Next, which runs more than 500 stores in Britain and Ireland as well as the Directory home shopping business, said on Wednesday group sales, excluding VAT sales tax, rose 3.3 percent, in the three months to Oct. 29.
That compared with analyst forecasts in a range of down 0.3 percent to up 3.0 percent and first half growth of 3.2 percent.
Sales at its stores dropped 3.3 percent, and were down around 8 percent excluding newly-opened shops. But this was offset by a 16.9 percent leap in sales at Next Directory.
"A good third quarter sales update ... that will reassure investors after what has been a difficult quarter as a result of weather impacts/cautious consumers," Espirito Santo analysts wrote in a research note. Next shares climbed more than 6 percent in early trading, the biggest rise by a European blue chip stock.
British retailers are mostly struggling as shoppers' disposable incomes are squeezed by rising prices, muted wages growth and government austerity measures.
Those with strong internet businesses have been faring better, however, as time-pressed consumers take advantage of the convenience, and price transparency, of shopping online.
While overall British retail sales rose just 0.6 percent year-on-year in September, according to government data, online sales surged 15 percent, according to industry body IMRG.
Analysts had feared Next might be hit hard by abnormally warm weather in September and October, though the weakness in store sales may not bode well for Marks & Spencer, Britain's biggest clothing retailer which reports first-half results next week and does not have such a big online business.
Liberum analyst Simon Irwin said that while Next's performance was better than expected overall, the industry could face a difficult few months because stock levels were generally too high and that could lead to heavy discounting.
Next forecast sales growth of 2.5-4.0 percent for the year ending January 2012, narrowed from its previous estimate of 2.0-4.5 percent, and pretax profit of 550-585 million pounds ($877-$933 million), compared with 545-590 million previously.
It also predicted earnings per share of 240-255 pence, growth of 8.3-15.2 percent.
Next said it remained confident it would see no further increase in selling prices in the first half of its 2012/13 financial year and that the early indications were this trend would continue into the second half of that year.
Clothing retailers have been hit this year by a surge in the price of cotton, as well as higher labor costs in key manufacturing countries like China, and have been struggling to pass on those extra expenses to cash-strapped shoppers.
Next shares have outperformed the STOXX Europe 600 retail index by 49 percent this year.
