Department store chain Debenhams said that like-for-like sales were down by 0.6% for the 42 weeks ended 21 June 2008, despite a gross transaction value 1.3% higher than the same period last year.

Over the ten weeks since Debenhams' last trading update though, like-for-like sales have grown by 1.0%.

The company said: "Debenhams has continued to gain market share across key product categories as customers find favour with our strategy of increasing the quality and value of our products at the same time as improving the in-store environment."

The UK retailer's own label and, in particular, its designer ranges were reported to continue to perform well, meaning that gross margin guidance for the year as a whole of flat to plus 20 basis points was unchanged.

Its cost saving target of GBP20m (US$39.3m) has already been achieved and will take full effect in 2009, the firm said.

The company said that a further two department stores in Dunfermline and Blackpool are due to open before the end of the financial year and five department stores are due in 2008/09.

Rob Templeman, chief executive of Debenhams, said: "In light of the tough trading environment across the whole UK retail sector, we are pleased with customer response to our new ranges and, as a result, our improving sales performance for the period.

"The strength of Designers at Debenhams is particularly pleasing. We continue to take market share across our key product categories."