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Thursday, Aug. 21, 2014 11:47 am

Sears, No-buck

In a 2012 column I recalled the bad deal made by the State of Illinois in 1989 when it caved it to threats from Sears, Roebuck to move its Merchandise Group out of Illinois. The package authorized a new TIF-like Economic Development Area (EDA) that diverted property tax revenues from local schools to the company, nearly 800 acres of eminently developable land worth nearly a quarter-billion dollars and reimbursement of any monies Sears expended in developing a lucrative business park there, including the cost of its own new corporate headquarters. That original EDA was set to expire in 2013; Sears in 2011 asked the General Assembly for a 15-year extension, which, after much wrangling, Mr. Quinn signed into law.

Two weeks later, Sears announced it had to close at least 100 under-performing Sears and K-Mart stores nationwide.

On August 21, the Chicago Tribune reported the announcement by Sears Holdings, the current owner, that  its loss widened significantly in the second quarter to $573 million, possibly necessitating closures of  additional stores on top of the 130 closures already underway. 

The company seems to have entered a death spiral; one of the reasons revenue was down is that so many stores have already been closed. 

It's hard to say which firm has been worse managed over the past 25 years. Downsizing and financial tricks have keep each afloat, but only at the cost of long-term viability.


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