High-street retailer Marks & Spencer today reported a 19.6 per cent hike in first-half profits - and made the surprise announcement that Per Una founder George Davies is to stay on at the company, a month after handing in his resignation.

Davies will continue to run Per Una on a full time basis until the end of June 2006. From July onwards he will be chairman of Per Una, working at least two days a week on the range.

In a statement M&S said: "George is fully committed to working with us to
further develop the successful Per Una brand."

M&S also revealed that first-half pre-tax profits totalled £308 million, beating analyst predictions and topping a restated £258m last year.

Clothing sales dropped 4.9 per cent during the first-half. However, they rose by 0.2 per cent in the second quarter compared to the first-quarter's 9.2 per cent plunge, as the company focused on improving product range, buying, pricing and marketing.

General merchandise sales were up 0.4 per cent in the second quarter against a
decrease of 2.4 per cent in the first quarter.

Chairman Paul Myners said the company has made progress "in a difficult environment," while chief executive Stuart Rose said the first-half results were encouraging, but "much remains to be done."

Rose continued: "Customer perceptions on value are improving. Value will continue to be a key driver across all price points."

M&S has opened sourcing bases in Hong Kong, Turkey, India and Bangladesh, which have helped boost efficiency with a faster time-to-market.

As well as Davies's decision to stay on, the company announced Fiona Holmes is quitting as director of the children's wear business and that the unit is being reshuffled.

Boys' wear, schoolwear and nightwear will now be controlled by the men's wear team, while girls' wear and babywear will be headed by the women's wear department.

The latest results, along with Davies's change of heart, will sound a positive note for the group, which has been battling to improve its financial figures and win back favour on the UK high street.