One of the major stories in the Washington press this mornings is not about the deficit, the Presidential race, or members of Congress who have resigned because of indiscretions. Sears Holdings (NASDAQ: SHLD) may move its headquarters to the city. The tax breaks it has had in Illinois, where it has been based in Chicago since its founding in 1886, are about to expire. The state of Illinois has decided it needs more corporate tax revenue to bring its troubled financial house in order and is prepared to risk that some firms will leave.
Sears is one of the largest retailers in the US along with Wal-Mart (NYSE: WMT), Target (NYSE: TGT). and Costco (NASDAQ: COST). Relocation will not change its fortunes, which have been poor for years due in part to the management of majority holder and Chairman Edward S. Lampert. He changes senior management as often as most people do socks.
Sears shares have fallen 50% over the last five years compared to a 10% improvement in the DJIA. The firm’s Sears and K-Mart stores are aged. The company is unable to match the most aggressive discounts of rivals. Sears and K-Mart have nowhere near the online e-commerce presence that Wal-Mart, Target, and Amazon.com (NASDAQ AMZN) do. This leaves Sears as a faltering bricks-and-mortar operation.
Sears can relocate, but it can’t hide.
Douglas A. McIntyre