Next says consumer spending is likely to remain weak

The comments came as it reported a better-than-expected 6.1% rise in half-year profits to �172.6m ($314m).

However, like-for-like sales at its stores fell 2.9%, the firm said.

Next added that in the six weeks to 10 September like-for-like sales at its stores were down 6%, which it said was its worst performance for 10 years.

'Cautious' outlook

We have been reducing the amount of orders we've been placing with suppliers David Keens, Next finance director See Next's share price

Including new store space, overall sales at Next retail in the first half of the year grew by 7%.

But the group warned that it was "very cautious" about the outlook for consumer spending in the second half of 2005.

"We think it's going to be tough all the way to Christmas," finance director David Keens told Reuters news agency.

"In recognition that sales will be tough, we have been reducing the amount of orders we've been placing with suppliers."

China quotas

Next also said that �1.5m-worth of its stock has been caught up in the recent trade dispute between China and the European Union.

The row, over import quotas, led to millions of items of clothing being held in European warehouses.

Next said that it believed it could now import most of this stock into the UK after the EU and China struck a deal.

However, the retailer warned that it now faced the problem of finding alternative sources of supply to get round the continuing restrictions on imports from China.

It said "almost all" of the new supplies of goods would still come from countries outside the EU.

"Whilst the restrictions will cause inconvenience and may prove costly to UK consumers they will have little or no benefits for European manufacturing," Next said.