The retailer has upped its full-year profit forecast from£435 million to£450 million, after driving up sales at catalogue business Next Directory and in-store by almost 10 per cent year on year.
A group statement said Next will remain cautious for the first half of the new year as it budgets for like-for-like sales to run at approximately -3 per cent over the next six months.
Christmas trading at the retailer was better than expected, according to Numis analyst Steve Davies. However, he pointed out that although the market will take today's news well, sales for the four months to Christmas Eve were affected by the extensive store-opening programme and had probably fallen by about 6 per cent like for like.
He added: 'There is a lot of new space maturing, which will help the top line, but, with underlying sales declining and margins under pressure, it is not easy to see where the profit growth is going to come from.'
Pressure on gross margins at Next will intensify, analysts say. The squeeze from grocers and value operators, such as Primark, along with direct high street rivals such as Marks & Spencer will also tighten.
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