NEW YORK >> Sears will live on— at least for now.

The company’s chairman and largest shareholder, Eddie Lampert, won a bankruptcy auction for Sears, averting liquidation of the iconic chain, according to a source familiar with the negotiations. The person agreed to speak on condition of anonymity because they were not authorized to discuss the negotiation publicly.

Lampert, who steered the company into Chapter 11 bankruptcy protection in October, is aiming to keep open roughly 400 stores and preserve tens of thousands of jobs.

But how long Sears can survive under the 56-year-old billionaire, who has tried and failed to turn around the company many times before, remains an open question. Cutthroat competitors like Amazon, Target and Walmart also pose challenges that the struggling retailer has so far been unable to overcome.

“While there’s no doubt that a shrunken Sears will be more viable than the larger entity, which struggled to turn a profit, we remain extremely pessimistic about the chain’s future,” said Neil Saunders, managing director of GlobalData Retail. “In our view, Sears exits this process with almost as many problems as it had when it entered bankruptcy protection. In essence, its hand has not changed, and the cards it holds are not winning ones.”

The operator of Sears and Kmart had 687 stores and 68,000 workers at the time of its bankruptcy filing. At its peak in 2012, its stores numbered 4,000.

Lampert, the only one to put out a bid for the whole company, had sweetened his offer to more than $5 billion over the last few days through an affiliate of his hedge fund ESL after his original bid had been rejected by the Sears board. That included assuming certain liabilities like covering bills to vendors of up to $166 million. Details of the final terms couldn’t be learned.

The plan is not a done deal and must be approved at a hearing on February 1 by a bankruptcy judge in White Plains, New York.

Lampert, who gave up the CEO title when the Sears filed for Chapter 11, has maintained there’s still potential for the company. But he has yet to spell out details on how he plans to turn it around.

Lampert combined Sears with Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. He pledged to return Sears to greatness, but that never happened.

The company, hammered during the recession and outmatched in its aftermath by shifting consumer trends and strong rivals, hasn’t had a profitable year since 2010 and has suffered 11 straight years of annual sales declines. Lampert has been criticized for not investing in the stores, which remain shabby.

Under Lampert, Sears has survived by spinning off stores and selling brands that had grown synonymous with the company, like Craftsman. Lampert has loaned out his own money and cobbled together deals to keep the company afloat, though critics said he has done so with the aim of benefiting his hedge fund. ESL has maintained that the moves put much needed cash into the business.

Four years ago the company created a real estate investment trust to extract revenue from the enormous number of properties owned by Sears. It sold and leased back more than 200 properties to the REIT, in which Lampert is a significant stake holder.

Lampert personally owns 31 percent of the Sears’ outstanding shares and his hedge fund has an 18.5 percent stake, according to FactSet.

Lampert stands to realize a big tax gain keeping Sears alive, using the company’s years of net operating losses to offset future taxable income if one of his other companies takes over the chain, says David Tawil, president and co-founder of Maglan Capital, which follows distressed companies.

Tawil and others believe Lampert wants to be in full control of liquidating Sears’ assets, including real estate.

If Lampert’s bid to save Sears gets final approval, he will need to dramatically reinvent the business. That means revitalizing aging stores and focusing on major appliance and tools that once were the jewels of the company, say industry analysts. Walmart, Target and others have been heavily investing in their own stores and expanding online, in large part because they have the capital to keep spending.

Sears will also need to convince shoppers like Sanjay Singh why they should keep coming back.

Singh was recently shopping with his wife at the Newport Centre Mall in Jersey City, N.J. and stopped by a Sears to look for a swimsuit for his 11-year-old daughter. He says he usually shops at other department stores.

“Sears is usually my last option,” he said.