Clothing retailer Next Plc today (10 September) warned that trading would remain difficult for at least the next 18 months after reporting a 12.4% decline in first-half pre-tax profits.

The results, including a 6% fall in like-for-like retail sales, were broadly in line with expectations, although the company was boosted by a marginally higher than expected 2.2% increase in Directory sales.

Group operating profit fell 6.9% to GBP198m (US$348m), with pre-tax profit down to GBP173.5m, compared to GBP198.2m last year.

Next brand profit was in line with last year, but both Venture and Next Sourcing posted significant declines.

Next brand sales fell 0.2% overall to GBP1.376bn, thanks to retail sales dipping 3.1% and ending up below the GBP1bn mark at GBP996.4m.

However, Next Directory revenues climbed to GBP379.9m, compared to GBP371.8m last year.

Next chief executive Simon Wolfson said the response to the company's autumn ranges had been encouraging, but admitted that sales remained "extremely volatile".

Any improvements, he added, were unlikely to compensate for the increasing financial pressure on the UK consumer.

He forecast that Directory sales would rise 0-2% in the second half.

International sales had risen 16.6% on last year, but profits only went up 2.4% thanks to set-up costs in the Czech Republic and China.

"We can see no reason why there should be any recovery in consumer spending during the next six months," said Wolfson.

"Food and energy prices continue to be well ahead of last year and our customer base is particularly exposed to higher refinancing costs of mortgages.

"In these circumstances, we do not anticipate any return to growth in consumer spending in the medium term, and we must prepare for another tough year in 2009/10."

Wolfson added that Next's internal forecasts for full-year pre-tax profits remained in line with the market consensus of about GBP400-440m.