Shares in Asos crashed 37 per cent on Monday after the online retailer warned it had experienced a “significant deterioration” in trading.

The shock announcement sent shares in a host of retailers tumbling as fear spread that a traditional Christmas sales boost would fail to fully materialise this year because shoppers are holding back on spending.

Asos warned sales would grow 15 per cent in the year to August 2019 down from an expected 20-25 per cent while its profit margin will fall from 4 per cent to 2 per cent.

Sales in the important trading month of November were below expectations and Asos said the outlook remains “challenging”.

“The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years,” Asos said in an unscheduled update on Monday.

Asos boss Nick Beighton highlighted an “unprecedented” level of discounting and promotional activity across the market which has cut into profits.

The company pointed to unseasonably warm weather in the run-up to Christmas which has reduced spending on clothes.

Trading conditions in Germany and France, which account for 60 per cent of the retailer’s EU sales, have also deteriorated.

Asos’s German rival Zalando, Europe’s biggest online retailer, fell 13.6 per cent after the announcement, wiping almost €1bn (£900m) off its valuation. H&M fell 8.5 per cent despite sales figures in line with expectations, while Marks and Spencer and Next both fell 4.6 per cent.

Shares in online fashion retailer Boohoo slumped 18 per cent, prompting the company to issue its own update pointing out that it registered record Black Friday sales.

Last week, Sports Direct tycoon Mike Ashley said November had been the “worst November in living memory” for retailers and predicted a number would be “smashed to pieces”.

George Salmon, equity analyst at Hargreaves Lansdown, said Asos’s announcement had caught the market off guard and could signal wider problems in the economy.

“Recent data revealed a huge decline in UK retail footfall, which it would have been easy to assume was due to online players taking share at a faster rate.

“These numbers show it’s more complicated, and more worrying, than that. It looks like consumer confidence has been knocked to the extent people aren’t spending much anywhere, be it in physical stores or online.

“The uncertainty around Brexit will be playing a major role, and it’s probably no coincidence Asos’s key demographic of twenty-somethings generally harbour more concerns over the future of the economy post-Brexit than their parents.”

Ian Forrest, investment research analyst at The Share Centre said the problems may be more specific to Asos, with Boohoo’s performance providing a clear contrast.

“Boohoo said its trading had remained strong in recent times with record sales in the Black Friday period and overall trading ‘comfortably in line with market expectations’.”