Lakeland pre-tax profits dipped from £7.2m to £6.2m in 2012 as the kitchenware retailer invested in new stores and refurbishments.
The retailer ploughed £5m into capital projects over the year.
Sales advanced 4% to £151.4m boosted by the popularity of home baking.
Lakeland said telephone calls into its call centre fell by 11% as part of the migration of orders from phone to online.
Lakeland said: “Uncertainties still remain with regards to the UK economy and how this will impact the retail sector. However, the directors believe that growth opportunities exist and the business is well placed, with a strong balance sheet to capitalise on these opportunities.”
Since the year-end, Lakeland has launched a German website and it also plans to double its store count in the Middle East. It currently has nine locations in the region.
Lakeland has 65 stores across the UK.