UPDATE 1-Ideal Shopping 21-week sales beat expectations

* Sales continue to perform ahead of expectations

* 21-week sales up around 2 percent year-on-year

* Shares up 8 percent

(Adds detail, analyst comment, shares)

LONDON, June 10 (Reuters) - British television shopping company Ideal Shopping Direct Plc IDLS.L said on Wednesday that sales were up ahead of expectations, and it was optimistic it would return to profitability in the medium term.

In a statement ahead of the company's annual general meeting, Chairman Paul Wright said sales in the 21 weeks to May 24 were up around 2 percent year on year, and he expected gross margins, which were stable in the period, to improve.

He also said the group, which operates the Ideal World 24-hour shopping channel, continued to attract new customers.

In April, the company posted a full-year loss of 13 million pounds ($21 million), including exceptional charges of 9 million pounds.

Its shares were 8 percent higher at 92 pence by 0745 GMT, valuing the group at about 27 million pounds.

"Although the economic conditions remain challenging, the board remains cautiously optimistic that the business will return to profitability in the medium term," Wright said.

Altium analyst David Stoddart raised his price target for the company to 25 pence from 22 pence, but said he remained a seller.

"IDS has enormous potential to improve its operating margins, but this would appear to require a level of management stability that the company has been unable to achieve in recent years," Stoddart wrote in a note. (Reporting by Josie Cox; Editing by Paul Sandle) ($1=.6101 Pound)