FAMILY owned convenience store retailer CJ Lang & Son has seen its profits fall by more than 36% in what it described as a "challenging" year.

The Dundee company, which owns the Spar franchise in Scotland and runs in excess of 100 stores, said both its turnover and margins had been affected as cash conscious consumers "exercise more discretion" on food spending amid the squeeze on household incomes.

Annual accounts filed at Companies House show turnover fell 3.5% from £200.1 million to £193m in the financial year to April 30, 2013. Pre-tax profits came in at £1.27m, down from almost £2m in the previous reporting period.

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Writing in the accounts, the directors said they were seeing more entrants into the convenience store sector. That comes as many of the big supermarket brands increasingly look to smaller format stores for growth.

The CJ Lang directors said: "We have seen a further increase in new competition in our sector which adversely impacted on footfall and income generation in stores.

"The resultant drop in gross profit was partly ­mitigated by cost reduction initiatives which will increasingly become a key element of our strategy."

The directors highlighted the strength of the company's balance sheet which they said would underpin a £6.1m investment in the current trading year which is likely to see it add new shops. They said: "The focus of this substantial investment will be on improving efficiency in distribution, energy and IT but crucially provision is also made for our Spar company store estate to grow further."

There was also a confident outlook in spite of weak consumer confidence and the growing competition in the sector. The directors said: "Recruitment of ­independent retailers into Spar is at its most buoyant for some time as is business investment by existing customers."

A charge of £458,000 was listed on the balance sheet for acquisitions with CJ Lang also noting its purchase of Dundee-based Gill Retail in the year.

Average staff numbers went down from 2090 to 2081 with employee costs dropping from £25.4m to £25.9m.

Total directors' remuneration also fell from £1.37m to £1.17m with the highest paid seeing their emoluments going from £599,000 to £512,000.

Dividends were steady at £1.12m with the accounts stating Joan Scott-Adie, chairman, received £572,600 while £533,120 was paid to other family directors.