Department store group David Jones says it is not deterred by a national interest rate hike today, predicting strong Christmas sales on the back of 2.2 per cent first quarter growth.

The upmarket chain said it had anticipated the 0.25 per cent rate rise to five per cent, with CEO Mark McInnes expecting a better holiday trading period than last year.

“We are well-prepared for the important Christmas trading period in terms of our brand portfolio, marketing and promotional campaigns, merchandise and window displays and our service strategy,” he said.

David Jones' first quarter sales were lifted to A$382.6 million, on track to meet a net profit target of $52m-56m for 2003/2004.

The company hopes a strategic review of operations will reduce the company’s cost base by $50m a year to the 2006 financial year, with $10m to flow through to earnings.