British discount retailer Poundland suffered in the run-up to Christmas as consumers deserted the high street in favour of online shopping.
This resulted in "disappointing" festive sales and a downgrade of profit expectations for the year.
Shares in the group that sells everything from washing detergent to boxes of chocolates and packs of batteries for just £1 slumped more than 10% after the retailer's third-quarter update today.
The company trades as Dealz in Ireland.
Poundland has rapidly increased its number of shops in recent years, culminating in the buyout of rival 99p Stores last year.
It was one of the first retailers to warn of a volatile Christmas two months ago.
"The trading conditions that we experienced in November continued through the third quarter, with high street customer numbers down year on year and this has impacted sales growth," the company's chief executive Jim McCarthy said.
The effect of changing shopping habits, with more and more sales moving online, has been felt in force on the UK high street this Christmas.
Marks & Spencer reported weak trading in clothing and gifts over Christmas, partly blaming unseasonably warm winter weather, while much of department stores group John Lewis's better performance came online rather than in store.
"We anticipated a pick-up in December because we had a very strong Christmas offer, and traditionally that's what we've seen," McCarthy said.
"Whilst we did have an uplift in December it was n't theusual hike, and that was a function of depressed footfall. We weren't on our own but that's cold comfort," he added.
He said that with no signs of the shift to online sales slowing, Poundland would have to work to adapt its offer for next Christmas.
The company posted a 29% rise in third-quarter sales, excluding its operations in Spain, to £424.9m.
Two thirds of the growth came from the acquired 99p stores, while 9 percentage points came from the Poundland estate, including the 99p stores it has already converted.
It downgraded expectations for pretax to the lower end of expectations after Christmas, which analysts say contribute saround half of the group's profit.
The market had expected on average £42.6m for the year to the end of March, with a range of forecasts between £39.8m and £45.8m, it said.
