Next sales down 7 per cent

Fashion chain Next said today it had made a "good start" to post-Christmas sales despite further trading declines in the run-up to the festive season.

Like-for-like sales across its high street stores fell 7 per cent between the end of July and 24 December - worse than the 4.4 per cent fall reported in November, but just within the lower end of its previous forecasts.

But unlike rivals, Next refused to slash prices in the approach to Christmas - and said it expected clearance rates to be ahead of last year after a good start to its sale period.

Next expects demand from hard-pressed consumers to remain weak, with the first half of the year set to be "particularly difficult".

But the firm gave some slim grounds for optimism after it cautioned against "some of the more extreme economic forecasts".

Profits for the year to January remained in line with market hopes of between £415 million and £435 million, Next added.

Despite falling sales on the high street, its Next Directory catalogue and online business - a key driver of profits in recent years - grew 1.1 per cent over the period.

While unemployment fears and falling house prices could hit trading, Next added there was "some relief in sight for the consumer" with food, fuel and energy prices set to fall, as well as interest rate cuts gradually feeding through to lower mortgage payments.

The group said it was "well placed to weather the downturn" with a strong balance sheet. It will continue to invest in store refits and new openings, albeit at lower levels than the current financial year.

But it also sounded a warning over the impact of the recent slump in the value of the pound, which it said would be a "major issue for the retail sector over the coming year".

The "substantial and rapid devaluation" of sterling was likely to put significant pressure on prices and squeeze margins for its autumn and winter stock this year, the firm added.