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Australia's David Jones Sees Profit Up 23%

Upmarket Australian department store chain David Jones posted a 9.3 percent increase in second-quarter sales, lifted by a bumper Christmas season, and raised its first-half profit growth forecast to between 23-25 percent.

That compares with its previous forecast of 8-13 percent.

"Our trading performance in January and the first two weeks of February was strong, notwithstanding the equity market fluctuations over this period," said Chief Executive Mark McInnes.

Successive hikes in official interest rates, most recently in February, a 20 percent dive in the stock market from last year's peak and flattening housing prices are all expected to put the brakes on retail spending this year.

The retailer, with 36 stores, has been helped by a buoyant economy and robust consumer spending so far, and by a shift down market at its larger rival, Myer, owned by private equity firm TPG.

But David Jones shares have fallen 24 percent this year on worries about a slowdown in consumer spending, against a 10.7 percent fall for the broader market.

David Jones said total sales increased to A$664 million ($598 million) in its second quarter, up from A$607.3 million a year earlier.

That beat market expectations of A$651 million, according to a Reuters survey of three analysts.

Over the Christmas period, sales of clothing, footwear and accessories and cosmetics did well, and McInnes said sales in all categories beat expectations.

Like-for-like sales rose 7.6 percent in the second quarter.

David Jones reaffirmed its forecast for net profit growth of 8-13 percent in fiscal 2008 despite the first half upgrade, saying it prefers to trade through the period and has tough comparisons with a strong second half in 2007.