	195		$	778
Number of:
Kmart Stores		1,387			—			—			1,387
Full-Line Stores		—			934			123			1,057
Specialty Stores		—			1,124			255			1,379
Total Stores		1,387			2,058			378			3,823
	39 Weeks Ended October 28, 2006
millions				Sears
	Kmart			Domestic			Canada			Sears Holdings
Merchandise sales and services	$	12,768		$	20,403		$	3,553		$	36,724
Cost of sales, buying and occupancy		9,726			14,156			2,498			26,380
Gross margin dollars		3,042			6,247			1,055			10,344
Gross margin rate		23.8	%		30.6	%		29.7	%		28.2	%
Selling and administrative		2,618			4,951			813			8,382
Selling and administrative expense as a percentage of total revenues		20.5	%		24.3	%		22.9	%		22.8	%
Depreciation and amortization		55			687			101			843
Gain on sales of assets		(26	)		(6	)		—			(32	)
Restructuring charges		8			—			19			27
Total costs and expenses		12,381			19,788			3,431			35,600
Operating income	$	387		$	615		$	122		$	1,124
Number of:
Kmart Stores		1,394			—			—			1,394
Full-Line Stores		—			933			123			1,056
Specialty Stores		—			1,083			252			1,335
Total Stores		1,394			2,016			375			3,785

8

Sears Holdings Corporation

Adjusted EBITDA

	13 Weeks Ended
millions	November 3, 2007									October 28, 2006
	Domestic Operations			Sears Canada			Sears Holdings			Domestic Operations			Sears Canada			Sears Holdings
Operating income per statement of income	$	(23	)	$	69		$	46		$	198		$	78		$	276
Plus depreciation and amortization		221			34			255			245			33			278
Less gain on sale of assets		—			—			—			(8	)		—			(8	)
Before excluded items		198			103			301			435			111			546
Hurricane related recoveries		(1	)		—			(1	)		—			—			—
Restructuring charges		—			—			—			4			—			4
Adjusted EBITDA as defined	$	197		$	103		$	300		$	439		$	111		$	550
% to revenues		1.9	%		7.9	%		2.6	%		4.1	%		8.9	%		4.6	%
	39 Weeks Ended
millions	November 3, 2007									October 28, 2006
	Domestic Operations			Sears Canada			Sears Holdings			Domestic Operations			Sears Canada			Sears Holdings
Operating income per statement of income	$	583		$	195		$	778		$	1,002		$	122		$	1,124
Plus depreciation and amortization		682			97			779			742			101			843
Less gain on sale of assets		(2	)		(8	)		(10	)		(32	)		—			(32	)
Before excluded items		1,263			284			1,547			1,712			223			1,935
Sears Canada post-retirement benefit plans curtailment gain		—			(27	)		(27	)		—			—			—
Hurricane related recoveries		(19	)		—			(19	)		—			—			—
Vice Chairman separation expense		—			—			—			8			—			8
Visa/MasterCard settlement		—			—			—			(36	)		—			(36	)
Restructuring charges		—			—			—			8			19			27
Adjusted EBITDA as defined	$	1,244		$	257		$	1,501		$	1,692		$	242		$	1,934
% to revenues		3.9	%		7.1	%		4.2	%		5.1	%		6.8	%		5.3	%

9