Icelandic investment company Baugur Group HF is planning to acquire a 3 per cent stake in high-street fashion chain French Connection, according to the Sunday Telegraph newspaper.

Baugur has made a string of purchases in the UK market recently, including the £55 million acquisition of value fashion company Mk One last November.

French Connection has been struggling to increase its sales over the past few months and last winter admitted its stock wasn't fashionable enough.