Arcadia brands

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Pre-tax profits for the half year at its ongoing brands jumped to �57.9m - a 59.5% rise on the same period the previous year - while overall pre-tax profits came in at �54.1m.

The figures exceeded the forecasts of City analysts, who suggested that Arcadia's turnaround strategy - of focussing on a select number of core brands - was paying off.

Investors welcomed the news, and shares in Arcadia closed up nearly 11% at 395p in London.

Sales up

Arcadia has sold off a number of its non-core brands - including Warehouse and Principles - and closed underperforming stores.

Sales at Arcadia's stores have been going well

The firm said its strategy was working.

Sales at stores open at least a year were up 9.4% for the six months to 23 February, and profit margins were also higher.

"Arcadia is a very different business from the one we had 18 months to two years ago," said finance director Nigel Hall.

"We have focused the business on our key brands, we have fewer stores, and we believe we can deliver sustainable growth in the future."

Share recovery

Arcadia's revival on the High Street has been reflected in its share price, which has risen 36% since the start of the year.

And analysts said the share price could be heading higher still.

"The figures were really very good and we are looking at raising our forecasts and recommendation on the stock," said one dealer.

Last October the Icelandic retailer Baugur - which is Arcadia's largest shareholder - approached the UK firm about a possible takeover bid.

But the talks were abandoned earlier this year, with Arcadia saying that Baugur has been unable to raise sufficient cash.