Kmart Finalizes Transaction With Sears

Kmart Holding Corporation (NASDAQ: KMRT) announced today that the Company has finalized the previously disclosed sale of stores to Sears, Roebuck and Co. (NYSE: S).

Kmart will sell 50 stores for cash proceeds totaling $575.9 million, including $172 million in net cash proceeds to be received during the current quarter. The balance will be paid when Sears takes possession of the stores, no later than April of 2005.

As reported on September 2, 2004, Kmart and Sears entered into an agreement that provided for the sale of up to 51 stores by Kmart to Sears for up to $589.7 million in cash. The exact number of locations to be sold was subject to certain conditions under the agreement.

Kmart will continue to operate the stores sold to Sears until March or April 2005, with the exception of the West Palm Beach, Florida store which will transfer this fall. Sears has agreed to consider offering employment to any Kmart employee who desires a position at the converted stores. Store associates at the locations affected by the sale were notified today.

Julian C. Day, President and Chief Executive Officer of Kmart, said, "We are pleased to complete this transaction with Sears and look forward to operating and providing continued service to our customers at our more than 1400 locations nationwide."

About Kmart Holding Corporation

Kmart Holding Corporation (NASDAQ: KMRT) and its subsidiaries (together, "Kmart") is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Kathy Ireland, Martha Stewart Everyday, Route 66 and Sesame Street. For more information visit the Company's website at http://www.kmart.com/ .

Cautionary Statement Regarding Forward-Looking Information and Other Matters

Statements or reports made by or on behalf of Kmart which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, Kmart's current views with respect to current events and financial performance. Such forward-looking statements are based upon assumptions concerning future conditions that may ultimately prove to be inaccurate and involve risks, uncertainties and factors that could cause actual results to differ materially from any anticipated future results, expressed or implied, by such forward- looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, factors relating to Kmart's internal operations and the external environment in which it operates; Kmart's ability to successfully implement business strategies and otherwise fund and execute planned changes in various aspects of the business; marketplace demand for the products of Kmart's key brand partners, as well as the engagement of appropriate new brand partners; changes in consumer spending and Kmart's ability to anticipate buying patterns and implement appropriate inventory strategies; Kmart's ability to reverse its negative same-store sales trend; competitive pressures and other third party actions, including pressures from pricing and other promotional activities of competitors, as well as new competitive store openings; the resolution of allowed claims for which Kmart is obligated to pay cash under the Plan of Reorganization; Kmart's ability to properly monitor its inventory needs in order to timely acquire desired goods in appropriate quantities and/or fulfill labor needs at planned costs; Kmart's ability to attract and retain customers; Kmart's ability to maintain normal terms with vendors and service providers; Kmart's ability to maintain contracts, including leases, that are critical to its operations; Kmart's ability to develop a market niche; regulatory and legal developments; general economic conditions; weather conditions, including those which affect buying patterns of Kmart's customers; other factors affecting business beyond Kmart's control; Kmart's ability to attract, motivate and/or retain key executives and associates; and other risks detailed in Kmart's Securities and Exchange Commission filings. Kmart undertakes no obligation to release publicly the results of any revisions to these forward- looking statements to reflect events or circumstances after the date such statements were made.

SOURCE: Kmart Holding Corporation

CONTACT: Kmart Media Relations, +1-248-463-1021

Web site: http://www.kmart.com/