THE North-East has been chosen as one of two pilot areas for Marks and Spencer's combined credit and loyalty card.

The news came as M&S said it had turned the corner, recording a 31 per cent leap in pre-tax profits in the year to March 30.

The group, which is recovering from years of falling sales and profits, said turnover grew 3.8 per cent to £7.6bn in the year while profits rose to £646.7m.

The group also said it planned to open 20 small food only stores this year, and trial run two large stand-alone home stores next year, creating more than 1,000 jobs. It wouldn't give details of where the new stores would be.

However, it is understood that the Durham store, in Silver Street, is to get a revamp, costing about £330,000.

But no update was given on plans to refurbish the Darlington branch.

The North-East, including the Tees Valley, and Wales have been chosen as pilot areas for a loyalty and credit card.

A spokeswoman for M&S said the combined card would be launched in autumn. "Further details on how it will work will be released nearer the time."

Chairman Luc Vandevelde said the group was not complacent and still had much to do. "We have made good progress and believe that we have turned the corner. However, I recognise our performance was helped by the buoyant high street trading conditions and now our task is to secure the recovery and to build for our future.

M&S said the year had seen a "significant turnaround" in the performance of its UK shops.

Sales were boosted by its Perfect Basics collection, the Per Una range for women and its more traditional Classic ranges, while its Blue Harbour collection of casualwear for men had seen an initial "encouraging" response.

M&S said the availability, quality and fit of clothing had improved and it had made market share gains following its spring ranges launch. However, it said although the UK clothing market remained strong it was "unlikely that current consumer spending levels will be maintained".

During the year, M&S said its food business had also performed well and had maintained market share.

However, profits in its financial services division were down on last year as the competitive market for personal loans saw its personal loan advances fall.

The firm has also closed its loss-making operations in continental Europe and sold US menswear retailer Brooks Brothers, after announcing that it planned to withdraw from its wholly-owned international operations.