Kmart Finalizes Previously Announced Transaction With The Home Depot

Kmart Holding Corporation (NASDAQ: KMRT) announced today the following regarding the previously disclosed transaction with The Home Depot, Inc. (NYSE: HD).

As reported on August 10, 2004, Kmart and The Home Depot entered into a revised agreement that provided for the sale of no fewer than 13 stores for $173 million in cash, and up to 19 stores for $288.5 million in cash.

Today, Kmart and Home Depot announced that the final transaction is for the sale of 18 stores for an aggregate purchase price of $271 million in cash. It is currently anticipated that sale proceeds in the amount totaling $259 million with respect to 17 of the stores shall have been released from escrow to Kmart by the completion of the current fiscal quarter. This figure includes the $54.6 million received last quarter. Subject to the receipt of a third-party consent, it is anticipated that Kmart will receive the remaining sale proceeds during the fourth quarter.

Julian C. Day, President and Chief Executive Officer of Kmart, said, "We are pleased to announce the successful completion of this transaction. The stores we are retaining from the originally announced transaction have been operating profitably and better than plan for this year. We look forward to providing continued service to our customers at these locations."

Kmart will also continue an employee retention program designed to promote and retain high-performing associates. Nearly 230 associates, or 41% of the full-time and management associates affected by this transaction, will be offered opportunities within other Kmart locations. In addition, The Home Depot anticipates that it will be employing approximately 200 associates per store, which is significantly above the current level of employment at the existing Kmart stores.

About Kmart Holding Corporation

Kmart Holding Corporation (NASDAQ: KMRT) and its subsidiaries (together, "Kmart") is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Kathy Ireland, Martha Stewart Everyday, Route 66 and Sesame Street. For more information visit the Company's website at http://www.kmart.com/ .

Cautionary Statement Regarding Forward-Looking Information and Other Matters

Statements or reports made by or on behalf of Kmart which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, Kmart's current views with respect to current events and financial performance. Such forward-looking statements are based upon assumptions concerning future conditions that may ultimately prove to be inaccurate and involve risks, uncertainties and factors that could cause actual results to differ materially from any anticipated future results, express or implied, by such forward- looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, factors relating to Kmart's internal operations and the external environment in which it operates; Kmart's ability to successfully implement business strategies and otherwise fund and execute planned changes in various aspects of the business; marketplace demand for the products of Kmart's key brand partners, as well as the engagement of appropriate new brand partners; changes in consumer spending and Kmart's ability to anticipate buying patterns and implement appropriate inventory strategies; Kmart's ability to reverse its negative same-store sales trend; competitive pressures and other third party actions, including pressures from pricing and other promotional activities of competitors, as well as new competitive store openings; the resolution of allowed claims for which Kmart is obligated to pay cash under the Plan of Reorganization; Kmart's ability to properly monitor its inventory needs in order to timely acquire desired goods in appropriate quantities and/or fulfill labor needs at planned costs; Kmart's ability to attract and retain customers; Kmart's ability to maintain normal terms with vendors and service providers; Kmart's ability to maintain contracts, including leases, that are critical to its operations; Kmart's ability to develop a market niche; regulatory and legal developments; general economic conditions; weather conditions, including those which affect buying patterns of Kmart's customers; other factors affecting business beyond Kmart's control; Kmart's ability to attract, motivate and/or retain key executives and associates; and other risks detailed in Kmart's Securities and Exchange Commission filings. Kmart undertakes no obligation to release publicly the results of any revisions to these forward- looking statements to reflect events or circumstances after the date such statements were made.

SOURCE: Kmart Holding Corporation

CONTACT: Kmart Media Relations, +1-248-463-1021

Web site: http://www.kmart.com/