Blacks Leisure had issued a profit warning last month in the run-up to Christmas, after the retailer in October said it was evaluating all kinds of funding options.
The directors do not believe that the group will be able to complete a fundraising which would provide for the equity requirements of the group on the basis of its current capital structure and indebtedness, Blacks Leisure said in a statement.
As a result, the directors now wish to invite offers to support further investment in the group.
The company, whose net debt stood at about 36 million pounds at December 5, plans to conduct the sale process through its adviser KPMG.
Blacks, which had posted a wider first-half loss of 16 million pounds, said it continued to be in talks with its lender, Bank of Scotland, who is supportive of the proposed sale.
The company, which sells walking boots, camping equipment and ski jackets from 306 Blacks Outdoor and Millets stores, came close to collapse in 2009 but survived after a rescue deal with creditors that saw it closing more than 100 stores.
Blacks shares, which have lost about half their value over the past month, lost a further 53 percent on Wednesday on the London Stock Exchange at 8 a.m British time.
(Reporting by Anirban Sen in Bangalore; Editing by Gopakumar Warrier)