Ted Baker’s pre-tax profit rose 3.6% over the year to January 30 to £20.3m as the business was buoyed by a strong performance in its retail division where sales recorded a 15.4% rise.

Total sales at Ted Baker rose 7.2% to £163.6m over the period.

Although in-line with expectations, total Ted Baker wholesale sales fell 21.2% to £27.1m.

The business attributed a quarter of the wholesale sales decline to the transfer of some accounts to retail concessions, a third due to the closure of accounts which weren’t sutiable for the brand, and the rest to difficult trading conditions impacting the performance of stockists.

Retail sales in the UK and Europe division were up 17.3% to £126.4m. While the UK was ahead of exepctations, the retailer said European stores had faced “challenging” conditions.

Ted Baker did not comment on current trading, but founder and chief executive Ray Kelvin said: “We have been encouraged by trading since the start of the current financial year and the positive reaction from our customers to our spring summer collections. Whilst we believe that 2010 will be a difficult trading year, we remain well placed to deal with the challenges.”

On wholesale the company said that although the year ahead will be challenging, forward order commitments are in-line with expectations and that there are no further “structural changes” envisaged for the division this year.

Underlying licencing income was up 9.5% over the period to £5.5m. Ted Baker has taken over its two stores in Hong Kong after its licensing agreement with Li & Fung ended “by mutual consent”.

New retail stores at Heathrow Terminal One, Boston, Dubai and Melbourne opened over the period. Average retail square footage rose 13.6% to 210,238 sq ft.

Retail sales per square foot remained broadly level at £649.