By Kristy Dorsey

Shares in Next jumped by more than seven per cent yesterday after the fashion retailer upped its full-year profit guidance with sales “materially ahead” of expectations.

The company will also repay some of its business rates relief, and intends to distribute £240 million of surplus cash to shareholders via special dividends. The £29m of rates relief that will be returned covered periods this year when its stores were able to open, which in Scotland was from April 26.

Full-price sales during the 11 weeks to July 17 were up 18.6% on the same period in 2019, before the pandemic hit. As a result, Next expects annual sales for the 12 months to January 2022 to grow by 6%, double its previous estimate.

The group also lifted its guidance for full-year profits to £750m, £30m more than it previously predicted.

READ MORE: Scottish retail sales edge closer to pre-Covid levels

Next said it benefitted from pent-up demand for adult clothing, with many customers having made few summer purchases during the past 18 months. The onset of extremely warm weather at the end of May also spurred demand, with customers fuelled by lockdown savings.

“We do not expect sales to continue at these exceptionally strong levels but we are more optimistic about the outlook than we were three months ago,” the company added.

The company has declared a special dividend of 110p per share to be paid in September, equivalent to £140m. Next said it intends to distribute the remaining £100m of surplus cash at the end of January, with ordinary dividends resuming thereafter.

Shares in Next closed 552p higher yesterday at 7,946p.