Weather was freezing but Next's sales were melting away fast

Price wars on the high street also took their toll, said Britain's second biggest fashion retailer after Marks & Spencer.

Next, the first of the big retailers to report festive performance, said underlying sales fell 6 per cent between 1 August and Christmas Eve.

"Retail sales were significantly affected by extreme weather and increased competitor discounting on the high street before Christmas," it said in a statement. "Retail sales were also somewhat affected by limited stock availability on best-selling lines in the run-up to Christmas."

However, Simon Wolfson, the group's chief executive, said despite the tough trading the company was repeating its guidance of last November that annual profits for the year to end-January would come in at between 540m to 555m.

Next said that assuming profits fell within that range earnings per share would be 15 to 18 per cent higher than the previous year.

The company, traditionally cautious in its guidance, said: "The outlook for 2011 is uncertain. The impact of government cuts on consumer spending is still unclear and we have yet to fully understand the impact of rising retail selling prices on overall demand."

Next has said previously that its own prices will be increasing by about 8 per cent due to higher input costs, such as the soaring price of cotton, and the just-implemented rise in VAT to 20 per cent.

"Our best guess is that price rises will moderately suppress like-for-like sales, though we believe this will be offset by the addition of profitable new retail space and continued growth of (Next] Directory's online business."

In the latest period under review Next Directory sales rose 8.7 per cent, lifting overall company sales 0.2 per cent.

The group said it believed the effect of the snow on online sales had been neutral.

"Directory initially benefited from the adverse weather conditions with people ordering from home rather than braving the cold," Next said."However, in the immediate run up to Christmas the fear of failed deliveries reduced demand."

Wolfson said that, excluding the bad weather factor, he had noticed no difference in cautious consumer sentiment since a November trading update.

But he added that post-Christmas sales had got off to a strong start, helped by milder weather. "The end of season sale started well. There was a marked improvement in performance when the weather thawed a bit," Wolfson said.