Next profits slide after tough year

In further signs of pain on Britain's high streets, Next reported an 8.1 per cent fall in annual pre-tax profits to £726.1 million, while total sales slid 0.5 per cent to £4.1 billion.

Sales were dragged lower by a 7.9 per cent slump in revenue at its shops to £2.1 billion, while online revenue grew 9.2 per cent to £1.88 billion, helping to soften the blow.

Next pointed to "product ranging errors and omissions" as contributing to the poor showing, as well as the shift away from consumer spending on clothing.

Next has stores in Shrewsbury and Telford. A new Next, which will be one of the biggest in the UK at 75,680 sq ft, will also be opening this summer at intu Merry Hill in the former Sainsbury's unit.

The chain is re-opening its 13,241 sq ft store at Oldbury Ringway on Wednesday. It has been closed while undergoing a 10-week re-fitting including a new glass shop front.

Chief executive Lord Simon Wolfson said: "In many ways 2017 was the most challenging year we have faced for 25 years.

"A difficult clothing market coincided with self-inflicted product ranging errors and omissions.

"At the same time, the business has had to manage the costs, systems requirements and opportunities of an accelerating structural shift in spending from retail stores to online."

Consumers and businesses have also been hammered by rising inflation, but Next said it expects some relief towards the end of the year as it eases.

The "wider economy, clothing market and high street look set to remain challenging", the firm added.

Shares were up nearly four per cent in morning trading to 4,801p as investors digested the news.

George Salmon, equity analyst at Hargreaves Lansdown, said: "The headwinds facing the clothing sector, which include cost inflation, weak high street footfall and tighter consumer spending, are well known.

"However, the fact Next says it's endured the toughest year since its near-death experience in the early 1990s, underscores the extent of these challenges."

The figures come at a time of growing concern for brick-and-mortar retailers.

As well as the administrations of Toys R Us and Maplin, Debenhams, Mothercare and Carpetright have all issued profit warnings this year.

To compound matters, a spate of firms including Jamie's Italian, burger chain Byron and Prezzo have shut hundreds of stores as consumer confidence dives in the face of Brexit-fuelled inflation.