Morrisons is gearing up to close its Rathbones bakery business, putting almost 400 jobs at risk of redundancy.

The supermarket snapped up the bakery business from administration in 2005, but said it has struggled to make it profitable and it has been loss-making “for a number of years”.

A Morrisons spokesperson said: “After a period of growth and investment, the business has been lossmaking for a number of years. Although we have tried several routes to return the business to profitability, none have been successful.

“This has led us to consider the possibility of closing the site.”

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The supermarket “will do everything we can to help those colleagues affected, including investigating whether there are any other suitable roles elsewhere in the group.”

Morrisons has now entered a consultation period with the bakery’s 378 staff members, while it is understood that the supermarket is still investigating how to maintain a smaller, specialised bakery division.

It is exploring options to continue making some baked breakfast goods, such as muffins and croissants, at the site, in a move which could save some jobs.

The spokesman confirmed that the 450 in-store Market Street bakeries would not be affected.

It comes as Morrisons has slashed its debt by nearly 40% following major debt restructuring, cutting its bill from £6.2bn to £3.8bn.

The restructuring included extending its term loan facilities from 2027 to 2030 and decreasing both the cost of the debt and the overall debt level. Morrisons has also extended its revolving credit facility to 2030.