DJs first-half profit gains 10.2%

David Jones' first-half profit has gained 10.2 per cent.

RETAIL giant David Jones Ltd has posted its highest first profit since it listed in 1995 and reaffirmed profit growth guidance for the next two years.

The department store chain lifted first-half net profit 10.2 per cent to $100.46 million for the 26

weeks to January 23, in line with expectation.

The result compares to $91.2 million in the prior corresponding period, Sydney-based David Jones said in a statement on Wednesday.

Chief executive Mark McInnes reaffirmed the company's net profit growth forecast of between five per cent and 10 per cent for fiscal 2010 and 2011, as well as for the second half of fiscal 2010.

"We note that to achieve the top end of this guidance the retail recovery will have to be in full swing, something Access Economics does not forecast until 2012," Mr McInnes said.

Mr McInnes said that, despite a firm outlook, the company was "very cautious about cycling the government stimulus in the fourth quarter of 2010".

The luxury retailer achieved its aspirational gross profit (GP) margin for the first half of 40 per cent, up from 39.5 per cent.

"This represents a 50 basis point improvement and is an excellent result given the heavy promotional activity and discounting by retailers throughout 2Q10," David Jones said.

The GP Margin reflected the store renegotiating its 2,700 supplier contracts, the reallocation of space to high margin categories and the increase in department store exclusive brands, it said.

The company declared a first half dividend of 12 cents per share fully franked, compared with the 11 cents paid a year earlier.

IG Markets analyst Cameron Peacock said the result was in line with expectation after the retailer upgraded guidance in February.

"The big focus going into the result was definitely margins and guidance, the company had previously stated that it's aspirational gross profit margin was 40 per cent and they achieved that this time around," Mr Peacock said.

"A pretty good results, certainly gives Myer something to chase down."

At 1051 AEDT its shares were flat at $5.07 but Mr Peacock said that David Jones' stock had rallied since last month's profit upgrade.

"Its started at about $4.50 in February and now it's about $5.10," he said.

"Most of the good news and expectation out of the David Jones has been priced in to the stocks in the last couple of week."

Myer Holdings Ltd said last week it was still at its turnaround phase after its former private equity owners prematurely listed the company with an eye to equity market conditions rather than sustainable earnings growth.

Myer posted a 38 per cent jump in first half profit to $114.8 million for the 26 weeks to January 23.