Supermarket giant Tesco has revealed a £1.2 billion hit from its failed foray in America, as annual profits more than halved after a difficult year.
The group confirmed plans to pull its Fresh & Easy business in the US and reported its first fall in full-year group profits for two decades, down 52% to £1.96 billion after a series of hefty property write-downs and slowing sales growth.
Tesco insisted its UK turnaround plans are on track as it said it saw its best like-for-like sales growth for three years in its final quarter, although the 0.5% rise marked a slowdown on the 1.8% surge seen during Christmas trading.
It said it is scrapping more than 100 store developments that had been in the pipeline in the UK, leaving it with a write-down of £804 million on land bought at the height of the property boom.
The group said the days of snapping up land and building major stores that led to its success in the 1990s are now behind it as shoppers are increasingly buying online.
Tesco chief executive Philip Clarke said: "The large stores we have are great and we are doing a lot of work to make them more vibrant and relevant for today's customers, but we won't need many more of them because growth in future will be multichannel - a combination of big stores, local convenience stores and online."
The group also said its plans to exit the US are "well-advanced", with interest from buyers for all or parts of the business.
Tesco said it will be at least three months before the tender process is concluded, but the group hopes to achieve a sale of Fresh & Easy as a whole to avoid redundancies among its US workforce.
The move to withdraw from the US has left it nursing a £1.2 billion impact to its bottom line, with post-tax profits plummeting by 95.7% to £120 million.On an underlying basis, pre-tax profits fell 14.5% to £3.5 billion.