Tesco plans to sharpen its focus on the convenience sector after announcing a fall in annual profits for the first time in almost 20 years.
The decline was fuelled by a slowdown in UK sales, its decision to pull out of the US grocery market at a cost of more than £1bn, and increased provisions for potential Payment Protection Insurance (PPI) claims against Tesco Bank.
A write down of the value of its UK property portfolio amounting to some £804m is also being blamed, after it decided against building new stores on more than 100 sites purchased with the intent to develop.
Group profit before tax was down 51% to £1.96bn in the 52 weeks to February 23. Total UK sales increased by 1.8% to just over £48bn, with UK trading profit declining by 8.3% to £2,272m.
Tesco also opened a “significantly smaller” amount of net new space in the last year – at 1.4 million square feet, this was a 40% reduction compared to the previous year.
The new space included 120 Express and 26 One Stop stores.
“We plan to open a similar amount of net new space in 2013/14, including a larger proportion focused on convenience,” chief executive Philip Clarke said.