Announcement comes months after company secured tax relief
Just months after Sears Holdings Corp. secured state tax breaks, the struggling retailer said it will close five stores in Illinois.
The Illinois stores — two Sears locations and three Kmarts — join a list of up to 120 underperforming stores that Sears said in December would be shut. No Illinois stores were on the first list, but Sears didn’t rule out later additions.
The tax breaks worth an estimated $150 million were aimed at keeping Sears from moving its Hoffman Estates headquarters out of Illinois and made no requirements for keeping stores open. Still, news of the planned closings, coming so soon after legislative help, rankled some lawmakers.
Rep. Mary Flowers, D-Chicago, voted for the Illinois package but said Friday it was a bitter pill to swallow.
“This is going to make it very difficult for the next company that’s going to be in need of a bailout,” Flowers said. “I guarantee we will think twice about it because of this experience.”
Some Illinois stores had been on the first list of closings, a Sears spokesman said Friday, but they were removed after a conversation with Gov. Pat Quinn.
Before releasing the latest closings, Sears officials discussed the details with the governor’s staff, said spokesman Chris Brathwaite.
“These decisions (to close Illinois stores) were driven in part by our results in the fourth quarter, which didn’t conclude until after our incentive deal was reached,” he said.
The planned closings were overshadowed by a flood of news out of Sears on Thursday, including a spinoff of its small-format hardware stores and outlets, a sale of 11 mall stores to Chicago-based General Growth Properties, and a fourth-quarter loss of $2.4 billion.
“This is why government shouldn’t pick winners and losers,” Lauzen said.
The legislative package also extended a special taxing district for the company’s corporate campus that could reduce its property tax bill for another 15 years, saving it an estimated $125 million. Together, the state and local breaks could provide $275 million in relief to the company.
That was the second package for Sears, which won nearly $250 million in incentives to stay in Illinois two decades ago. That agreement required Sears to employ at least 2,000 workers at its headquarters.
Under the current agreement, which takes effect in July, Sears must maintain a headquarters workforce of at least 4,250. Sears has about 6,000 workers at its headquarters.
The five Illinois stores scheduled to close include a Sears in Alton, east of St. Louis; a Sears Grand/Essentials in McHenry; and Kmarts in Oak Lawn, Zion and Peru, about 100 miles southwest of Chicago.
The stores are among 15 nationwide Sears and Kmart stores added to its closing list Thursday. The remaining 10 are in Ohio, Maryland, New Jersey, Minnesota, South Carolina and Florida. Sears’ roster of stores set to close stands at 96.
The company has not said when the stores will close. A typical store employs between 40 and 80 workers, Sears said.
Sears also disclosed plans Thursday to close all nine of its Great Indoors stores, including one in Lombard. Last week, Sears said it would lay off 100 headquarters workers.
Sears raised the possibility of leaving Illinois in 2011 as tax incentives related to its move from the former Sears Tower in downtown Chicago to a 200-acre campus in Hoffman Estates were due to expire later this year. The retail giant, which has called the Chicago area home since 1887, weighed offers from Ohio, Texas and other states.
Sears is hardly alone in getting state tax breaks to retain or create jobs. CME Group Inc., Motorola Mobility Holdings Inc., Navistar International Corp. and Ford Motor Co.are among employers that have received relief.
“We’ll be ensuring that Sears lives up to its end of the agreement,” said Brooke Anderson, spokeswoman for Quinn. “We’re not happy to see anyone lose their job, but without the agreement the losses would have been far greater.”