Discount retailer Matalan has bucked the gloom to post a 5.9 per cent like-for-like increase in sales over Christmas.

In the 13 weeks to January 3, the 203-store retailer revealed that total sales increased 4 per cent to£327m with like-for-likes up 3.4 per cent.

Over the five weeks to January 4, which includes the crucial festive season, like-for-likes soared 5.9 per cent.

The retailer, which said that it maintained its usual promotional position, revealed that gross margins improved in the period. It added that it gained market share in all major categories. Terminal stocks are lower than previous years.

The sales uplift helped the retailer to reduce its debt to about 1.5 times its earnings, from 3.6 times its earnings at the time of being taken private in December 2006.

Matalan chief executive Alistair McGeorge said: “The ongoing investment we are making in stores is delivering a better shopping experience for our customers. Our ranges continue to improve and we offer fantastic value to all of our customers.

“We are now in a position to grow the business and will be investing to do so despite the current economic environment.”

The retailer is poised to open three new stores in 2009.

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