Pumpkin Patch says its first half result demonstrates the business is heading in the right direction.
The children clothing retailer made a first half net profit of $749,000 - a six-fold increase over last year's $106,000.
First half sales rose 2.2 percent to $121.9 million, for the six months ended in January, over the year earlier, reflecting currency impacts.
Traffic on its online retail sites rose 10.3 percent, with a significant increase in the frequency of customer purchases in the company's retail and online channels.
Online retail sales grew 9.8 percent in New Zealand and 10.7 percent in Australia, while international sales fell 1.2 percent.
Cash flow from operating activities have been substantially improved, swinging to $14.8 million, compared with a deficit of $134,000, the year earlier.
Pumpkin Patch chief executive Di Humphries said the cost of doing business has been permantly lowered by $4 million, reflecting savings of $1.1 million and $2.7 million retail costs.
"We have strengthened our connection and interaction with our customers both in New Zealand and Australia, and as a consequence of this and refinement of our product range our customers are re-engaging in a very positive and sustainable way," Ms Humphries said.
Chair Peter Schulyt said there were clear signs the underlying business was improving, despite challenging circumstances.
"Given competitive intensity in the trading environment and currency headwinds being encountered at the present time, the overall first half result is a satisfactory one," he said.
The company said it would continue to right-size its retail network, and expected to cose nine Australian stores in the second half of the year.
It would continue to focus on reducing debt and therefore would not be paying a dividend. It expected its full year EBITDA, before reorganisation costs, to be about the same as last year, in the order of $14 million.