Debenhams is to resume its store refurbishment programme after revealing sales stabilised last year.

The department store group, which last week revealed total sales in the year to August 29 were flat at £2.3bn, said it will start investing in updating its stores again.

It put its refurbishment plans on hold last year, blaming the downturn. The group has 144 stores and 10 smaller Desire shops.

Debenhams chief executive Rob Templeman said he will approach the revamp programme cautiously. Four to six stores, including Glasgow and Manchester – where it trades alongside House of Fraser – are poised for an update in the spring, to bring them up to the standard of the Westfield London store.

The retailer will also devote capital expenditure to overhauling its own-label brands, including Red Herring, Jeff Banks and John Rocha.

During the year, like-for-like sales dropped 3.6% as Debenhams reconfigured its sales space to favour own-label. Pre-tax profit was up 13.7% to £125.2m, gross transaction values rose 0.2% and gross margin increased 70 basis points.

In the seven weeks since the year end, like-for-like sales have risen 0.6%. Debenhams has been driving margins through the expansion of own-label ranges.

The retailer, which has cut its debt mountain from £994m to £590m over the year helped by a £323m capital placing in June, said it remains acquisitive following the equity raising, and paid off £100m of borrowings early during the period. This week private equity backer TPG sold its 9.3% stake.

Investec analyst Katharine Wynne said: “Spending about £25 per sq ft, this is a bigger investment than Debenhams has previously made but indicates it is determined to keep on the front foot.”

She thought that sales projections for own brands “may be cautious”.

On the festive trading outlook, Templeman said: “I think that it is going to be a competitive and promotional Christmas and it will come late. We will be at the heart of the promotions. Ours are all planned.”

Altium analyst David Stoddart said: “The example of the Principles deal last year is encouraging; management has earned the benefit of the doubt on acquisitive growth.”

Chairman John Lovering will step down in March.

➤ Debenhams will relaunch its website early next month.