Shares in Debenham's, Britain's second biggest department store operator, plunged 7.7pc yesterday after it warned that it now expects its gross margin growth for the financial year to be half that it previously expected.
The news shocked investors despite the strong like-for-like sales growth reported in the 18 weeks to January 5.
But that growth was achieved on the back of heavier than normal promotional activity for the time of year, as it softened prices in the run-up to Christmas.
"We traded the business accordingly which meant some increase in our own promotional activity in the run-up to Christmas," the company said.
It added: "We now expect gross margin to be 10 basis points higher than last year rather than the 20 basis points as previously guided."
The company had its busiest December ever.
Analysts were impressed with the performance, notwithstanding the share-price decline.
"We maintain our view that Debenhams is still at the relatively early stages of sales-led recovery with an excellent management team and strategy in place," said analyst Sanjay Vidyarthi at Espirito Santo.