The retailer will reinvest margin gains in promotions and driving sales of own-bought ranges.
Debenhams chief executive Rob Templeman said that he was shifting its southern China sourcing to cheaper regions. “I think inevitably we are going to start to see inflation on the price of goods,” he said.
But he warned: “It is dangerous to put prices up without putting more into product.”
Templeman said the retailer’s promotional schedule, the subject of City scrutiny, will be “broadly similar to last year”, but reviewed “as we go along”.
He believed that falling fuel prices and peaking food inflation indicated a glimmer of hope for retailers. “There are one or two things that could bode well for the consumer, but it could take months to impact,” he said. “It is tough and I think it will stay tough.”
Like-for-like sales fell 0.9 per cent in the year to August 30. Pre-tax profits for the year are expected to be in line with market consensus of£110 million.