Sears Holdings Corp. (SHLD) is a wheel that never stops turning.

Each time investors write off the struggling department store, hedge fund manager and Sears CEO Eddie Lampert pumps some more money into the company in order to continue funding his turnaround plan. More recently, Sears announced a restructuring plan in the hopes of shaving more costs. 

The road ahead for Sears is fraught with uncertainty, however. 

Sears is trimming its assets in order to have more liquidity to restructure the company. Stanley Black & Decker(SWK) - Get Report has already acquired the well-known Craftsman tools brand from Sears for $525 million. Combine that with the company's sale-leaseback transaction with CBL & Associates, and the company carries just enough liquidity to either cut debt or invest in restructuring. But it can't do both.

Given its negative interest coverage ratio (a ratio of earnings before interest and taxes to interest expenses) of 3.3 times, Sears is not generating profits to meet its interest obligations. Peers like Macy's(M) - Get Report or upscale retailer Nordstrom(JWN) - Get Report  also have significant debt, but are better situated on an interest coverage basis at 5.6 times and 8.8 times, respectively. Anything below zero is a very negative indicator.

The true test for Sears will be its ability to survive even as it sells off assets. If a retailer doesn't have enough stores, its ability to make money will always be compromised. Only last month, Sears announced that it would close another 150 stores, which were racking up losses.

Couple that with the reality that the retail environment is rapidly changing in the age of e-commerce and Sears' brand degradation, and the outlook looks bleak.

Glancing across the retail sector, Walmart(WMT) - Get Report and Costco(COST) - Get Report are much better businesses to own given their solid sales trends and balance sheets.

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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.