The parent of Sears and Kmart is set to layoff 250 employees and close even more stores than expected, putting a dent in the promises of revival laid out by its longtime chairman, Eddie Lampert.

Through an affiliate of his hedge fund ESL Investments, Lampert bought Sears and Kmart after their former parent, Sears Holdings, filed for bankruptcy in October. Sears had been unable to tackle its debt load and faced robust competition from Walmart, Target and Amazon. Without the roughly $5 billion deal Lampert led, the company would have liquidated.

Lampert promised employees and the bankruptcy court that a new Sears could take advantage of its iconic heritage and fend off these challenges, preserving roughly 45,000 jobs. He and his partners said they would improve the retailer's performance by only running 425 of its profitable stores, rather than the roughly 700 stores it had when it filed for bankruptcy.

They also said the company would build out smaller stores focused on selling its most popular products like appliances and mattresses. This shift is being accelerated by a deal it made in June to purchase an interest it didn't already own in the Sears Hometown and Outlet business. The transaction is expected to close in the third quarter of this year. In August, the company said the deal would add "several hundred" stores once it closed.

At its core business, however, the store closures and challenges continue. Sears previously disclosed it would shutter 26 Sears and Kmart stores, this fall. Recently it said it would add dozens more to the list, people familiar with the situation tell CNBC. The mounting store closures outpace by a wide margin the rate of an average of three stores a month it had previously projected it would close.

Missed plans are not new for Sears, which hasn't turned a profit since 2010. Sears board member Kunal Kamlani acknowledged in bankruptcy court in February that the company missed its financial plans every year he was on its board.