Woodward & Lothrop Inc., the 14-store department store chain that often is viewed as a barometer of the local retail picture, is cutting its 1980 expenditures by $7 million and is bracing for the tightest fall season in recent memory, Chairman Edwin Hoffman said yesterday.

Hoffman described the cutbacks and cautious approach after telling company stockholders that Woodies' first-quarter results, although not yet official, "don't look promising."

"We had a good February and a fair March, but the early Easter seriously affected the month of April," Hoffman said. "It is more difficult now than it has been in a long period of time to predict the future.

"Prices have not increased sufficiently to offset rising operating expenses, and discretionary spending levels continue to decline," he added.

Hoffman said Woodies' management is doing "everything within our power" to keep expenses down without limiting service, while also "endeavoring to change merchandise mix in an effort to maximize our gross margin."

Woodies is in the midst of a major remodeling program, but the company has "temporarily delayed" future projects, including the revamping of the Landmark store, as part of the $7 million cutback, Hoffman said.

He said those projects will be put off until "some economic uncertainties in our industry abate." Difficulties for Woodies include credit restrictions and the high cost of borrowing, he said. "This is also an election year, which invariably adds to the uncertainty of the consumer in the nation's capital," Hoffman added.

Hoffman said the company isn't counting on a speedy national economic recovery, and is making the "tightest plans we've ever done in our lives" for the fall retail season.

Last year Woodies' earnings dropped by 17.9 percent to $10 million, and revenue rose by 8.9 percent to $295 million. The decrease in profits reflected bad weather, gas shortages, rising inflation , changes in accounting and a rise in the company's effective tax rate, Woodies said.

But the chain's expansion, which includes construction of new stores in Fairfax and the northeast corner of Baltimore County, apparently is continuing on target, and Hoffman said Woodies expects to build its second Baltimore area store northwest of the city.

Anotehr major phase of Woodies' plans involves the block north of the downtown store, in the vicinity of the District's new convention center. Hoffman said announcement on development of that block is "very close," and that plans for the site include a retail-office-hotel complex.

That project will be a two-phase effort, with the first phase completed about the time of the convention center's opening, in early 1983, Hoffman said. The second phase should be finished two years later, he added.

The store's customers are switching from credit to cash purchases, Hoffmans said. He also described the restricted-credit practices instituted by the federal government as "silly."

"I'd like to see them dropped," he said. "They don't serve any useful purpose."

Hoffman pointed to mens-wear and top-of-the-line women's clothing as two of the company's more successful types of merchandise. Hoffman said that with Easter a week early this year, however, April sales figures "aren't going to be good," further cutting into Woodies' profit picture.

Although inventories were the lowest as a percentae of sales since 1969 at the time Hoffman spoke to stockholders last year, the trend "reversed and our inventory shortage once again reached unrealistic levels," he said.

"We continue to work on this problem, but find in times of increasing inflation and anxiety about rising prices, shortages tend to increase," Hoffman said.