Smiths City made an operating profit of just over $1 million in the six months to October, an increase of 24% on the same period last year.
Revenue fell 6% to $107 million, while sales at stores open at least a year declined 4.5%.
But the Christchurch-based retailer managed to cut costs and stock and boost its cashflow.
The company opened a new store in Porirua this month and says it wants to expand in the region to complement its LV Martins operations.
The company will pay a half year dividend of 1 cent per share.