UK clothing retailer Next lowered its full-year sales forecast, saying it may face the toughest year since the financial crisis of 2008.

The shares fell as much as 7 per cent, the most in more than a year, as the company said sales of goods at full price will be in a range of down 1 per cent to up 4 per cent. That compared with a January 5 forecast for growth of 1 per cent to 6 per cent.

"It may well feel like walking up the down escalator, with a great deal of effort required to stand still," chief executive officer Simon Wolfson said in the statement.

“The outlook for consumer spending does not look as benign as it was at this time last year.”

Such cautious comments from a company known as one of the industry’s most reliable will add to concern over the outlook for UK retailers.

Slowing growth in disposable incomes will crimp spending, Mr Wolfson predicted.

He also pointed to a possible shift away from spending on clothing in favor of travel and dining out.

“These wider consumer and economic trends may reverse as the year progresses,” Wolfson said.

“However our instinct, along with the volatility of our own sales, suggest that it would be sensible to prepare for a tougher economic environment.”

Next, whose earnings have beaten analysts’ estimates each year for more than a decade, is facing increasing competition in its Directory online business.

Inditex’s Zara has been cutting prices relative to peers, according to Credit Suisse research.

"We think the statement will weigh on the rest of the UK apparel sector although Next does appear to have some more company specific issues," Richard Chamberlain, an analyst at RBC Europe, said in a note.

Marks and Spencer shares also fell, declining 2.7 per cent to 401.8 pence.

Underlying pretax profit rose 5 per cent to £821.3 million in the 12 months through January, the company said Thursday.

Analysts surveyed by Bloomberg expected £818.4 million. Full-year sales under the Next brand advanced 3.7 per cent, with store revenue up 1.1 per cent and sales at its home-shopping unit growing 7.7 per cent.

Bloomberg