Bottom line trumps local ties in locating Sears HQ

Updated 5/10/2011 11:48 AM
  • In deciding whether to stay in Hoffman Estates, Sears Holdings will look at the bottom line, not at its long local ties, analysts say.

      In deciding whether to stay in Hoffman Estates, Sears Holdings will look at the bottom line, not at its long local ties, analysts say. Mark Black | Staff Photographer

  • Sears Holdings Corp. Chairman Edward Lampert

    Sears Holdings Corp. Chairman Edward Lampert

When Edward A. Brennan was at the helm at Sears Roebuck & Co., he spearheaded the move from downtown Chicago to Hoffman Estates. He lived in West suburban Burr Ridge and maintained strong suburban ties.

Today, Sears Holdings Corp. is a different international company that merged with Kmart and has different leaders, including Chairman Edward Lampert, who lives in Greenwich, Conn.

Lampert is a self-made multibillionaire who cut his teeth at Goldman Sachs, while Brennan followed in his father's and uncle's footsteps by working his way up the ladder at Sears and grew up dressed in Sears suits.

Sears has evolved dramatically over the past two decades, and local ties are unlikely to be the trump card as the company decides whether to remain in Hoffman Estates when a tax-incentive deal expires next year, analysts say.

It's all about the bottom line and how to keep companies viable, especially during tough times, analysts said.

"Lampert is looking for the best deal," said John Melaniphy, president of Melaniphy & Associates, a Chicago-based retail research firm. "It may not be here. Or it may not be Connecticut, either. They're looking at a lot of places."

On Monday, the Daily Herald reported that Sears has started to quietly search for a new headquarters since its multimillion-dollar incentive package in Hoffman Estates is set to expire in 2012. North Carolina -- where Sears had threatened to go 22 years ago -- as well as Texas, Tennessee and New Jersey are being considered, according to sources. A Sears spokesman confirmed the company has started a search for a new location but would not provide further details.

Today, it doesn't matter whether the chairman or other head of a national or international company lives close to the headquarters, said Jason Asaeda, retail equity analyst with Standard & Poor's.

"It's not critical if the chairman lives in the same state as the headquarters," Asaeda said.

If Sears did pull up its longtime suburban roots, it could cost the state roughly $3 billion, with the loss of about 6,200 local jobs, the ensuing unemployment insurance paid to them and the loss to nearby hotels, businesses and vendors that could ripple through the local economy for years to come, Melaniphy said.

A study commissioned by Sears reached a similar conclusion, saying the local job loss could total 9,000 if vendors, contractors and nearby businesses were included.

Gov. Pat Quinn said Monday he'd work diligently to keep Sears here, just as he did for Navistar, Caterpillar and Motorola Inc.'s spinoff Motorola Mobility.

In fact, Wall Street speculation was strong that Motorola Mobility CEO Sanjay Jha, who continues to live in San Diego, likely would move the mobile phone maker's headquarters to California. But Quinn's offer of more than $100 million in a tax incentive package helped keep Motorola Mobility in Libertyville.

While Sears is a different corporation today than it was when it moved to Hoffman Estates two decades ago, it's still been a good corporate citizen and neighbor. Sears has been a longtime member of the Hoffman Estates Chamber of Commerce with Jeff Terry, Sears director of associate and community involvement, as a board member who attends meetings regularly.

The company is a longtime sponsor of the Hoffman Estates Park District's annual Fishing Derby, which attracts fishing enthusiasts from around the Midwest. Sears also is instrumental in the "Tools for Success" drive that collects school supplies for needy kids and has donated backpacks, as well as participated in other local fundraising events, chamber Executive Director Cheri Sisson said. "They've been a longtime benefactor."

The company website also mentions other charitable efforts, including its support of those in the military and donations of millions of dollars to charitable causes to help children, including the March of Dimes, American Diabetes Association and St. Jude.

Despite local involvement, Sears could be lured away with a good deal, Melaniphy said.

"When you look at Sears, it's a different company than it was 20 years ago," Melaniphy said. "The times are different, and there's not very much loyalty, either. It comes down to what they can get as an incentive to stay or to relocate somewhere else. It's the bottom line. That's what it's all about."