The market obviously got the David Jones profit right yesterday.
The department store retailer revealed a 30 per cent increase in net earnings to $71.1 million for the six months to January and the shares bumped higher to peak at $4.57 then eased in the afternoon to close on the day’s low of $4.45, off 3c.
The result had been well signalled and it was priced in with the shares having enjoyed a solid run up in the past month or so.
There were no surprises on the upside as there was with the Woolworths interim which has boosted the shares of the supermarkets giant to record levels after its earnings statement.
David Jones shares peaked well before the release of the profit figures yesterday.
The latest result was up from the $54.5 million earned in the first half of 2006. Earnings per share reached 15c in latest half compared to 12c in the same half of last year.
The company raised profit forecasts three times over the past year, the most recent was in mid January which saw the price of the shares surge as investors realised that the company was travelling very nicely.
The earnings growth of 30 per cent came in right at the top of the January estimate.
DJS also made a one-off profit of $99.3 million from the unwinding of a sale and leaseback agreement for its Sydney stores. David Jones bought the stores back in September.
The company reiterated its previous forecast for second-half earnings to increase between 8.5 per cent and 13.5 per cent. (DJS earned $26.6 million before one-off items in the second half of 2006.)
Department store sales for the first-half rose 7.6 per cent to $1.04 billion and the company said sales in the first seven weeks of the current third quarter have been “broadly in line” with the 8.9 per cent rise in the second-quarter.
Department store earnings before interest and tax jumped 44 per cent to $93.3 million in the half and the so-called EBIT margin (earnings before interest and tax as a percentage of sales) rose to 9c in the dollar from 6.7c a year earlier.
Earnings from the financial services unit, which includes an in-store credit card, rose 6.1 per cent to $17.3 million and the company is moving closer to working out its future strategy with its card business.
David Jones will pay a first-half dividend of 9c a share, up from 7c in the first half of 2006.
