Woolworths Group, the sweets-to-DVDs retailer, said it has agreed to sell leases on up to nine stores to supermarket giant Tesco for up to £9 million.

It said proceeds from the disposals, which are expected to take up to six months, will be used to reduce group borrowings.

Assuming all nine leases are transferred, a profit of about £7 million would be generated, Woolworths said.

This will be disclosed as part of operating profit from property transactions, it said.

Last month Woolworths posted a record first-half underlying loss and suspended its dividend payment.

Earlier this week it said it was comfortable with its financial and cash positions and was continuing to trade normally with its suppliers despite their loss of credit insurance cover.