MARKS & Spencer likened its falling out with George Davies to a lovers' tiff last night as it welcomed the designer back into the fold.

Announcing profits at the top end of hopes after an overhaul of stores and clothing ranges, M&S said Mr Davies had signed a new contract - only a month after resigning.

The U-turn means he will continue to oversee the successful Per Una brand, which is seen as a key part of the retailer's recovery drive.

It came as M&S reported a 19.6 per cent rise in half-year profits to £308.2m after enjoying its first quarterly sales rise in two years.

The company, which has 416 stores in the UK, said trading conditions remained very difficult and that it had made progress in a tough environment.

M&S boss Stuart Rose said he sat down with Mr Davies "in the cold light of day" and worked out a new contract.

He said: "It's a bit like having a row with your girlfriend. If you still love her at the end of the day, you still love her."

William Maydon, assistant director at investment manager Wise Speke, in Newcastle, said: "M&S announced interim results which showed a headline drop in UK like for like sales of 2.3 per cent. However, there has been a turn in sales trend for both general merchandise and food, when comparing the second quarter to first quarter.

"M&S's share price has rallied very strongly recently to the current level of 433p. This goes a long way to vindicating those shareholders who repelled Philip Green's proposed £4 per share bid.

"Stuart Rose has made the first big steps towards driving sales and profit growth, partly through a very expensive high- profile advertising campaign. The strengthening of his senior management team is going to be the key to driving sales growth going forward. The announcement that George Davies is to stay shows the strides Mr Rose is making in that area."