In a trading statement that was brought forward from next week, the retailer said it had been forced to slash prices to boost flagging sales - describing business as "highly competitive and volatile".
The department store chain said like for like sales in the 17 weeks to 30 December in its core UK market fell 2.6%.
"We took tactical promotional action to improve our performance which resulted in a stronger 6 week Christmas period against tough comparatives, with like for like sales up 1.2% in constant currency and digital growth of 15.1%," the statement said.
It added: "However, the first week of post-Christmas Sale was below expectations despite further markdown investment, particularly in the highly seasonal Gift category."
As a result, the group said it now expected full year profit before tax to fall in the range of £55m to £65m. The City had been expecting a figure around £83m.
It said an acceleration in cost-cutting - with a further £10m in savings identified - was cushioning reduced profitability.
Sources told Sky News that while the company had not yet announced any job losses as part of the savings drive, they could not be ruled out.
The update from Debenhams suggested it was likely to be another mixed Christmas for the retail sector after Next defied its own forecasts of a weaker festive season to post a surprise increase in sales.
Debenhams 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."
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