BHS, the retail chain bought by Philip Green a year ago, has more than doubled profits in its first year in private ownership.

Profits rose to £31.5m in the year to March, up from £12.5m in the previous year.

Green believes that BHS should be making profits of about £90m within two years. Analysts say BHS will almost certainly be sold or floated if it reaches these targets.

"We have turned sales round by about 10 per cent, taken costs down by 10 per cent and reduced stock by about a quarter, as well as increasing margins," said Green, who paid £219m to buy the troubled retailer from Storehouse last year.

He recruited Terry Green (no relation), the former Debenhams chief executive, to run the chain and Allan Leighton, the former Asda chief executive, as chairman.

BHS hopes to double its profits again this year, said Leighton. "We would be disappointed if we didn't achieve double-digit like-for-like sales growth in womenswear and close to double-digit growth on kids," he said.

Only one store out of 156 was closed, but new-store openings were limited to two.

"New stores have to be the cream on the top," said Leighton. "If you are going to grow, it has to be by growing like-for-like sales."

The turnaround of BHS started from a relatively low base. The group had the lowest sales per square foot among its peer group and only half of its floor space was devoted to selling.

Many analysts believe the company will float the group in 18 months.

One analyst said: "Green likes to buy cheap and sell cheap. He is not going to hold out for the last penny. Once he thinks he can get a good return he will be out of there."