British menswear retailer Moss Bros swung to a full-year profit aided by cost cuts and improved sales across both its hire and retail businesses, and said it would pay a dividend for the first time since 2007.

The suit specialist, which is engaged in the retail sale and hire of clothing through its Moss Bros Hire, Moss Bespoke, Moss Bros, and Savoy Taylors Guild brands, said trading in the eight weeks to March 25 has been encouraging.

"Like-for-like sales continue to improve in line with management expectations, although the gross margin has been affected by rising raw material prices," Moss Bros said in a statement.

The company proposed a dividend of 0.4 pence per share for 2011.

Pretax profit from continuing operations was 900,000 pounds ($1.43 million) for the full year, compared with a loss of 8.9 million pounds last year.

"A focus on product, operational delivery and cost control have combined to return the business to profitability," the company said.

The suit chain, which was set up in 1851, and currently has over 135 stores across the UK, said on a like-for-like basis, retail sales increased 13.1 percent, while hire sales rose 10.1 percent, during the year.

Moss Bros' shares, which have gained about 20 percent in value since the company reported its first-half results in September, closed at 48.25 pence on Wednesday on the London Stock Exchange.