Burberry reported pre-tax profits of £166m for the year to March. A year ago it made a loss of £16.1m, hit by charges at its Spanish operations.
In the past year it has opened 21 new stores and closed nine. It plans to open 20-30 stores this year worldwide.
The group has also focused on promoting the Burberry brand online.
Sales rose 7% to £1.28bn, with the company recording double-digit sales growth in Europe and Asia Pacific.
Adjusted profit rose 23% to £215m, taking into account one-off items and a favourable exchange rate.
Stores in London in particular benefited from favourable currency movements and increased tourism.
"Looking forward, while mindful of the economic environment, Burberry plans to build on its strong financial position by accelerating investment in growth initiatives in retail, digital and new markets, while continuing to enhance the brand," said chief executive Angela Ahrendts.
Burberry shares were up 7.6% at 659 pence in afternoon trading.
Luxury fashion designer Burberry has returned to profit after opening new stores and spending more on online marketing