Next Fiscal Year Pretax Profit -14%, Sees Falling Sales, Margins

U.K. fashion retailer Next PLC (NXT.LN) Thursday reported a 14% fall in annual pretax profit, hit by lackluster consumer demand for clothing and houseware goods, and warned of further sales falls and declining margins in the year ahead.

It warned of a challenge in 2009 from the weak pound and the faltering economy.

Pretax profit fell to GBP428.8 million in 2008, broadly in line with market expectations of GBP427.5 million, and down from GBP498.1 million a year earlier. Revenue fell 1.7% to GBP3.27 billion.

Sellers of clothing, houseware and electrical goods have been hit particularly hard by the U.K. economic downturn, which accelerated in the last quarter of 2008.

The company said it in a statement that it was planning for a difficult year ahead, with the first half of the year expected to be "particularly tough."

Sales from stores open at least a year are expected to fall by between 6% and 9% in the first half of the year, while sales from the group's catalogue and online operations are expected to be flat to 2% lower.

The weak U.K. currency will hit the company's buying power, resulting in a 3% drop in its retail operating margin to about 10%. Catalogue and online margins are expected to remain at about 19%.

Next added, however, that it is well placed to weather the storm and expects to achieve a profit in the current year in line with market expectations.

It maintained its full-year dividend at 55 pence.

Company Web site: www.next.co.uk

-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com

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