Debenhams benefits from discounts

Deep discounts attracted customers in the run up to Christmas.

The firm said on Tuesday sales at stores open over a year, excluding VAT sales tax, were flat in the 18 weeks to January 7.

That compared with analysts’ forecasts of sales down 0.9 percent from a range of flat to down 3.2 per cent, according to a Reuters poll of nine.

British stores appear to have had a tough Christmas trading period and were forced to use early sales to attract customers, who are struggling with rising prices, muted wages growth and government austerity measures.

Many do not expect 2012 to be much better.

The strategy of Debenhams, which is ranked second in the UK after employee-owned department store chain John Lewis, is to drive profits by investing some of its gross margin, through price cuts and promotions, into pushing sales.