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Lauri BrunnerSenior Research AnalystThrivent Investment Management

Store Closings,Slower Growth…now What?MSCA 3/3/10Lauri Brunner/Thrivent Asset Management

Store Closings, SlowerGrowth…now What?• A. Recent Events• B. 2010 Outlook and Themes• C. Survivor Event• D. The New Normal3

Stores and Growth23,00021,00019,00017,00015,00013,00011,0009,0007,0005,0001996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009e 2010e 2011eExisting StoresNew Stores4

Stores and Sales23,00037020,00036017,00035034014,00033011,0003208,0001996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e310Total Stores (lhs)Sales p/Avg Sq Ft (rhs)5

6%4%2%0%SSS and Square Footage Growth-2%-4%-6%-8%12%10%8%6%4%2%0%6Q4:11eQ3:11eQ2:11eQ1:11eQ4:10eQ3:10eQ2:10eQ1:10eQ4:09eQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02Avg SSS (lhs) Sq Ft Growth (rhs)

$370$360$350$340Sales p/Avg Sq Ft$330$320$310$3007Q4:11eQ3:11eQ2:11eQ1:11eQ4:10eQ3:10eQ2:10eQ1:10eQ4:09eQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02Q4:01Q3:01Q2:01Q1:01Sales p/Avg Sq Ft

$370$360$350$340Sales p/Avg Sq Ft$330$320$310$3008Q4:11eQ3:11eQ2:11eQ1:11eQ4:10eQ3:10eQ2:10eQ1:10eQ4:09eQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02Q4:01Q3:01Q2:01Q1:01Sales p/Avg Sq Ft

$34$32$30$28Operating Profit p/Avg Sq Ft$26$24$22$209Q4:11eQ3:11eQ2:11eQ1:11eQ4:10eQ3:10eQ2:10eQ1:10eQ4:09eQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02Q4:01Q3:01Q2:01Q1:01Operating Profit p/Avg Sq Ft

Operating Profit p/Avg Sq FtQ4:11eQ3:11eQ2:11eQ1:11eQ4:10eQ3:10eQ2:10eQ1:10eQ4:09eQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02Q4:01Q3:01Q2:01Q1:01$32$30Operating Profit p/Avg Sq Ft10$28$26$24$22$20

$370$360$350$340Productivity and Profitability Cycle$330$320$310$300$32$30$28$26$24$22$2011Q4:11eQ3:11eQ2:11eQ1:11eQ4:10eQ3:10eQ2:10eQ1:10eQ4:09eQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02Q4:01Q3:01Q2:01Q1:01Sales p/Avg Sq Ft (lhs) Operating Profit p/Avg Sq Ft (rhs)

$50$45$40$35Expectations$30$25$20$32$30$28$26$24$22$2012Q4:11eQ3:11eQ2:11eQ1:11eQ4:10eQ3:10eQ2:10eQ1:10eQ4:09eQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02Q4:01Q3:01Q2:01Q1:01Avg Share Price (lhs) Operating Profit p/Avg Sq Ft (rhs)

1313Operating Margin6%7%8%9%10%Q1:01Q2:01Q3:01Q4:01Q1:02Q2:02Q3:02Q4:02Q1:03Q2:03Q3:03Q4:03Q1:04Q2:04Q3:04Q4:04Q1:05Q2:05Q3:05Q4:05Q1:06Q2:06Q3:06Q4:06Q1:07Q2:07Q3:07Q4:07Q1:08Q2:08Q3:08Q4:08Q1:09Q2:09Q3:09Q4:09eQ1:10eQ2:10eQ3:10eQ4:10eQ1:11eQ2:11eQ3:11eQ4:11eOperating Margin

Avg Cap Ex p/Sq FtQ4:11eQ3:11eQ2:11eQ1:11eQ4:10eQ3:10eQ2:10eQ1:10eQ4:09eQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02Q4:01Q3:01Q2:01Q1:01$25Avg Cap Ex p/Sq Ft14$20$15$10$5

Avg Cash Balance ($MM)Q3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:020 500 1,000 1,500 2,000 2,50015

Circuit City Cash Balance ($MM)Q3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:020 200 400 600 800 1,000 1,20016

Circuit City Stock PriceQ3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02$0 $5 $10 $15 $20 $25 $3017

Sears Holdings Cash Balance ($MM)Q3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:020 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,00018

Sears Holdings Stock Price2/22/2010Q4:09Q3:09Q2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04Q4:03Q3:03Q2:03Q1:03Q4:02Q3:02Q2:02Q1:02$95$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $20019

Q4:10eQ3:10eQ2:10eQ1:10eQ4:0920Q3:09Q2:09Q1:09Q4:08Q3:08Q2:08CPI Food at HomeQ1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04210200190180170bCPI Food at Home

Q4:10eQ3:10eQ2:10eQ1:10eQ4:09Q3:0921Q2:09Q1:09Q4:08Gasoline, Avg Price p/GallonQ3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Gasoline, Avg Price p/GallonQ3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:04$4.00$3.50$3.00$2.50$2.00$1.50

Q4:10eQ3:10eQ2:10eQ1:10eQ4:0922Q3:09S&P/Case-Shiller, 20 City, Home Price IndexQ2:09Q1:09Q4:08Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Q4:05Q3:05Q2:05Q1:05S&P/Case-Shiller, 20 City, Home Price IndexQ4:04Q3:04Q2:04Q1:04225200175150125

Q4:10eQ3:10eQ2:10eQ1:10eQ4:0923Q3:09Q2:09Q1:09Q4:08Unemployment Rate, in %Q3:08Q2:08Q1:08Q4:07Q3:07Q2:07Q1:07Q4:06Q3:06Q2:06Q1:06Unemployment Rate, in %Q4:05Q3:05Q2:05Q1:05Q4:04Q3:04Q2:04Q1:041110987654

50403020100-10-20-30-40-50-60-70-80-90-100-110-12025-48The Capacity Cycle for US Retailers:2010/2011: Below average openings and closings, but growth resumes.19-6815-4919-4623-7127-4428-11532-9034-551995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e36-2739-3542-2626-3423-10314-6311-3420-35Square Footage CLOSED (in MM), All US RetailersSquare Footage ADDED (in MM), "Walmart US"24

Disclosures• Data on slides 3-183represent average values for the following retailers: Wal-Mart, Target, JCPenney, HomeDepot, Bed Bath & Beyond, Best Buy, Gap, Nordstrom, Kohl’s, Lowe’s, Macy’s, TJX, as of 2/16/10. Source forslides 3-18: 3Thrivent Asset Management and Company reports.• Slide 11: Average price at 2/22/10.• Source for slides 19 and 21: Company reports.• Source for slides 20 and 22: FactSet.• Source for slide 23/CPI data: U.S. Bureau of Labor Statistics.• Source for slide 24/Gasoline data: U.S. Department of Labor.• Source for slide 25/Home Price data: Standard & Poor’s Corporation.on.• Source for slide 26/Unemployment rate: U.S. Department of Labor.• Note: for slides 23 through 26, values reflect average daily, weekly, ekly, or monthly values. Future values assume nochange in values from 2/16/10.• Source for slides 27 and 28: Thrivent Asset Management, Company reports, Citigroup.• Source for slide 29/Capacity Cycle: Thrivent Asset Management, Company Creports, Credit Suisse First Boston.25