A booming discount sector has helped Crown Crest record a 26% jump in full-year pre-tax profits.

The wholesaler said a 2% increase in turnover to £153.9m and profits of £16.6m for the year to March were due to supply agreements with discount retailers including Farmfoods, Poundland, 99p Stores and TJ Morris

"We are in the right sector because we provide for the discount, value end of the market, which is obviously doing well," said Crown Crest finance director Hemant Patel. "Despite our figures, the market is very tough and we are just pleased to be growing."

Patel said competition was getting tougher due to increased value offerings from supermarkets, which would make it difficult for Crown Crest to maintain its growth this year.

Crown Crest currently owns about 60% of the shares of Instore, the company that owns discount chain Poundstretcher. Patel said Crown Crest was hoping to buy the rest of the shares over the next three months and delist the AIM-listed business from the London Stock Exchange.

Instore, which made pre-tax losses of £5.8m in the year to February, currently has about 310 stores across the UK. Crown Crest aims to increase the number of stores to 400 "over the next few years".

"With the infrastructure we have we can increase the number of stores without greatly increasing overhead costs," Patel said. "We believe Poundstretcher has a good future."