UPDATE 2-Australia's Woolworths profit jumps, to spend more

(Adds analyst comment, share price, details)

By Victoria Thieberger

MELBOURNE, Feb 26 (Reuters) - Woolworths Ltd, Australia's biggest supermarket chain, beat forecasts with a 28 percent jump in first-half profit on strong food and liquor sales, and outlined plans to hold on to its top position.

Shares in Woolworths (WOW.AX: Quote, Profile, Research, Stock Buzz) rose 4.5 percent after it said it will ramp up spending on store upgrades and announced plans for a credit card venture with British bank HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz).

"They are trying to capitalise on a very strong position in the marketplace and that's the right strategy to adopt, they'd be silly to take maximum profits now and ignore the future," said White Funds Management portfolio manager Angus Gluskie.

Woolworths, which runs 770 supermarkets, outlined further refurbishment and supply chain improvements, while Wesfarmers Ltd (WES.AX: Quote, Profile, Research, Stock Buzz) begins a three-year overhaul of 740-store main rival Coles, which it acquired for A$20 billion ($18.5 billion) last November.

"Coles can make some fundamental improvements in how it runs its own business. But there's no doubt they are up against one of the world's best competitors in grocery," said Gluskie.

Woolworths said net profit for the six months to Dec. 30 rose to A$891.3 million, above forecasts of A$864 million in a Reuters survey, despite higher petrol prices and interest rates.

Woolworths maintained its full-year net profit guidance of a 19-23 percent increase. Analysts already expect a 23 percent rise in profit in the year to June 2008.