Woolworths is in talks with restructuring specialist Hilco to sell its retail chain for £1.
Woolworths said in a statement this morning: "The board can confirm that it is in preliminary discussions regarding a possible offer for the retail business. There can be no assurance that any offer will be forthcoming."
The Times newspaper reported that any deal would require approval from Woolworths' banking syndicate. Last month its banks appointed Deloitte to help with further loan negotiations with the retailer.
The newspaper also said that the talks would hinge on how much of Woolworths' debt Hilco is prepared to take one. Hilco is also thought to be reluctant to assume responsibility for Woolworths' £100 million pension fund deficit.