Wednesday brought another battering for the stores sector, which had already lost more than a tenth of its value in the previous week, as Marks & Spencer’s shares plunged 20 per cent after a damp squib Christmas.

Year on year, general retailers’ valuations overall have slumped by more than a third and disappointing updates still to come are likely to dent stocks further.

DSGi, the first retailer to warn on profits after Christmas, precipitated a panic about the retail outlook. Sell the electricals retailer, advises Investec, noting the dividend is barely covered. The broker said: “DSGi faces challenging structural issues, but the new chief executive’s strategic review is still some time away.”

Land of Leather, whose January Sale fell flat, is on Shore Capital’s hold list. “Land of Leather’s model offers more flexibility than many of its competitors, aided by store concessions and a high level of direct sourcing from Asia,” it observed.

Next’s shares took a hit after gloomy comments about the consumer outlook, despite reassuring noises on profit prospects. Panmure Gordon retained its buy stance and said: “We still believe that Next has potential for profit upgrades over the next 12 months. However, this statement has pushed the likelihood out towards the end of that period.”

Value homewares group Dunelm did not escape the retail sector’s fall from favour, despite an encouraging update. Buy, urged Landsbanki. The broker said Dunelm’s low transaction value and low leverage should protect profits, while its expansion programme may be helped by a softening property market.

Numis welcomed Topps Tiles’ trading update, but cut its price target from 250p to 200p because of the “contraction” in earnings multiples across the retail sector.

Following the collapse of founder Lord Harris’s bid for Carpetright, investor Harris Associates – which is unconnected to Lord Harris and had opposed a sale – upped its stake in the retailer from 7 to 8.2 per cent. Harris Associates also increased its holding in JJB Sports.

Carphone Warehouse was up early in the week as speculators bought on talk that a bid was in the offing. Vodafone and US electricals chain Best Buy were both linked to Carphone, which nevertheless ended the week down as the talk subsided.

A swathe of updates is due next week, including Debenhams, Tesco and HMV. And the sector may once again be subject to extreme volatility. As Retail Week went to press, all eyes were on Sainsbury’s and fears were mounting that it would be the latest big name to disappoint.