A shock profits warning sent Mothercare shares plunging by nearly a third today as Sainsbury's also scaled back sales guidance after a competitive Christmas for retailers.
The babycare products chain fell 31% after it said a 9.9% drop in UK sales would see profits fall short of City expectations, while supermarket Sainsbury's dropped 2% in the FTSE 100 after like-for-like quarterly sales growth nudged up just 0.2%.
Overall, the FTSE 100 Index slipped 33.7 points to 6721.8 as investors awaited the minutes of the US Federal Reserve's latest meeting, which should offer more guidance about its tapering plans.
The Dow Jones Industrial Average fell nearly 60 points in early trading on Wall Street, despite survey figures showing US businesses added the most jobs in a year in December.
The jobs data fuelled hopes of a pick-up in economic growth worldwide, spurring on the pound, which rose to 1.65 US dollars and 1.21 euros.
Among stocks, Mothercare shares sank 128.5p to 291.5p after confidence in its turnaround plan was hit by today's profits warning.
Quarterly sales in its loss-making UK business were lower because of fierce competition over Christmas and the impact of recent store closures on year-on-year comparisons.
Currency deflation also impacted its overseas business.
It is the second high street retailer to warn over profits after Debenhams issued its alert on New Year's Eve.
The department store chain was also lower today, down 0.6p at 76.3p.
Sainsbury's was likewise in the red in the FTSE 100 as its admission that full-year sales were now likely to miss targets took the shine off a better-than-expected festive sales performance.
It maintained its nine year track record of consecutive like-for-like sales growth in the 14 weeks to January 4, but offset this by confirming it no longer expects to achieve an annual sales increase of 1% to 1.5%.
Analysts at Barclays said 0.7% to 0.8% growth was now more likely as they also shaved their forecast for annual pre-tax profits.
Sainsbury's shares were 8.9p lower at 360p, while Tesco slipped 3.5p to 328.3p ahead of its own trading update tomorrow.
Morrisons and Marks & Spencer bucked the trend with a rises of 0.6p to 254.2p and 3.8p to 444.9p respectively.
M&S is expected to announce a 1.5% drop in clothing sales tomorrow, although this is likely to have been offset by much better trading in its food aisles.
Elsewhere, shares in RSA Insurance continued their recovery on hopes that an independent report expected on Thursday will rule out the need for any more write-downs in its troubled Irish business. Shares were 3p higher at 100.7p, a rise of 3%.
The biggest FTSE 100 risers were RSA Insurance 3p higher at 100.7p, Royal Bank of Scotland up 7.5p to 357.9p, Glencore Xstrata 6p ahead at 314.8p and Lloyds Banking Group 1.3p stronger at 83.8p.
The biggest FTSE 100 fallers were Aberdeen Asset Management down 17.7p to 473.3p, Tate & Lyle off 27.5p to 773p, Imperial Tobacco 67p lower at 2247p and Aggreko 50p weaker at 1690p.