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Price cutting dents Debenhams sales record

Debenhams has become the latest of the big department store chains to post record Christmas sales, boosted by a surge in online revenues.

But shares in the company tumbled after it admitted profit margins had been dented by more promotional activity in the run-up to Christmas and higher distribution costs due to strong internet sales.

The High Street stalwart delivered a 5 per cent leap in sales at stores open more than a year over the five weeks to 5 January, helped by barnstorming demand for clothing featured in its first Christmas TV advertising campaign for six years.

While Debenhams grew like-for-like sales by 2.9 per cent over the 18 weeks to January, online revenues rocketed by 39 per cent. The British Retail Consortium said that online sales boomed by 17.8 per cent last month – the highest growth for a year – but underlying sales for the high street grew by 0.3 per cent.

The figures from Debenhams closely mirrored the strong trading from rivals House of Fraser and John Lewis, although the latter was the best performer with like-for-like sales up 13 per cent over Christmas.

The three firms have benefited in recent years from being one-stop shops and booming online sales, including consumers picking up products ordered online in stores.

Michael Sharp, chief executive of Debenhams, said: "The department store model is clearly a winner in the multi-channel world because of the breadth of choice and ways to shop, as well as lots of products under one roof."

TV advertising delivered a boost as designer Jonathan Saunders' women's red coat enjoyed a 400 per cent uplift on the day the adverts aired.