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Next describes outlook as 'cautious' for 2010

However retail company also expects sales and profits to grow.

In its interim management statement, the company announced like-for-like sales up 4.1 per cent for the three month period to May, and described the sales as being "at the top end of our expectations and are encouraging." Sales were strong in the retailer's directory division, which was up 7.2 per cent. It said that its internal profit before tax forecasts were towards the top end of the range of current City forecasts, of up to £565m.

However Next, which is Britain's second largest fashion outlet, was keen to sound a note of warninng. "We remain very cautious in our outlook for the year ahead," the statement said. "Prior year comparisons become more demanding as the year progresses and we anticipate that a new Government will have to take action to tackle the budget deficit. Whatever form this action takes, it is likely that it will act to restrain growth in consumer spending." Next also said in the statement that its 2010 Autumn Directory would launch one week later this year, which they believe will suppress first half Directory sales by around 2 per cent.

Yet the company added that "nothing new has occurred since then to diminish our expectation for another year of growth in sales, profits, EPS and dividends."