The figure for trading from October 28 to December 24 means it is on track to outperform its forecast of 1% growth for the quarter to January.
With Next also announcing a 50p special dividend for shareholders, the update - the first significant retail figures since Christmas - boosted its shares by as much as 4% and gave a lift to rival Marks & Spencer too.
Next’s announcement revealed that while sales from its stores were ahead by only 0.5%, overall trading was lifted by its Next Directory online and catalogue arm, up 7.5%.
The group said it had gone into its end-of-season sale with “significantly more stock than last year”. It warned in October that it had been hit by the mild autumn weather, which resulted in it lowering profit expectations as it needed to offload goods at a discount.
Following today’s trading update, it said full-year profits should be £775 million - £5 million higher than at the time of the warning.
Week-by-week figures showed full-price sales struggled in November but picked up in the run-up to Christmas and were ahead by £20 million in the final week, though the figure was flattered by the retailer having an extra day’s trading compared to 2013.
Next said the outlook for UK consumers appeared “relatively benign” with low inflation, wages starting to recover, available credit and strong employment painting “a somewhat more positive picture than recent years”.
But the group said it was “very cautious” for the year ahead as it faced comparisons with a strong spring and summer in 2014 while uncertainty in the UK and global economy - with a general election looming - presented risks.
It is expecting sales growth for 2015/16 of between 2.5% and 7.5%, compared to latest expectations for 2014/15 of 6-8%. For the financial year to date, full-price sales are ahead 7.7%.