Next saw like-for-like sales fall 6% and pre-tax profits profits dip 12.4% to £173.5 million for the first half ended July.
Next retail sales fell 3.1% over the first half. Profit from Next’s retail stores fell 4.4% to £107.6m.
Next Directory sales rose 2.2%, 0.2% above Next’s growth guidance of between 0% and 2%. Next Directory profit was up 6.3% to £78.4m.
Next said it was budgeting for autumn retail like-for-likes to be down between 4% and 7%. Next Directory sales are expected to be between 0% and 2% for the second half.
Next said it was happier with the positioning and fashion content of its product ranges, particularly improvements to its womenswear. It said the initial response to the autumn collection had been encouraging but added that sales “remained extremely volatile” and that the improvements would no compensate for the increasing financial pressure on the UK consumer.
Next chief executive Simon Wolfson said: “We can see no reason why there should be any recovery in consumer spending during the next six months. Food and energy prices continue to be well ahead of last year and our customer base is particularly exposed to higher refinancing costs or mortgages. Whilst the decline in house prices has little impact on customers’ day to day expenditure, the slow-down in the housing market is very likely to affect the sales of home furnishings as fewer people refurbish their new property.”
Wolfson added: “It is also hard to see any medium term relief for the economic situation. Tax cuts seem unlikely given the current budget deficit and spending commitments. Interest rate cuts are likely to be constrained by strong inflationary pressure, not least in our own sector, where the weaker Pound and overseas inflation will push up input costs. In these circumstances we do not anticipate any return to growth in consumer spending in the medium term, and we must prepare for another tough year in 2009/2010.”
To read the full breakdown of the results click on the attached Pdf document.