Tesco said it would spend £1bn this year overhauling its underperforming UK business and will rein in expansion as it seeks to win back market share and calm nervous shareholders.
It said that the blueprint to revitalise its most important market, which it conceded was not a radical change of direction, would focus on improving staffing levels, smartening up stores and delivering better prices and product ranges.
But the focus on stemming falling sales in the UK and refreshing existing stores means overall group capital expenditure will be cut to £3.bn in the coming year from £3.8bn last year. This will mean new space added in Britain in 2012/13 will be 38 per cent lower than in 2011/12.
"I'm announcing today our £1bn plan to put the heart and soul back into Tesco," Chief Executive Philip Clarke told reporters on a conference call after the group reported a small full-year profit rise that met market expectations.
"The plan isn't radical, isn't a radical change of direction, but it's a radical change of pace - more staff, better quality and range, warmer stores, friendlier service and a determination to do the basic things better," he said.
The firm dominates Britain's grocery sector with a 30 per cent market share but in January issued its first profit warning in 20 years.
Tesco also said its Fresh & Easy US business would break even later than previously anticipated.
"Our focus was to push the pace of expansion to reach breakeven (towards the end of the 2012/13 year) , I've decided now to focus on making the stores we have profitable first before pushing ahead with further higher levels of expansion," the chief executive said
City A.M. Reporter