Next signalled brighter prospects for UK retailers today with a solid rise in Christmas sales, especially online, without resorting to the discounting seen on many shopping streets. 

The UK fashion company has outperformed rivals for a decade thanks to its strong online business, new stores and diversification overseas and into areas such as homewares. 

The group's skills in multichannel shopping across stores, catalogue and online, helped to produce a 2.9% increase in sales from October 28 to December 24, at the upper end of its expectations. 

Next, the first big British retailer to report on the holiday season, benefited from its policy of not cutting prices before Christmas.

And it did not take part in "Black Friday" promotions in late November that sent UK retail sales growth to a 27-year high. 

Before Black Friday, retailers had been having a tough time due partly due to a mild autumn that hit sales of winter fashions.

Muted wage growth in Britain has also forced consumers to keep spending under control. 

Next's chief executive Simon Wolfson said Christmas had been a little bit better than he had expected back in the autumn, when warm weather was hurting sales of winter clothes. 

This forced Next to cut its profit guidance and fourth-quarter sales expectations. "We had discounted all the bad news in October," he said. 

Full-price sales at Next dipped slightly in the week of Black Friday, a phenomenon imported from the US, but rose week-on-week in the run up to Christmas. 

Wolfson said Next also had a successful post-Christmas clearance, with more stock on offer than a year earlier. 

The group said it now expected profit for the year to January 24 to rise 11.5% to be within £10m either side of £775m, £5m ahead of the midpoint guidance it issued in October. 

Next's Directory Internet and catalogue business was the standout performer in the run up to Christmas with a 7.5% rise in sales. Sales in its stores rose 0.5%, the company said. 

"More people were doing their Christmas shopping online than last year, and that trend seems to be continuing," Wolfson said. 

But stores remained central to its growth strategy, he said, with about half of online orders picked up in shops. 

Researchers Mintel had predicted European online retail sales would rise 17% to €193 billion this year, up from 15% in 2013. 

But there is also evidence that a greater proportion of this growth is from shops offering customers the option of picking up online orders in store. 

Wolfson said the outlook for the British consumer looked relatively benign, and he said an end to the decline in real wages boded well for the retailer. But he remained cautious about the group's sales budget for the year ahead. 

The Next CEO said the company would open about 350,000 square feet of new space in the coming year, and some could come from land owned by grocers.

"There are some sites that supermarkets have where we would be interested in taking additional space." 

Next also said today it would pay a further special dividend of 50 pence a share.