Wilko has halted three consecutive years of declining sales thanks to a “buoyant” Christmas and its growing portfolio of stores.

The retailer hailed the 12 months to 30 January 2016 as “a year of recovery”, which included a 1.4% rise in sales to £1.5bn, according to newly filed accounts.

Operating profits surged by £20.7m to reach £23.6m as Wilko restructured the business to lower costs, with operating expenses falling almost £10m to £566.5m.

“The restructuring activity that commenced in 2014/15 successfully lowered costs and we made a strong start to the year,” the accounts said. “A continuation of tight management control throughout the year followed.”

Wilko opened eight stores during the year to take the estate to closer to 400 strong. The business added that its activity in 2015/16 had delivered the strongest new store pipeline for “some time”, with more outlets set to open this year.

The accounts sign a light on how the group has performed in the first year of the new ownership structure. Half the Wilkinson family sold their stake in the value retailer in 2014/15, banking more than £60m in the process, with Lisa Wilkinson now the sole chairman.

Wilko sales have been in decline for the past three years, falling from £1.57bn in 2012/13 to £1.44bn in 2014/15, as competition in the discount sector heated up, with Poundland, Poundworld and B&M all aggressively growing their store bases.

Wilko said it was now in a “healthy position” after repaying an outstanding loan of £22m, six years ahead of term, to finish the year with no debt and cash of £96m.