Debenhams, Britain's second biggest department store group, said it would meet forecasts for year profit as it bucked the general doom and gloom in the retail sector with a rise in second-half sales.

The firm, which trades from about 170 stores in Britain, Ireland and Denmark and about 60 franchised outlets in 24 countries, said sales at stores open more than a year, excluding VAT sales tax, were up 1.5 per cent in the 17 weeks to June 25th.

Debenhams, ranked second after employee-owned department store John Lewis, said it had invested some gross margin to drive sales, which meant gross margin for the full year was now expected to be "broadly neutral".

It forecast year-end net debt of about £400 million.

"We remain cautious about the consumer environment and will continue to focus on growing cash margin through our self-help strategy," said chief executive Rob Templeman.

Prior to today's update, shares in Debenhams, which returned to the stock market at 195 pence in 2006 after two and a half years in private equity hands, had increased by 10.4 per cent over the last three months.

The stock closed at 69 pence yesterday, valuing the business at £888 million.

Reuters