Next has recorded its first drop in full-year pre-tax profits since 2009 and warned of another tough year to come.
The fashion retailer said underlying profits fell 3.8% to £790m, while total sales fell 0.3% to £4.1m.
Directory performed better than retail, climbing 4.2% against a 2.9% fall in in-store sales, as customers continued to shop online.
Next had already warned of a challenging year ahead in January, after recording a 0.4% drop in full-price sales over the Christmas period.
The retailer said that would face rising inflation on customer spending and the devaluation of the pound.
In a statement published this morning, Next said it remains “extremely cautious” about the outlook for the year ahead.
“The clothing sector faces three potential threats: 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 statement continued.
“These headwinds are likely to be felt most acutely in our retail business, as sales continue to migrate away from the high street to online shopping.”