Next suffers in the spending slump

FASHION group Next underlined the extent of the consumer spending slowdown today as it revealed a 3.5% fall in underlying sales over the seven weeks to 20 March, and warned that it sees no improvement in trading conditions 'for at least six months'.

'We are still very cautious about the outlook for consumer spending.

'However, we believe that Next will continue to grow both its sales and profits in the year ahead, even though achieving underlying like-for-like sales growth may be challenging,' said chief executive Simon Wolfson.

He made it clear that the group will not be panicked into short-term cost-cutting measures and will continue to open new space.

But he also indicated that the era of price cuts for customers could be at an end, with increased costs requiring the group to take 'a more conservative approach to selling-price reductions'.

Next pushed profits for the year to 29 January ahead by 18% to £423m before tax, on sales 13% ahead at £2.86bn. This was at the top end of the range given by the group when it cut its forecasts by £5 million after the difficult Christmas period.

Earnings last year jumped by 26% to 118p a share and the dividend total was raised by 17% to 41p.