M&Co fell to its first operating loss in its 50 year history in its last financial year to February 24 but is now back in profit.
M&Co chairman Iain McGeoch said the results were “very disappointing”.
The retailer made a £5m operating loss, compared to a £14.8m profit the year before. However, EBITDA remained positive at £4.6m. Sales plunged 7.3% to £173.3m.
However, the retailer said it had a “favourable” customer reaction to its new autumn 2012 collection and has experienced a like-for-like sales lift.
McGeoch said: “We expect to see a return to profit despite the incredibly poor summer weather, which had a significant effect on sales. We remain positive for a much better overall result which we credit to the much improved product range as a result of a buying restructure.”
The retailer opened its first stores in the Middle East this year, launching three franchise shops in the UAE. Further stores are set to open next year.
During the year the group secured its borrowing facilities for a further five years with its existing banks, Clydesdale and HSBC.