Tesco is in discussions with sporting goods specialist Sports Direct over taking space in some of the grocer’s largest stores.

Mike Ashley’s Sports Direct has already taken a store within a hypermarket in the Czech Republic which Tesco downsized from 80,000 sq ft to 50,000 sq ft.

The parties are now discussing potentially installing Sports Direct into mezzanine floors in three of Tesco’s largest UK stores, the Financial Times reported.

Tesco chief executive Philip Clarke has admitted the grocer has too much space in its largest stores with the migration of sales in a number of non-food categories moving online.

Sports Direct already has agreements whereby Tesco is its landlord in several developments. The sporting goods retailer could also look for other opportunities to sit alongside Tesco in the UK and internationally.

Clarke’s plans to revitalise excess store space have included installing gyms, play areas, coffee shop investment Harris + Hoole and potentially its newly-acquired restaurant chain Giraffe into stores.

Separately, Clarke will present to shareholders at Tesco’s annual general meeting today.

He is expected to face questions over executive pay and the exit process from its US Fresh & Easy business.

It is understood billionaire Ron Burkle’s investment firm Yucaipa Companies is the frontrunner to acquire Fresh & Easy to reopen the stores under the Wild Oats Markets fascia.