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While Sears says it continues the course, suburban leaders hope for the best

The possible loss of the Sears Holdings Corp. headquarters in Hoffman Estates and its stores could bring untold losses for local families, governments and the hospitality industry, experts said Wednesday.

The long-struggling company said in a federal filing that it has "substantial doubt" about its future. Yet, in statements to investors and others on Wednesday, representatives remained steadfast about plans to improve the company's financial position and stay open. Many suburban business leaders and experts expressed concern about the future of the company, whose stock dropped 14 percent on Wednesday.

Local officials worried about losses of jobs, property tax income to local governments, and hotel and restaurant income from workers and visitors at the headquarters. About 5,500 employees are based at the headquarters, which is part of the Prairie Stone economic taxing district that paid about $28 million in 2015 property taxes, which helped support Hoffman Estates, local schools, the park district and other taxing bodies. Sears Holdings then received a $12 million rebate as part of its deal with the state to stay in Illinois.

Losing Sears would be "distressing on multiple levels," said Dave Parulo, president of Schaumburg-based Meet Chicago Northwest, a tourism organization for the Northwest suburbs. "There's a major concern of jobs for many of the local families, and the ongoing economic impact to local communities, and the impact on tourism in the Northwest suburbs, since their corporate offices help to fill many of our hotel rooms and restaurants with visitors."

In the suburbs, Sears Holdings has three Kmart stores, eight Sears department stores and seven hardware and appliance stores.

Local leaders Wednesday were trying to determine their next steps in light of the company's filing with the U.S. Securities and Exchange Commission. The filing said the company was looking at a bleak future after store closures, layoffs and selling of real estate and brands still have not stopped erosion of its bottom line.

"They have to be honest in their federal filings. Hopefully they can turn the company around," said Hoffman Estates Mayor Bill McLeod.

The Sears' SEC filing describes efforts to boost liquidity, including new financing arrangements, savings from restructuring programs and store closings and the sale of the Craftsman brand to Stanley Black & Decker. It added:

"Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern. We believe that the actions discussed above are probable of occurring and mitigating the substantial doubt raised by our historical operating results and satisfying our estimated liquidity needs 12 months from the issuance of the financial statements."

"That's a bold statement," said Bartlett resident Thomas Rowan, vice president and senior portfolio manager of Fifth Third Bank. "That brings up more questions on whether the organization is considering bankruptcy or other actions."

Sears is not the only retailer struggling. HHGregg recently filed bankruptcy. JCPenney, Macy's and Payless are among other retailers closing stores, Rowan said.

Shoppers at Hawthorn Mall in Vernon Hills said they have watched Sears lag behind competitors over the years.

"They haven't updated," said Lois Hedgpeth of Waukegan. "They need more things for young people."

Violet Rowe of Lake Zurich, who still shops at the retailer for large appliances, agrees.

"They are stuck in the old days," Rowe said. "I used to love the Christmas catalog. I would dream of all the toys."

She also remembers, growing up on a farm in Eastern Kentucky, that her parents would order little chickens from the catalog.

"They came in cardboard boxes with little holes and straw on the bottom," Rowe said.

Sears contends people are overreacting to the SEC report and that the company plans to take action to stop its financial woes, according to a blog Wednesday by Jason Hollar, Sears Holdings' chief financial officer.

"Sears Holdings remains focused on executing our transformation plan and will continue to take actions to help ensure our competitiveness and ability to continue to meet our financial obligations," Hollar said.

Hollar explains that Sears' independent auditors have provided the company with an "unqualified audit opinion."

"This indicates the company remains a 'going concern,' which means we are a viable business that can meet its financial and other obligations for the foreseeable future," Hollar said. "Nonetheless, we have always followed SEC guidelines by providing a complete and comprehensive set of disclosures."

Tricia O'Brien, executive director of the Hoffman Estates Chamber of Commerce, remains hopeful Sears will stay in business and at the headquarters it has occupied since the early 1990s.

"With their consolidations and a larger online presence, we are hopeful that Sears will continue to remain a viable company," O'Brien said.

• Business Writer Kim Mikus contributed to this report.

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  Hoffman Estates-based Sears, once a leader in American retail, said in a federal filing that it has "substantial doubt" it will be able to keep its doors open. Local business leaders said the loss of the Sears headquarters and stores would have an untold affect on the suburbs. JOE LEWNARD/jlewnard@dailyherald.com
  Hoffman Estates-based Sears, once a leader in American retail, said in a federal filing that it has "substantial doubt" it will be able to keep its doors open. Local business leaders said the loss of the Sears headquarters and stores would have an untold affect on the suburbs. JOE LEWNARD/jlewnard@dailyherald.com
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