FASHION and home wares retailer Next said today it had continued to weather the tough trading conditions on the high street as it posted a 3.9% increase in sales for November and December.

Next said its performance over the festive period meant it was on track for profits growth at the top end of expectations.

The group was driven by a strong online performance, with Directory revenues rising by 11.2% between November 1 and December 24, but its store sales were better than many City expectations, at 0.8% higher than a year ago.

Despite the progress, however, chief executive Simon Wolfson warned trading conditions were likely to remain difficult this year as wage growth continues to lag behind inflation.

He said: “On balance, we expect the consumer environment to remain subdued but steady.”

Next said group pre-tax profits for the year to January were now expected to jump by between 7.1% and 9.6%, taking the figure to between �611million and �625m.

It said the better-than-expected performance reflected cost controls, less marked-down stock in the end of the season sale and better margins.

Freddie George, research analyst at Seymour Pierce stockbrokers, said: “We believe the company was one of the winners over Christmas, helped by a strong range geared to the colder weather.”

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said the Directory business remained the “jewel in the crown” of Next.

But he said: “On a more cautious note, the company remains embroiled in a fiercely competitive sector where the consumer is acutely aware of making cost-conscious decisions.”

Next, which has more than 500 shops, plans to create a further 250,000sq ft of retail space this year, including a net increase of 10 new shops, and will continue to grow its Directory operation in the UK and overseas.

It has forecast sales growth of between 1.5% and 4% for the forthcoming financial year, with underlying profits up by a similar level.

Yesterday’s statement from Next maintains an up-beat start to the festive trading update period, with department stores chain John Lewis having kicked off the season yesterday with a 13% increase in like-for-like sales after a record pre-Christmas week and a milestone online performance.

Today, Waitrose, the John Lew Partnership’s supermarket business, reported “exceptional” sales in the run up to New Year’s Eve as shoppers stocked up on champagne and party food.

The grocer, which has 288 shops across the country, said like-for-like sales were 5.4% higher than last year between December 18 and 31 as shoppers prepared to entertain friends and family during the festive period.

With demand for fresh food also strong, total sales in the 12 day period broke the �300million barrier for the first time following an 8.8% rise.

Managing director Mark Price said: “Our sales for the festive period as a whole have been record-breaking, but the 12 trading days leading up to New Year’s Eve were exceptional as customers got ready for family entertaining and parties.”

Waitrose had already reported last week that in its Christmas trading period, between November 4 and December 24, sales were up 4.3% on a like-for-like basis.

The figures come ahead of Christmas trading updates from three of the country’s biggest supermarkets – Tesco, Sainsbury’s and Morrisons – next week. High street food and clothes giant Marks & Spencer will also update the City.