FASHION chain Next today said its shoppers were in better financial shape than first feared as it upped its sales forecasts for the rest of the year.

The high street climate has been "more benign" than anticipated in the three months to October 31, helped by "encouragingly low" inflation and interest rates, it said.

Shoppers are managing their credit carefully and fewer of its Next Directory customers are going into arrears, reflecting a "general improvement in consumer finances", Next added.

In September it pencilled in like-for-like sales high street declines of between 3.5% and 6.5%, but today Next forecast a worst-case 3% slide and said sales could even hold steady against last year in the six months to the end of January.