Shares in Debenhams (LON:DEB) surged on Wednesday following reports that Sports Direct (LON:SPD) had discussed merging the struggling high street retailer with its House of Fraser business at board level.
Sports Direct, however, distanced itself from the reports, which were fuelled by comments made by Simon Bentley - one of its non-executive directors - to journalists present at Sports Direct’s Annual General Meeting (AGM) on Wednesday.
Sports Direct acquired House of Fraser last month and owns a 29.7% stake in Debenhams.
Earlier this week struggling department store group Debenhams said it was working with advisers on “longer-term options” but that it was not actively considering a raft of major store closures to help save the business.
Sports Direct’s Bentley told journalists on the sidelines of the AGM that combining the two department stores “had been discussed” at board level, according to the BBC.
"If any of you had the job of handling House of Fraser right now, I think you might have your hands full, and incidentally we've also got Sports Direct. If there's opportunities in the future, then we'll be in a position to take advantage of them,” Bentley was quoted as saying by the BBC.
However, he later claimed his remarks had been misinterpreted, saying he had been “asked a general question about whether or not we (Sports Direct) discuss our strategic investments, and in particular Debenhams, to which I replied in the positive.”
"I made no mention of any merger between House of Fraser and Debenhams, nor did I intend my answer to infer that,” he added.
British department stores have struggled in recent times with House of Fraser going bust and John Lewis warning on profits.
Debenhams is due to publish its annual results next month when it expects to report an adjusted pre-tax profit of £33mln and underlying earnings (EBITDA) of £157mln. Net debt is forecast to come in at around £320mln.
The company said on Monday that the early weeks of the new season “have shown more positive trends”.
Shares in Debenhams, which have shed two-thirds of their value so far this year, were 7% up at 13.12p in late afternoon trade.