A dispute with the Australian Tax Office has hit Michael Hill International's first half profit, which slumped 26 percent.
MHI made a net profit of $A16.2 million for the six months to December, compared with $A22 million last year.
Michael Hill International has two unresolved tax matters relating to the sale and financing of its intellectual property between the New Zealand and Australian Group members.
It has made a provision for the tax dispute, but would not give details of the provision, because it does not want to affect the outcome of the negotiations.
Operating profit rose 4.1 percent to $29.7 million, while sales at stores open for more than a year, known as same-store sales, rose 4.7 percent.
As signalled last month, same-store sales at its New Zealand retail operations fell four percent in New Zealand currency terms and total sales fell 3.5 percent to nearly $NZ61 million.
In Australia, Michael Hill's biggest market, revenue increased 5.5 percent to nearly $A172 million and same store sales were up 1.4 percent.
Canadian sales were higher but the company's American operations turned in an operating loss of about $US0,5 million.
Michael Hill will pay an interim dividend of 2.5 cents per share.