Boost for Next but uncertainty reigns

The group posted pre-tax profits of 505m in the 12 months to January, up on the 428.8m seen a year earlier.

Next thanked better-than-feared consumer spending and efforts to

improve product ranges for the improvement, as like-for-like sales returned to positive territory with a 0.5 per cent rise.

But chief executive Simon Wolfson joined fellow retailers in expressing concern over 2010, saying the group is "extremely cautious" on the sales outlook.

Mr Wolfson said 2010 is "hard to predict" ahead of the General Election and potential for tax rises as the Government seeks to bring down national debt.

The fashion and homewares chain is budgeting for same store sales ranging from 2.5 per cent down to 0.5 per cent up in the first six months, but stressed it hopes to be able to grow profits by around 30m even if annual sales fall 2 per cent.

Mr Wolfson added: "A worse scenario for the consumer would be a rise in taxation – direct taxes will reduce consumer spending, indirect taxes are likely to be inflationary.

"So the outlook for the economy – and therefore for retail sales – remains dependent on policy decisions and their timing and, as yet, we have little certainty as to either."

Next enjoyed a resurgent performance in 2009 after it refocused the business to aggressively back new products.