Tesco, Britain’s largest supermarket operator, has reported a 5.4 per cent increase in full year net profit, despite a disappointing performance in its home market.

Tesco is embarking on a STG1 billion ($A1.54 billion) program to revamp its UK stores while cutting back on expansion in the current year. At stores open for at least a year, Tesco sales in the UK excluding sales tax and gas fell by 0.9 per cent during the year, including a 1.2 per cent drop in the second half.

For the 52 weeks ending February 25, Tesco on Wednesday reported an after-tax profit of STG2.81 billion, up from STG2.67 billion a year earlier. Revenue from continuing operations was up 6.8 per cent to STG64.5 billion.