Department store group Debenhams said it saw good sales over Christmas of gifts, cosmetics and accessories but the City was disappointed with its figures and shares tumbled.

Like-for-like sales rose 2.8 per cent for the 19 weeks to January 11, while margins rose 0.2 per cent.

Chief executive Belinda Earl said: "We are pleased to report positive sales growth since the beginning of the financial year against strong comparatives last year. This performance demonstrates that our strategy to give customers value for money across a unique choice of brands and products continues to deliver resilient results."

However, shares slid on the news. Richard Ratner, retail analyst at Seymour Pierce, said: "The like-for-like sales were very disappointing. We were expecting four to five per cent."

Ms Earl said the group achieved "good sales growth", particularly in gifts, cosmetics, accessories, young fashion and its Designers at Debenhams ranges. She said that, despite heavy price cutting before Christmas on the High Street, the group started its sale as planned on Boxing Day, which had seen an "encouraging start".

But she said: "Looking forward, we remain cautious about the economic outlook for the UK consumer."

In July, Debenhams' market value tumbled almost 20 per cent after it warned that margins were being hit by price cuts needed to shift unsold stock.

Ms Earl dismissed those problems as a blip in October as she reported a 5.1 per cent lift in annual pre-tax profits to £153.6 million.

Debenhams has almost 100 stores in the UK and Ireland but plans to have 120 in five years' time and 150 within the next ten.