Iconic toy retailer Hamleys made a loss of £2.7m in the year to March 31, 2008 as its annual interest bill increased.
Sales increased from £35.9m to £44.2m in the year.
The sales growth has continued in recent weeks, with like-for-likes rising 5 per cent in the eight weeks from the start of April this year.
Hamleys said it is “trading above its internal targets for both sales and profit”.
In the year to March 31, 2007, Hamleys recorded an operating profit of £2m following the sale of its loss-making Bear Factory, compared with a loss of £3.2m the previous year.
Chief executive Gudjon Reynisson said: “We are pleased with how we have responded to the challenging economic circumstances. In the last year we have protected our cash position through improvements to our stock holding and cost structure. We have paid our debts on time and in full, retain the full support of our bank and now have a relatively low senior debt to EBITDA ratio, providing a strong platform for the future.
“Our current trading is strong and we remain confident we have put the right things in place to grow the business over the coming years.”