Hilco, the turnaround specialist in talks with Woolworths to buy its retail business, is likely to sell off the stores and wind the business up, analysts have claimed.

Verdict Research's Nick Gladding said he did not believe Hilco would run Woolworths as a going concern for long. "It would be difficult for someone to revive it as it faces unprecedented competition from supermarkets," he said, predicting: "They will look to dispose of the stores."

Woolworths said the discussions were in "preliminary" stages and refused to comment on the potential sale price, rumoured to be £1. Negotiations are believed to be focusing on how much of the business's debt Hilco would be prepared to take on. The other arms of the business - 2Entertain, the DVD publisher, and EUK, a specialist distribution business - would remain with the Woolworths Group.