Next has raised its profit forecasts after enjoying a bumper Christmas period driven by strong sales of Christmas jumpers and growth in its ecommerce arm.

The retailer today reported sales rose 11.9% between November 1 and December 24, “significantly” ahead of its expectations.

Next is raising its profit forecast for the year to January 25 to between £684m and £700m as a result. On October 30, it had forecast profits of between £650m and £680m.

Sales in stores rose 7.7% over Christmas and are up 1.2% in the year to date.

Its Directory arm enjoyed a 21% jump in like-for-likes over Christmas and are up 12% in the year so far. Total group sales are up 5% in the year to date, 1.25% ahead of previous guidance.

Next is also paying a one-off dividend of 50p, costing £75m.

The retailer said strong sales of its seasonal knitwear, nightwear and gift lines had driven the healthy Christmas performance. Next stuck with a long-term strategy not to go on Sale before Christmas unlike many of its rivals.

Next added that increased confidence in its online deliveries meant that more customers continued to trade with Next Directory right up to the weekend before Christmas and that it does not expect the growth rates experienced over Christmas to carry through to the first half of next year.

Next boss Lord Wolfson said: “As far as the consumer environment is concerned, it seems likely that the economy will continue to steadily improve with strong employment numbers driving a general recovery. 

“However, the problem of little or no growth in real earnings looks set to persist for some time, and we cannot see any reason to expect a significant increase in total consumer spending in the year ahead. 

“We are also wary that any return to significant economic growth is likely to result in rising interest rates which, in turn, is likely to moderate spending of those with mortgages.”

Next expects sales to rise between 3% and 7% in the next financial year and pre-tax profits to be in line with this growth.