UK clothes retailer Next has reported a jump in profits, seeing off a challenge from a revitalised Marks & Spencer.

The company said on Thursday that pre-tax profits for the year to January 2002 came in at �266m, 22% up on the previous year.

Sales also rose, climbing 18% on the year to �1.9bn.

Next chairman sir Brian Pitman said he expects further sales growth in the months ahead, driven by new store openings and product launches.

M&S challenge seen off

"We have made a good start to the current year, and I believe 2002 will prove to be another year of growth for Next," he said in a statement.

The upbeat results are expected to allay investor concerns that a recent surge in sales at rival clothes seller Marks & Spencer would hit Next's performance.

Marks & Spencer's turnaround after a two-year sales slump is attributed in part to a new range of trendy designs ushered in by former Next chief George Davies.

Next built its reputation during the 1980s by selling fashionable clothes at affordable prices, and enjoyed strong growth during the 1990s consumer boom.

Investors cheer

The company continued to grow last year, expanding its store space by 20%. It now owns a total of 331 stores in the UK and Ireland.

Next said it aims to cash in on growing sales of home products - furniture, kitchenware and ceramics - by offering them in a wider range of stores.

Investors welcomed the statement, marking Next shares 6% higher at 1045p in late afternoon trade on Thursday.