Full-price retail sales at Next declined -7.0% across the year to January 2018, while the retailer's online full-price sales increased by +11.2%.
Total group sales were marginally down on last year by -0.5%, at £4.1b.
Chief executive Simon Wolfson says: "In many ways 2017 was the most challenging year we have faced for 25 years. A difficult clothing market coincided with self-inflicted product ranging errors and omissions. At the same time, the business has had to manage the costs, systems requirements and opportunities of an accelerating structural shift in spending from retail stores to online.
"Whilst it has been an uncomfortable year it has also prompted us to take a fresh look at almost everything we do – from the structure of our store portfolio, the in-store experience and the generation of alternative retail revenue streams, the management of our cost base, our sourcing and buying methods, stock management and, most importantly, our online systems, marketing and fulfilment platform."
According to chairman Michael Roney, £104m was invested in new stores, warehousing and systems over the year.
In other news, Richard Papp, Next's group merchandise director, will succeed Michael Law as group merchandise and operations director next month.