New ways to create value
Sears portfolio of service businesses represents an extraordinary opportunity for the company to add value by extending Sears relationship with America's families beyond the walls of its retail stores.

Sears offers a whole houseful of services
The company markets its home services business under the Sears HomeCentral brand, launched in 1997. Sears is building on its reputation for trust and integrity by offering customers "a whole houseful of services from someone you know." Accessible 24-hours-a-day through 1-800-4-MY-HOME, Sears HomeCentral is quickly gaining customer recognition as the source to call for home appliance repair, parts and home improvements. Sears is the market leader in all three major segments of the home services arena - product repair services, service contracts and home improvement services. In 1998, for example, Sears HomeCentral made more than 15 million product repair service calls, sold service contracts on more than 13 million items and initiated more than one million home improvement projects in households all across the United States.

Although Sears enjoys a leadership position, the company's $3 billion share of the fragmented $175 billion home services market is small. As a result, Sears continues to pursue an aggressive growth strategy that includes selective acquisitions, internal growth and unique brand-based marketing to increase its scale and scope in this industry. In 1998, for example, Sears acquired two home improvement businesses: Spray-Tech, the nation's fourth largest home remodeling contractor, and Continental Carpet Cleaning, the company's largest carpet cleaning licensee. Sears will continue to grow its existing businesses and enter new businesses in order to deliver on its mission of caring for America's homes.

Alternative channels to reach customers
Sears Direct is the company's newest business group, formed in 1998 to develop innovative new product offerings and make them available to customers via catalogs, telemarketing, direct mail and the Internet. It includes one of the largest direct marketing businesses of its kind and makes extensive use of Sears database of information from 100 million households to provide customers with the products and services they want.

Sears Direct is positioned to become the number one source for home-related products and services on the Internet. It offers customers the convenience of Internet information, comparison shopping and purchasing online, backed by the reassurance of buying from Sears. It benefits from Sears core strengths in merchandising, services, credit, brands and advertising in building long-term relationships with customers via non-store based channels.

In 1999, Sears will offer 2,000 appliances online utilizing the company's brand authority and nationwide fulfillment capability. This will be complemented by online sales assistance, repair assistance and scheduling, and an unsurpassed assortment of repair parts.

Since 1997, shoppers have been able to purchase 3,500 Craftsman tools online as well as log on to to learn more about Sears, its businesses, full-line store locations and promotional activity. During the 1998 holiday season, customers also could choose from more than 2,300 toys and gifts at, the online counterpart to Sears Wish Book toy catalog.

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