UK clothing retailer Next has revealed a better-than-expected 5.8% rise in full-year profits, but warns that trading conditions remain "tough".

Pre-tax profits were up to GBP449.1m (US$783m) from GBP424.3m the year before, marginally up on analysts' estimates and driven by a revenue rise of 8.7% to GBP3.1bn.

The company reiterated its advice that trading conditions in the UK were tough and likely to remain so. It would continue its store expansion policy to maintain profitability, it added.

It said that cost-cutting measures and better stock management had helped performance during the year.

Finance director David Keens said the company would open 450,000sq ft of new retail space this year, up 11% on 2005.

Next is also set to test a new layout in six new and two existing stores this year, and is aiming to build on its home catalogue business.