Debenhams has posted interim profit ahead of expectations at £94.1 million, although the figure is still below last year's results.
For the six months to March 1st, like-for-like sales were down 0.7 per cent, while discounting led to a 20 basis points decline in the gross margin for 26 weeks.
However, the department store chain did report market share gains in clothing, with a particularly strong performance for Designers at Debenhams.
Rob Templeman, chief executive of Debenhams, said: "We expect the trading environment to remain challenging so we will continue to focus on the areas of our business that are within our control; making further improvements to our own bought products and providing customers with a pleasing shopping experience."
Debenhams said trading was difficult over the first half - although Christmas and January sales provided a fillip to retailers, sales have since softened.
Figures released from the British Retail Consortium (BRC) found sales were slower for most department store chains, despite several mid-season events and promotions.
An early Easter, bad weather and low consumer confidence following the credit crunch has led to deteriorating conditions across the retail industry, the BRC said.
Debenhams is planning refurbishments and new store openings to boost sales. Over the next three years, the retailer plans to open 22 sites with flagship stores in Liverpool and White City.