Department store David Jones has increased its first half sales by 2.3 per cent and sharply raised its interim and second half profit guidance. 

The upmarket department store chain reported sales revenue for the six months to January 23 of $1.087 billion, up from $1.062 billion in the previous comparable period.

On a like-for-like store basis, sales were up 2.2 per cent.

For the second quarter of 2009-10, sales were up 2.4 per cent to $634.7 million or 3.1 per cent like-for-like.

The department store increased first half profit guidance to "approximately 10 per cent" growth, up from previous guidance of zero to five per cent growth.

David Jones lifted its second half profit guidance to five to 10 per cent growth, up from zero to five per cent growth.

CEO Mark McInnes said the company was "cautiously optimistic about the winter trading half".

"Our caution is based on cycling the Q409 government stimulus, however, that said, we are cycling (in February and March) the worst of the 2009 economic downturn."

David Jones said gave fiscal 2011 profit guidance of five to 10 per cent growth.

"Our strong balance sheet, low debt levels, unique market position, medium term growth program and strong management team give us confidence to provide FY11 PAT Guidance of five to 10 per cent growth," McInnes said.

"Added to this, we reiterate our commitment to continue to return excess cash generated by the business to shareholders in the most efficient manner over time."

McInnes said the company experienced a slow improvement in consumer sentiment in in the first half.

"Despite a very competitive retail environment in quarter two with heavy promotional activity by retailers struggling to maintain sales momentum without the help of the December 2008 stimulus package, I am pleased to report that our gross profit margin (GP) and our earnings before interest and tax (EBIT) margin improved compared to this time last year."

McInnes said Access Economics was forecasting a return to retail sales growth following the cycling of the Government Stimulus impact in the fourth quarter.

"Keeping in mind Access Economics comments, our business is well prepared to capitalise on the slowly improving economic environment."

Outlook for the second half will be given at the first half profit results in March 2010.

Rival department store Myer Holdings Ltd has last week increased its first half sales by two per cent despite a disappointing Christmas period, and has upgraded its first half earnings guidance.

©2010AAP