David Jones (DJS) is a chain of premium department stores, and is currently one of the best known Australian shares.

David Jones’s main business divisions include retail fashion, cosmetics, homewares, and electronics, and its main rival is fellow department store, Myer.

When looking at Australian shares, attention must be paid to how sensitive the stock is to a country’s economic growth.

As a retailer, David Jones is highly leveraged to the economic cycle.  Australia has emerged from the global recession relatively unscathed, and its economy is firmly on a growth path.

Economic growth means people are more likely to be spending their money, which is good news for retailers like David Jones.

David Jones recently reported a 10.2% jump in 1H10 net profit to $100.5 million, and declared in interim dividend of 12 cents per share.  Analysts had expected a profit of $101.1 million.

David Jones’s cost of doing business fell slightly, and was a key factor behind the rise in its operating profit.

The company reaffirmed guidance of 5% to 10% net profit growth for FY10, but has sighted the fading effect of government stimulus as a threat to earnings growth.

If Australia’s economy continues to grow, this is good news for Australian shares – and good news for retailers like David Jones.

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