Next's profits are on the up but it remains cautious over 'challenging' year ahead

Next has predicted that 2016 will be a "challenging year" for its business, and has said it holds a "generally more cautious outlook for the economy" despite seeing profits increase year-on-year.

In its annual results, revealed today (24 March), the British firm posted a pre-tax profit of £836.1m, up from £782.2m a year earlier.

"The year ahead may well be the toughest we have faced since 2008. We are very clear on our priorities going forward and whatever challenges we may face, it is important that we remain focused on ensuring that the company’s product, marketing, services and cost controls all improve in the year ahead," said Next chief executive Simon Adam Wolfson in his review of 2015.

In light of this, the firm has downgraded its sales forecast for 2016-2017, shifting its growth expectations to fall within a range of minus one per cent to plus four per cent, it had previously expected this to be anything between one and six per cent.

The retailer also shone the spotlight on its online Next Directory division, which has also experienced a slow growth over the past 12 months, noting a 1.7 per cent rise in sales. It made clear in the results that digital is an area it is looking to invest in through updates to its Directory iPad app and improvements to its website interface.

Mobile helped boost the retailer's gains in 2015, with the high street store pointing out that a tailored mobile version of the site had helped sales conversion rates rise from 4.2 per cent to 5.8 per cent.

Next had a substandard fourth quarter in 2015, noting a 0.5 per cent fall in sales across its 500 stores over the crucial Christmas trading period. At the time it labelled the loss "dissapointing," blaiming the warm weather for the challenges it faced throughout the festive season.

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