At pounds 36.2m, profits before tax and exceptionals in the year to 31 January 1993 were beyond the highest analysts' forecasts. The final dividend of 2p gives a total for the year of 2.5p, against 0.75p last time.
Next's shares, which have outperformed the market by 100 per cent this year, moved up a further 11p to close at 172p.
In 1990-1991 the shares fell as low as 2.5p when Next suffered net losses of pounds 226m. Its revival stems from the management's decision to improve the quality of its products within the existing brand name.
'It is ironic that even in its darkest hour, when its product was looking decidedly diseased, the number of people going into its shops was still very high,' commented Julie Ramshaw, an analyst at Morgan Stanley.
Last year, operating profits in Next Retail, the largest of the divisions, nearly quadrupled, soaring from pounds 6.4m to pounds 24.4m. Sales in the second half rose by 24 per cent.
David Keens, finance director, said Next had gone back to basics to find out what its typical customer wanted to buy. 'We decided it was high quality, good-looking comfortable clothes in natural fibres that appeal to the vast majority.'
He attributed last year's successful autumn and winter collection to Next's return to its old values. 'People prefer to buy one good quality hand-knitted jumper costing pounds 50 or pounds 70 than two cheaper, inferior ones.'
Over the year, sales in Next Retail were up 18 per cent, even though the selling space was cut, on average, by 4 per cent.
Mr Keens said Next had gained market share at an equal rate in womenswear and menswear, which now account for 45 per cent and up to 30 per cent of sales respectively. The biggest area of growth was children's clothes, which now represent 7 per cent of sales. Next has just launched a new line for girls aged between eight and 12.
There was a pounds 10.3m exceptional charge for writing down lease premiums, although this was covered by a pounds 13m one-off credit from Club 24, which provides consumer credit services. This consisted of pounds 3m profit and a pounds 10m unused provision. Next ended the year with net cash of pounds 65m, an improvement of pounds 30m in the year.
Ms Ramshaw believes that Next should produce good organic growth for another three years. 'Bear in mind that Next only has 3 per cent of the UK clothing market, with 305 stores,' she said.
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