Shares in Next were up on the FTSE 100 in morning trading after the group reported a rise in pre-tax profit in the year ended January 2011.

Group revenue climbed one per cent to £3.5 billion, while pre-tax profit rose nine per cent to £551 million. The group had previously predicted profits of between £540 million and £555 million.

Following the results Next said it would be increasing its total dividend 18 per cent to 78 pence per share.

John Barton, Chairman of Next, said, "The year to January 2011 has been another good year for NEXT, with excellent growth in earnings per share of 18% to a new record for the Group of 222p.

"At the beginning of the year Next adopted a cautious approach to the underlying consumer economy and budgeted conservatively for growth. In hindsight this approach has served the Company well, allowing us to keep tight control of both stock levels and costs. Next identified several avenues of growth, despite the weak underlying environment, and we have developed these opportunities aggressively.

"Looking ahead we are facing a tough trading environment. Increases in VAT, cotton prices and labour rates in many of the countries in which we source means the price of our products are rising at a time when our customers are experiencing increased demands on their income. However, we believe NEXT can continue to thrive by keeping to our strategy of investing in the Brand, improving the products, and developing new avenues of growth."

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented, "Some of the recent share price underperformance has been reversed following a strong set of numbers from a dependable retailer.

"The cautionary outlook is one which is always expected from Next, but this does not mask the fact that the company continues to progress. In particular, its flagship online offering, which now accounts for 40% of profits, is well established and ideally placed for the ongoing split between physical and virtual shopping. A near 20% hike in the dividend represents confidence in the outlook and reflects the strength of last year's performance. The rise in cotton prices, which will inevitably be passed on to the customer, had been previously flagged and may have provided something of a headwind on the shares, whilst the competitive environment remains difficult.

"Prior to today's results, the shares had lost 9% over the last six months, as compared to a gain of some 4% for the wider FTSE100. These numbers could yet provide something of a positive fillip to investors reconsidering the current market view of the company as a strong hold."

By 09:40 shares in Next were up 6.41 per cent on the FTSE 100 to 2,091.00 pence per share.

FTSE