CLOTHING retailer Next reported strong sales over Christmas but reduced its profits forecasts because of excess stock.

Like-for-like sales in the 285 stores that were not affected by new openings rose 2.9 per cent in the period from August 3 to Christmas Eve.

That was slightly above the level predicted by analysts who had expected the group to shake off the impact of discounting by rivals and any slowdown in high street spending.

Total like-for-like sales were up by only 0.5 per cent after new stores diverted trade away from 49 older outlets, Next said in a trading statement.

Some of the gloss was taken off yesterday's figures by news that the post-Christmas sale had been disappointing.

Clearance rates were below the expectations of managers on stock levels that were higher than planned.

This led Next to lower its internal profits forecasts for the year to January 29 by £5m, although it remained confident of posting results within the range expected by analysts.

"We currently expect Next Group pre-tax profits for the full-year to be in the range of £415m to £425m," the company said.

Annual profits totalled £371m last year following a 14 per cent rise in turnover from its high street stores, overseas franchises and catalogue operations to £2.52bn.