Value retailer Instore, which operates the Poundstretcher and Instore fascias, could expand its food range further if Leicester-based wholesaler Crown Crest takes over the loss-making company.

The retailer revealed this week it was “in preliminary discussions with a third party, which may or may not lead to an offer being made for the entire share capital of the company”, after reporting a pre-tax loss of £7.4m for the year to 1 March on sales up 6% to £296.8m.

The City was confident that Crown Crest, which bought a 29.8% stake in Instore through its investment vehicle Seaham Investment in May last year, was the interested party. Neither Instore nor Crown Crest would comment.

Crown Crest operates a C&C business selling ambient retail food, crisps and snacks, soft drinks, non-foods and tobacco.

It would “make sense” for Crown Crest to increase the supply of food products to Instore’s 305 stores, analysts said.

Since buying a stake in the retailer last year, Crown Crest has been supplying Instore with ambient lines including crisps and snacks, soft drinks, tea, coffee and confectionery.

Instore CEO Peter Burdon told The Grocer last month he was keen to expand the number of food lines Instore currently offered.