Electronics retailer Dick Smith has had nearly $90 million wiped off its market value after a sales downturn forced it to abandon its profit forecast.
Just weeks after revealing sales had been disappointing during October, the retailer on Monday said the trend had continued into November.
The sales slump has left Dick Smith with excess stock and facing a $60 million writedown.
Managing director Nick Abboud said given the writedown and uncertain trading outlook, the company is unable to stand by its previous profit forecasts.
"We remain cautious on the outlook for the Christmas trading period," he said.
The news spooked investors, who pushed the stock down by 70 per cent in early trade. The shares closed 38 cents, or 57.6 per cent, weaker at a record low of 28 cents.
The retailer is planning to beef up its marketing campaigns to help try and entice shoppers ahead of Christmas.
However it has no idea if this will help reduce the amount of excess stock.
Dick Smith in October slashed up to $8 million off its full year net profit guidance, saying it would fall to between $45 million and $48 million.
CMC Markets chief market analyst Ric Spooner said the update from the electronics retailer contrasted with more upbeat reports from other discretionary retailers recently, including David Jones, Myer and Oroton.
"It is obviously concerning, I think, for shareholders, coming as it does against a background of some signs that the overall consumer discretionary retail sector is doing a bit better, though they are only modest signs," he said.
"It does appear, at least prima facie, to be related to Dick Smith's competitive position and the attractiveness of their offers."
In October, Dick Smith said sales growth had been well below the level achieved between July and September, despite more advertising.
The sales slide dented the group's expectations for the key Christmas trading period.
A year ago, the retailer outlined plans for 450 stores across Australia and New Zealand as it reported a 10 per cent leap in sales for the first 15 weeks of fiscal 2015.
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