High street retailer Next has outpaced its own increased profit guidance by £10m.

Financial results for the year ending in January showed profit before tax hit £870m, more than the £860m that had been forecast.

The high street giant and FTSE 100 constituent had increased its profit outlook in January as a result of far better than expected Christmas sales: full-year profit before tax guidance was increased by £20m to £860m.

In 2021 profit before tax stood at £823m, meaning 2022 figures were up 5.7%. Compared to the 2019-2020 figure it’s a 16.3% increase.

Sales were also up 8.4% on 2021 despite cost of living pressures weighing on households. Discounting items added £5m to profits and clearance rates and end of season sales also surpassed expectations.

Shareholders have received record earnings per share. In January basic earnings per share were 573.4p, up from 530.8p in January 2022 and £472.4p in January 2020.

Price rises are forecast to be lower than previously expected. Costs will rise 7% in the spring/summer season – a drop from a previously forecast 8% rise – and 3% in the autumn/winter months, half the 6% predicted in the past.

The company has been on a buying spree in the past 12 months, purchasing brands in difficulty: JoJo Maman Bebe, Joules, Made.com and Cath Kidston.

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“It has been a good year for Next”, chairman Michael Rooney said.

But Mr Rooney expressed caution for the year ahead. “We have prepared (and budgeted) for a difficult year.

“If we continue to improve our product ranges, relentlessly manage our costs and upgrade our customer service, whilst also developing new business opportunities; we can lay the foundations for an exceptionally strong business and still deliver healthy profits, cash flow and dividends,” he said.

Sales and profits are forecast to fall. The company is budgeting for full price sales to be down 1.5% on last year and profit before tax to fall to £795m.