Sears cuts 400 jobs, no longer qualifies for Illinois state tax breaks

CHICAGO—Sears Holdings Corp. on Tuesday said it would eliminate 400 full-time jobs, with most of the job cuts coming at its suburban Chicago headquarters. The announcement means Sears’ headcount there has been cut by more than a third since 2011, when it employed 6,200 people at its headquarters and received a package of tax breaks after threatening to leave the state. Company spokesman Howard Riefs declined to say how many employees work at its headquarters but said the company had already fallen below the number of jobs it was required to maintain as part of the tax break deal.

While the majority of the eliminated positions are in the Chicago-area headquarters, some are in Sears’ field offices. Sears said it already eliminated open positions and reduced contract employees to lessen the impact of layoffs.

Also exiting Sears are three executives: Stephen Zoll, Sears’ president of online; David Pastrana, president of apparel; and Eric Jaffe, senior vice president of Sears’ Shop Your Way program. Shop Your Way, Sears’ membership program, has been the centerpiece of Sears Chairman and CEO Edward Lampert’s plan to turn around the struggling Sears and Kmart chains since it launched in 2009. In a recent interview, Lampert said he’s still committed to that strategy: strengthening Sears’ e-commerce business while using the rewards program to cater to top customers. The 2011 state tax deal gave Sears credits worth $15 million a year for 10 years, which it can use against withheld employee income taxes. Sears dipped below the requirement because it was only allowed to count certain types of jobs, Riefs said in an email. Sears had to invest a certain amount of money in the state before receiving the credits. The company has invested $260 million so far, more than 85 percent of the amount it was required to spend as part of the incentive agreement, Riefs said.

In 2016, the first year Sears received payments through the program, it collected about $20 million, Riefs said.

“We have a rich history in Illinois spanning over 130 years, so while tough but necessary decisions are being made today, we believe both the company and the state of Illinois have benefited and will continue to benefit greatly by our remaining in the state,” he said. The cuts announced Tuesday come on top of the embattled retailer’s latest round of store closures. By early September, Sears will close 49 Kmart and 17 Sears stores, according to a source close to the company, after shuttering 150 in the first quarter of this year.