KITCHENWARE giant Lakeland has seen pre-tax profits fall by half after investing millions and expanding its business into Europe.

Lakeland Ltd, which is based in Windermere, reported a record turnover of £166m for the year to December last year, up six per cent from £157.5m in 2012.

However, the company said pre-tax profit fell from £6.2m to £3m as a result of “investment plans and increased competitive margin pressures”.

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During the year, the company announced plans to expand into Europe by creating a German website and catalogue.

Although it made a loss in 2013, with further losses expected in 2014, retail and finance director Bob Granger said this was only a short term effect and Lakeland was confident about its future performance at home and abroad.

He said: "Whilst investment in new business and price matching has affected profitability in the short term, these are long term investments securing Lakeland's market position as a competitive retailer and forming the foundations for the considerable future growth of the business."

A report accompanying its accounts said: "Steady progress was made in our international division and we are confidently expecting increased activity in the area during 2014.”

Lakeland, which has 68 stores in the UK and employs 1,900 staff, also made considerable investments in 2013 by launching seven new British stores and investing £10m in its Kendal distribution centre in Shap Road.

A spokesman for Lakeland said: "In a very difficult retail trading environment during 2013 we are pleased to report that turnover increased to a record high of £166m.

"As a consequence of increased competitive margin pressure and the financial impact associated with the investment initiatives undertaken during the year, our 2013 profit was adversely affected.

"This is 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."