Retailer MFI Furniture Group said on Saturday that talks over the sale of its retail operations to a private equity group were now at an advanced stage.

The company remains in talks with Merchant Equity Partners, MFI said in a statement, responding to newspaper reports that the group was close to selling its retail arm.

There is not yet certainty as to the final terms or timing of any transaction. However, discussions are at an advanced stage, and a further statement will be made when appropriate.

The Financial Times said the MFI board was poised to approve this weekend the sale of its struggling retail business to MEP, run by veteran investment banker Henry Jackson, for a nominal 1 pound.

The newspaper said the furniture retailer was set to pay MEP a dowry of around 100 million pounds to take the loss making business off its hands so it can concentrate on its profitable Howden Joinery trade business.

The Daily Telegraph, which said a deal could be announced as early as next week, quoted a banker working on the deal as saying an agreement was almost there but that there were still a number of obstacles to overcome and a deal could yet collapse.