The Woodward & Lothrop department stores increased their sales by 3.2 percent last year, but profits slipped fractionally, from $22,680,000 or $4.89 a share to $22,636,000 or $4.72 a share.

Woodies sales and earnings "were hampered by strong competitive factors and continued inflationary pressure on expenses," said president Edwin K. Hoffman.

The chain's sales increased from $241 million to $249 million, a gain described as "modest" by Hoffman.

For the fourth quarter ended Jan. 28, Woodward & Lothrup sales increased 3.9 percent, from $76.4 million to $79.4 million, but net earnings declined from $5.8 million to $5.5 million, a drop from $2.44 a share to $2.28.

Bad weather has hampered sales since the current fiscal year began, Hoffman said, but a $19 million capital improvements program this year is expected to "assure continued growth." Woodies fourth Montgomery County store is to open this fall at Lakeforest, and renovations are underway at the downtown store and the one in Chevy Chase.

Potomac Electric Power Co. reported net income of $82.9 million (1.76 cents per share) for the 12 months ending Feb. 28, up from $78.2 million (1.75 a share) for the same period in 1977.

For the first two months of 1978, Pepco said it earned $10.6 million, (27 cents) compared with $12.7 million (28 cents) for January and February last year.