The Birmingham-headquartered business has bounced back from the lockdown slump with total sales rising 12.7% in the 12 months to May compared to the 2020 financial year.
The retailer has 525 stores across the UK, including in the Black Country, Shropshire and Staffordshire. It has profited from the "BookTok" phenomenon which brought together book lovers on social media platform TikTok.
Branded toys and games have also boosted sales with ranges of Peppa Pig, Paw Patrol and Cocomelon flying off the shelves.
But the typical post-Christmas slowdown has been made worse by the recent surge in the cost of living and the budget seller believes people are already cutting back on non-essential spending.
Official data released on Friday show that retail sales have dropped over the three months to the end of April, despite a boost last month.
Rising inflation and interest rates have squeezed households' disposable income and this is starting to have an impact on the high street.
The Works had to close its shops during the lockdowns causing sales to slump by 19% in the year to May 2021, despite an online shopping surge.
It chose to also compare its latest sales to 2020 results, because store closures in 2021 mean it cannot make a meaningful comparison to the previous year.
The retailer also suffered a cyber-attack at the end of March which forced it to close some shops and delay online deliveries to customers.
But a stronger performance in the past year means the business expects to reinstate its dividend to shareholders from September at around 2.4p per share.
"We are pleased to report strong trading in (the 2022 financial year), consistently delivering sales well ahead of pre-Covid levels and another record Christmas," said chief executive Gavin Peck.
"We are delighted that our improved trading performance will enable us to recommend reinstating the dividend and remain optimistic that we can deliver further sales growth in the year ahead.
"As we move into our new financial year, general trading conditions remain challenging.
"We will continue to focus on the factors within our control and ensure that, as customers face increasing cost-of-living pressures, they can continue to rely on The Works as a destination for great value products to inspire reading, learning, creativity and play."