Strong demand for a £350 sterling party dress and booming sales over the Internet helped department stores group Debenhams to defy the gloom among Britain's retailers and report a rise in Christmas sales.
However the group, which runs 136 stores across the UK and Ireland, said today that trading conditions were tough and it might have to cut prices further if competition intensified.
Britain's store owners are struggling as indebted shoppers cut back on spending after a series of interest rate rises and amid higher energy bills and a cooler housing market.
Debenhams said sales at stores open at least a year rose 2.2% in the four weeks to January 5, beating most analysts' forecasts for a small fall.
CEO Rob Templeman said designer clothes sold particularly well in the run-up to Christmas, led by a £350 sequin dress with a black sash from Julien Macdonald.
Last week, Britain's biggest clothing retailer, Marks and Spencer, reported a 2.2% fall in like-for-like sales over Christmas, sending its shares sharply lower.
Debenhams said it had fewer promotions before Christmas than the year before, but that it had cut prices aggressively in the post-Christmas sales amid heavy discounting from rivals.
As a result, gross margin - a measure of profitability - would be flat or up slightly for the year ending August, provided competition did not get even tougher, Templeman said.
Debenhams's online sales rose by 85% over Christmas and Templeman said he believed so-called multi-channel retailers, which combine stores with Internet sites, were enjoying the strongest growth online.
