Founded as a catalogue business by a railway clerk in 1886, Sears firmly held its ground as an iconic retailer in the lives of North American households for more than a century.

Any kitchen in middle-class suburbia may well have a Kenmore appliance humming in the background. The car in the garage might fire up with a kick from a trusty DieHard battery. I'll always keep my Craftsman tool set as a reminder of my father, who gave it to me for a birthday present years ago. Besides, those tools are good.

Now though, thanks to a combination of neglect, mismanagement, a weak economy and the ever-changing dynamics of retail, the unthinkable may happen. After years on death watch, Sears Holding (SHLD.O) may actually fall — joining the ranks of retailers like Borders and Blockbuster as mere entries in the archives of Wikipedia.

A new round of store closings was recently announced. Key executives are leaving. Sales have been in steady decline for years. These are not good signs.

"I don't think Sears is viable. I don't think they can survive in their current state," says veteran retail sector financier Howard Davidowitz of Davidowitz & Associates, who has advised retail greats like Wal-MartStores (WMT.N) founder Sam Walton over the years. "Too many things have gone off track. Too many customers have been lost, and it's too expensive to bring them back."

A turnaround that tanked
In short, under the management of hedge-fund kingpin Eddie Lampert of ESL Investments, which took over the show in 2005, a lot of sins have been committed at Sears. Redemption may not be possible.

"It's too late. Something different has to happen to the company, and I honestly don't know what it can be," says Davidowitz.

Goldman Sachs analyst Adrianne Shapira has a $27 price target on Sears stock, which recently changed hands for $59. In other words, Shapira is forecasting a decline of more than 50 per cent from here — because she's not convinced a turnaround will play out, despite a smattering of reforms by the retailer.

Of course, Sears has a different view. The company believes using technology to improve the shopping experience, such as arming sales staff with iPads to carry out research on the floor for customers, a new loyalty program called "Shop Your Way Rewards," and improving merchandise, among other things, will bring its core customers back.

And there's value in those powerful brands: Craftsman, Kenmore, DieHard and Land's End. As for bankruptcy — a clear risk at a retailer that's posted six straight years of sales declines — Sears believes financial wizardry will keep the wolf from the door.

Some investors agree; Sears was actually the best performing S&P 500 stock in the first quarter of 2012.

They may be right, but such financial wizardry — or the use of tactics like asset sales and balance-sheet adjustments to drain off cash — goes only so far. It's also a big part of what got Sears in trouble in the first place.

For the past seven years, Sears and Kmart (also owned by Sears Holding) has been in the hands a of hedge fund manager whom many consider to be a financial genius, Eddie Lampert.

The problem is, he's been treating Sears more like a hedge fund than a retailer, say critics. And that simply doesn't work in the highly competitive world of retail. Instead, it leads to one sin after another, and the sins build on each other until — poof! — an iconic retailer hits the endangered-species list.

Now, I don't think Sears will go bankrupt or close its doors overnight; Lampert has the financial clout and skills to keep it going. More likely, the retailer may simply keep getting whittled down, as Lampert continues to hive off stores, leases, brands and other assets to try to deal with ongoing sales declines. Sears announced 120 store closings late last year, and more than 60 more last month.

But in retail, you can't shrink your way to success. This is why retail experts like Davidowitz now question the viability of Sears.

Here's a look at the five sins of Sears, and how the company is trying to repair the damage.