Profits at 99p Stores have risen 23% year on year with sales up 8.5% to £370m.

The business, which sells a wide range of products including groceries for 99p and below, now operates more than 250 stores across the UK.

In addition to investing in staff, IT and distribution this year, the company has also launched a new store format which features an in-store bakery, coffee to go and a small range of fruit and vegetables.

New format stores, which are set to number 60 by the end of this year, are trading “significantly above the rest of the chain” chief operating officer Tony Brown said and a further 100 have been earmarked for development.

“2014/15 is a year of change for 99p Stores as we build the business for the future,” Brown added.

“We will continue to innovate in product and services to meet our customers’ changing expectations.”