Fashion group retailer Next is looking to stage a recovery following a £12.5 million sterling decline in pre-tax trading profit to £163.5 million in the year to January 30th, the first profit setback in seven years.

Chief executive Mr David Jones said the spring/summer 1999 season had started well and was showing "a good recovery from the difficulties of last year" caused by problems with the group's product range. Retail sales are up 27 per cent ahead of last year's figures, partly due to an 11 per cent increase in selling space, including the new store opened at the Liffey Valley Centre in Dublin last year.

Although retail sales and profits have responded well to the board's remedial treatment, the key Next Directory home shopping business looks to be "ex-growth".

Since home shopping accounted for nearly 20 per cent of the group's operating profit last year, Next Directory difficulties may limit the anticipated profit recovery this year. Shares in Next fell 23p to 718p in response to the board's warning over Next Directory prospects.