Arnotts, the department stores group, has announced a 16.3 per cent increase in pre-tax profit to €5.03 million (£3.96 million) from €4.33 million in the half year to July 31st, 2000. The underlying results are somewhat better as there was a depreciation charge of €261,000 under accounting rule FRS 15, compared with nil in the comparable period last year.

Managing director Mr Seamus Duignan concurred with the Central Bank that there was a deflation of some 1 per cent in clothing prices. "There are no easy takings in clothing . . . we are not piggy-backing on the Celtic Tiger." He said volume growth was about 5 per cent compared with 10 per cent in other sectors. But he stressed that this growth was necessary to cope with wage inflation of around 5.5 per cent.

While group margins had improved, there were some difficult areas, he said. Some products were bought in sterling but the manufacturers stuck to recommended selling prices, he added. The only way to maintain or increase margins was at the buying end and Arnotts was trying to get manufacturers to invoice in euros, he said. Asgard, its credit card company, which provides retail stores with cards, has signed up a large multiple store. Arnotts would not identify the store but said the card launched last November now had almost 10,000 cards. These are expected to grow to 20,000 in 18 months.

The latest results show turnover, including concession sales, grew to €74.2 million (£58.44 million) from €64.9 million.

Refurbishment continued at the Henry Street store. "This impacted negatively on our trading performance," said chairman Mr Michael O'Connor. But all work in the giftware section had been completed and this "is now back trading strongly". Two other departments, curtain and linen, are expected to be completed by early September.

The Grafton Street store in Dublin will be revamped for about £1.5 million, said Mr Duignan. Completion is expected early next year and will be followed by a Boyers revamp. Security firm Brink's Allied is "now a multimillion-pound business" and has "done well". Arnotts is happy to hold on to the company but Mr Duignan admitted it was "not its mainstream" business.

The latest results show a rise in earnings per share to 21.1 cents (16.62p) from 17.2 cents. The interim dividend is being raised to 8.25 cents from 6.94 cents.