Icelandic retail group Baugur says it has no intention of raising its investment in UK department store operator Debenhams.

Its denial follows mounting speculation that Baugur, which already owns House of Fraser and Iceland in the UK, was planning to splash out on the retailer.

Baugur last month took up a 4.87% stake in Debenhams through its Unity Investments and Unity One part-owned vehicle.

However, the company said today (20 July): "Following recent press comment, Baugur confirms that it has no current intention to make an offer for Debenhams or to acquire a shareholding in Debenhams which would trigger an obligation to make an offer for the shares in Debenhams."

Debenhams, which has issued a number of profit warnings in the past year, saw its share price drop by 3.97% or 5.5 pence, to 133 pence on the London Stock Exchange.

The company has struggled of late, with same-store sales fell by 4.5% in the 26 weeks ended 3 March, compared to the same period last year.

Under stock exchange rules, today's announcement means Baugur cannot table a further offer for Debenhams in the next six months, unless certain conditions prevail. Conditions for such a U-turn would include the Debenhams board agreeing to such an announcement or a third party making an offer for Debenhams.