Debenhams plans to hold the line during the crucial run-up to Christmas and insists it will not go on Sale early.

'Last Christmas there was a degree of discounting at Debenhams,' said chief operating officer Michael Sharp. 'You won't see that again this Christmas.'

Last year, retailers, unnerved by the late Christmas, resorted to premature discounting. Next and John Lewis, who held their fire, were among the clear winners last December.

Reporting bumper pre-tax profits of£300.5 million, Sharp, who joined the plc board in 1999, said Debenhams was now selling more full-price merchandise than ever before.

However, finance director Chris Woodhouse said the retailer was also more astute at identifying slow-moving lines and would act immediately to sell through, rather than await the season's end.

While Marks & Spencer's gross margin slipped 1.5 per cent in the first half, Woodhouse said Debenhams is clocking up quarter- on-quarter gross margin gains. Underlying sales are currently running above 2.5 per cent.

Debenhams, acquired by private equity consortium Baroness Retail for£1.7 billion last December, is bolstering the Designers at Debenhams stable.

Last month's launch of the Julien Macdonald range met an enthusiastic reception and will reach 50 stores by February. The retailer is working with a new, undisclosed, big-name designer to create a womenswear collection for next autumn.

The management team, led by chief executive Rob Templeman, Woodhouse and chairman John Lovering, has mapped out an ambitious development programme.

The retailer is spending£6 million next year to create a true flagship experience at the Oxford Street store and is ramping up domestic and international expansion plans.

The retailer's experiment with a mini-format store will begin next spring, with a store in Truro, Cornwall.


- Sales up 5.1 per cent to£1.9 billion

- Like-for-like sales up 1.6 per cent

- Trading profit up 14 per cent to£184.7 million

- Pre-tax profit up 119 per cent to£300.5 million

-£286.4 million net cash flow from operating activities

- Net debt reduced by£537.1 million

-£130 million cash returned to shareholders.