UK's Next shares hit record after strong Christmas sales

* Total (NYSE: TOT - news) sales up 11.9 pct year-on-year from Nov. 1 to Dec. 24

* Yr to Dec. 24 sales up 5 pct, 1.25 pct ahead of guidance

* Raises yr profit forecast to 684-700 mln stg

* Sees sales growth of 3-7 pct in 2014-15

* Shares rise 11 pct to record high (Adds detail, background, CEO comment, shares)

By James Davey

LONDON, Jan 3 (Reuters) - Next Plc (LSE: NXT.L - news) , Britain's second-largest clothing retailer, raised its yearly profit outlook on the back of pre-Christmas sales that topped its own forecast, placing it firmly among the sector's winners in the festive trading season.

Shares in the company, up 47 percent over the last year, rose another 11 percent to a record high after it said total sales rose 11.9 percent in the Nov. 1 to Dec. 24 period, helped by its policy of not offering price-cutting promotions before Christmas.

Sales in the year to Dec. 24 were up 5.0 percent, 1.25 percent ahead of the top end of guidance issued in October by the company which targets the mass market with clothing ranging from suits to underwear.

The outcome was in contrast to Debenhams (Other OTC: DBHSY - news) , Britain's second-largest department stores group, which issued a profit warning on Tuesday, blaming the highly promotional pre-Christmas environment and mild weather which curbed demand for warm winter garments.

That was an ominous sign for Britain's biggest clothing retailer Marks & Spencer (Other OTC: MAKSF - news) , whose rare move to cut prices before Christmas has prompted fears it too has suffered poor trading. It is scheduled to update on Jan. 9.

Alongside Next in the winners category so far are department store groups John Lewis and House of Fraser, which both posted positive statements on Thursday.

However, Next (Other OTC: NXGPF - news) cautioned investors not to expect a continuation of the level of growth it saw in the run-up to Christmas, predicting sales growth of between 3 and 7 percent in its 2014-15 financial year.

Chief Executive Simon Wolfson, a prominent Conservative Party supporter who sits in the upper house of Parliament, said although the economy was likely to continue to steadily improve, lack of growth in real earnings looked set to persist and there was no reason to expect a significant increase in consumer spending in 2014.

RETURN TO GROWTH

"We wouldn't want people to believe that there's going to be a return to the sort of levels of consumer expenditure growth that there were in the early 2000s," he told Reuters.

Wolfson also cautioned that a return to economic growth was likely to result in higher interest rates which, in turn, was likely to moderate the spending of those with mortgages.

Separately on Friday a survey by mortgage lender Nationwide (LSE: CCDS.L - news) showed UK house prices jumped in December by the biggest amount in more than four years - a trend likely to fuel concerns that government policies may be creating a housing bubble which may require corrective measures.

The outlook for UK consumer spending may become clearer next week when Tesco (Xetra: TCO.DE - news) , Britain's biggest retailer, and J Sainsbury (EUREX: SBRF.EX - news) , the No. 3, also issue trading statements.

Next attributed its performance to improvements in its seasonal knitwear, nightwear and gift offers, and said increased confidence in online deliveries meant more customers continued to trade via the Next Directory internet and catalogue business right up to the weekend before Christmas.

"We weren't planning for anything like as good a Christmas as we had," said Wolfson.

Next Directory sales soared 21 percent, while sales at the group's more than 500 stores in Britain and Ireland - and about 200 stores in over 30 countries overseas - increased 7.7 percent.

The firm now expects a pretax profit of between 684 million pounds ($1.1 billion) and 700 million in the year to end-January 2014, ahead of previous guidance of 650 to 680 million.

Shares in Next were up 530 pence at 6,065p by 0944 GMT, valuing the business at 9.5 billion pounds.

Analyst Freddie George at brokerage Cantor Fitzgerald raised his 2013-14 pretax profit forecast by 29 million pounds to 695 million, made similar revisions to subsequent years and upgraded his recommendation to "buy" from "hold".

Next also said it would pay a special dividend of 50 pence a share at a cost of 75 million pounds and outlined a plan for more payouts rather than share buybacks. ($1 = 0.6084 British pounds) (Editing by Kate Holton and David Holmes)