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By Bloomberg

Next Plc said the outlook for U.K. retail is improving after the clothing retailer reported Christmas-season sales that beat analysts’ estimates, driving the shares higher in London trading.

“The economic outlook for the U.K. consumer looks relatively benign,” and low inflation and stabilizing wages “paint a somewhat more positive picture than recent years,” the Leicester, England-based company said today.

European clothing retailers have struggled this year as unseasonably warm weather held shoppers back from adding to their wardrobes. Next, with more than 500 stores in the U.K. and Ireland and nearly 200 stores elsewhere, said it has been clearing inventory after starting the end-of-season sale with significantly more stock than last year.

The shares rose as much as 4.4 percent. They traded 3.8 percent higher at 6,760 pence as of 8:48 a.m. in London, bringing the gain this year to 24 percent.

Next-brand sales advanced 2.9 percent in the Oct. 28 to Dec. 24 period. Analysts expected a 1.1 percent gain, according to the median estimate. Revenue at its stores gained 0.5 percent during the eight-week Christmas period, while sales at its home- shopping business, called Directory, rose 7.5 percent.

‘Impressive Directory’

The trading update is “better than feared, driven by another impressive Directory performance,” wrote Richard Edwards, an analyst at Citigroup Inc.

The company said it remains “very cautious” in its sales budgets for next year as the company will face “very tough” comparable numbers.

For fiscal 2016, Next forecast full-price sales growth of 2.5 percent to 7.5 percent, while profit is expected to grow in line with revenue. First-half sales growth will be at the lower end of the range, the retailer said.

“Next’s business model has again proven to be robust,” Simon Bowler, an analyst at Exane BNP Paribas, said in a note to clients. The guidance for next year is probably “reflective of comparatives and caution rather than a change in or problem with the business model.”

The company also narrowed its forecast range for pretax profit for the year ending Jan. 24. It now expects 765 million pounds ($1.2 billion) to 785 million pounds, compared with a previous forecast of 750 million pounds to 790 million pounds.