Fashion retailer Next has raised its annual earnings forecast after delivering a 6.9% rise in first-half pre-tax profit to £185.5m.

The upgrade is the third in five months and comes as the retailer hailed better product lines and an improvement in consumer confidence.

Next expects annual profit to come close to last year’s £429 million.

However, Next said that while comparable sales declines had been easing - down by an underlying 1.2% in the six months to July - the retailer expects to remain in negative territory through to spring/ summer 2010.

In a statement, Next chief executive Simon Wolfson said: “To an extent this sales performance has been the result of a slight improvement in the consumer environment and favourable weather. We also believe that our ranges have improved and in particular we have increased the fashion content through earlier adoption of new trends.”

Total first-half retail sales rose 0.8%, while sales from the firm’s Directory arm were 1.7% higher than last year. Retail profit increased by 4.4% in the first half, with net operating margin 0.4% higher at 11.2%.

Wolfson added that this year the end of season Sale falls awkwardly so Next will pull the Sale forward to Boxing Day Saturday to avoid the first day falling on a Sunday. He said this will “increase the costs of the Sale and we believe may have a negative impact on clearance rates”.

He said Next remains highly cash generative and will continue to invest in 2010, despite the weak consumer environment.

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