FASHION chain Next lifted profit hopes as new stores and strong online sales provided shelter from the stormy climate on the high street.

The fashion and homewares chain, which has a store at Kingsgate in Huddersfield and about 540 stores nationwide, lifted sales by 4.5% in the 26 weeks to July 28 as outlet sales edged 0.2% ahead and online Next Directory rose by 13.3%.

The group said the store performance was helped by new space offsetting lower sales from shops open more than a year.

It now expects profits of between £575m and £620m for the year to January 31 – up from an earlier forecast of between £560m and £610m.

Chief executive Lord Simon Wolfson admitted that without the larger online business and 300,000 sq ft added in the period, Next would be in a similar position as rivals such as Marks & Spencer – which recently revealed its worst trading performance for three years.

Lord Wolfson said London stores had suffered as a result of the Olympics, but added that this was “absolutely expected’’ as many Londoners had left the City and visitors were in the capital for the event, not to shop.

About 10% fewer people visited London’s West End and 7% fewer visited the East End last Friday and Saturday compared with the same weekend last year, according to figures from business information group Experian.

The retail sector has suffered from the consumer spending squeeze and record rainfall throughout April, May and June.

Lord Wolfson said the wider retail climate was “treading water”.

He said: “I don’t think the economic environment is getting better or worse.

“The underlying situation shows a couple of positives on the horizon. The first is inflation is coming down and employment is continuing to rise. The underlying picture is getting better.”

He said price inflation had been flat at Next in the last year and he did not see any significant price pressures ahead.

Lord Wolfson said the womenswear market had been tougher in the period, which has been the case throughout the industry, while the retailer was also affected by the record rainfall throughout June.

He said the new space in the period added about 2.5% to sales and the business planned to continue opening stores with a “healthy pipeline” next year.