Retail fashion group French Connection is in a more cautious mode in the second half of the year.

After the first six months of 2010 resulted in a profit for the British outfitter, slow sales in recent weeks at retail outlets have kept celebrations muted.

The impending VAT rises and winter budget constraints have hampered spending by consumers, many of whom are returning from summer holidays and tightening their purse strings. Despite this, French Connection said last week that year-on-year comparisons with wholesale orders were still ahead, with the group forecasting slow by steady progress for the full financial year.

Like many in the fashion industry, French Connection has been streamlining its services to achieve greater profitability, with the latest round of restructuring seeing the sell-off of the loss making Nicole Farhi brand. In addition, partnerships in Europe and Japan have been scaled back in favour of the US, with the group claiming it has signed a new North American licensing partner. The deal will see LF USA, owned by the Hong Kong consumer goods exporter Li & Fung Ltd earn up to $10 million in net royalties over the next five years.

The latest direction for French Connection follows recent years of struggle following the decline of the popular FCUK brand. In stark contrast to last year’s £5.4 million pound loss, the group has finally been able to report a profit, though tough times are still ahead.

Britain’s second largest retailer remains bullish as profit forecasts exceed expectations.

Debenhams announced yesterday that its yearly pre-tax profit would likely rise by 20m per cent. The increase comes on the back of designer range performance and online sales.

The company predicted that it would hit the £150 million profit mark, with the recent trends of store expansion and discounting helping to fuel coffers by £3 million over what analysts had previously forecast. However, at stores that had been open to the public for at least one year, overall sales were flat compared with the previous 12 months.

Despite the unsteady consumer environment, which has seen the public sector suffer widespread job cuts, material costs rise and austerity measures hinder spending, Debenhams has been able to produce the upbeat estimate which covers the year until 28 August. Deputy chief executive for Debenhams, Michael Sharp, said the store was well placed to cope with what has been a challenging storm. Mr Sharp said the impending VAT rise was an obvious concern for all retailers, but that his company’s commitment to offering the right products at right prices had served them well in times of financial hardship. Mr Sharp also acknowledged that online sales had seen a significant rise, with many customers trending towards the time and money saving alternative.

With 160 stores across Britain and Ireland, Debenhams is the UK’s second largest sales retailer behind John Lewis, and also features stores in Denmark and over 60 franchised outlets overseas.

Sainsbury’s has bucked the economic trend away from spending on new technology.

Investment in technology in the retail industry is set to be stagnant in the UK for the foreseeable future, as most high street stores and supermarket chains brace themselves for another economic downturn.

The austerity budget and impending VAT rise has seen widespread speculation that the industry could be confronted with a period of loss, leading to financial outlays for development of existing technology to be capped as most leading companies say that they have no IT overhauls planned. In some cases, computer systems are up to 20 years as old but are kept on as long as they do the job.

According to a report published last week by Martec International, a leading retail sector consultancy specialist, Tesco is the retailer that seems most content with its incumbent IT system. Their latest upgrade was in 2007 while the yearly spend on IT investment is £200 million. Rival Sainsbury’s spends around £220m per year on IT according to the Martec study, which also reported that UK’s leading supermarket chain is planning on updating its store, e-commerce and supply chain systems next year. The in-house system used by staff, installed first in 1995, will be upgraded the following year.

While Frances Riseley, practice manager at Martec, said that many retailers were hesitant to reveal their IT plans for fear of rivals being alerted to their developments, his group’s survey did establish that 19 per cent of the 142 British retailers polled said the reason for not revealing any details was that they were either being finalised or had not been considered.