Next has today cut its profit forecast for the current financial year after a poor Christmas and warned of a further decline in 2017-18.
The news sent shockwaves through Britain's clothing sector as the most successful performer of the last decade stumbled badly.
The company, which trades from about 540 shops in Britain and Ireland, said it was disappointed with its Christmas sales and highlighted "exceptional" levels of uncertainty in the sector.
The company added that it was preparing for tougher times.
Next, which has said repeatedly that Britons were spending less on clothes, warned that its 2017-18 pretax profit could come in a full £100m below market forecasts, wiping 9% off a share price that had already slumped by a third in 2016.
The downbeat statement from the first major British retailer to report on Christmas trading hit shares in rivals.
Marks & Spencer, Primark owner AB Foods and Debenhams fell 4.8%, 3.5% and 4.5% respectively in London trade today.
"Not only do we face a continuing cyclical downturn in clothing but over and above that we've got price increases and a squeeze on real earnings," Next's chief executive Simon Wolfson told Reuters.
"So it makes sense to be conservative...I don't think we're being overly gloomy," said Wolfson, who is a Conservative Party member of Britain's upper house of parliament and a supporter of Brexit.
He believes Britons are spending less on clothes and instead splashing out on holidays, eating out and events.
He is also anticipating a further squeeze in spending as inflation begins to erode earnings growth.
Following the plunge in the pound after last June's Brexit vote he also expects prices to rise by up to 5%.
Given this cocktail, the company, which also has franchised stores overseas and the Directory online and catalogue business, forecast that full price sales could fall by up to 4.5% in 2017-18.
At the same time Next is facing inflationary pressures in its cost base, notably a national minimum wage, higher business rates, an apprenticeship levy and higher energy taxes.
In the run-up to Christmas, full price sales at stores fell 3.5%, while Next Directory sales were up by 5.1%, raising questions about the value of high street shops.
Next said its central guidance was for pre-tax profit of £792m for its year to January 2017, down from the £805m it had previously forecast. It made £821m in 2015-16.
For 2017-18 it forecast a pre-tax profit range of £680-780m, below analysts' average forecast of £784m, according to Reuters data.
In the 54 days to December 24, the bulk of Next's fourth quarter, full price sales fell 0.4%, compared with a third quarter decline of 3.5%.
Next had expected sales in the fourth quarter to grow from the previous year as comparative numbers in 2015 were weak.
