Retail giant Next has posted falling profits for the second consecutive year, and warned that 2018 will remain challenging as the sector faces intense pressure.
In further signs of pain on Britain’s high streets, Next reported an 8.1% fall in annual pre-tax profits to £726.1 million, while total sales slid 0.5% to £4.1 billion.
Sales were dragged lower by a 7.9% slump in revenue at its shops to £2.1 billion, while online revenue grew 9.2% to £1.88 billion, helping to soften the blow.
Next pointed to “product ranging errors and omissions” as contributing to the poor showing, as well as the shift away from consumer spending on clothing.
Chief executive Lord Simon Wolfson said: “In many ways 2017 was the most challenging year we have faced for 25 years.
“A difficult clothing market coincided with self-inflicted product ranging errors and omissions.
“At the same time, the business has had to manage the costs, systems requirements and opportunities of an accelerating structural shift in spending from retail stores to online.”
Next chief executive Lord Simon Wolfson (PA)
Consumers and businesses have also been hammered by rising inflation, but Next said it expects some relief towards the end of the year as it eases.
The “wider economy, clothing market and high street look set to remain challenging”, the firm added.
The figures come at a time of growing concern for brick-and-mortar retailers.
As well as the administrations of Toys R Us and Maplin, Debenhams, Mothercare and Carpetright have all issued profit warnings this year.
To compound matters, a spate of firms including Jamie’s Italian, burger chain Byron and Prezzo have shut hundreds of stores as consumer confidence dives in the face of Brexit-fuelled inflation.