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* First-half full-price sales up 3.5 pct
* Firm raises full-year profit guidance by 1.9 pct
* Announces third special dividend of year
* Shares rise up to 2 pct (Adds details, analyst comment, shares)
By James Davey
LONDON, July 28 (Reuters) - Next, Britain'ssecond-largest clothing retailer, nudged up its annual sales andprofit forecasts after beating its own guidance for first-halfsales growth, boosted by warm weather in June and July.
Shares in the firm, which trades from more than 500 shops inBritain and Ireland, about 200 mainly franchised stores overseasand the Directory catalogue and internet business, rose up to 2percent on Tuesday -- near to their record high -- after it alsosaid it would pay another special dividend, its third this year.
Next has outperformed peers for a decade due to a strongonline business, rapid expansion at home and abroad anddiversification into new product areas, such as homewares.
It said full-price sales rose 3.5 percent in the 26 weeks toJuly 25, ahead of company guidance of flat to up 3 percent, andfirst-quarter growth of 3.2 percent.
Full-price sales from stores were up 0.8 percent, whileDirectory sales were up 7.5 percent. Despite the solid trading,the firm said consumer demand was volatile over the six months.
"We believe the improvements experienced at the end of theseason were mainly driven by warmer weather," it said.
Earlier this month, rival Marks & Spencer posted a0.4 percent fall in underlying sales for the quarter ending June27 for general merchandise, which includes clothing.
"Next's full-price trading stance means it was more thanable to offset a weak May, and we believe this will once againresult in a better gross margin out-turn relative to clothingpeers," said Investec analyst Alistair Davies.
Next raised the mid-point of its profit guidance for the2015-16 financial year by 1.9 percent to 825 million pounds($1.3 billion), which it said was close to analysts' currentconsensus forecast.
It also increased its full-year sales growth guidance to3.5-6 percent, from 1.5-5.5 percent previously.
Shares in Next, up 17 percent over the last year, were 140pence higher at 7,643 pence at 0738 GMT, valuing the business at11.7 billion pounds. The stock hit a record high of 7,730 penceon July 21.
The firm has a well-established policy of returning surpluscash to shareholders through share buybacks or specialdividends.
Tuesday's announcement of a special dividend of 90 millionpounds, or 60 pence a share, follows similar payouts announcedin February and April.
($1 = 0.6421 pounds) (Editing by Mark Potter)
