British fashion retailer Next posted a 12% fall in first-half pre-tax profit today but said its internal forecast for the full year remained in line with the market consensus.

The UK's second-largest clothing retailer by sales made an underlying pre-tax profit of £173.5m for the 26 weeks to July 26, down from £198.2m in the same period last year. Analysts' estimates had ranged from £165m to £177m.

Next said the majority of external forecasts for full-year pre-tax profit were currently in the range £400m to £440m.

The profit decline reflected a fall in sales, partly offset by gross margin gains. Like-for-like full-price sales from 353 Next Retail stores were down 6%, while sales in the Next Directory home shopping operation increased 2.2%.

Many UK retailers are struggling as consumers curb spending because of higher fuel, food and mortgage costs. Fashion retailers have also had to cope with a second consecutive summer of dismal weather.

Next said it would pay an interim dividend of 18p, unchanged from the previous year.

The group's shares have halved in value over the last year, underperforming the DJ Stoxx European retail index by 24%.

The stock closed yesterday at £11.43, valuing the business at £2.5bn.