Adams Childrenswear has announced an operating profit of £1.3 million in its first year of trading since retail entrepreneur John Shannon rescued the business from administration.

Adams chief executive David Carter-Johnson said the company is now out of “intensive care”. He said profit has come in part from tight stock control and central cost reductions of£7.5 million.

The retailer has also generated a positive cash flow of£5 million and ended the year with cash of£7.5 million. The 260-store children’s apparel chain reached sales of£159 million for the year to January 31.

“Our original budget was slightly more ambitious than these results, but we are reasonably pleased with the numbers,” said Carter-Johnson. “We have taken a company that lacked direction and made it a product-led, sales-driven retailer.”

He said the retailer would open a mix of 10 shops and concessions by the end of this year, and a further 20 by the end of next year.

Adams will open its first new-format store in Lewisham, south London next month. The retailer said the store’s fashion-focused strategy would be the blueprint for a roll-out.

Carter-Johnson said the biggest challenge he had faced was getting the product right. “The old business was reliant on -discounts and we want to put the emphasis back on fashion. We have now weaned the -company off the discounts that it had relied on and improved gross profit,” he said.

He added that the back-to-school season had been strong and its one-third-off promotion, in response to tough price -competition from the supermarkets, had performed well. “We will end September with less than half the uniform stock we were left with last year,” he said.

Former Stead & Simpson chairman John Shannon bought the assets of Adams Childrenswear and baby clothes retailer Mini Mode in a pre-pack administration deal in February last year.