Debenhams' shares slumped 12% today despite a relatively upbeat trading statement and a promise that profits are rising.

With the City nervously eyeing the department stores chain's £900 million debt pile, some were looking for news of a rights issue or other fundraising deal, which did not arrive.

Altium Securities makes the point that the shareholder base does not lend itself to a rights issue, given that the top two investors — Baugur and Milestone Resources — have their own problems to deal with.

Debenhams chief executive Rob Templeman was tight-lipped on the subject today, preferring instead to focus on a turnaround in the refurbished stores.

Although sales in the 26 weeks to 28 February were down 3.6% on last year, Templeman said that profits are growing.

“It's all about the products, and we expect our profits to be better than last year,” he added.

That should leave him with enough cash to finance a forthcoming debt repayment of £100 million, after which he has some breathing space.

Debenhams was floated back on the stock market two years ago, since when the shares have had a terrible time. They today fell another 5.75p to 40.25p.

Templeman said: “Visibility for the second half remains poor, and we will continue to run Debenhams in the expectation that the trading environment will remain challenging.”