If anyone was still on the fence as to whether Sears Holdings Corp (NASDAQ:SHLDQ) is doomed, yesterday's news removed all doubt. Sears is doomed.

11 years after spending $1.9 billion to buy Lands' End to shore up "the softer side" of its business, Sears changed its mind Friday, and announced it's spinning off the clothing business. This leaves investors wondering if other brands, such as Craftsman tools or Kenmore appliances, might be next.

Sears won't make any money off the Lands' End spinoff -- won't collect a single red cent with which to pay down its $4.7 billion debt load. Instead, Sears will just transfer Lands' End to its shareholders -- so that if you owned a piece of Sears before, you'll soon own a piece of Sears ... and also a piece of Lands' End, separately.

The plan continues an 8-year-long trend of corporate dismemberment at Sears under the "leadership" of Chairman Eddie Lampert, which has seen the company:

  • spin off its Orchard Supply Hardware Stores unit in 2011 (only to see the chain go bankrupt two years later )
  • then spin off Sears Hometown and Outlet (SHO) last year
  • liquidate $383 million worth of Canadian real estate two months ago
  • and muse publicly about its hopes of selling Lands' End and Sears Auto.

At this point, investors must be wondering "after all that's been sold, what's left?"

Sears' shelves look bare
The answer is "not much." Not much worth selling. Not much that anyone in their right mind would want to buy.

Sales at Sears' hardlines  businesses are down 19% year-to-date, in comparison with where the company was at just one year ago. Food and drug sales have dropped 11%. And while Apparel and Soft Home revenues declined "only" 5%, this is the very business that Sears is now spinning off.

Apparel -- with Lands' End as the flagship -- was Sears's only business showing any signs of life this year. And yet, even Apparel is performing so poorly that Sears couldn't attract a decent offer to buy Lands' End. That's probably why the company decided to go the spinoff route instead of negotiating a sale to private equity.

What's next?
At this point, there's not much left worth saving at Sears, and not much reason to visit the stores either -- as the declining sales figures attest. In food and drugs, Sears plays fifth fiddle to dedicated grocery chains like Kroger and Harris Teeter, and better general stores Walmart and Target. The apparel category is also crowded with competitors -- Walmart and Target, again. And also Gap, the "three As" of Abercrombie, Aeropostale, and AE, and a host of other alternatives.

If Sears is looking to sell off, spin off, or shut down more bits and pieces of itself, soft goods and food and drugs look like the right places to start.

Kenmore -- still looking pretty

What's worth saving?
Really, the only retail niche where Sears can still compete is hardlines, where the company's Kenmore appliances and Craftsman tools still hold some appeal for consumers seeking a nice balance between price and quality. But even here, the clock is ticking.

At Kenmore, Sears benefits from the worst-kept secret in retail  -- that many of its "Kenmore" appliances are actually manufactured by Whirlpool (NYSE:WHR) and General Electric (NYSE:GE). This gives Sears two valuable benefits: If you like the Kenmore brand, you can buy one at Sears. But even if you're unsure about Kenmore, you can still talk yourself into buying one on the theory that it's "really a Whirlpool."

But the same cannot be said about Craftsman.

Sears Craftsman brand -- a little dusty, but we can clean it up.

"America's most trusted tool brand"
That's how Craftsman still describes itself , but it's becoming less true by the day.
Under Eddie Lampert's management, Sears committed the unpardonable sin of outsourcing much of its Craftsman manufacturing to China. In doing so, Sears cut costs -- but also sacrificed quality, and damaged decades of customer loyalty to this "Made in the U.S.A." brand. You can see the results in the steep sales declines in hardlines at Sears these past three quarters.

But Craftsman can still be saved. It's not too late. The surprising popularity and rapid growth of new "patriotic" store brands such as the Made in America chain in New York, which has grown from one store to three  in just three years, and the All American Store in Ohio (two locations in three years) shows there's still a hunger for American-made products out there -- and American-made is what Craftsman used to be.

With Sears's store name tarnished, what the company really needs to do is finish the plan that Lampert began eight years ago -- close down the poor-performing businesses, sell off and monetize the real estate, complete the dismemberment. What remains will be the company's core Craftsman, Kenmore, and Sears Auto businesses -- hard goods that still have a following among consumers, and a chance to succeed.

Were Sears to sell the rest of its businesses off, then rebrand itself as the "Craftsman" store, focus on selling American-made goods to distinguish itself from the Home Depots and Lowe's of the world, I think Craftsman might still have a chance of making a comeback.

So to answer the question we began with -- "should Sears sell Craftsman?" -- I say no. Craftsman should sell off Sears for parts, and use whatever money it can get for these parts to reinvest in itself.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.