Pre-tax profits rose to £505.3m, with sales totalling £3.41bn up from £3.27bn last year.
The company said the spending drop on the high street in the recession had not been as bad as feared.
Next, which runs over 500 shops in the UK and Ireland, said it had made sure its shelves were stocked with new fashions more quickly, while its Home stores had been performing well.
Next Directory sales were up by seven per cent. The company has cut net debt to £400m through a round of cost cutting.
Chairman John Barton said: “It was an extraordinary year. At the beginning of the year we faced an unstable economy, falling sales and sterling weakness against both the US dollar and the euro, our main purchasing currencies. In the event the consumer economy has been relatively stable.”
The company also said the internet had helped to boost the company’s fortunes with trading now in 35 countries.
Over the next twelve months the firm estimates that international website turnover will be around £7m, generating a profit of £1.4m.
Next also has 14 stores in central Europe, five in northern Europe and four in China.
There are a total of 517 outlets, with 12 new Home stores planned for this year because of the success of that section of the business.
Despite the profit lift the company warned that the economy was still not out of trouble.
It said: “The main concern is the size of the government deficit. In whichever way a future government balances its books, the results will be uncomfortable for the consumer.”