High-street fashion chain Next has said that the coming year would be challenging and that it expects to raise prices in 2017. The company said that full-price sales fell by 0.4% in the 54 days to 24 December, and adjusted annual profits to the lower end of expectations.
The fall in the value of the pound by around 16% since June 2016's Brexit vote has led the retail bellwether to reiterate previous guidance that this would feed through into price rises of up to 5% this year.
The group's forecast for full-year profits is now set at £792m ($971.4m, €931.2m) compared with previous guidance of £785m-£825m.
Shares in the retailer tumbled by as much as 11% in early trading. Other high street stocks, Marks & Spencer, Burberry and Associated British Foods - which owns Primark - were among the biggest fallers in the FTSE 100 Index.
"The year ahead looks set to be another challenging year, therefore we are preparing the company for tougher times," the company reported.
The group also said that expected rises in inflation this year would put a further squeeze on consumer spending. Next is also forecasting a fall in profit for the 2017-2018 financial year, pencilling in a pre-tax profit of £680m to £780m for the period.
"We expect the cyclical slowdown in spending on clothing and footwear to continue into next year," the firm said.
Shore Capital analyst George Mensah said: "Whilst Next has been a consistent retail operator over the long-term, we feel a shifting landscape and significant cost pressures leave the business facing tough times."
Next has more than 500 stores in the UK and Ireland, and 200 more overseas.