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Signs of life on the High Street emerged today when Next surprised the City with trading figures much better than expected.
The UK's second-largest clothing retailer after Marks & Spencer still reported a fall in sales in the 14 weeks to 2 May.
But they were down just 2.3% in the stores, far better than pessimistic chief executive Simon Wolfson had been expecting.
He had planned on seeing sales sink by up to 9%, assuming that the recession would only get worse and that shoppers would keep a tight grip on spending.
Instead, boosted by warm weather, consumers threw caution to the wind by buying summer clothing early. Overall sales, including from the mail order and online Next Directory, were up 1.1%.
Next, sometimes derided as offering school uniform for the office, is a good bellwether of the wider economic climate.
So it may be telling that it remains guarded. "We believe that the first quarter's figures need to be treated with caution as they are flattered by a number of factors," said the company.
These factors include a later Easter, which is seen as good for retailers in general, and fewer people travelling overseas due to the weakness of sterling.
Next expects sales to fall by between 4% and 7% in the next three months. Still, it was able to add £15 million to its full-year profit forecasts on the back of today's numbers.
For the year to the end of January 2010, City analysts now expect it to make more than £370 million in profit, down from £430 million for the previous year.
Nick Bubb of Pali International believes Wolfson is playing a tricky hand well. "Looking at the weather forecast, we would advise him to stay cautious," says Bubb.
City dealers are also unsure about the shares. Manoj Ladwa of ETX Capital said: "The market has already priced in the upside but has yet to factor in the downside. Therefore, we can assume the stock has run its course for the time being."
The shares slipped 35p to 1651p.
