High street chain Next has hiked its profit outlook for the fifth time this year after better-than-expected festive sales and forecast earnings to increase further over the next 12 months.

The retail giant saw full-price sales jump 5.7% higher over the nine weeks to December 30, with growth of 10% in both of the final two weeks before Christmas Day.

It is now forecasting full-year sales to rise by 4% as it said January trading is also set to be better than expected.

Next upped its profit forecast to £905 million for the year to January 27, which would be a 4% rise on 2022-23 and compares with guidance for £885 million given in November.

The group is also predicting a 5% rise in underlying group pre-tax profits to £960 million for the year ahead on full-price sales up 2.5%, or 6% including recent acquisitions.

It revealed it is not planning to increase prices for shoppers over the new financial year as it said its own input costs are set to be stable for the first time in three years.

It cautioned over “some delays to stock deliveries” early this year from the Red Sea attacks on container ships and disruption to the all-important Suez Canal shipping route.

Next said trading in the run-up to Christmas was better than expected for across its stores and online, with sales up 0.6% and 9.1% respectively in its Christmas quarter to December 30.

“Online performed particularly well, which we believe was as a result of service improvements versus last year,” it said.

The firm said consumers are set to be boosted in 2025 as wages finally outstrip inflation, which “will ease the pressure they have felt on their cost of living for the last eighteen months”.

Next said: “On the face of it, the consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties.”

It cautioned there may be more unemployment over the coming year while many homeowners still face higher mortgage rates as they come off fixed deals.