Like-for-like sales at Debenhams fell by 1.3% on a reported basis in the 17 weeks to 30 Dec while gross transaction value fell by 0.8%.
Group like-for-like sales in constant currency fell by 1.8%, with UK like-for-like sales down 2.6% and International LFL up 2.1%.
Digital sales rose by 9.9%, with two year growth of 22%.
Debenhams said early weeks of the quarter were disappointing as the market remained volatile and competitive.
Debenhams said it took tactical promotional action to improve its performance which resulted in a stronger six-week Christmas period against tough comparatives, with LFL sales up 1.2% in constant currency and digital growth of 15.1%.
But is said the first week of its post-Christmas sale was below expectations despite further markdown investment, particularly in the highly seasonal 'gift' category
It said H1 gross margins were now expected to be c150bps down on the prior year, as a result of the promotional market and to deliver a clean end-season stock position
Debenhams said it had identified cost savings of c£10m above previous guidance.
Looking ahead, it said that if the current competitive and volatile environment continued into H2, FY2018 ore-tax profit was now likely to be in the range of £55m to £65m.
Chief executive Sergio Bucher said: 'The market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance.
'Nevertheless, we are seeing positive early signs from the changes we have made as part of our Debenhams Redesigned strategy.
'The market dynamics we have seen have reinforced our view that we need to move even faster to implement the cultural and organisational changes needed to ensure Debenhams is in the best possible shape for today's fast-changing retail environment.
'I am grateful to my colleagues for their hard work and I am proud of the service improvements we have delivered, whilst maintaining a rapid pace of change throughout the organisation, including strong new hires to important management roles.'