David Jones shares finished up 13 cents, or 2.8% yesterday after the company upgraded 2010 earnings following a solid first half sales performance.
First half sales rose 2.2% on a same store basis after a sluggish September quarter.
The 3.1% rise in second quarter same store sales easily beat rival Myer, which reported flat sales for the Christmas quarter.
David Jones said profit margins were growing and raised its first-half earnings outlook for growth of about 10% and second-half growth to 5%-10%.
It previously forecast growth of 0%-5% for both halves.
David Jones said sales in six months to January 23 totalled $1.087 billion, up from $1.062 billion in the previous comparable period.
For the second quarter of 2009-10, sales were up 2.4% to $634.7 million or 3.1% like-for-like.
David Jones CEO, Mark McInnes said in the statement to the ASX, “We experienced a slow improvement in consumer sentiment in 1H10 as can be seen in our Total and like for like sales performance this half.
“Despite a very competitive retail environment in 2Q10 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 & Tax (EBIT) Margin improved compared to this time last year."
Mr McInnes said David Jones was "cautiously optimistic about the winter trading half. Our caution is based on cycling the 4Q09 Government Stimulus, however that said, we are cycling (in February and March) the worst of the 2009 economic downturn.
“The fact that we will be cycling our worst sales trading performance in February and March coupled with the fact that:
"Our redeveloped Bourke Street store is expected to deliver positive sales momentum in 2H10 as we cycle the significant refurbishment disruption incurred in 2H09; and
"Our Margins, Costs and Inventory have been excellently managed, gives us confidence that we are well positioned to trade through the remainder of FY10.
“As a result of all of these factors we have increased our 2H10 Profit after Tax (PAT) Guidance to 5% – 10% from 0% – 5%,“ Mr McInnes said.
