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Last Updated: Thursday, 22 March 2007, 09:40 GMT
Next must 'recapture the magic'
Next store display
Next says it must "recapture some of the magic" in its stores
Next says it must "recapture some of the magic and excitement" in its stores after reporting falling sales.

Like-for-like sales, which exclude the effects of new store openings, fell 7.2% in its Next Retail business.

In spite of that, the fashion retailer reported 6.5% growth in annual pre-profits to 478m ($936m).

Next said it had managed that with "rigorous cost control", improving margins and continued growth in its Next Directory business.

However, there was a warning that it would not be able to rely on the directory business as much in the coming year.

Future success will soon become depend on resurgent like-for-like sales across the group's store portfolio and the clock is ticking
Keith Bowman, Hargreaves Lansdown Stockbrokers

Next said new customer growth in its catalogue business would slow because it is increasing its credit status requirements in an attempt to reduce its exposure to bad debts.

Brand focus

The fashion retailer said it had started to revitalise its brand over the past six months and that the changes would become more apparent in the coming year.

The programme will focus on improving products and marketing and continuing to develop the store environment.

Next said that in the past it focused too much on its cheaper products and now needed to increase its emphasis on mid-range and higher-priced products.

However, analysts warned Next needed to make swift progress in revitalising its stores.

"Whilst current progress is being made, future success will soon become depend on resurgent like-for-like sales across the group's store portfolio and the clock is ticking," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

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