Next has posted a fall of 12.4 per cent in pre-tax profits in its first half to July, down to £173.5 million for the period.

Retail like-for-like sales were down 6 per cent, with sales for the Next Brand down 0.2 per cent on last year at£186 million.

Directory like-for-like sales continued to be stronger for Next, ahead 2.2 per cent and beating its expectations. The retailer says it now gets about 60 per cent of its Directory orders from online, where it will continue to improve on its web site functionality.

Next said it was pleased with its stock controls, with stock 20 per cent down this year when it went into its end of season Sale. This was put down to far stricter stock control and more realistic budgets.

Chief executive Simon Wolfson remained very cautious and said that Next is anticipating another tough year in 2009/10. “It is hard to see any medium-term relief for the economic situation,” he said.

“Although conditions are set to remain tough we believe that the group is well prepared for the current environment, with sound financing and good cash flows. The Next Directory continues to fare well and provides the group with opportunities to expand into new markets.”

At Next’s international business, sales were up 16.6 per cent in the first half, with its first stores opening in Beijing, Egypt and Romania. The retailer now operates 164 stores outside the UK and Eire.

For the rest of its financial year, Next will continue with its store refit programme. 69 per cent of its portfolio will be refitted or redecorated at a cost of£40 million. The work carried out on improvements to its stores over the past two years means it will be able to reduce its refit spend by£20 million in the year to January 2010.