Wilkinson’s pretax profit has plunged 62.6% to £22.74m in the year to January 27 due to the “tough trading environment” and £44m investment in stores and systems across the period.

It is the second consecutive year profits have fallen.

Turnover, however, edged up to £1.57bn from £1.56bn, driven by its 18 new store openings in the year.

In its annual report, outgoing Wilkinson chief executive Stuart Mitchell acknowledged that profits were “considerably less than last year, or than we planned”.

But it added: “It is an achievement to be proud of in such a tough trading environment.”

It also posted a “small” drop in like-for-likes due to fewer customer visits.

Wilkinson said its financial position “remains strong”. At year end it had £3.7m of net funds compared to £19.5m last year.

The retailer said it will invest over the next three years to improve business processes and technology. It has already been ploughing cash into its online and catalogue businesses to achieve its ambition of becoming a “true multichannel retailer” through online and catalogue investment.

Retail Week last week revealed Wilkinson’s trial store format, which aims to deliver a multichannel experience to its customers using an out of hours click and collect service and offering free wi-fi in store. It is the first store to trade under the ‘Wilko’ fascia.

More London stores are planned going forward, following the popularity of its new Tooting store which it “exceeded all expectations”.

Wilkinson is also currently seeking a new chief executive after Retail Week revealed Stuart Mitchell was stepping down after six years in the role.