Furniture retailer ScS Upholstery has suspended its shares as it enters talks with an external party for a possible buy-out.

The struggling furniture retailer said in a statement today that it had received an approach to acquire the entire share capital of its trading subsidiary and has begun due diligence with this unnamed party.

ScS's said that the extent of working capital required would result in "only negligible value being attributed to the shares in ScS".

This has resulted in the retailer's decision today to suspend trading on its shares.

The retailer has been hit by difficult trading conditions and last week hired Ernst & Young to advise it on a restructure to raise cash for its future.

ScS has also been hit severely by the withdrawal of credit insurance to its suppliers.

Rival furniture retailer Land of Leather said last week it would raise £15m through a new share issue, in an attempt to bolster its cash position in a weak market for furniture sales.

Shares in the company sank to a record low last week as investors anticipated a refinancing,