Hundreds of jobs could be under threat after troubled MFI was said to be planning the closure of up to 20 stores.
Reports said the move was part of an overhaul of the business which will also see a dramatic shift up-market with the launch of a new kitchen chain and the sale of Sofa Workshop.
MFI, which has ten stores across the Midlands, was also said to be considering pulling out of the bathroom market altogether after sales slumped 40 per cent in recent months.
It is thought that the measures will be announced by chief executive Matthew Ingle as part of his strategic review of the company, which has faced plunging sales across nearly all its divisions.
A spokeswoman for MFI said: "It is all speculation and no final decisions have been made. We will be updating the market fully in our preliminary results on February 28."
Reports said MFI was testing the new upmarket kitchen store in a secret warehouse in Doncaster. The concept - thought to be called Dream-works - will sell kitchens in the £8,000 to £12,000 range, which is well above MFI's current price range.
Last week MFI sold its French kitchens Hygena Cuisines to Nobia for £92 million, which was much more than City expectations and eased fears about the cost of future restructuring. MFI also secured a new £150 million banking facility to fund the turnaround.
It is unclear which stores will be closed and how many jobs will be lost, if any.
Mr Ingle is battling to the turn the chain around in the wake of four profits warnings and the departure of his predecessor John Hancock.