Next 'cautious' on sales outlook

Next says economic conditions may get worse in the coming months

Fashion retailer Next has reported a fall in sales for the first half of the year and warned that the trend is set to continue in the coming months.

Next said like-for-like sales - which strip out the impact of new stores - of full-price items were down 6% in the half-year to 26 July.

It remained "very cautious" about prospects, saying it could see no sign of any recovery in consumer spending.

Higher food, fuel and mortgage costs would hit consumers, Next said.

The retailer added that "the economic risks appear to us to be on the downside". As a result it expects like-for-like sales in the second half of the year to be down by a similar amount to that in the first half.

'Belt tightening'

Next said overall sales at its Next Retail and Next Directory were down 1.8% in the first half of the year.

Retailing is an extremely difficult place to be Keith Bowman, Hargreaves Lansdown Stockbrokers See Next's share price

However, it added that stock levels going into the end-of-season sale were lower than last year. The sale has started well, Next said, with clearance rates ahead of last year.

"Today's statement again underlines the retrenchment which UK consumers are suffering, further compounded by the increasingly erratic weather," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

"Retailing is an extremely difficult place to be, with the clothing arena looking particularly vulnerable to consumer 'belt tightening'."