House of Fraser said this weekend that it had received a "very preliminary approach". The department store group added that this offer might possibly lead to a takeover offer. The FT reports that the offer is thought to come Icelandic group Baugur. The acquisitive group bought a 9.5 percent stake in House of Fraser in early April, but has refused to comment on this. If Baugur is indeed the bidder, it will be the second time it has shown interest in the chain. In 2003 it bought a 21 percent stake in House of Fraser before selling it a year later.

Earlier this year, private equity group Apax Partners was in "very preliminary" talks with the chain, but these ended in March. House of Fraser was valued at £281 million at the end of last week. In the year ended 28 January 2006 , pre-tax profits dropped to £22.3 million from £58.9 million, due to a turnaround in exceptional items. Underlying profits rose 4.6 percent.