The owner of catalogue chain Argos cut profit forecasts today after admitting conditions were "more difficult and volatile" than it had expected.
Home Retail Group, which owns Homebase, is also more cautious about the year ahead and warned Argos faced another year of falling sales.
It is the latest gloomy update from the mass market retail business, which has felt the brunt of low consumer confidence and rising input costs.
Home Retail said it now expected profits for the financial year ending last month to be between £250m (291.9m) and £255m (€297.7m), rather than in the region of £263m (€307m) predicted two months ago. Shares slumped another 8% today.
Chief executive Terry Duddy said: "There are clear signs of further pressures on consumer spending, with recent trading conditions, particularly at Argos, proving to be more difficult and volatile than we anticipated."
Argos saw like-for-like sales drop 5.6% in the financial year and Home Retail warned it expected a similar decline in the current year.
The final quarter of the year saw a 4.6% drop in sales, but this compared with a weak period a year earlier when snow caused a decline of 9.4%.
Home Retail said the video gaming market continued to be weak, offsetting strong performances for laptops and tablet computers and further growth in the white goods and toy categories.
Margins came under pressure as Argos was forced into an increased level of clearance activity.
The group added that Homebase like-for-like sales were down 0.3% over the year and looked set to be broadly flat in the current financial year.