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Next profits down three per cent

Next posted a 3.8 per cent drop in pre-tax profits for the year to the end of January. Next is anticipating another fall in profits. UK’s biggest clothing retailer has been battling a combination of economic, cyclical and internal factors. Next has raised shop prices by four per cent to offset the higher import costs from a weaker pound.

Total sales at the retailer’s 538 shops have fallen by 0.3 per cent, hit by a 4.6 per cent slump in full-price shop sales. The group’s Directory business, long seen as the engine driving its growth, also suffered a lackluster year with its own-brand sales down by 1.8 per cent. However, this was offset by its growing business selling other brands, which lifted its Label sales by 18.9 per cent and boosted total Directory sales by 4.2 per cent.

Next attributed some of its weakness to a reshuffle of its buying operations, which means it can respond to fashion trends faster, but at the expense of omitting some of its best-selling, heartland products from the range. The retailer also bore an increase in costs. Next expects a further increase in costs this year as it absorbs wage rises, the apprenticeship levy, and energy taxes.