Tesco profits fall as supermarket pulls out of US

Tesco's annual profits have fallen for the first time in almost 20 years, as the UK's biggest supermarket confirmed it was pulling out of the US.

Tesco is exiting its US chain of 199 Fresh & Easy shops, which have never made a profit, at a cost of £1.2bn.

There was also a huge write-down in the value of Tesco's UK property portfolio.

The company's statutory pre-tax profits fell 51% to £1.96bn, but post-tax profits including the cost of the US exit were just £120m, down 95.7%.

Tesco said sales at UK stores in the past three months, excluding fuel and VAT sales tax, rose 0.5%, a slowdown from growth of 1.8% in the six weeks to 5 January when the company hailed strong Christmas trading.

The world's third-largest supermarket group, which reported a shock profit warning in January last year, has been restructuring under chief executive Philip Clarke.

A £804m write-down in the UK property portfolio comes after a review in which Tesco identified more than 100 sites, bought mainly during the property boom more than five years ago, which the company no longer plans to develop.

For the year, total UK sales rose 1.8% to just over £48bn, with UK trading profit falling by 8.3% to £2.27bn.

The company last reported a fall in annual profits in 1994, since when it has grown into the dominant force on the High Street.