As of 1100 GMT, the Debenhams stock price fell by just over 14% to 71.31p after saying that poor festive retail sales would mean it have to cut prices and take a hit on profits.

It has forecast profit before tax for the first half of its fiscal year to be in the region of £85m (€102m, $140.47m), a 26% plunge from last year. Analysts had previously expected a first-half pretax profit of £112m.

Debenhams also added that "the retail section as a whole has been highly competitive with an unprecedented level of promotional activity."

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Competitors

Debenhams' gloomy outlook was exacerbated by its rivals' apparent Christmas trading success.

John Lewis Partnership said on 16 December that it saw a second week of soaring online sales as it enters the festive trading period.

The employee-owned partnership, which operates John Lewis department stores and Waitrose supermarkets, said online sales lifted 22% in the week to 7 December on the year before.

It was the second week in a row that online sales made up a third of overall trade. Total sales lifted 1.8% on the year to £144.5m, despite a sharp real terms decline in wages for UK consumers.

Meanwhile, online retail sales are predicted by accountancy giant Deloitte to hit £5bn over Christmas 2013. Though this is only an eighth of the total £40bn retail sales anticipated over the festive period.