Annual profits at Next fell by 8.1% in what the High Street retail chain described as a “challenging” year.
The company said pre-tax profits dropped to £726.1m in the 12 months to January, marking the third year in a row that income has declined.
Next said that sales of full-priced products at its stores tumbled in contrast to online demand.
It blamed “a weak clothing market” as well as “self-inflicted product ranging errors and omissions”.
Full priced sales at its shops fell by 7% but rose by 11.2% online.
Total revenue for the year fell by 0.5% to £4.1bn.
Next’s chief executive Lord Wolfson said that “in many ways 2017 was the most challenging year we have faced for 25 years”.
He said that while it had been uncomfortable, “it has also prompted us to take a fresh look at almost everything we do” including the structure of its shop portfolio and the “in-store experience”.
Experts on the retail sector say mid-priced retailers like Next are in a tough spot.
“The middle market is suffering and there isn’t a way back home,” according to Kate Hardcastle from consultancy Insight with Passion.
“I think retail generally in this market place has been quite lazy. As soon as consumers had an alternative option that are perhaps are a better price, better product or faster moving product I think they’ve taken it,” she said.
“So you’ve seen the rise of Primark on the discount side, Asos and Zara on the more fashion orientated side and a consumer very much influenced by Instagram and social media.
“It’s just too much of a turnaround, too much of a challenge for these quite heavyweight retailers who have expected to trade they always have.,” Ms Hardcastle said.