Next image source.
Next will raise prices this year to make up for higher wages and shipping costs.
It said prices for its spring and summer clothing and homeware ranges would rise by 3.7% from a year earlier, while it expects a 6% increase for autumn and winter goods.
Its forecast came as it said sales for the three months to 25 December were up 20% compared with pre-pandemic 2019.
Next raised its profit forecast.
The company expects to make an extra £22m, which will increase its annual profits by 10%.
The retailer said that sales in the last quarter of the year had been boosted by revival of formal and occasionwear.
Next's online business increased sales by 45% from two years ago, while its High Street stores decreased sales.
The company warned that this year could see a tougher trading environment due to the financial pressures facing households, and that it was forecasting sales of full-price goods to rise by 7%.
Next said it needed to increase its prices more than previously expected because it was facing higher costs.
The company said it had seen higher costs. Wage costs were going up because of the increase in the National Living Wage and because of staff shortages in some areas, most notably in warehousing and technology.
Next announced a special dividend of 160p a share and was praised by analysts.
"For all the tales of woe on the High Street, there is one shining jewel to be found in the form of Next," said the analyst.
There aren't many bricks-and-mortar retailers who upgrade guidance multiple times.
She said that Next had managed its business well, with stock levels reduced and labour shortages not derailing performance.
The growing strength of the brand and its agility to operate through the ongoing challenges posed by the Pandemic is demonstrated by these results.
He said the outlook for 2022 looks more challenging. The combination of tax hikes and a rise in the cost of living erodes incomes for many households.
