Sears will ask a bankruptcy judge to pursue liquidation, which would mark the end of the iconic retailer's downward spiral.

The retailer also rejected a takeover offer from former Sears CEO Eddie Lampert, once called the "next Warren Buffett."

Buffett predicted the retailer's and Lampert's downfall in 2005.

"Turning around a retailer that has been slipping for a long time would be very difficult," Buffett said at the time. "Can you think of an example of a retailer that was successfully turned around?"

The end for Sears appears near. And Warren Buffett's decade-old prediction is finally coming true.

Sears will ask a bankruptcy judge to pursue liquidation on Tuesday, likely ending the retailer's more than century-long run.

The move comes after Sears filed for bankruptcy in October and Eddie Lampert, a hedge-fund manager who long promised to turn the struggling company around, also agreed to step down as CEO. A last-ditch attempt by Lampert, who can still make the case to save Sears, was also reportedly rejected.

The announcement appears to be the final straw in a long decline for the once iconic retailer.

The fall from grace of both Lampert, once considered the "next Warren Buffett," and Sears was laid out by the Berkshire Hathaway CEO 13 years ago.

In an interview between Buffett and a group of University of Kansas students that has been circulating since 2005, Buffett was asked about Lampert and his attempt to turn around Sears.

In his reply, the famed investor laid out the road map for the retailer's continued decline.

"Eddie is a very smart guy, but putting Kmart and Sears together is a tough hand," Buffett told the Kansas crowd. "Turning around a retailer that has been slipping for a long time would be very difficult.

"Can you think of an example of a retailer that was successfully turned around?"

Buffett also compared it to his experience investing in retail in the 1970s.

For him, the constantly changing winds of consumer preferences make it impossible for retailers to catch up to more forward-thinking stores after falling behind. From Buffett [emphasis added]:

"Retailing is like shooting at a moving target. In the past, people didn't like to go excessive distances from the streetcars to buy things. People would flock to those retailers that were nearby. In 1966 we bought the Hochschild Kohn department store in Baltimore. We learned quickly that it wasn't going to be a winner, long term, in a very short period of time. We had an antiquated distribution system. We did everything else right. We put in escalators. We gave people more credit. We had a great guy running it, and we still couldn't win. So we sold it around 1970. That store isn't there anymore. It isn't good enough that there were smart people running it."

Buffett said other competitors such as Costco and Walmart could provide better deals while operating on smaller margins, making it hard for Sears and Kmart to compete.

"Costco is working on a 10, 11% gross margin that is better than the Walmarts and Sam's," Buffett said.

"In comparison, department stores have 35% gross margins. It's tough to compete against the best deal for customers. Department stores will keep their old customers that have a habit of shopping there, but they won't pick up new ones."

This is what has happened.

The focus on downsizing the store footprint and becoming resource-light under Lampert didn't translate into sustainable sales or profits; instead, the stores hemorrhaged customers and other retail competitors have lapped both Sears and Kmart.

"How many retailers have really sunk, and then come back?" Buffett said. "Not many. I can't think of any."

He's not called the "Oracle of Omaha" for nothing.