Sears must think we’re stupid or gullible. Here’s why.

Having spent my first 12 years in retail as an executive at Sears, I’ve followed the company’s trials and tribulations with more than a passing interest. And considering my last role at the once-storied brand was leading corporate strategy–where my team was mostly focused on trying to fix the mall-based department store format and making the Lands’ End acquisition work–I am far from an impartial or unknowing observer.

Arguably, I’ve taken Sears to task too many times over the years. When I left Sears in 2003 (a year before Sears and K-mart merged), I had already concluded that the once iconic brand was on a slow slide to oblivion. Combining a deteriorating, mediocre chain with a terrible one did not change my view. Over the years Eddie Lampert’s misguided leadership has been a frequent target of criticism on my blog. In 2013, I labeled Sears “The World’s Slowest Liquidation Sale” as it became abundantly clear that after nine years Lampert still had no viable turnaround plan. In 2014, I lampooned the futility of their efforts in an April Fool’s post and went on CNBC arguing that investors would be better served by a swift liquidation rather than perpetuating an increasingly delusional strategy that only served to lower asset values.

So, years later, Sears is still hanging around and Lampert is still peddling his special brand of snake oil. How is this possible?

Let’s answer the easy question first. Sears has endured longer than they deserve to because they had enough assets to unload (real estate, private brands and fungible business units) to cover the massive operating losses they’ve racked up during the past decade. The fact that Sears has very low operating costs (partially because of favorable rents, partially because Lampert has cut overhead to the bone) has extended their life. But, make no mistake, they are very close to the end of the runway.

To answer the other question we must conclude that investors are either stupid or gullible–or at least Lampert is counting on it. Before we get to the most recent nonsense, it’s worth mentioning some of the whoppers we were supposed to believe over the years:

• That Sears and Kmart would create some magical synergy
• That Sears’ problems could be fixed by cutting costs rather than investing in the customer experience
• That it made sense to have merchandise categories compete internally with each other, rather than focus on the customer and external competition
• That Sears could disinvest in stores and profitably transition much of its business online
• That selling once enormously valuable private brands like Kenmore, Craftsman and DieHard in off-the-mall formats and Ace Hardware Stores was a sufficient antidote to the massive share loss to Home Depot, Lowe’s and Best Buy.

Today, the company continues to make a big deal about how it is a “member-driven” company, touting its “Shop Your Way” program and “ecosystem” as some sort of important differentiator and value contributor. The facts are that a) it is, at best, a mediocre loyalty program, b) customer engagement is driven almost exclusively by a high rate of discounting, c) margins have declined since its introduction and d) sales continue to slide. Referring to customers as “members” may sound good, but it connotes a strength of relationship and value that clearly does not exist. The program has always been an expensive gimmick to collect customer data. Suggesting anything else defies credulity.

In an apparent attempt to distract from the collapse of its mall-based stores, Sears Holdings also continues to announce “innovative” new store formats like an appliance & mattress store (which isn’t a new idea at all) and a DieHard Battery Center. These might be interesting formats to franchise when Sears ceases to be a significant retail operator, but the notion they will somehow be material to a turnaround is just silly.

More broadly–and most stupefyingly–Lampert continues to claim turnaround efforts are on track. This from a company that has had precisely one-quarter of positive sales growth in seven years, operating losses that continue to worsen, an acceleration in store closings and rampant departures of key executives. Moreover, the moves detailed in the most recent press release are all about financial restructuring and say nothing about actions to improve customer relevance. If Sears does not quickly and dramatically improve its performance with its customers nothing else matters. Period.

At one level, I get why Lampert apparently chooses to create the illusion that Sears can actually stay in business. He needs vendors to keep shipping product to mitigate a complete unraveling. He needs employees to keep the lights on and greet the few customers who might wander into the ever shrinking store fleet. He needs to avoid looking too desperate to dodge fire sale pricing on the few remaining assets he must unload to make it through the holiday season. And he needs creditors to give him more time to try to pull another rabbit out of his hat.

Yet, let’s be clear, to believe that Sears is somehow going to make it much longer as anything remotely resembling a national, fully operating retailer is beyond folly. I have no idea whether Lampert truly believes Sears can be saved. I hope not because that would be quite sad.

But for the rest of us, there is simply no reason to be stupid or gullible. The reality is there for all to see. A story and, most importantly, the one spinning the tale–only has power if we allow them.

A version of this story recently appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.

Originally published at stevenpdennis.com on July 5, 2017.