Debenhams (LON:DEB) reported a 10 percent drop in profits on Thursday, as the department store saw a decrease in clothing sales.

The UK’s second largest retailer reported a 7 percent slide in pre-tax profits to £105.8 million in the three months to September. However, underlying profit margins rose by 0.5 percent to £118.2 million.

Additionally, the company’s pension scheme encountered some difficulties and slipped into a deficit of £4.1 million on September 3rd, compared with the end of August surplus of £26.2 million. The group attributed these difficulties to a decrease in bond yields, which was partly mitigated by a growth in their pension asset numbers. As a consequence, the group announced plans to reduce debt by £260 million by the following year.

“Our diversified business model together with good cash generation and reducing debt means that Debenhams is in good shape to withstand a market background that remains uncertain,” said company chairman Sir Ian Cheshire.

“Our strategy to re-balance the business towards non-clothing has supported our performance, with strong progress in beauty, gifting and food,” he continued.

The retailer maintained that its current strategy, which involves shifting away from clothing, had proved successful and had paid dividends. The company reported strong growth in beauty, gift and food department revenues and noted a 9.3 percent increase in its online sales, with particular growth from mobile revenue.

Debenhams have just recently appointed a new chief executive, Sergio Bucher, who was formerly vice-president of Amazon. He has been tasked with updating the company’s online operations as well as attempting to reconfigure the retailer for overseas markets.

Additionally, the group have announced that they will issue a final dividend of 2.4p per share, with the full-year dividend up by 0.7 percent to 3.4p per share. Shares in Debenhams rose by 2.4 percent to 55p in early trading.