Next has upgraded its sales and profit guidance for the full year after witnessing an “encouraging performance” in the last three months.
While the retail environment remains tough, Next said its prospects going forward appear “somewhat less challenging” than they did six months ago.
Next now predicts full-year profits of £687m-£747m, compared with its previous estimate of £680m-£740m.
It said the first half of the year has been difficult, but sales and profits are in line with its cautious expectations.
Profit before tax fell 9.5% to £309m in the six months to July 29.
Retail sales fell 8.3% to £993m in the same period, but directory sales climbed 5.7% to £868m, with profits up 6.3%.
Next chief executive, Lord Wolfson, said: “The wider economic environment, clothing market and high street look as challenging as ever, and we do not underestimate the task of managing our stores through a period of prolonged negative like-for-like sales.
“Nonetheless, we believe our stores will remain cash generative for many years to come and represent an important asset for the group.
“While the external environment looks set to remain difficult, from where we stand today our prospects going forward appear somewhat less challenging than they did six months ago.”
Lord Wolfson added that the programmes of improvement Next has made to its directory business are beginning to “bear fruit” and two new and developing businesses, LABEL and directory overseas, continue to deliver “healthy levels of growth”.