Lakeland grew profits and sales last year but the homewares retailer has said that 2011 has been “miserable” in the last two months.

Lakeland - loved by the well-heeled middle classes for its quirky homeware products – saw pretax profits rise from £10.1m to £10.7m in the year to December 31. Turnover increased from £141.9m to £147.9m.

However, Lakeland director Julian Rayner said that while 2010 was a “good year” for the retailer, the latter half of 2011 is shaping up to be “completely different and much harder”.

Rayner told Retail Week he “would use the words ‘tough, hard and miserable’” to describe trading conditions in recent months. “We started well but the last two months have been miserable. It’s as though people have stopped spending,” said Reyner.

He added that the spending power of Lakeland’s core customer, the middle classes, is being put under pressure this year.

“It’s the middle that’s getting squeezed, so our customers are getting squeezed,” he said. “We think it’s going to be an extremely tough Christmas. Consumers will play it right up to the last minute. The consumer is much more savvy now.”

Rayner said retailers are having to launch more money-off promotions to pull in reluctant cash-strapped shoppers, and that Lakeland is no different. It has launched more offers this year but cautioned against getting the consumer too used to deals.

The 55-store retailer has also curbed its expansion plans in the tough climate, and will open five stores this year instead of the six it had planned. “We’re looking at [opening] the ones that are high up the list,” said Rayner.

Two more stores will open in the Middle East this year, with an opening in Dubai and another in Abu Dhabi.

Rayner said its baking category has continued to drive sales this year, up 30%, as programmes such as the Great British Bake Off inspire Brits in the kitchen.

He added that online growth was still strong, and that while last year the split of non-store sales was 50/50 between online and catalogue, this year it would be 60/40 in favour of the internet. “There is an absolute shift away from catalogue to online,” said Rayner.

Lakeland will launch a mobile transactional site before Christmas.

Rayner said last year Lakeland benefited from a focus on its core product as well as cost cutting. “We looked at every aspect of the business,” he said.