"In many ways 2017 was the most challenging year we have faced for twenty-five years", Next's chief executive Lord Wolfson commented in the statement, with "a hard clothing market" coinciding with "self-inflicted product ranging errors and omissions".
"Next may not repeat the 180p-a-share in special dividends for fiscal 2017-18 but even an unchanged regular dividend of 158p would represent a perfectly respectable yield of 3.2% more than twice covered by earnings per share".
The high street fashion retailer saw pre-tax profits drop 8.1 percent to £726.1 million, while total sales fell marginally by 0.5 percent to £4.1 billion.
The FTSE 100 retailer said it had experienced its toughest period in a quarter of century and also warned of more "challenging" times to come.
Chief executive Simon Wolfson explained: "A hard clothing market coincided with self-inflicted product ranging errors and omissions..."
Clothing retailer Next said it sees a more favourable pricing environment in the coming year after a tough 12 months in which retail failures piled up on British high streets.
However, it also expected to see a more "benign" outlook for the group's costs in the months ahead as the pressure caused by the slump in the pound eases.
The retailer said the clothing and homeware markets were adversely affected by unusually high cost price inflation past year, a squeeze on incomes, and a sectorial shift away from its core markets of clothing and homeware into leisure, entertainment and other experiential spending.
"As a result of these endeavours, many challenges and opportunities have emerged".
Fellow clothing retailer New Look this week said it would close 60 United Kingdom stores and cut 1,000 jobs after creditors approved its restructuring plan.
"We are anticipating that NS will have another challenging year in 2018/19".
Next added the "wider economy, clothing market and high street look set to remain challenging".
"We have continued to invest in the business, spending £104m on new stores, warehousing and systems".
"The board continues to be focused on building shareholder value through the delivery of long term sustainable growth in earnings per share".
The company, in a statement to the London Stock Exchange, vowed to improve its product ranges, defend its retail sales and profitability, maximise the online value of its retail stores and improve the shopping experience.
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