Next warns coming year could be 'toughest since 2008'

Total group sales rose by 3% to £4.1bn as growth from the Directory online and catalogue business of 8% made up for just a 1% increase from retail.

Within retail, new stores contributed 2.4% to growth, implying negative like-for-like sales.

Underlying pre-tax profit rose 5% to £821.3m, with pre-close guidance pointing to between £810m to £824m.

Underlying earnings per share grew 5% to 442p and the board proposed a 5% hike to the total dividend to 158p.

Looking to the new financial year, chief executive Lord Wolfson said: "It may well feel like walking up the down escalator, with a great deal of effort required to stand still" before darkening the mood with his warning that "the year ahead may well be the toughest we have faced since 2008".

Guidance for the year ahead has been cut. For 2017, Next brand full price sales growth has been reduced from 1.0-6.0% to -1.0%-4.0%, with a mid-point of +1.5%. As a result, pre-tax profit is expected in a range of £784m-£858m.

"The outlook for consumer spending does not look as benign as it was at this time last year," Wolfson said, pointing to employment rates at record highs, slowing growth in real earnings since September and in output across various sectors throughout the course of the year.

"In addition to our generally more cautious outlook for the economy, we also believe that there may be a cyclical move away from spending on clothing back into areas that suffered the most during the credit crunch."

Broker Shore Capital said the results were generally in line with City expectations, with PBT even slightly above the consensus profit figure of £818.4m.

"Today’s statement was broadly, however the downbeat mood music around the year ahead - both at a company and economy level - will not provide investors with greater confidence," analysts wrote. "It would not surprise us to see the share price decline during market trading today. With that being said, we look forward to hearing from management later today but we would also expect to see some downgrades to estimates across the market."

Mike van Dulken at Accendo Markets said it was a "surprisingly downbeat outlook" that easily outweighed the positive results and was certain to undermine investor confidence.

With shares "bumbling around" two-year shallow rising support awaiting a positive driver, he added it was "no surprise to see that key trendline having been easily breached to the downside this morning and the shares testing the 6000p level last traded in early 2014".

"It’s early days for FY16, but traders are obviously pricing in the possibility of results this time next year coming in at the lower end of today’s new gloomy guidance, preferring to run the risk of being pleasantly surprised rather than sorely disappointed."

Shares in Next were down 9% to 6,050p by 0825 GMT on Thursday.