The Australian economic downturn and the collapse of margins in clothing sales is forcing retailer Coles Myer to consider scaling back or delaying an anticipated $450m off-marker share buyback, the Australian Financial Review reported today.

A retail analyst believed the buyback talk was one of a number of factors affecting Coles Myer shares today, with a weekend newspaper report highlighting a sudden retail sales drop in recent times.

Coles Myer may still announce the share buyback on Thursday when it releases its first half results. Analysts expect the retailer to report a net profit of between A$220m and A$250m for the first half, down from A$294.5m in the previous corresponding period.

Last month the retailer slashed its full year profit forecast to around $400m, undercutting analysts' already downgraded forecasts by 10-15 per cent. Coles Myer shares were down 22.3 cents or 3.4 per cent to $6.34 at 11:17 AEDT.

A number of other retail stocks were also weaker, with David Jones down one cent to $1.31, Freedom Group Ltd four cents lower at $1.15 and Miller's Retail down 12 cents to $4.96 by 11:18 AEDT.