Arnotts, the department store group, has announced a 10 per cent increase in pre-tax profits to €5.55 million (£4.37 million) despite the impact of increased staff costs.

Turnover grew by 13 per cent to €84.2 million, as the company experienced continued buoyancy in sales.

Security firm Brink's-Allied were reported to have made "a significant contribution".

Arnotts has announced an interim dividend of 9.25 cents, an increase of 12 per cent, payable on October 19th.

The company said it had completed refurbishing its Grafton Street store in Dublin and renovating its flagship Henry Street store.

"These developments should encourage further progress in the second half of the year," Arnotts said.

The group has also received planning permission for an additional 176 car spaces in the company car park, bringing the total to 376 spaces.

The company plans to begin work on its Boyers store, on North Earl Street, next February.

However, the company admitted that the economic outlook was now more challenging than previously.

Managing director Mr Seamus Duignan said the market was still strong and he believed the underlying situation was good, while Arnott's business was conservatively positioned and well placed to take advantage of any opportunities that might arise. But he noted: "The danger is the feelgood factor, that people might go cautious on spending."

Arnotts said it had completed its preparations for the introduction of the euro in January, as its staff were fully trained and it was already dual pricing.

"We are taking all the precautions we can," Mr Duignan said. Arnotts shares closed five cents lower yesterday, at €6.80.