Next sees more gloom as sales slump again

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The fashion group reported a 6% slump in like-for-like sales in the 26 weeks to 26 July. And despite hopes from the City of a brighter outlook, the group, led by chief executive Simon Wolfson, said it expects sales to fall by a further 6% through to the new Year.

"We anticipated a tough season and managed stock accordingly," the company said. "We remain very cautious about the outlook for the second half and can see no reason for any improvement in consumer spending, indeed, the economic risks appear to us to be on the downside.

"We believe that continued year on year increase in food, fuel and mortgage costs will weigh heavily on our customers. We are therefore currently planning for retail full price like for sales in the second half to be down by a similar amount to that of the first half."

That outlook, said leading City retail analyst nick Bubb of Pail International, is "dispiriting". He added: "With the amount of investment in its ranges, its designs, its shops and its marketing one perhaps might have hoped for better in the second half, considering the soft comparatives they are up against."

The figures reveal like-for-like sales were down 2.4%, a vast improvement on the 9.4% crash reported in the first trading quarter. But next cautioned that the apparently improved recent trading compares with very poor figures-last year when floods ruined the British summer.

Finance director David Keens said: "Our customers have cars, mortgages and families. Their disposable income for discretionary spending is falling."

The group's autumn ranges will focus on higher-end products, concentrating on selling more jackets than T-shirts.