Next's forecast makes grim reading for the high street

Its physical store sales have collapsed...

Next warned in January that "challenging times" were ahead in 2017 and today the British fashion retailer has shown the extent of the sales hit it suffered in the first three months of the year.

While overall sales dropped 2.5% in the first quarter, transactions in physical stores fell markedly by 8.1%.

The sale of full-price clothing was down 3%. Next's directory and online business was the only strong performer, improving by 3.3%.

Next's preemptive pessimism meant that the performance is chiefly in-line with forecasts, while on the positive side a later and warmer Easter helped March and April perform better than February.

The fact that Next  had been one of the leading lights of the retail sector in terms of performance will mean that recent results should have the high street on edge. The tone was set in 2016, when it recorded its first fall in profits since the recession. That January warning that the situation would continue, if not worsen, caused its share price to collapse 14%.

The short term spells more doom and gloom, with Next admitting that sales growth is almost impossible this year. 

Business Insider notes that even if it managed to hit the most optimistic end of its forecasts, it would still represent a 6% fall on last year's profits. 

Next had said that the annual figure could be between £680 million and £780 million but has now capped that range at £740 million.

Its sales performance range of -3.5% to +2.5% has now been revised down to -3.5% to +0.5%.

The news wiped close to £500m off Next's stock market value today.

Richard Chamberlain, analyst at RBC Capital Markets, said of the performance:

"We think Next has been finding it challenging managing the balance between having faster decision-making in the business and enough commercial, wearable product. It may also be being impacted by tougher price competition in the mid-market."

Hargreaves Lansdown equity analyst George Salmon stated:

"Whichever way it turns, Next just can’t seem to catch a break at the moment. Online competition is ratcheting up, weaker sterling is increasing costs, and conditions on the UK high street are far from favourable.

"The positive to hold on to is that Next has historically been an exceptionally well-run business, and many of those who have contributed to its success are still on board. Investors will be hoping this raft of experience will help chief executive Lord Wolfson steer the ship through these choppy waters."