Clothing retailer Alexon has surprised both itself and the City by coming through the post-Christmas Sales period in better shape than feared.

After issuing a profit warning last month, the owner of Dash, Eastex and Ann Harvey reported that pre-tax profits for the year to January 26 are expected to be no less than£12.5 million. That compares with previous guidance of£11.5 million to£12.5 million.

The retailer said that, despite the anticipated challenging pre-Christmas trading period, it had performed “better than expected” after Christmas and gross margins “remained strong”.

Stock levels are lower than last year and Alexon said it expects to end the year with terminal stocks “well under control”.

However, Kaupthing analyst Matthew McEachran warned: “There are no guarantees that trading performance can be held at these levels, primarily due to the problems with its menswear trading fascia Envy, where losses could widen in 2008.”

Alexon will issue full-year results on March 31. Alexon shakes off City’s fears with post-Christmas profit lift