Clothing retailer Next remains "extremely cautious" about prospects for 2008, despite predictions of full year profits ahead of market expectations.

The UK chain said combined sales for Next Retail and Next Directory for the period from 30 July to 24 December last year were up only 0.3%, representing a 3.2% dip in like-for-like sales.

Next Retail sales were down 0.3% over the period, while Next Directory's online sales increased 2.2%.

The figures were broadly in line with guidance given by the company in September.

Next predicted full year profits before tax would be about GBP492-502m (US$972-992m), equating to a 4-6% rise in operating profit and ahead of expectations. But the company added: "Our outlook for the year ahead remains extremely cautious, with consumers continuing to face increasing demands on their finances.

"We will continue to take on profitable new space in the UK, expand overseas and grow our online business through Next Directory. However, we are not forecasting a return to like-for-like growth in the UK in 2008 for Next Retail."

Next is due to issue its preliminary results for the year ended 26 January on 19 March.