Retailer Next has reported its first fall in annual profits in eight years and has said that the year ahead would likely be another tough one for the high street stalwart.
The group reported that underlying profit before tax fell by 3.8 per cent in the year to the end of January to £790.2m. Full price sales were down by 1.3 per cent.
Earlier this year, Next already warned that trading conditions would be challenging in 2017 and that profit would be hit, after a weaker-than-expected performance over the crucial Christmas period.
“We remain extremely cautious about the outlook for the year ahead,” the group said on Thursday.
It cited three major challenges to the business, including the risk of “a sectorial shift away from spending on clothing, price inflation as a result of sterling's devaluation and potentially weaker growth in real incomes in the wider economy”.
The group said that headwinds were most likely to be felt in its retail business, as shoppers continue to migrate away from the high street in favour of doing their shopping online.
Next is not the only UK retailer facing hurdles over the coming months.
Earlier this week, figures showed that consumer price inflation jumped to 2.3 per cent in February as the slump in the value of the pound since last year’s Brexit vote fed through into the cost of living.
The rate was up from 1.8 per cent in January and outstripped City expectations for an increase to 2.1 per cent.
Total average wage growth in the three months to January was 2.2 per cent, which implies that in real terms wages are now declining again.
