The charity invested £1.3 million last year to refurbish 80 stores. It plans to refit a further 120 outlets a year and invest £2 million annually in the network until 2005.
The charity has reduced running costs to enable this investment, this included making 200 central staff redundant 18 months ago.
In the financial year ending April 2002, running costs for shops fell £1 million to £53 million.
The retail arm has reported total sales of £63.8 million for the year ending April 2002, returning a 17.4 per cent profit of £11 million. Last year's figures stood in the region of £60 million, with a 10.3 per cent profit of £6.2 million.
"You have to spend money to make money, said Chris Coe, head of trading at Oxfam and a former director of high-street store BhS.
Coe forecasts next year's profit will be in the region of £15 million, with the network of 800 shops expected to reach £21 million by 2005 - a 30 per cent profit.
Oxfam started its trading review two years ago at a time when its contribution from its shops had dropped to an all-time low, which it said was partly due to increased competition from discount clothing retailers.