Sears Holdings Corp is looking at whether to move its corporate headquarters after the state and local incentives that brought it to Hoffman Estates, Illinois, a northwest Chicago suburb, expire in 2012.

The company, which says it is in the early stages of the process, has had some preliminary discussions with the village of Hoffman Estates, a Chicago suburb northwest of the city, and commissioned a study to assess the economic impact of its departure on the village and the state, spokesman Chris Brathwaite told Reuters.

We owe it to our associates and shareholders to consider options and alternatives and intend to be very thoughtful and thorough in our deliberations, he said.

In the wake of a huge income tax increase enacted by Illinois in January to address a budget deficit that was heading toward $15 billion, states like New Jersey and Wisconsin launched plans to sway Illinois-based businesses to relocate.

And while Illinois continues to struggle with unpaid bills, it granted a tax break worth about $100 million over 10 years to Motorola Mobility Inc last week to ensure that the company remains in the state.

Sears is struggling and trying to shake things up with a new chief executive officer, Lou D'Ambrosio.

Its sales have fallen every year since it was formed by the 2005 merger of Sears and Kmart, but the first quarter results it reported last week were its worst sales showing since the merger.

The company saw its stock fall 10 percent after it posted a worse-than-expected first-quarter loss. Chairman Edward Lampert said there were no excuses for the company's poor performance [ID:nN0399641].

Sears generates roughly one-tenth of Wal-Mart Stores Inc's revenue and also faces competition from online rivals such as Inc .

(Reporting by Helen Chernikoff in New York; additional reporting by Karen Pierog in Chicago; editing by Gerald E. McCormick)