Image copyright Reuters

Debenhams is understood to be seeking to close 50 of its 166 stores in a radical overhaul as it prepares to reveal a record £500m loss.

The struggling department store chain has previously said 10 stores were earmarked for closure over the next five years but has raised that target.

The retailer's survival plan, which was first reported by Sky News, will affect about 4,000 jobs.

Debenhams, which declined to comment, reports annual results on Thursday.

About 25 store leases are due to expire over the next five years, although the company will not necessarily want to close all of those outlets.

Debenhams will have to negotiate ending other leases with landlords, many of which may be reluctant to do so given the headwinds facing retailers.

The chain has been under increased scrutiny since rival House of Fraser collapsed in August.

Image copyright Getty Images

Last month Debenhams sought to reassure investors about its finances after appointing KPMG to help improve its performance and maximise shareholder value.

It said annual profits would be £33m - below previous guidance of £35m to £40m.

It has issued three profit warnings this year and shares have fallen from 35p in January to just 8.5p, valuing the company at just over £100m.

Sports Direct owner Mike Ashley, who bought House of Fraser for £90m after it failed, also owns 29.7% of Debenhams.

That holding, which is just below the level at which he would be required to launch a takeover bid, has prompted speculation that the two chains could merge.

Last month an outgoing director from Sports Direct suggested the idea had been discussed at board level before later insisting his remarks had been misinterpreted.

The retailer later issued a formal statement confirming it did not intend to bid for Debenhams for at least six months.

Sports Direct has also denied claims that it wants Debenhams to collapse so it could buy it on the cheap.