Next has increased its profit guidance for the full year by £12m to £1.25bn, as a result of a small upgrade in sales expectations and some additional cost savings.

In the six months to July, the fashion and homeware retailer saw its group sales increase by 9% year-on-year to £3.54bn, while its profit before tax jumped by 10.5% to £569m.

The firm said its first-half performance was better than originally anticipated, both in the UK and overseas.

Its UK full price sales rose by 3.6% year-on-year as a result of "two unusually warm summers", against guidance of 1.3%, while its online international sales jumped 23.9%, following guidance of 14.7%.

Furthermore, across this period, Next’s post-tax earnings per share increased by 12.2% to just over £3.70.

Despite these results, the retailer has moderated its sales growth estimate for the UK in the second half, down from 2.8% to 2%.

It stated that while this reduction is modest, it reflects the firm’s concerns around rising inflation, higher mortgage interest costs and a weak employment market, compounded if they are accompanied by tax increases.

However, Next has increased its full-year sales, profit and earnings per share guidance.

Sales are set to increase by 6.9% to £7.5bn, while its profit before tax is set to rise by 8.4% year-on-year to £1.25bn.

Its post-tax earnings guidance has also been increased from 9.2% to 10.3% at £8.20 per share.

Investment director at AJ Bell, Russ Mould, said Next’s ability to manage expectations is "unrivalled".

He concluded: "With a slight upgrade to future guidance accompanying the first-half numbers, investors felt able to reward the company with a healthy share price increase despite the stock being within touching distance of all-time highs.

"For the shares to be in this lofty position in an environment where consumer sentiment is so weak is remarkable. Next’s intervention to warn the government against further tax increases in its latest Budget suggests it recognises how strapped for cash many households are right now.

"Rather than surrendering to this tough backdrop, Next has done an excellent job of ensuring that the money people do have to spend on clothing and its other core categories is being spent with them, whether on its own branded items or on third-party products sold through its website.

"Next gets the right products in front of the right customers at the right time and at the right price points to get them through the tills or clicking the buy button. While its next-day delivery and use of stores as locations for click and collect dial up the convenience factor for shoppers. This all sounds simple but it is beyond a lot of its peer group."

---