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 CHICAGO, Jan. 25 /PRNewswire/ -- Sears, Roebuck and Co. (NYSE: S) today announced a major restructuring program to streamline its Merchandise Group by focusing on profitable core retail operations, further implementing its September 1992 decision to concentrate on its retail and insurance businesses. The restructuring program will require a $1.7 billion after-tax charge in the fourth quarter of 1992.
 Sears said that over the next year it will discontinue its U.S. catalog operations, close unprofitable U.S. retail and specialty stores, streamline or discontinue various unprofitable activities, offer a voluntary early retirement program to certain salaried associates, and write down various real estate properties.
 The restructuring program was approved by Sears board of directors at a meeting Saturday, Jan. 23. When completed early in 1994, the restructuring is expected to improve net income by about $300 million annually, improve cash flow, and eliminate about 16,000 full-time and 34,000 part-time positions. Sears Merchandise Group had an estimated 350,000 associates in 1992.
 Sears also announced it would establish a $200 million after-tax reserve to write down land held for office development and selected office properties in its Homart Development Co. Additionally, Sears will take a $1.9 billion non-cash after-tax charge in 1992 to adopt previously announced new accounting standards covering post-retirement health and other post-employment benefits.
 Sears Chairman and Chief Executive Officer Edward A. Brennan said, "These measures continue our broad corporate restructuring to focus on our core retail and insurance businesses. Plans to divest some of our financial services units are proceeding on schedule, and successful implementation of the Merchandise Group's initiatives will result in a Sears that has a sharper focus on profitable businesses and considerably reduced debt, which we believe will enhance shareholder value."
 Sears Merchandise Group Chairman and Chief Executive Officer Arthur C. Martinez said, "The restructuring program we are announcing today is a painful but necessary step to correct a number of chronic business problems for Sears Merchandise Group and to accelerate progress on our cost reduction goals. Sears will now focus on core retail businesses and locations where we are either winning today or have the capacity to do so in the near future. Our objective is simple: To provide customers with good values and superior service in merchandising businesses that will provide an attractive return to our shareholders."
 Martinez continued, "The restructuring program is diverse, complex and comprehensive and will require several months to complete. We are committed to its careful and thoughtful implementation to ensure proper communication and understanding with associates, customers, and vendors.
 "Sears will remain a dominant retailer in key merchandise lines and related services. Sears merchandise businesses not affected by the restructuring accounted for about $28 billion, or 88 percent of the total estimated 1992 Merchandise Group revenues of $32 billion," Martinez said.
 The major elements of the restructuring program are:
 -- Discontinue by the end of 1993 the traditional U.S. catalog operations while remaining in the direct response business. Of the total $1.7 billion after-tax charge, $800 million is for catalog. About 3,400 full-time and 16,500 part-time positions will be eliminated. In 1992 Sears Catalog had estimated U.S. revenues of about $3.3 billion. Martinez said, "This was a very difficult decision because the catalog is our heritage. It's how Sears started. However, the U.S. catalog had after-tax losses ranging from $135 million to $175 million in each of the last three years. We have concluded that we cannot improve our market position or achieve an acceptable return on investment fast enough or with sufficient certainty to justify remaining in the business.
 "Nevertheless, we will retain and expand our profitable direct response business. We also will be evaluating various opportunities to participate in non-store retailing, as well as utilizing parts of our network of catalog sales offices and independent catalog stores as possible retail selling locations in certain markets," Martinez said. Sears will continue to accept orders from its final Spring 1993 "big book" until the end of 1993. (Note to Editor: Backgrounder follows.)
 -- Close in 1993 113 U.S. retail stores, principally small- to medium-sized. Closure dates for stores will depend upon a variety of factors, including current lease arrangements. About 1,300 full-time and 4,600 part-time positions will be eliminated. (Note to Editor: A list of units whose closing is being announced today will be available at noon Chicago time Monday after associates in those units are informed.)
 -- Divest in 1993 its 35 Pinstripes Petites women's specialty apparel stores. About 100 full-time and 200 part-time positions will be eliminated. Earlier this month Sears announced plans to sell its Sears Business Centers unit to InaCom Corp.
 -- Offer a voluntary early retirement incentive program to about 4,000 salaried corporate and merchandise group associates who are 50 years of age or older and have at least 20 years of service. Also, Sears will re-align salary range schedules for salaried associates to a competitive retail industry standard, placing greater emphasis on linking pay and incentives to individual performance.
 -- Associates whose jobs are eliminated and who are not eligible for the early retirement program may be placed in available positions at other Sears units if they are qualified, or may be eligible for Sears standard reorganization incentive. "We will work very closely with our associates over the next several months to explain the situation, discuss their options and explore any alternatives that may be available," Martinez said.
 -- Accelerate and complete the consolidation over the next several months of various regional accounting, credit and human resources offices, resulting in the elimination of 1,300 full-time and 1,300 part- time positions.
 -- Write down the value of certain Sears Merchandise Group assets and previously closed catalog facilities and retail stores to reflect current valuation.
 -- Re-position in 1993 the following merchandise lines and services:
 ... Sears will continue to offer customers a variety of installed home improvement services (such as siding and heating and air conditioning), as well as installation of products purchased at Sears, such as garage door openers, washers and dryers, water heaters, storm doors, and built-in kitchen appliances, etc. However, as part of a restructuring scheduled to begin this spring, marketing of some of these installation services will be done exclusively through Sears authorized licensees, as some are now. As a result, about 3,000 full-time and 2,000 part-time Sears positions will be eliminated. All outstanding service warranties will continue to be honored.
 ... Sears Tire and Auto Centers in 1993 will focus on tire and battery sales and related services, including wheel balancing, shocks, struts, and brakes. Sears will no longer provide certain back-shop services, such as tune-ups, electronics, radiator and air conditioning services and miscellaneous repairs. All outstanding service and merchandise warranties will continue to be honored. About 4,300 full- time and 6,400 part-time positions will be eliminated.
 ... Sears Product Services will continue to provide parts and repair service for major appliances, electronics and other household products nationwide. However, by mid-1993, it will complete the consolidation of offices and the automation of various back-room non-technical functions, resulting in the elimination of about 1,200 full-time and 3,000 part- time positions. This consolidation will result in lower costs and re- directed assets to better serve the customer for repair, parts, and maintenance agreement services. Calls for parts and repair service will be handled almost exclusively through "800" phone numbers staffed by Sears specialists in Tucson, Ariz.; Greensboro, N.C.; Madison, Wis.; Dallas; San Antonio; and Louisville, Ky.
 ... Sears will continue to develop its freestanding Homelife furniture format and, over the next five years, plans to phase out the sale of furniture and carpeting in smaller retail stores.
 Martinez said that while many details for the restructuring need to be worked out, Sears is committed to completing almost all of the program by year-end and to maintaining superior customer service levels.
 Sears Catalog
 The roots of the famous Sears Catalog began in 1886 when Richard W. Sears, then a railroad station agent for the Minneapolis and St. Louis Railway, in North Redwood, Minn., began selling watches and jewelry and later offered them through printed mailers which grew into catalogs. In 1887 he moved his R.W. Sears Watch Company to Chicago and hired Alvah C. Roebuck from Indiana.
 In 1896 Sears produced its first general merchandise catalog, featuring 532 pages of merchandise targeted to America's farmers and their families with a variety of merchandise from apparel to farm implements -- in addition to watches and jewelry.
 Today Sears Catalog is based in Skokie, Ill., and in 1992 had estimated revenues of $3.3 billion in the United States. Last year Sears offered merchandise through two 1,600-page "big books" -- the "Spring/Summer" and "Fall/Winter" annual catalogs -- and through its famous "Great American Wish Book" Christmas catalog, each of which was distributed to about 14 million households. Sears Catalog also produced about 50 other seasonal, monthly sale and specialized catalogs.
 As announced Jan. 25, 1993, Sears will close almost all its U.S. catalog operations by the end of 1993 and its catalog outlet stores by the end of 1994. Sears said it will continue to accept orders for merchandise in its 1993 Spring/Summer annual catalog and other catalogs through the end of 1993 through its 1-800-366-3000 telecatalog number. Sears will not publish any further "big books" or Wish Books, but will circulate smaller specialty and promotional catalogs in 1993. Sears will continue to honor all warranties on catalog merchandise and services.
 Discontinuing the Sears Catalog will result in the elimination of about 3,400 full-time and 16,500 part-time positions. About 1,200 associates work at the Skokie headquarters and three other Chicago-area facilities located in Skokie, Downers Grove and Northbrook.
 Sears Catalog said it plans to close seven of its 11 telecatalog centers gradually in 1993. They are located in Downers Grove, Ill.; Fort Wayne, Ind.; Johnson City, Tenn.; Mobile, Ala.; Provo, Utah; Roanoke, Va.; and Wichita, Kan. Each center employs about 1,000 associates who are primarily part-time workers. The Downers Grove center employs about 300 associates. It is possible that one or two of these centers could remain in operation to support other Sears business units.
 Telecatalog centers located in Greensboro, N.C., Louisville, Ky., San Antonio; and Tucson, Ariz., will be retained by Sears to support its Sears Product Services unit, which offers repair services for major appliances, electronics and other household products. Sears Product Services has grown to a large national service organization and experienced staffs at the telecatalog centers have been trained to process customer service requests that are taken almost exclusively through "800" numbers. A telemarketing center in Des Moines will remain open to support Sears direct response business.
 Sears wholly owned subsidiary Sears Logistics Services will close five catalog merchandise distribution centers gradually in 1993.
 Their locations and employee counts are: Columbus, Ohio, about 1,400 associates, 960 of whom are part-time; Dallas, about 750 associates, 400 of whom are part-time; Greensboro, N.C., about 1,000 associates, 600 of whom are part-time; Jacksonville, Fla., about 500 associates, 300 of whom are part-time; and Kansas City, Kan., about 850 associates, 600 of whom are part-time.
 Sears said it will close most of its 91 catalog outlet stores located in major metropolitan areas around the country by Spring 1994. Catalog outlet stores primarily offer close-out merchandise from Sears catalogs.
 With the changes Sears is announcing today, most independent catalog stores will close. However, Sears is evaluating utilizing some catalog selling locations (both company-owned and independent sales merchants) as possible company-owned or independent retail-selling units in certain markets around the country.
 -0- 01/25/93
 /CONTACT: Gerald E. Buldak, national manager - media relations of Sears Merchandise Group, 708-286-8371/

CO: Sears, Roebuck and Co. ST: Illinois IN: REA SU: RCN

AH -- NY025 -- 8377 01/25/93 10:31 EST
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Date:Jan 25, 1993

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