Next has revealed an annual profit haul of more than £1 billion and hiked its outlook for the year ahead despite worries over the impact of Budget measures on consumer confidence.

The high street retail giant, which has 457 stores across the UK, reported pre-tax profits of £1.01 billion for the year to January, up 10.1% on a year earlier.

It said trading had been better than expected in the first eight weeks since its year-end, helping it to raise its guidance for 2025-26, pencilling in sales growth of 5% to £5.3 billion and profits up 5.4% to £1.07 billion.

It had previously forecast full-year sales to rise 3.5% and profits to rise by 3.6% to £1.05 billion.

Shares lifted 7% in morning trading on Thursday.

Chief executive Lord Simon Wolfson said a strong first half will help offset a tougher end to 2025, with next month’s national insurance hike set to hit jobs and weaken consumer spending.

He told the PA news agency the threat to employment was the biggest worry, with the group already seeing significant increases in applications for each vacancy it posts.

Lord Wolfson said: “We’re concerned that the opportunities for employment in the economy will diminish, we hope we’re wrong, but that’s the biggest concern.”

The group is forecasting sales growth to almost halve to 3.5% in the second half, down from an upwardly revised 6.5% in the first six months.

Lord Wolfson said: “We expect the UK tax rises in April to weaken the UK employment market and negatively impact consumer confidence as the year progresses.”

The group has already said it will have to raise prices by around 1% to offset the impact of Labour’s rise in national insurance contributions (NICs) and the minimum wage hike on its labour costs, with both taking effect in April.

Lord Wolfson hit out at the moves to increase taxes for business, saying it is wrong to think that big firms “can afford to take on the burden of paying for excessive regulation and government financing”.

“Policymakers should not allow themselves to believe that burdening ‘big’ business does not impact the lives of millions of ‘ordinary’ people: it does – consumers through higher prices, workers through fewer jobs and savers through lower pension income,” he said.

Next’s results showed that, across its stores, like-for-like full prices sales fell 1.2% over the year to January 25 and profits fall 3.2% to £204 million.

Online profits jumped 8% to £444 million thanks to a 4.6% rise in sales.