We still see considerable potential in both Hamleys and Bear Factory

Simon Burke, Hamleys chairman

The company made £0.2m ($0.3m) in the six months to the end of September compared with a loss of nearly £1m last time.

And Hamleys provided evidence that spending was still strong.

Its flagship store in London's Regent Street saw a 10% increase in sales over the six months.

And since the end of September, sales have gone up by 23%.

Many of Hamleys' customers are tourists, and last year the store suffered a drop in sales after the September 11 terrorist attacks.

Bear facts

Teddy bears are now a growing part of the company's business and Hamleys said its Bear Factory had made a strong contribution to sales and profits.

There are now 30 Bear Factory stores around the UK.

Hamleys has also bought the English Teddy Bear company and is planning to relaunch the stores next year.

The chairman, Simon Burke, said: "We still see considerable potential in both Hamleys and Bear Factory."

The company sounded an optimistic note about sales leading up to Christmas.

It said that both Hamleys and Bear Factory had introduced significant new ranges that it expected to do well.

In the City, shares in Hamleys closed up 3.5p at 165p.