Lakeland has reported a “disappointing” set of results as its profits for the year halved after it invested heavily and cut prices.

Operating profits for the year ending December 31 fell from £6.18m to £3.01m as turnover increased by 5.7% year on year from £157m to £166m.

In-store sales increased by 4.9% and home shopping sales jumped by 4.6% during the year, which also involved the company opening seven new stores in the UK to take the total number of stores up to 67.

The retailer reported it was a “disappointing result but with the actions taken during the latter part of the year and the improvement in our systems and infrastructure we expect profitability to return to more normal levels in 2014”.

Lakeland invested £10m in a 60,000 sq ft distribution centre in Kendal, which opened early in the year and is expected to result in future cost savings.

The retailer also attributed its drop in profits to “increased competitive margin pressure” and gross margins were down from 52.1% to 50.6% after being impacted from a competitive trading environment, particularly in the branded electricals product sector.

Last year Lakeland also entered the European market with a website and catalogue in the German language, which incurred a loss during its 2013 financial year.

It is expected its German business will make a further loss in 2014, but Lakeland reveals “confidence in this project being a success is high”.