Retailer Next said it had managed to cushion the inflationary impact of a weak pound and nudged up its full-year sales and profit forecasts, sending its shares more than 10% higher today. 

Next said its prospects appeared less challenging than six months ago after it improved its ranges and website. 

"We're using analytics and data management to help us understand our customers better and we're able to offer a more specific service for individual customers," Finance Director Amanda James said. 

UK consumers are being squeezed by high inflation and muted wage growth and the improved outlook at Next should not be seen as a reflection of the wider economy, James added. 

The group said it had mitigated the impact of the decline in the pound on its prices following the Brexit vote by using new and developing sources of supply and taking advantage of surplus manufacturing capacity in a weak overall market. 

It expected price rises of no more than 2% in the first half of 2018, and no price rises in the second half, assuming no further movements in the value of sterling.

Next has faltered over the last two years due to a broader slowdown in spending on fashion and footwear that it first identified in 2015. 

Signs of improvement were evident in its directory business, which includes online, and international sales lifted by the weak pound. While sales in its Directory business were up 5.7% in the first half of the year, its Retail arm fell 8.3%. 

However the group has continued to open stores, believing that physical space remains profitable if not as productive as before. 

"We take a bottom-up view," James said. "If we see an opportunity we will still go for that opportunity." 

Next's first-half profit fell by 9.5% to £309.4m, which analysts said was slightly better than consensus forecasts. 

Next also lifted its guidance for full-price sales for the year for the second time in less than two months. 

"Our performance in the last three months has been encouraging on a number of fronts and whilst the retail environment remains tough, our prospects going forward appear somewhat less challenging than they did six months ago," it said. 

Next said it now expected its full-year sales to come in between -2% and +1.5% higher, from a previous range of -3% and up 0.5% in August. 

The mid-point of its profit guidance moved up by £7m to a target of £717m, it said.