* Says outlook for consumer spending has deteriorated
* Says Brexit uncertainty not influencing spending
* Says 2016-17 profit could fall 4.5 pct in worst casescenario
* Next shares slump up to 13.4 pct
* Shares in M&S, Debenhams, Primark all lower (Adds detail, analyst comment, updates shares)
By James Davey
LONDON, March 24 (Reuters) - Next, Britain's mostsuccessful clothing retailer of the last decade, warned that2016 could be its toughest year since 2008 as the outlook forconsumer spending has deteriorated, sending shares across thesector sharply lower.
Next, which trades from over 500 shops in Britain andIreland and about 200 in more than 40 countries overseas,lowered its sales and profit guidance for the second time inthree months on Thursday, forecasting 2016-17 profit could fallby 4.5 percent in its worst case scenario of a 1 percent salesdecline.
Its shares slumped by as much as 13.4 percent. Those ofrivals Marks & Spencer, Debenhams andPrimark-owner Associated British Foods fell 4.3 percent,3.1 percent and 4.1 percent respectively.
While Next blamed a worsening economic environment for thedowngrade, analysts said it also reflected company specificproblems. These include the maturity of its Directory catalogueand Internet business and competition from the likes of Inditex, H&M and pure online players such as ASOS.
"It is also in part due to Next's mea culpa on not keepingpace with some omni-channel development and other issues," saidanalysts at Jefferies.
Next has moved to address these issues, outlining plans torevamp Directory by improving its website and mobile offer anddeveloping its credit business. It is also targeting betterclothing design, with improved quality along with a quickerresponse to new trends.
NO BREXIT IMPACT
"The year ahead may well be the toughest we have faced since2008," said Next Chief Executive Simon Wolfson.
"The outlook for consumer spending does not look as benignas it was at this time last year."
Wolfson noted growth in Britons' real earnings slowedmarkedly from September last year, while growth in output acrossservices, manufacturing and construction all deceleratedthroughout the course of 2015.
Figures published on Thursday showed UK retail sales volumesdropped 0.4 percent last month after a 2.3 percent rise inJanuary, partly reflecting weak demand for new season clothes.
Wolfson also believes there may be a cyclical move away fromspending on clothing back into areas that suffered the mostduring the economic downturn, such as eating out and travel.
But Wolfson, a member of Britain's upper house of parliamentand a prominent supporter of the ruling Conservative Party, saidhe did not believe uncertainty surrounding the outcome of a June23 vote on Britain remaining in the EU was influencing consumerspending.
"I don't think anybody consciously says 'look I'm not goingto buy that dress because we might leave the EU'. My instinct isthat it's not affecting consumer sentiment," he told Reuters.
Wolfson favours Brexit but says Next is completely neutralon the matter.
Next met guidance with a 5 percent rise in pretax profit of821.3 million pounds ($1.2 billion) in the year to end-January2016. Sales rose 3 percent to 4.15 billion pounds and thedividend was increased 5.3 percent to 158 pence.
Sales guidance for the 2016-17 year was cut to a range ofdown 1 percent to up 4 percent from previous guidance of growthof 1 to 6 percent. Profit was forecast at down 4.5 percent to up4.5 percent.($1 = 0.7102 pounds) (Editing by Paul Sandle and Keith Weir)
