Independent retail chain Leekes has reported a 5.2% increase in turnover to £53.3m for the year to March 2011.
Gross profit held flat at £20m while operating profit took an 88% dive to £237k due to significant investment made by the company into its existing portfolio and new stores.
Pre-tax profit was halved to £865k.
JH Leeke & Sons' financial director Mike Fowler told DIY Week: "The increase in sales and turnover over the past year has been generated by the addition of three new Leekes stores in the Midlands. Significant investment was made in improving the existing properties, in particular the Bilston store, which received £3m of capital investment to completely refurbish it. As a completely new brand within the Midlands region, we also invested heavily in the marketing of the new stores, which combined with the expenditure on the stores themselves, resulted in an anticipated decrease in our operating profits."
The retailer is reaping the rewards of this investment however, with sales in the Midlands up significantly, said Mr Fowler. Sales at the Bilston store increased by 60% in the first six months of Leekes' current financial year.
The company has also signed an option to purchase what will be its largest store, relocating its Bedworth store to a former Makro site in Coventry, and is in the process of agreeing a deal to become a tenant in a new £200m town centre development near its Llantrisant store.
The deal would see Leekes move from its existing Llantrisant site to a brand new three-storey department store in a high street location.
Mr Fowler added: "We are very fortunate in that Leekes Limited, the retail arm of the business, is a subsidiary of JH Leeke & Sons, a substantial retail and leisure group that achieved another strong year of profits. Underling profits of £3.2m, coupled with a £62m net asset balance sheet and the support of our bank, Barclays, means that we are able to continue to expand in this challenging economic climate."