The improved performance at the Liberty store was down to key lines such as ladies accessories, jewellery, womenswear and menswear.
The Liberty branded ranges also did well, making up 10 per cent of sales. It said that it planned to increase this to 25 per cent over the next five years.
The retailer has set up a dedicated design studio, headed by design director Tamara Salman, to co-ordinate the development of Liberty branded goods. The first range from the design studio will appear on shelves this autumn.
Capitalising further on the Liberty branding, Retail Stores will change its name to Liberty.
The retailer noted that unlike the majority of retailers, it had an excellent run up to Christmas, with sales in the 24 days up to the holiday increasing by 14 per cent compared with the same period in 2003. Turnover continued to show healthy increases throughout February and March compared with the previous year.
Retail Stores chairman Richard Balfour-Lynn said: 'Considerable progress is being made at Liberty and the signs are encouraging. It is pleasing to see that Liberty continues to deliver sales growth, as we re-establish the store as a luxury goods emporium. Early indications are that this growth will continue for the remainder of the second half and I am confident of reporting a healthy uplift in sales at the year end.'
Analayst Seymour Pierce acknowledged that the retailer had started to re-establish itself as the worlds leading emporium of luxury goods, but was not so optimistic about the retailer's bottom line, increasing its expectations for year-end losses from£5.2 million to£5.5 million.