Debenhams claimed yesterday that it was winning customers across the high street as it moved to draw a line under persistent concerns about its £1 billion debt mountain.

Rob Templeman, chief executive, said that the department store group was outperforming its main rivals and that it would have no problem meeting the first £100 million repayment on its banking facility in May. He added: “It's already sitting in the bank account.” Shares in Debenhams have tumbled nearly 70 per cent in the past year because of worries over trading conditions on the high street and fears that the group could breach its banking covenants.

Mr Templeman has denied repeatedly that there have been crisis talks with the banks and insisted yesterday that the group's debt would end the financial year below £1 billion.

The comments helped the shares to end the day up 3p at 56p, a rise of nearly 6 per cent. A trading statement showed that like-for-like sales across Debenhams fell 0.7 per cent in the six months to March 1. However, analysts believe that this is a better performance than either Next or Marks & Spencer will have achieved.

Next reports annual results today and operating profits may be only 4percent higher.

Mr Templeman said: “People say they believe the market could be tough for another two years. but I can't see how anyone can be that sure.

“Footfall is down across the high street, but we're picking up business. Our designer ranges are selling well. We're gaining market share.”

He added: “In the future, we will have to refinance our debt, but we have a long way to go to get there, which is fortunate as I wouldn't want to refinance in the current market.”

Debenhams is scaling back its store refurbishment programme to only three sites over the next six months, instead of the expected eight, in an attempt to cut costs.

Mr Templeman said that a final decision on the dividend would be made when the group reports half-year figures next month.

Analysts said that Debenhams' trading performance implied a 2 per cent drop in like-for-like sales over the past eight weeks.

Richard Edwards, retail analyst for Citigroup, said: “Debenhams is gaining market share, albeit in a sharply declining market. However, its capital structure remains a significant hurdle to its earnings stability and corporate activity if this downturn persists.”

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