The company's CEO and chairman, Eddie Lampert, announced in a blog post recently that the company is shuttering more locations. It is closing eight Sears and 35 Kmart stores that were unprofitable in early October, according to the announcement.
"We have fought hard for many years to return unprofitable stores to a competitive position and to preserve jobs and, as a result, we had to absorb corresponding losses in the process," Lampert said in the statement.
If you've ever gone into a Sears or Kmart store, you will likely understand why the retailer's same-store sales have plunged in 11 out of the last 12 quarters and why it has failed to turn a profit in the past 29 out of 37 quarters. It's surprising Sears has managed to turn a profit in even eight out of the last 37 quarters.
Lampert, who has recently quieted down from a string of Trump-like rants he went on against the media, appears to have an unrealistic view that the retailer is not in fact doomed to the same fate its Canadian sister succumbed to - bankruptcy.
"If you can find someone with something positive to say about Sears, you are talking with an employee of Lampert," former Sears Canada CEO Mark A. Cohen said in an interview with TheStreet's Michelle Lodge.
In 2016 alone, Sears wiped out $1.6 billion of its own cash and, according to financial analyst Brian Sheehy of Iszo Capital, the retailer is currently burning through $189 million in cash a month. Per Sheehy's calculations, Sears could run out of cash shortly.
TheStreet's consumer team found 50 reasons Sears Holdings is failing. Here they are.
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Over the past 10 years, Sears' shares have tanked nearly 95% from a high of $147.31 on April 17, 2007. It is down more than 4% in 2017 alone.
That's a ton of red ink for investors. What's left of them....
Every few months, news hits that the company is closing more Sears and Kmart locations. This year, the company has said it is closing 269 stores.
The company's same-store sales have declined in 11 of the past 12 quarters.
The company has failed to turn a profit in 29 of the past 37 quarters.
Sears Holdings spent $5.8 billion buying back shares from 2005 to 2010, draining the company's capital. Now, it has a major cash flow problem.
Sears burned through $1.6 billion in cash in 2016, and Fitch Ratings said it expects the company to burn through another $1.8 billion in 2017. As a result, Fitch estimates Sears will have to raise approximately $2 billion in liquidity in 2017, but it is running out of sources to find that money.
Sears has $2.8 billion in high yield bonds and institutional term loans coming due in the next few years, and with a low cash flow, that will be challenging to pay back.
CEO and chairman Eddie Lampert is rarely seen in public, often avoids the media and lacks public social media accounts. Doesn't exactly inspire confidence.
From allegedly rude employees to poor customer service, even loyal customers have lost trust in the company.
Young people are leaving suburban neighborhoods for the hustle and bustle of city life and shorter commutes. Department stores like Sears, however, are less common in large cities. In turn, that demographic shift could set the company up for a future of failure.
Many of the stores look old and dingy just from the outside, making it challenging to get customers through the front doors.
For the traffic that the company is getting, the stores are way too big to run profitably.
Parking lots and stores often lack customers — telling prospective shoppers to stay away. That is easily evident in the company's sales trends.
Former employees have called CEO Eddie Lampert divisive, and he receives low approval ratings from his employees, according to Time. Lampert also has criticized the media for covering the company unfairly.
Many Sears and Kmart stores have several levels to explore, which makes the search for what a shopper may need even more difficult and time consuming.
Sears acquired Kmart in 2005. The company has gone through several CEOs since the merger, and its sales have dropped from $49.1 billion to $22.1 billion in 2016.
Former Chief Financial Officer Jason Hollar left the company in April after being promoted a mere six months before. It is probably not a good sign when the chief number crunchers are fleeing.
Kmart is supposed to be recognized for its value, but it does not offer a dollar store-like selection.
Although Sears sells shoes from Reebok and Sketchers (SKX) , it lacks designer and other well-known brands such as Calvin Klein, Coach (COH) , Dockers, Nike (NKE) , Ralph Lauren (RL) , Sperry and Ugg that are available at Macy's (M) . That extends to clothing, too.
Sears' loyalty rewards program, Shop Your Way, allows customers to earn points when they purchase items. Former employees, however, have said when the program started in 2009, the company started going downhill, according to Business Insider. They said the company poorly executed the program, and it caused confusion, hurt profits and slowed customer service.
Lampert has said Shop Your Way was a means to collect customer information to sell it and make the company an "asset-light" tech enterprise.
Lines to check out at Kmart and Sears are often long. Understaffing and poor execution of the Shop Your Way rewards program can lead to slow service, TheStreet has found.
Some stores are falling apart on the inside and in need of repairs.
Lampert has the company's divisions compete against each other to win his time and money. The result is a lack of collaboration and cooperation, as infighting over scarce resources ensues, employees told Bloomberg.
As Sears closes locations, especially in malls, it is also hurting other retailers in those spaces that depend on a large anchor store to bring shoppers to them.
In an age of online shopping, having everything under one roof is less appealing to consumers.
Since Lampert, who is reportedly worth $1.6 billion, owns portions of the company's debt and acts as a landlord for some locations, he may benefit as the company dies and lays off its employees.
Closures also affect Sears' suppliers. As stores closure, suppliers lose business.
Plus, those everything-most-go sales can harm suppliers' brand appeal.
Lampert told the Chicago Tribune in May that suppliers have expressed uncertainty that the company would be able to pay its bills. It has submitted lawsuits against two suppliers including Craftsman, which is now owned by Stanley Black & Decker (SWK) , this summer for refusing to meet their supply agreement, according to The Wall Street Journal.
Rural and low-income consumers are left with fewer options as Sears closes its locations, and some may not so easily turn to Amazon or other online shopping options because of a lack of broadband access.
When stores do have products, they are often on the shelves in a cluttered heap or at least in no reasonable organization.
When products are on display, they are often set up in an uninviting way. Many times, however, furniture and other products are sitting in boxes, which does nothing to appeal to shoppers.
When TheStreet recently visited a Kmart, there were few employees. Only two people worked the checkouts. Understaffing has been a complaint by employees and customers alike, and it often results in long lines.
Some stores leave doors into storage areas wide open, which could be dangerous especially for young children. In other cases, doors marked "employees only" are unlocked as easy to go beyond.
Stores that are open often have such few items on the shelves, they make customers wonder if that location is one of the next to close its doors.
When TheStreet visited a Sears recently, an employee gave a customer some incorrect information that could have meant she had to return to the store the next day to get a refund. Some workers may not know the store's own policies.
Unlike Target (TGT) or Walmart, Kmart does not have ready-to-eat meals, a produce section or a deli. All of its food is packaged.
With bland white walls, dirty floors and so much cardboard, the stores look more like a storage ground.
Bleach next to frozen food? Bikes next to soda pop? There has to be a better way to layout these sections.
The selection of electronic gadgets, tech gear and video games is quite limited. Plus, device displays do not let customers try out phones and tablets.
The cash registers are ancient.
While some Kroger (KR) , Target and Walmart stores feature restaurants inside them such as Starbucks (SBUX) or Subway, Sears and Kmart do not have restaurants inside them for shoppers to get a pick me up before they drop.
With so many stores having closed, Sears and Kmart locations are becoming less convenient for shoppers to get to or pickup online orders from.
Although the Kmart and Sears websites are modern in appearance, so many categories can make it challenging to navigate and inconvenient to browse the options.
In June, the company announced its was cutting 400 corporate jobs, including the positions of online presidents Stephan Zoll and Eric Jaffe, senior vice president and chief operating officer of Shop Your Way, according to Twice.
In the company's 2016 annual report, the retailer acknowledged that "substantial doubt exists related to the Company's ability to continue."
Despite all of this, Lampert told the Chicago Tribune in May that the company is "ahead" of its competitors such as J.C. Penney's, Macy's and Target and that it doesn't need more customers.
"As soon as we start making money, people are gonna say, 'How did I miss this?'" he said. "I give you my assurance I am not in denial."
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