We won't utter the word "bankruptcy" just yet -- OK, I just did -- but it's one of the scenarios investors need to ponder as they look at the continued dismal performance of Sears Holdings (NASDAQ:SHLD). After a few years of using gimmicks to post profits -- selling off real estate, using total return swaps, failing to make capital expenditures to upgrade stores, buying back expensive shares -- Chairman Eddie Lampert's bag of tricks has apparently run dry.

For the first time in three years, Sears failed to report a profit, instead posting a $56 million net loss, or $0.43 per share (a loss of $0.53 a share, excluding favorable gains on the sale of assets). The top line fell 5.2% to $11.1 billion, and total domestic comps -- sales at stores open for at least a year -- plummeted 8.6% from the year-ago period.

Not that falling comps are any surprise. Sears hasn't posted a single increase in this important retail metric in years.

The new game plan for supposedly turning Sears around is to reorganize the company into five autonomous pieces that will all be held separately accountable for making good on progress. Without question, Sears has some well-known brands that it could tap and exploit -- DieHard batteries, Land's End clothing, Kenmore appliances, and Craftsman tools -- but it seems that a new distribution model is necessary, because consumers simply don't want to shop at Sears.

Instead, they're heading to Wal-Mart (NYSE:WMT), Costco (NASDAQ:COST), and Target (NYSE:TGT), all of which reported higher sales. The combination of low price and quality are bringing in consumers looking to stretch their dollars.

Despite the new strategy, it looks like Lampert is returning to his old financial-engineering ways. The board of directors approved another half-billion worth of stock buybacks. When combined with the amount remaining from previous authorizations, that gives Sears nearly $650 million to spend. Over the past year, the company's buybacks haven't proven beneficial to shareholders' returns; management bought shares as high as $150 a stub that are worth less than $85 today. Sure, the shares seem cheap to repurchase now. But if conditions continue their current trend, they might seem as richly priced as those previous certificates it retired.

Sears is running out of time, if not cash. With more than $1.4 billion in the bank and a substantial $4 billion line of credit, it can hold on for a while longer. However, if the once-venerated retailer continues to bleed through its cash, it might not be too long before we're once again discussing the dreaded "B-word."

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