Debenhams turns up the heat on its market rivals

Chief executive Rob Templeman said he was pleased with the firm's Christmas performance given the adverse weather that gripped the nation last month, but would not commit to forecasting underlying sales growth in the months ahead.

"What we've got to see is how consumer sentiment unfolds over the next six to eight weeks, then we'll be in a better position to talk about how we think the future lies," he said.

Many retailers fear the 81bn of spending cuts announced by the Government, as well as tax rises, a slowing housing market and hikes in transport and fuel costs will hit consumer demand in the months ahead.

But Mr Templeman said he is hopeful Debenhams will benefit from the shift of more than 530,000 square feet of trading space from concessions to its own products, as well as new store openings, growth online and overseas expansion.

Debenhams, ranked second in its sector after employee-owned firm John Lewis, said sales at stores open more than a year increased by 0.3 per cent, including VAT sales, during the 19 weeks to January 8.

That compares with analysts' forecasts in a range of up one per cent to down five per cent, and flat like-for-like sales in the previous 12-month period.

The firm said December's snow impacted like-for-like sales by 2.5 -3 per cent, or about 30m.

It said gross transaction value increased by 4.2 per cent over the period, with gross margin ahead of the previous year and market share won in men's, children's and women's clothing.

Several retailers, including Next, HMV and Mothercare last week blamed the coldest December since records began in 1910 for big falls in Christmas sales.

But some analysts argue that, while important, the snow has not been the full story, and may be masking long-term problems at some retailers.

Debenhams' shares, which returned to the stock market at 195p in 2006 after two-and-a-half years in private equity hands, closed down 1.3 per cent last night, a fall of almost 1p, to 73.25p.