UK fashion retailer Next has cut its guidance for 2016 as it prepares for its “toughest year” since the recession.
Shares in the high street chain fell 15% as the group predicted a challenging year ahead “with much uncertainty in the global economy”.
Next, which has more than 500 stores, said it believed that there may be a “cyclical move” away from spending on clothing back into areas that suffered the most during the credit crunch, such as travel and recreation.
Previously, Next had expected growth of between 1% and 6% for the 2016-17 financial year, but it said it now expected it to fall within a range of minus 1% to plus 4%.
The prediction came as the retailer unveiled its financial results for the year to 30 January, showing a modest rise in profits.
Pre-tax profit was £836.1m, up from £782.2m a year earlier.
Despite the growth, Next remains cautious and said it will prepare for a tougher economic environment heading into the 2016/17 financial year.
“The year ahead may well be the toughest we have faced since 2008,” said Next chief executive Simon Wolfson.
“It may well feel like walking up the down escalator, with a great deal of effort required to stand still. If we are going into a downturn the companies that prepare for it and manage in a realistic way are most likely to weather the storm best.”
Wolfson said Next will strive to improve its buying process, pushing the boundaries in terms of design and quality; upgrade its UK directory business; develop new ways of recruiting customers by personalising its offering and improving its delivery service; and expand its UK retail store network.