Next’s full-price sales have suffered a 0.4% drop in the 54 days to Christmas – a key trading time – and shares were down 9% as it warns of a “challenging” year and “tougher times” ahead.
The company forecast its full-year profits to be £792 million, against previous guidance of £785-£825 million.
It expects that its 2017 sales are likely to be hit by the affect of rising inflation on consumer spending and the devaluation of the pound, which is proving a challenge for many retailers.
Next said in its latest financial report: “The year ahead looks set to be another challenging year; therefore we are preparing the company for tougher times.”
It added that the price of clothing may rise by up to 5% following the drop in the pound and added that this could “depress sales revenue by around 0.5%”.
The retailer expects the National Living Wage, Apprenticeship Levy, national business rates revaluation and energy taxes to add £13 million to its costs this year. It will also be investing £10 million in improving its website systems and online marketing.
The latest financial results follow a 3.5% fall in Q3 full-price sales.