Myer Holdings Ltd (ASX:MYR) has topped market forecasts by reporting a 38% hike in first half underlying profit.

The department store chain booked earnings of $115 million for the six months to January 23, 2010.

The result excludes $93.5 million in costs from the group’s initial public offering.

The company reported a 2% rise in sales to $1.797 billion for the half year, but is maintaining a cautious outlook for the second half of the year.

CEO Bernie Brookes says that despite a strong rise in sales in the first six weeks of the second half, he expects total sales growth for the period in the range of zero to 2%.

Mr Brookes says the company remains confident of delivering its forecast for 10.7% growth in earnings before interest and tax this year to $261 million.

The company has also reaffirmed its expansion strategies are on track with 15 new stores set to open by 2014.

The board declared a 10.5 cent per share dividend for the half year and says it is on track to meet its prospectus target of between 20.5 and 21.2 cents per share.

Myer posted a profit of $104 million for the 12 months to July 30, 2009.