The news comes after poor results over Christmas when the company blamed a mild December for a drop in sales.
Despite the positive figures, Next's chairman is warning of a difficult year ahead.
John Barton said: "The year to January 2016 was a solid year for NEXT. Underlying Earnings Per Share (EPS) grew by 5% to 442p and we propose to increase our total full year ordinary dividend by 5% (to 158p).
"Sales for NEXT Directory, our online and catalogue business, increased by 8% and NEXT Retail by 1%. Total Group sales rose by 3% to £4.1bn.
"Our share price remained above our declared share buyback price limit for much of the year. Cash flow remained strong and we returned £568m to shareholders through a combination of ordinary dividends (£227m) and special dividends (£341m). In January the share price fell and we re-started our buyback programme, returning a further £151m.
"We have continued to invest in the business, spending £151m on new stores, a new warehouse and systems. In addition, we changed the credit terms for our Directory customers, which increased Directory debtors by some £215m. As a result, net debt increased to £850m, well within our bond and bank facilities of £1.3bn.
"The strength of the Group is built on the hard work and productivity of all the people who work for NEXT. I would like to thank them all for their contribution throughout the year.
"2016 will be a challenging year with much uncertainty in the global economy. For NEXT it makes it particularly important that we remain focussed on our core strategy of delivering long term sustainable growth in EPS, investing in the business, improving the design and quality of our products and returning surplus cash to shareholders."
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