Baugur is understood to have made an informal offer for Moss Bros, dispelling speculation the investment group had closed the door on a deal.
Sources close to Baugur said reports that its interest in Moss Bros had floundered after uncertainty surrounding the Icelandic banking market were wide of the mark.
“Baugur is still very much in play with Moss Bros. There are ongoing talks,” said one source familiar with the situation.
Baugur, which already holds a 29% stake in the company, has been linked to a bid for the group for about 18 months. In December, Baugur issued a statement saying it was assessing its options for its Moss Bros stake, which could include making an approach for the business.
Baugur is rumoured to be considering building a menswear version of its multi-brand womenswear conglomerate Mosaic Fashions around the Moss Bros business.
Moss Bros issued a profit warning in December and has struggled to compete in a deflationary market and with a resurgent Marks & Spencer.