Tesco has reported a worse than expected £6.38bn year-end loss, impacted by a £4.7bn write down on the value of its property, restructuring and stock charges, along with costs relating to last year’s accounting scandal.

The group’s trading profit was down 58% to £1.4bn, in line with company guidance, but hit by weak performance across the business. In the UK, profits plummeted 78.8% to £467m with like-for-like sales declining by 3.6% across the year to 28 February, although it pointed to an improving trend into the second half driven by recent price cuts. Tesco said customer transactions, having been in decline since the beginning of 2012, increased by 1.5% in the fourth quarter, with UK like-for-like sales down only 1.0.%.

Trading conditions had also remained tough overseas where trading profit in Asia and Europe fell 15.3% and 31.1% respectively.

The group’s Chief Executive Dave Lewis said: “It has been a very difficult year for Tesco. The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years. We have faced into this reality, sought to draw a line under the past and begun to rebuild, and already we are beginning to see early encouraging signs from what we’ve done so far.

“Over the last six months we have put customers back at the centre of everything we do. By focusing on the fundamentals of availability, service and targeted price reductions, we have seen a steady increase in footfall, transactions and, most significantly, volumes. More customers are buying more things at Tesco.”

He added: “The market is still challenging and we are not expecting any let up in the months ahead. When you add to this the fundamental changes we are making to our business and our offer, it is likely to lead to an increased level of volatility in short-term performance.”