DEPARTMENT store chain Debenhams reported its best-ever December today (January 8) after increasing discounting in the run up to the festive season in a bid to attract price-conscious consumers.

The group, which has 155 UK stores and 73 overseas outlets, cut prices by up to 50 per cent in one-day promotions on some products in what chief executive Michael Sharp said was the most competitive Christmas in his 37-year career in retail.

Debenhams saw sales in the five weeks to January 5 rise 5 per cent on a like-for-like basis after a record December, helping comparable sales in the first 18 weeks of its financial year lift 2.9 per cent.

But the group sacrificed margins for sales and said the move to discount earlier in the season was expected to hit profit margins for the year to September.

Profit margins are now expected to be 0.1 per cent higher over the financial year, half the 0.2 per cent rise previously forecast by the group.

Shares fell more than 5 per cent as the margin blow took the shine off the Christmas sales hike.

Investors were also taking profits after a stellar 2012 for the stock - which rose 95 per cent over the year thanks to a recent sales revival.

Mr Sharp said consumer confidence would remain subdued over the year ahead.

"Whilst consumers have become acclimatised to the new economic reality, we don't anticipate a significant change in consumer confidence in the remainder of the year," he said.

Debenhams said promotions over the festive period ran for two days longer than the year before as it sought to overcome "extremely challenging" conditions.