David Jones’ first half profit has fallen, despite higher sales and earnings from its department stores.

The company made a net profit of $70.1 million for the six months to December 31, down from $73.5 million a year ago.

David Jones attributed the fall to lower earnings from its financial services division following changes to an agreement with American Express, which provides a line of David Jones branded credit cards.

But earnings from the company’s department store business lifted more than eight per cent to $91.6 million thanks to a 3.8 per cent increase in sales during the half.

Paul Zahra, David Jones CEO, said the company was well positioned to grow its earnings further, after several difficult years for the retailer.

“Our department store business is delivering good EBIT (earnings before interest and tax) growth,” he said.

“We have a strong brand and market positioning which holds us in good stead for future growth.”

The company said the transfer of control of its electronics division to retail business Dick Smith had helped boost its result by removing what had been a drag on earnings.

It also said it planned to exit underperforming stores, including Birkenhead Point in NSW and Harbour Town in Queensland, and would not renew its leases.

Meanwhile, the DJs said it had received positive feedback from Sydney City Council in relation to a proposal to develop the space above its Market Street store.

David Jones announced a fully-franked interim dividend of 10 cents per share, unchanged from a year ago.

AAP