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Last Updated: Tuesday, 11 September 2007, 19:27 GMT 20:27 UK
UK retailers predict tough times
French Connection store front

Two of the UK's top clothing retailers, French Connection and Next, have warned that tough times are coming.

The pair are worried about the effect that five interest rate rises are having on spending on the High Street.

Despite the cautious outlook, Next's six month results were better than expected with profits before tax up 11% to 198.2m.

Meanwhile, French Connection narrowed its losses from 3.6m to 2.5m for the six months to the end of July.

Rates pressure

"We remain cautious about the outlook for the UK consumer," Next said in a statement.

"We are acutely aware that the full effect of recent interest rate rises has not yet filtered through to our customers," it added.

Despite these warnings, Next's shares closed up more than 4% at 1940 pence.

Richard Hunter, an equity analyst with Hargreaves Lansdown stockbrokers, said Next's figures were "robust" but added that tougher financial conditions for consumers meant life would get more "difficult" for the business.

French Connection has warned that its turnover in the six months to the end of January 2008 will be lower than at the same time last year.

"The first few weeks of the second half of the financial year have seen continued challenging trading conditions," French Connection's chairman Stephen Marks said.

Most clothing retailers have also been hit by the wet weather, which depressed demand for summer ranges.

French Connection shares were unchanged at 172 pence.

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