UPS Recognized As Top Supplier to Sears Holdings Corporation

UPS Receives Three Prestigious Awards Including “Supplier of the Year”

ATLANTA, July 19, 2006 - Sears Holdings Corporation has named UPS (NYSE: UPS) one of the select companies to receive top honors in its 2005 Partners in Progress awards. Most notably, UPS was awarded the “Supplier of the Year in the Non Merchandise Category” and “Carrier of the Year” in addition to being named one of 84 “Partners in Progress” that are selected from the company’s approximately 40,000 suppliers.

UPS received the awards for several accomplishments, including:

* Significant contributions to the successful integration of the Sears and Kmart supply chains in 2005 that resulted in substantial annual freight savings for Sears, Kmart and Lands’ End through a consolidated small package initiative.
* The deployment of UPS shipping technologies, including the UPS CampusShip Web-based shipping solution, across all Kmart stores. This project replaced a manual paper-based shipment process at Kmart stores in order to provide automated package shipping and tracking capabilities down to the store level.
* UPS converted all Sears Holdings mailrooms around the world to a suite of automated UPS shipping platforms. The integration included Sears and Kmart International Buying Offices around the world; all Kmart stores and distribution centers and Sears Holdings mailrooms, and a majority of Kmart’s 15,000 inbound-collect suppliers.
* UPS also was recognized for maintaining near-perfect on-time service performance throughout 2005 and during the integration process.

UPS has worked with Sears and Lands’ End for the past decade and began its service to Kmart in 2005 under the Sears Holdings umbrella. The effort requires a dedicated team of on-site UPS management at the company’s Hoffman Estates, Ill., headquarters as well as field support in regions across the globe.

The prestigious Partners in Progress award is presented annually to a select group of supplier companies that provide Sears Holdings with quality products and services from apparel, appliances and tools to marketing, facilities design and technology. Less than one percent of Sears Holdings’ more than 40,000 suppliers earn the coveted award each year.

The winning companies were hosted at a reception by Aylwin B. Lewis, chief executive officer and president of Sears Holdings Corporation.

“Strong and productive supplier relationships are critical to building relationships with our Kmart and Sears customers,” said Lewis. “As a new company, Sears Holdings has an opportunity to better serve our customers by working hand in hand with our suppliers. We’re pleased to have the opportunity, through the Partners in Progress program, to recognize the suppliers who have gone the extra mile to support our company.”

“It means a great deal to us at UPS to receive recognition of a job well done directly from our customer,” said Mike Eskew, UPS chairman and CEO. “We look forward to bringing even more meaningful solutions to Sears Holdings over the years to come.”

Started more than 20 years ago, the Partners in Progress program recognizes sources for product or service quality, innovation, diversity and overall market performance. The winners were selected from nominations submitted by Sears’ associates who purchase goods and services for the company.

UPS is the world’s largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS’s stock trades on the New York Stock Exchange (UPS), and the company can be found on the Web at UPS.com.

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Steve Holmes

UPS

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