DEPARTMENT store Debenhams, which is in talks about opening a branch in Darlington, yesterday announced a 9.6 per cent rise in underlying profits.

The chain, which has been at the centre of a takeover battle since May, reported the rise to £168.4m after a what it described as a volatile year for retailers, particularly during the summer heatwave.

Total sales grew 6.7 per cent to £1.81bn in the year to August 30 - up 3.7 per cent on a like-for-like basis.

Chairman Peter Jarvis praised the management for delivering a strong trading result, while at the same time co-operating with two rival bidders who were putting together offers for the group.

The company agreed a £1.66bn takeover offer last month from a bid vehicle backed by private equity groups CVC Capital Partners and Texas Pacific, which beat an earlier offer from Permira.

But the uncertainty continues, with Mr Jarvis conceding that the process is still under way, saying only that the board expects a conclusion in the near future.

Despite the rise in underlying profits, bottom line pre-tax profits were slightly lower than last year, from £153.6m to £151m, after £17.4m one-off costs relating to the bidding war.

Shareholders are due to vote on the takeover next month, but Permira may yet raise its offer.

Since reporting its half-year results, the group has opened another two branches, one in Birmingham's newly-developed Bullring shopping area and the other in Londonderry, Northern Ireland. The group said it was delighted with the performance of both stores.

St Martins International Property Investment is in talks with Debenhams over occupancy of a 85,000sq ft unit in a new £45m shopping centre in Darlington.

Shares in Debenhams closed up p at 472p.