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David Jones reports 3.3 per cent rise in sales

A marked upswing in trading last month has helped top-end retailer David Jones Ltd swipe better-than-expected third quarter sales through its registers.

But with the timing of an upswing in consumer sentiment still unclear and the result of trading in the key winter clearance season yet to come, the Sydney-based department store chain stuck to its profit guidance.

David Jones on Thursday reported a 3.3 per cent increase in sales to $402.8 million for the three months from January 29 to April 29, 2006, on solid sales of clothes, shoes, cosmetics and home entertainment products.

David Jones chief executive Mark McInnes said trading improved in April, possibly because of a change in consumer sentiment and a later Easter, as more shoppers were lured in to stores by the colder weather and holidays.

"We did get a marked upswing right across our business - quite a marked upswing given that for February and March, we traded relatively flat on the previous year," Mr McInnes said.

"We were particularly pleased with the performance of our women's, men's, children's apparel, footwear, accessories, cosmetics and home entertainment categories, all of which delivered solid sales throughout the quarter."

A modest improvement in consumer sentiment was anticipated in the second half and sales were expected to strengthen next year, the company said.

But Mr McInnes said the key winter season clearance period would need to be seen before the company could comment further on the profit outlook for the second half of this financial year.

David Jones has forecast profit growth at the lower end of a five to 10 per cent target growth range for the 2005/06 year.

The upmarket retailer also kept to a previous earnings forecast of net profit growth between five per cent and 10 per cent a year in 2006/07 and 2007/08.

"Whilst external economists broadly believe that the overall trend of the retail cycle is positive, the timing of this upswing is still unclear," Mr McInnes said.

"There are a number of recent external economic factors such as interest rates, petrol prices, tax cuts and consumer confidence that influence retail sales."

He said the company had timed a revamp of its flagship Elizabeth St Sydney, Bourke St Melbourne and Queens Plaza Brisbane stores to coincide with an upturn in consumer spending.

But Mr McInnes defended the department store's performance against rival Myer, which earlier this week reported a 7.9 per cent lift in third quarter sales over a 13-week period to April 30.

"When we restate our result comparable with our largest competitor, our company's growth rate, given our history, would be 2.2 per cent higher (than the reported 3.3 per cent)," he said.

"(It's) about the quality of the sales."

Sales for the first nine months of the year fell 0.2 per cent to $1.37 billion.

David Jones shares rose almost five per cent Thursday to a high of $2.82 in a mixed retail market. The stock closed 11 cents or 4.1 per cent higher at $2.80.