Next has seen its annual profits drop by 8% after what the retailer described as its most challenging year for 25 years.
The fashion retailer’s pre-tax profits dropped to £726.1m down from £790.2m, although this was in line with expectations. Next attributed the decline to “a weak clothing market” as well as “self-inflicted product ranging errors and omissions”.
Physical full-priced sales declined by 7%, however online full-price sales increased by 11.2% as ecommerce continues to increase percentage of overall profits – with a 7.4% increase to £461.2m. In comparison its bricks-and-mortar retail profit declined 24% to £268.7m
Total revenue for the year fell marginally by 0.5% to £4.1bn.
Next’s chief executive, Lord 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. In the end our profits were in line with the forecast we issued in January 2017 and the company goes into the coming year in good financial health.”
He added: “Whilst it has been an uncomfortable year it has also prompted us to take a fresh look at almost everything we do: from the structure of our store portfolio, the in-store experience and the generation of alternative retail revenue streams, the management of our cost base, our sourcing and buying methods, stock management and, most importantly, our online systems, marketing and fulfilment platform.
“As a result of these endeavours, many challenges and opportunities have emerged.”
Next also announced that its net debt increased to £1bn up from £861m but that it remains “well within our bond and bank facilities of £1.4bn”.
The retailer added that earnings per share declined by 5.6% to 416.7p. Next is now proposing a final ordinary dividend of 105p – taking the total ordinary dividend to 158p, flat on last year.