The owner of QS has vowed to make the value fashion retailer profitable this year despite recording a £21.4m pre-tax loss last year.

In the year to March 28, Grabal Alok – which trades as QS – notched up sales of £91.3m, down from £94.7m the year before.

Grabal Alok chief operating officer Anupam Jhunjhunwala said that the retailer was showing significant progress since Indian investor Alok Group acquired the business two years ago. In the previous year, to March 2008, losses were £24.7m.

Jhunjhunwala said: “Alok bought a broken piece of machinery and it took time to get it right.”

He said that like-for-likes in the first quarter of the financial year are in positive territory, with double-digit margin growth. QS has been aided by the flight to value, stripped-out costs and improved buying and product knowledge, he added.

Grabal Alok wants to strip £10m in costs out of the business in the current year. Many of the cost-saving exercises began last year, including the streamlining of senior management and a reduction in payroll.

QS has received £5m in capital expenditure from Alok to refit its stores over the next two years, which it will convert to its Store 21 format. It will open 22 stores this autumn.

The retailer plans to up its homewares ranges – which make up 12 per cent of the offer at present – to 16 per cent, to take advantange of the gap left by Woolworths.

Jhunjhunwala added that “the auditors have expressed the view that we are stable, we have achieved our KPIs”. The retailer breached a banking covenant last year.

The retailer has in place working capital facilities including a cash credit facility of £5.3m and a syndicated loan of $35m (£21.4m).