Fashion helps boost David Jones profit

David Jones predicts annual profit growth of up to 10 per cent this year and next. Photo / Getty Images

David Jones, Australia's second-biggest department store, says profits have risen 7.6 per cent, helped by demand for shoes and clothes, and has affirmed its full-year earnings outlook.

Net income rose to A$70.3 million ($91.3 million) in the six months ended July 25 from A$65.4 million a year earlier. Second-half figures were derived by subtracting first-half earnings from the A$170.8 million full-year profit, the Sydney-based company reported yesterday.

Profit rose because of reduced costs to supply stores and demand for shoes and designer fashions, the firm said.

Chief executive Paul Zahra, in the role three months, said cost reductions started under predecessor Mark McInnes and new outlets would underpin annual profit growth of as much as 10 per cent this year and next.

The full-year profit compares with the A$170.3 million average of eight analyst estimates compiled by Bloomberg.

Earnings before interest and tax from department stores rose 13 per cent to A$79.2 million in the second half as the company cut old inventory.

The financial services unit, which includes a store credit card with American Express, posted a 7.4 per cent rise in profit to A$23.2 million.

David Jones shares slipped 1.2 per cent to A$5.14 yesterday on the Australian Securities Exchange and have fallen 4.8 per cent this year compared with a 5.2 per cent decline by the benchmark S&P/ASX 200 index.

The company said two stores due to open in the 12 months ending 2012 have been delayed by between 18 and 24 months after mall owners deferred development projects.

- BLOOMBERG