The parent companies of PC World and Argos saw their share prices slide after US investment bank Merrill Lynch cut its outlook on the non-food retail sector in the UK to 'underweight' adding that it expects customers to rein in spending over the next couple of months.
Despite seeing a rise yesterday on speculation that Metro AG may be preparing a bid for the firm, DSGi's shares slipped 8.5 per cent on the news.
Speaking to Bloomberg's Loveday Morris, Merrill Lynch equity strategist Karen Olney said: "Real wage growth is collapsing. Although towards the end of the year, wages may surprise us on the upside, it isn't going to happen in the next couple of months."
She added that recent rises in food prices, mortgage prices and utilities had removed the effect, if any, that rises in wages had had, and that non-food retailers were likely to feel the squeeze the most.
Kesa, which owns Comet, and Metro AG, which owns Media Markt, also saw their shares slide on the news.