John Lewis’s revelation that last week’s trading was the “toughest in recent memory” spooked an already panicky City.

Even before the news, analysts feared the consumer slowdown has some way to go. Landsbanki expects the aggregate sales and profit performance across the sector in 2008/2009 to be worse than in 2005. Kaupthing advised investors to remain underweight in retail.

Bearish Piper Jaffray cast doubt on the success of Tesco’s fledgling US chain Fresh & Easy and the giant grocer came under attack in the newspapers for alleged tax avoidance. Rival brokers came to the grocer’s defence.

Blue Oar Securities argued that it was too early to judge the Stateside venture, which is only four months old and said: “On the tax issue, this looks like efficient tax management to us.” Bernstein said that concerns about Tesco, which have hit its stock in recent months, are “unwarranted” and has a 500p price target.

Sainsbury’s was down over the week, despite speculation that a reduction in the family shareholding might rekindle Middle Eastern bid interest.

Seymour Pierce downgraded Marks & Spencer from hold to sell, alarmed by a “grim outlook”. Fashion retailers in general are finding life grindingly hard and M&S is not immune. The broker does not expect M&S to hit the£1 billion profit mark and warned of “increasing downside risk” to next year’s forecast.

Next remained out of fashion with Panmure Gordon, which maintained its sell advice. Panmure cut its forecast for the year to next January from£430 million to£377 million, criticised Next’s ranges and warned that the share buy-back programme was unlikely to be continued once the present phase is completed.

Pali International cut its price target for DSG International from 75p to 60p and recommended switching into Kesa Electricals. The broker observed: “It’s easy to do the maths on the fast-disappearing dividend cover and fast-disappearing cash position and conclude that the board will have no choice but to slash the final dividend.” On Tuesday, Kesa got shareholder go-ahead to sell its But chain for 550 million (£416.7 million).

Value fashion chain Primark, owned by Associated British Foods, posted a 4 per cent rise in first-half like-for-likes in its pre-close update. Panmure Gordon forecast a first-half EBIT rise from£91 million to£113 million.

Shares in Game tumbled after directors, including chief executive Lisa Morgan, sold a big tranche of shares. Shore Capital told investors to follow the lead, but Oriel believed the sell-off that greeted the news was overdone.