Debenhams has reported like-for-like sales up 0.1% for the 18 weeks to January 2 and warned that the economic environment remains uncertain.

The department store chain said sales, including the acquisition of Magazin du Nord, over the period were up 1.6%. Debenhams said its continued focus on cash margin has meant it has recorded an increase in pre-tax profit over the Christmas period for the second year in a row.

Debenhams said its like-for-like increase of 0.1% includes the preciously advised impact of lower sales densities resulting from the strategy of moving space away from concessions and into own bought merchandise. This has resulted in a 1.5% reduction in like-for-like sales since the start of the financial year.

The retailer said gross margin year-to-date has been “particularly pleasing” and improved significantly over the previous year.

It said it will accelerate store refits following the opening of the Cardiff shop. This investment, in addition to buying Magasin du Nord, will result in capital expenditure guidance for the year increasing to £115m.

Debenhams chief executive Rob Templeman said: “Looking forward, with the rise in VAT and a general election pending, the consumer environment remains uncertain and difficult to predict.

“Against this backdrop, we will continue to execute our strategy of improving gross margins through the expansion of our successful and exclusive Designers at Debenhams ranges. The launch of our new ranges Principles by Ben de Lisi and H! by Henry Holland will give customers an even greater choice within our Designer ranges. We believe that the strength of our own bought offer will enable us to expand gross margins throughout the remainder of this year.”

Debenhams bought Magasin du Nord in November last year and said it was pleased the the way the six-store Danish chain traded over Christmas.

During the 18-week period thee new Desire by Debenhams stores were opened in Kidderminster, Monks Cross and Witney. Three new department stores will open this year in Newcastle-upon-Tyne, Carmarthen and Bury.