Next to meet profit forecast but sees tough 2009

By James Davey

LONDON (Reuters) - Fashion and homewares retailer Next on Wednesday reported underlying sales at the top end of its expectations for the third quarter and said it would meet full-year profit forecasts, lifting its shares as much as 4.4 percent.

The better recent performance offset a warning from the UK's second-largest clothing retailer by sales value that underlying sales were expected to remain negative throughout 2009.

Next said like-for-like sales in 334 stores unaffected by new openings were down 4.4 percent in the 14 weeks to Nov 1.

This outcome was towards the top end of its second-half forecast range of minus 4 percent to minus 7 percent.

Sales at its Next Directory catalogue and online business were up 2.1 percent, which compared with a company forecast of flat to plus 2 percent.

Nick Bubb, analyst at Pali International, said the performance was much better than the minus 7.5 percent he had expected for Next Retail and minus 1 percent he anticipated for Next Directory.

"Improvements they've made to the ranges and store formats have perhaps begun to have some impact and begun to stabilise and improve their market share," he said.

Next expects underlying retail sales to fall by a greater amount in November and December than they did in the third quarter.