This question was asked a few times before and there are plenty of reasons for their failings.

One of the biggest ones was the lack of a good base for professional officers; the Italian Army did not have much of an officer training program and their officer were poor overall. When a large group of officers were lost it was incredibly difficult for the Italians to replace them.

Another huge issue was the lack of industry. Most of Italy at the time was still rather agrarian and as such mass-production was harder to accomplish on the scale needed for the scale of war that Italy was engaged in. They simply could not replace all the planes, ships and tanks they lost on the scale America, Russia, Germany, Britain or even Japan could.

Now my specialty, weaponry. I'll quote myself from a previous instance of this question (found [here] (http://www.reddit.com/r/AskHistorians/comments/1me7o3/why_was_the_italian_army_so_horrendously/) by the way)

Well I'm an amateur weapons historian and I can tell you that weaponry was one of the problems in WWII (not so much in WWI). My favorite example of Italian weapon failures: Their standard LMG was the Breda M30 a very poorly designed weapon which relied on the unfortunate concept of lubricated cartridges. It was a poorly designed weapon, with a permanently attached magazine which would be fed with strips of standard 6.6 mm Carcano or 7.35 mm (a cartridge the Italian Army attempted to convert to during the raging war, similar to Japan trying to convert from 6.5 mm to 7.7 mm). In the North African theater it was pretty much useless, due to dirt which was attracted to the lubricant. In other theaters it fared a bit better, but it really was a crappy gun.

To compensate for these weaknesses, the Italian Army required everyone in a squad to be capable of operating the M30, but it was normally handed off to the smartest/strongest (pick and choose what most reliable means) person in the squad, and often this was an NCO. This was actually common practice with most automatic weapons in service with the Italian Army. I'm sure you can guess what happens to the guy in a squad with an automatic weapon, the enemy tends to focus on him and his life span tends to be short.

Another issue with Italian weapons is the lack of industry to produce them. Their SMG's (the Beretta M38 SMG as the primary example, as it was the most populous of their produced machine guns) were of very high quality build, made to the same standard as the Thompson M1921's were: with fully milled and machined parts, fluted barrels for cooling and a high quality craftsmanship on the internal mechanism (I'm not implying that the Thompson M1921 had a fluted barrel I'm just describing quality levels). Even attempts to reduce all this fine craftsmanship still involved a lot of milling and precise machine work. The only time they came close to creating a "cut-cost" design (a la Sten, MP40, PPSh and PPS, M3 Grease Gun, etc.) was in 1945 and it was called the TZ-45, and came with an interesting feature: a magazine grip safety (as featured in the more popular Madsen M1946 or P.16, pick the name you prefer). It was made of sheet metal and was a rather crude construction, and only saw use with Italian partisans, so it wasn't even part of the general Italian Army of WWII.

Their rifles, we hear few complaints about. I've never fired one so I can't say anything on that account and I won't. Reports from both soldiers and post-war sources indicate that the standard Carcano M91 (and its numerous variations) were solid rifles with few issues.

Now to their tanks: I can tell you they were trash. I quick wiki-peek could tell you that, but I'll take it one step further. The Italian Army had few tanks during WWII. Their most numerous tank was the L3/35 tankette. Now if you know what the British Universal Carrier (AKA Bren Gun Carrier) looks like, its very very similar except its fully covered with a very thin sheet of armor and armed with a pair of machine guns. Not the finest tank to assault positions with, or even act as support to an advancing column because an American .50 cal mounted on a Jeep could go straight through it and perhaps even keep flying (16 mm (0.63 inch) plate at its thickest, whereas tungsten core (AP) .50 caliber ammunition from 1944 could go through 2 inches of plate at 100 yards)

Now for their heaviest tank (not SPG, mind you): the Carro Armato P40 (Armored Car/Tank Model 40). To say that it doesn't deserve the title is an understatement. Armed with a paltry 75mm gun, 60 mm turret armor and 50mm upper glacis plate, it was barely powerful enough to stand up to any Allied medium tank (Sherman, Cromwell, T-34) and since only ~100 were built, it hardly stands up to the hordes of M4 Sherman tanks produced. Even though it was designed in the 30's, it was only produced in 1943, by which point it was a rather outdated design.

TO put it in a simpler way, the most powerful heavy tanks of the war (arguably, I don't want people assaulting me here) had guns upwards of 88mm (88mm on Tiger II, 90mm on the Pershing M26 and 122 on the IS2). The Italians could barely muster a 75mm gun. I could mention their medium tanks, but I'm sure the picture is understood, they had very bad tanks.

So in conclusion, the Italians had very poor tanks, rather poor, or in short supply (sometimes even both) automatic weaponry and was effectively a resource drain on Germany. Had Italy kept out of the war, its very likely Mussolini wouldn't have been viewed as a completely bumbling idiot because he was actually rather successful in many of his endeavors, until he decided to support Hitler in war. The weaponry and tanks of the army were a key issue, as was the issue of few professional officers (covered in other posts in this thread) which lead to a rather poor showing on the battlefield.

I would suggest Ruth Ben-Ghiat's Facist Modernisms and Claudio Fogu's The Historical Imaginary. Both critics touch on precisely this issue. PM if you're interested in more sources.

Long story short, despite the actual resources they had at hand (not the reason for their fall), they performed terribly due the failure of Italian unification and internal corruption. Mussolini drew on Roman history to support a reconfiguration of the modern Italian as embarking on a spiritual transformation through fascism that would lead to the rebirth of the nation (and not merely a political or religious transformation). Most of the Italian soldiers where from various parts of Italy, predominately the South (a place that continues to be economically suppressed). Southern Italians were asked to fight for a country that during WWII was still not unified as a whole and had historically overlooked or oppressed southerners (See Gramsci's theory of Hegemony and the Italian "southern question"). For centuries, southerners were considered "African" and treated as sub-human. Moreover, the Mussolini regime enlisted "Italian" expats living in Argentina and elsewhere (largely Southerners who had left Italy in search of economic opportunity) by suggesting that they were still Italian citizens and we required to fight for an army in a country many no longer remembered living in. Would you have poured your heart into fighting for a country that blatantly didn't care about you for centuries?

Lastly, of all of the European armies, Italy's had always been one of the weakest as many high ranking military officials had gained their position through favor and not expertise (corruption is endemic in Italy and has a long, complicated history). The soldiers were not highly trained and most of them didn't speak Italian so they could hardly communicate with one another. All the regions of Italy have different dialects. Italian began the linguistic standard only after WWII with the advent of TV and the wide spread disimination of the national standard (See Gundle, Forgacs, and David Kerzer).

When Mussolini was sent to Salo and set up there in a puppet government by the Third Reich, the king of Italy left. Italy was left divided, ravaged, and left without real leadership. In the months following the abdication of the King, a rebel underground army was assembled nearing 2 million in participation. They began as an off shoot of the illegal Communist party at the time (Italian Communists also, for decades until the 70s, highlighted their participation in bringing "liberty" to Italy. In fact, the Americans and Russians were more responsible for their liberation than the Italians themselves). Italians later painted themselves as a "brava gente" (good people) who were victimized at the hands of the Nazis and Americans.

Italy did not perform poorly during WWII purely because of firearms and a lack in resources as this thread has thus far painted the situation.