Tesco has confirmed its first fall in annual profits for 20 years and writedowns totalling more than £2.5bn as it moves to concentrate on improving its UK supermarket business.
The retailer confirmed it is exiting its loss-making Fresh & Easy operation in the United States, with a resulting £1.2bn writedown a major factor behind its 51.5% fall in pre-tax profit to £1.96bn in the year to February 13.
Tesco was also hit by costs related to its turnaround plan for the UK while its bank's exposure to the payment protection insurance scandal grew to £115m.
A writedown of £804m was also confirmed on the value of its UK property portfolio as it scrapped more than 100 store developments to focus on store revamps, convenience stores and improved delivery to online customers.
Tesco is seeking a buyer for its Fresh & Easy operations A £495m 'goodwill impairment' relating to its operations in Poland, the Czech Republic and Turkey was announced too.
Tesco's chief executive Philip Clarke said that the actions would put the company "back on the right track" to deliver long-term growth for shareholders though its share price took a 2.8% hit when trading opened in London.
He continued: "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 multi-channel - a combination of big stores, local convenience stores and online."
The group said fourth quarter sales at British stores open over a year, excluding fuel and VAT, grew 0.5% - a slowdown from growth of 1.8% in the six weeks to January 5.
Philip Clarke has signalled an end to 'store wars' by halting new building Mr Clarke admitted that sales over the past few months had been impacted by the horsemeat scandal as customers steered clear of frozen meat products.
Tesco had to withdraw four products from sale amid the crisis, but said the effect on overall sales was minimal and stressed that trading was now "back to normal".
While still well ahead of its supermarket rivals in terms of market share, Tesco has been facing a greater challenge from the likes of Asda, Morrisons and Sainsbury's.
They had been investing in their UK operations at a time when Tesco had concentrated on diversifying its business.
Tesco apologised in January for horsemeat in some of its burgers Last year, Mr Clarke pledged a £1bn investment to upgrade its stores and customer service offering - at one stage taking personal charge of the turnaround plan.
Capital expenditure fell by 19% or £0.7bn to £3bn in the financial year.
Recent surveys have suggested the supermarket chain is still struggling to win round customers, with a study by Which? in February suggesting that Tesco was the most complained-about.
Researchers Espirito Santo said this week that customer perceptions of Tesco had deteriorated since November, with the horsemeat scandal a contributory factor.
It found that views on Tesco's quality, prices, promotions and overall value for money had all fallen while a net 16% of Tesco customers chose to shop more elsewhere because of horsemeat.
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