Matalan says it has found it difficult to cope with ongoing trading challenges and has now engaged Lazard to find a buyer or an investor.

The retailer’s founder and chairman John Hargreaves is reportedly working with advisors at Lazard to either find a buyer for the entire business or an investor to inject capital, according to The Sunday Times. Matalan has admitted struggling with inflationary pressures in recent months.

John Hargreaves reinstated himself as chairman of the retailer last month, when he told the board that tens of millions of pounds would need to be invested in the business. He has returned to Matalan after a 15 year absence, replacing executive chair Steve Johnson. However, this has prompted a leadership battle; John and his family would expect to maintain overall control of Matalan following their new investment, but some City sources report that senior creditors have voiced their objections to this strategy, forcing the exploration of a sale or external financing.

The value of the sum that the Hargreaves family shareholders have said they are prepared to invest has not been made public, although sources have suggested it could be between £25-50 million.

The company is approaching a January deadline for refinancing £350m in debt, while an additional £130m instrument is scheduled for repayment the following year.

Matalan continues to carry a selection of toys and games for all ages, in departments curated by The Entertainer. The company employs 11,000 people across 230 UK stores and posted sales growth of 38% to £1.03b last year.