THE outlook for the retail sector darkened after a raft of gloomy updates across the industry – including a shock profit warning from supermarket giant Tesco.

Tesco, which has 2,700 stores in Britain, saw billions of pounds wiped from its value after it reported dire Christmas trade in an unprecedented blow to the company’s fortunes.

Elsewhere, Argos owner Home Retail Group warned it was set to slash its dividend after a poor festive season, while Mothercare reported another drop in sales, albeit at a lower rate than during the summer.

Chocolate retailer Thorntons reiterated its recent profit warning after Christmas sales fell by more than expected – while milder weather hit sales of car maintenance products at Halfords.

Investors ditched retail stocks as the updates rolled in yesterday. Tesco closed 61.6p lower at 323.5p – pulling Sainsbury’s was down by 16.2p to 285.9p and Morrison’s off by 18.1p at 285.9p.

Bucking the trend, department store House of Fraser, with a store at Kingsgate in Huddersfield, reported a 11.1% surge in like-for-like sales in the five weeks to New Year’s Eve.

Tesco admitted that its £500m price-cuts campaign failed to bring in enough customers over Christmas.

The company, which has several stores in the Huddersfield area, reported a 2.3% fall in like-for-like sales excluding VAT and petrol in the six weeks to January 7.