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Sears CEO cites U.S. minimum wage hikes, tax rules as burdens

(Reuters) – Sears Holdings Corp has found it harder to compete, in part because of moves to increase the minimum wage and different tax rules for online retailers like Inc, Chief Executive Officer Eddie Lampert said on Thursday.

In an annual letter to shareholders, Lampert described a U.S. operating environment stacked in some ways against traditional companies like once-iconic Sears, which has lost more than $8 billion over the past five years, all under his watch.

Lampert said Sears’ $580 million loss in the latest quarter was disappointing and acknowledged that the company needed to take steps to improve its apparel business, which has been hit by an industrywide downturn in demand.

But he also pointed to regulatory issues that he believes have been weighing on Sears.

For one, Lampert said Amazon and other Internet companies had been able expand rapidly without having to collect sales tax as retailers with physical stores do. Other brick-and-mortar retailers have also complained about loopholes in some states that only require businesses with facilities to collect tax.

Many states have over the years changed their laws. Items sold on Amazon are now subject to sales tax when shipped to 28 states, according to the company’s website.

However, Lampert said traditional retailers were still being hurt.

“We are now seeing more and more retail stores shut down and the tax base of many municipalities eroding due to the hollowing out of the sales tax base,” Lampert wrote.

Sears said this month that it would accelerate store closings, and Lampert noted Wal-Mart Stores had recently announced plans to shutter 154 stores in the United States.

Earlier on Thursday, Sears reported the loss for the fourth quarter ended Jan. 31 as its cost-cutting efforts failed to offset a drop in sales during the crucial holiday season. The company said it would further reduce costs by up to $650 million and look to raise cash through asset sales.

In the letter, Lampert also pointed to the recent moves by some states and cities to raise the minimum wage as another problem for large companies like Sears.

“With stores that are marginally profitable or unprofitable,” he wrote, “such additional cost burdens can be the straw that breaks the camel’s back, causing stores to close and eliminate jobs.” (Reporting by Nathan Layne in Chicago; Editing by Lisa Von Ahn)

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