Cover Intro Page

Financial Highlights

Chairman's Letter
Strategic overview of Sears performance in 1998, financially and operationally; importance of having multiple ways to create value; priorities for 1999.

Sears at a Glance
Descriptions of Sears major businesses.

Retail - Value No Other Retailer Can Match
Full-line and specialty stores serve customers both on and off the mall with a broad range of softgoods and hardgoods; brand leadership and innovative new formats key to long-term success.

Services - New Ways to Create Value
Home services, direct response and online businesses connect with customers outside the store format; multi-billion dollar market in home services; sales growth via the Internet.

Credit - Enhancing Valued Relationships
Largest retail credit card receivables portfolio; performance rebounds in 1998; new products being launched to enhance bond with customer.

Consolidated Statements of Income

Management's Analysis of Consolidated Operations

Consolidated Balance Sheets

Management's Analysis of Consolidated Financial Condition

Consolidated Statements of Cash Flows

Consolidated Statements of Shareholders' Equity

Notes to Consolidated Financial Statements

Management's Report and Independent Auditors' Report

Five-Year Summary of Consolidated Financial Data

Market Risk, Quarterly Results and Common Stock Market Information and Dividend Highlights

Community Leadership

Board of Directors

Executive Officers

Company Information