Half-year sales have declined 0.7% at Debenhams.

Department stores group Debenhams Tuesday became the latest UK retailer to warn of tough trading conditions after recording a slight decline in half-year sales.

Like-for-like sales for the 26 weeks ending 1 March 2008 were down 0.7%, reflecting challenging conditions across the retail sector in January and February.

The retailer has, however, gained a market share in all major clothing categories, but said it is expecting gross margin for the period to be down some 20 basis points, “largely due to price realignments in some ranges in the second half of last year, particularly menswear.”

Looking forward, Rob Templeman, CEO of Debenhams, said: “The macro economic climate leads us to expect the retail environment to remain challenging and we are therefore focusing on driving sales, gaining market share and controlling our stocks and cost base.”

The announcement comes as the FTSE 100 fell to its lowest level in two years on Monday following the demise of Bear Stears – JPMorgan Chase & Co is paying just $2 per share for the 85-year-old bank.

By Natasha Piscitelli