Sales at Marks & Spencer's Irish unit came close to €540 million last year as the group capped its recovery with a 28.5 per cent rise in pre-tax profits to £965 million (€1.42 billion), its best performance for nine years.

M&S does not publicly discuss its Irish figures, but senior sources said that Irish sales rose above €530 million for the first time in the year to March from more than €500 million the previous year.

Chief executive Stuart Rose, the architect of the group's recovery, indicated that the Irish unit accounted for most of the profits in its international division, which includes eight stores in Hong Kong and 13 Irish outlets.

Operating profits in these shops rose 26.8 per cent to £45.4 million (€66.6 million). Mr Rose responded positively when asked whether Ireland accounted for the overwhelming bulk of such profits. "In Ireland we've got a very good business, and yes," he said, "we've had a good year in Ireland. We're pleased with the results."

M&S Ireland executive Neil Hyslop said that the chain would increase its floorspace in Ireland by 20 per cent in the current fiscal year to 630,000 sq ft.

With a new store opening next week in Letterkenny as well as an extension in Liffey Valley, Mr Hyslop said that M&S would open an extension to its store in Tallaght in July.

An extension to its Grafton Street store is with planners and a new store will open in Athlone in October. Planners rejected a store in Tralee, but Mr Hyslop said that local people were in favour of such an outlet.

Mr Rose made light of suggestions that increasing interest rates posed a threat to M&S in Ireland. "We haven't seen any noticeable affect yet, but clearly we'd rather they didn't go up. We just have to keep an eye out.

"But I believe that even if it does toughen up a bit, M&S can still hold its own against competition," he said.

Sales in M&S overall rose more than 10 per cent to a record £8.6 billion last year, helped by gains in childrenswear and "celebration and indulgence" foods. The group plans to create 10,000 jobs in Britain and it is looking for growth in India and from a return to European markets such as France, from which it retreated some years ago amid a downturn.

Mr Rose sees further scope for growth in Ireland. "We've got certain conurbations that we want to concentrate in. We want to concentrate to get more market share out of Dublin. We're keen to develop the situation in Cork. But I mean there's other locations we're not in," he said.

"But now that the brand is in a better position in the UK, the differential between how we trade in the UK and how we trade in Ireland has narrowed a bit. Nevertheless, Ireland is a good, buoyant, attractive market for us."

In spite of the positive results, shares in the group slipped 4 per cent after Mr Rose warned of "challenging" market conditions.