Department store business Myer has suffered an eight per cent slide in its first half profit amid higher costs and reduced margins.

Myer recorded a profit of $81 million for the six months to January 25, down from $88 million for the same period a year ago.

Total sales increased by just 0.3 per cent over the half, or 1.2 per cent on a comparable store basis.

Chief executive Bernie Brooks said that was a positive result given the disruption caused by refurbishment work at three of the company’s top stores and the closure of another shop.

“It was encouraging to achieve total sales growth despite significant sales disruption caused by three of the top 20 stores being under major refurbishment and the closure of our store at Dandenong (VIC),” he said.

“It was also pleasing that this growth was achieved on top of strong growth in the previous corresponding period.”

The company’s gross profit margin decline 21 basis points to 41 per cent due, in part, to price discounting as part of its stocktake sale.

Meanwhile, increased labour and rent costs and investment in new stores helped push the company’s cost of doing business up 2.1 per cent to $540 million.

The company said costs were expected to continue to increase during the second half and to be up between four and five per cent over the full year.

Meanwhile, the anticipated completion of refurbishment work at Myer’s Adelaide store in May and at its Indooroopilly, Brisbane, store in June is expected to help increase customer traffic and sales, though this would be offset by the closure of four stores during the second half.

The company announced a fully-franked interim dividend of nine cents per share, down from 10 cents last year.