Like-for-like sales at Next’s stores fell 3.2% for the period July 30 to December 24 but full year pre-tax profits will beat market expectations thanks to tight cost controls.
Next said that the like-for-like performance showed an improvement on trading last spring despite the worsening consumer environment.
Next Directory sales rose 2.2%, which helped total sales to grow by 0.3% against the same period last year.
The company said in a statement that despite difficult trading, pre-tax profit would be in the region of £492 million to £502m thanks to tight cost controls and careful management of the balance sheet. This equates to a rise in operating profits of between 4% and 6%. Next added that stocks had been well controlled ahead of the post-Christmas Sale and said that to date, clearance was in line with expectations.
However Next warned that it was “extremely cautious” about the outlook for 2008, when consumers will face increased demands on finances such as higher mortgage payments as more fixed rate mortgage periods expire. As a result, the company said it was not forecasting a return to like-for-like growth this year.