Next's Profits Rise Amid Warning Of Tough 2013

Strong online and catalogue sales have helped Next report an increase in profit - but the retailer said it planned to adopt a more "cautious approach" looking ahead.

The chain, which has over 500 UK stores and almost 200 more overseas, said underlying pre-tax profit rose by 9% to £621.6m in the year to the end of January.

Next Directory - the company's online and catalogue business - grew by 9.5% over the period, but sales in stores were flat when compared to the year before.

The retailer warned that trading in the New Year had got off to a slow start, and was expected to "remain subdued" as wage freezes and inflation hit consumer spending.

"The first few weeks of the year have been quiet and serve to reinforce a more cautious approach," Next said in its results.

Sales in 2013 were at the bottom of the company's target range, it said, but were expected to improve.

It added: "We will get a better understanding of the underlying consumer environment once temperatures return to seasonal levels."

The company's chairman, John Barton, said he anticipated "another challenging year" in 2013, with little if any growth in the UK retail economy.

Next's announcement contrasted with that of fellow clothing retailer Ted Baker, which reported strong trading to date in 2013.

"The new financial year has started well at this early stage, particularly in the UK," the company said in its results.

The British brand reported a hike in profit as a result of strong sales in its home markets and investment in its online operations.

Profit before tax and exceptional costs was up by 16.5% to £31.5m in the year to January 26, compared to the year before.

Ted Baker, which has over 300 stores and concessions across the world, said retail sales were up by 11% in the UK and Europe.

It also reported strong demand overseas, which helped boost sales in the US and Canada by 68%.

The results come as official figures revealed that retail sales in the UK increased by more than expected in February.

Excluding fuel, retail sales rebounded by 1.9% when compared to January, and by 3.3% on the year, according to the Office for National Statistics.