MORE than £459 million has been wiped off the stock market value of supermarket chain Wm Morrison after its revelation of a slump in sales over Christmas compared to last year sent its shares to a seven-year low.

Market leader Tesco revealed it had also lost sales over the festive period as the sector's biggest names struggle to cope with increasingly stretched shopper finances and increased competition from discounters at one end and top-end stores at the other.

The performance in what is a crucial period for retailers leaves the chief executives of both companies under pressure.

Morrisons, which is disproportionately strong in Scotland where it is the market number three, used an unscheduled trading update to announce that like-for-like sales in the six weeks to January 5 were down 5.6% on last year.

The performance, which was accompanied by a warning that earnings would be at the bottom end of City expectations, was "quite awful" said analysts at Shore Capital.

Sales at Tesco, which has around 180 stores in Scotland, were down 2.4% in the six weeks to January 4.

This leaves J Sainsbury as the only one of the big four grocers to have confirmed sales growth for Christmas, albeit a lacklustre 0.2%. Asda, owned by US giant Walmart, has yet to report its numbers. Upmarket retailer Waitrose reported a 3.1% rise over the same period.

After being led to expect a return to sales growth over Christmas, many investors dumped Morrisons shares which closed down 19.7p or 7.8% at 234.5p. This is the lowest price since October 2006 and left it valued at £5.5 billion.

Some in the City expect a further slide, with Panmure Gordon cutting its price target to 210p. Tesco's shares, which had fallen 7% in the last year, closed down 3.95p or 1.2% at 324.35p.

Morrisons chief executive Dalton Philips said: "In a very tough market, our sales performance over Christmas was disappointing. However, we are firmly focused on driving our core business and accelerating our penetration of the fast growing channels."

Morrisons has few convenience stores and, until today, no online grocery retailing, which were rare growth areas this Christmas.

Mr Dalton's predecessor Marc Bolland, now chief executive of Marks & Spencer, was reluctant to sign the chain up to online grocery shopping while its profitability was unproven, and also kept the fresh food specialist out of convenience.

The first Morrisons food delivery will be made tomorrow although the chain has yet to say if it will extend the service to Scotland. Meanwhile, it has just 85 convenience stores, including one in Kilmarnock, although it aims to have 200 open by the end of its next financial year.

At Tesco, chief executive Philip Clarke's £1 billion turnaround plan has yet to provide tangible results.

The group, which makes about two-thirds of its revenue in Britain, is 20 months into its new strategy that has directed investment towards store upgrades, extra staff, new product ranges and price cuts.

It blamed a weaker grocery market and a greater than expected shift of general merchandise to online sellers for its weak performance.

Sales growth was 2.7% at Edinburgh-headquartered Tesco Bank.

Tesco remains a "jam tomorrow" stock, according to Hargreaves Lansdown Stockbrokers.

The group is poised for a second consecutive fall in annual pre-tax profit with the company expecting to meet current market expectations of between £3.16bn and £3.41bn of earnings. It made £3.45bn last year.

Bookmaker Paddy Power is giving odds of 11/10 that Tesco chief executive Philip Clarke, who has been in post for three years, will be the next retail boss to leave his role. Mr Philips, who has been at Morrisons for four years, is not far behind at 7/2.