Next to meet profit hopes

By James Davey

LONDON (Reuters) - Fashion and homewares retailer Next on Tuesday reported a fall in underlying retail sales in line with its guidance and said it would meet full-year profit forecasts, sending its shares up nearly 7 percent.

But the group, the UK's second-largest clothing retailer by sales value, reiterated that it expected a "challenging" 2009.

"We anticipate that consumer demand will remain weak during 2009, although we would caution against some of the more extreme economic forecasts," it said.

Next said like-for-like sales in 347 stores unaffected by new openings were down 7 percent in the 21 weeks to December 24.

This outcome was at the bottom of its second-half forecast range of a fall of 4 percent to 7 percent. Analysts had forecast a fall of up to 8 percent.

Sales at the Next Directory catalogue and online business were up 1.1 percent, which compared with a company forecast of flat to up 2 percent.

Many UK retailers are struggling as shoppers cut back on spending amid soaring unemployment, falling house prices and fears of a deep recession. Some, such as variety store retailer Woolworths, have collapsed.

Next's Christmas update, along with one from department store group Debenhams, came as a survey from Nationwide said UK consumer confidence hit a record low in December.