DSG shares plunged nearly 16 per cent to 54dp as analysts also poured cold water on hopes the Currys and PC World chains operator could allay concerns about its finances by offloading loss-making Italian and Spanish businesses.

The high street giant, relegated from the FTSE 100 index last December, has lost more than two-thirds of its value in the past year as its business has been squeezed by online and supermarket rivals.

It has, however, been buoyed by speculation it could be a target for US retailer Best Buy. A potential merger with UK rival Kesa Electricals, owner of Comet, has also been floated. Bid and break-up speculation has led to investors who had placed bets on DSG shares falling further closing their negative “short” positions.

New chief executive John Browett, who joined from Tesco last December, has targeted improved customer service levels to help turn around the business, which lost £192.8million in the year to May 3 as a result of a huge writedown in its Italian operation.

However, broker JP Morgan yesterday delivered a bleak assessment of the company’s prospects as it cut this year’s profit forecasts by 10 per cent to £126 million.

JP Morgan’s Simon Irwin said: “We remain concerned that ‘back to school’ could herald renewed competition in laptops due to market entrants such as Argos and Carphone Warehouse.

“We believe hopes that DSG could ease its situation through asset sales are misplaced. Its Spanish and Italian operations are leasehold and loss making.”