Debenhams says own brand strategy paying off

A British Retail Consortium survey last week said retail sales recovered in February from January's snow-related slide.

However, analysts remain wary about retailers' prospects amid fears that steps to cut government borrowing after an election, expected in May, could hit consumer confidence.

"We do believe that we'll see some direct and indirect taxation increases but we think there are other compensating factors that means the economy should be broadly neutral," said Templeman.

He forecast year-end net debt "slightly ahead" of market forecasts of about 525 million pounds.

The firm had been dogged by concerns about its borrowing since returning to the stock market at 195 pence a share in 2006 after two-and-a-half years in private equity hands. A 323 million pound equity fundraising in June put an end to these worries.

(Editing by Mark Potter and Antonia van de Velde)