Sears, which in January this year was bought by a consortium involving entrepreneur Philip Green and the Barclay brothers, owns women's clothing chains such as Wallis, Warehouse, Miss Selfridge and Richards.

Mr Green and his backers won control of Sears with a £548m ($870.7m) bid.

Arcadia on a shopping spree

The entrepeneur has since agreed to sell Sears' Freemans mail order business to Germany's Otto Versand in a deal valued at an estimated £150m.

A deal with Sears would greatly strengthen Arcadia's position in the womenswear market, where it is estimated to have a share of between 8-10% with brands such as Dorothy Perkins, Principles, Evans and Top Shop.

Arcadia, which was created last year when department store Debenhams was demerged from the Burton Group, said a further statement would be made in due course.

In April, the group announced that its profits have almost halved - reflecting the tough times retailers have been facing on the high street.