I love a good turnaround story. Few things embody the American spirit better than a battered and bruised person (which I hear is the same as a corporation now) who rises up and comes back bigger, stronger, and more profitable. Unfortunately, that hasn't been the story for one of America's legendary catalog-gone-bricks-and-mortar outfits. Now, the artist formerly known as Sears, Roebuck, & Co. is getting separated from its peers. What's next for the "please kill me" of old-school department stores?

The end is nigh
Sears Holdings (Nasdaq: SHLD), the company almost wholly owned by Eddie Lampert of ESL Holdings, was never even scheduled for a comeback. It reminds me of the movie I, Robot, where the old, loser robots are brought to robot Hell, where scavengers pick them apart for scraps. It's not fair to call Lampert a scavenger, but it was an entertaining flick, so whatever.

Since Lampert took control of the company, the stock has tumbled and crept up and tumbled again, only to make a staggering 70% gain in 2012. Don't look for any evidence of improvement in fundamentals, though, as the move is a result of the market's pricing in of expectations that the company will go private or be sold off in pieces, just like those sad robots. What's been happening to the physical Sears stores during this time? They limp along hopelessly, occasionally glancing behind them, wondering when the end will come.

Trying to get to the food court
As we all know, Sears' business these days is to be a barely navigable nightmare of an entrance to the rest of the mall. Yes, Sears supposedly has things for sale in those brown brick buildings that never got the memo that the '80s were followed by the '90s, but I'm not sure most people are aware of it. Sears is basically just the closest entrance to American Cookie, and that's why we went to the mall instead of just ordering whatever we wanted off Amazon.com.

The former glory that was Sears has few remains these days. While other department stores such as J.C. Penney (NYSE: JCP) are bringing in top-tier management to do companywide makeovers, Sears is selling off assets and laying off employees. In a bout of irony, despite J.C. Penney's valiant efforts to remain relevant in today's culture, Sears has had a slower deterioration, with comps down almost 3% compared with almost 20% for JCP. But even with a horrific stock slide and people still not interested in shopping there, JC Penney has hope. And it doesn't hurt being given constant IV fluids from the soul of CEO Ron Johnson, he of Apple retail fame.

A sputtering exit
Sears held its place on the S&P 500 for decades and was once a bulletproof holding for many an investor. But as of this week, even the S&P has no more use for the company. Sears will soon no longer be listed in the big 500.

It's a little funny, the way this came about. You would think it was because the company is blatantly bleeding out on the street and needs a corporation version of hospice, but it's actually because there aren't enough shares floating around (what we investing types call float). Between Lampert and Bruce Berkowitz, another hedge-fund manager extraordinaire, more than 90% of the company's shares are taken up -- leaving too little on the table for outside investors and traders.

Well, I think it's funny.

Didn't have to be this way
Lampert might have been able to save the company if he felt it was worth his while. He conducted a very successful turnaround of AutoZone (NYSE: AZO). With a seat on the board and two other hand-picked directors, Lampert was able to leverage AutoZone's free cash flow and capital structure to help take the company from a $20-$30 stock to its current $360 share price today. Clearly, Lampert knows something about retail.

Letting Sears sink down to nothingness is simply the most profitable way for ESL to exit its position. The real estate and individual assets are worth more in pieces than in their current state. It's sad, but in the world of cutthroat business, it's just the right thing to do.

For a look at other retail operations that aren't heading toward the grave, check out this free report. In it, our analysts discuss what they consider to be the real cash kings of retail.