Tesco's like-for-like sales in general merchandise - which includes toys, nursery, entertainment, home and more - have fallen five per cent over the past year.
Total sales declined slightly, but clothing bucked the trend with a like-for-like sales growth of nine per cent for the year.
Overall group sales for the supermarket rose by 1.3 per cent to £72.4 billion.
Group profit before tax fell by 51.5 per cent to £1.96 billion.
The supermarket also confirmed its exit from the US, which cost the business £1 billion.
Tesco's Chief Executive Philip Clarke said: "With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers.
"Our plan to 'Build a Better Tesco' is on track and I am pleased with the real progress in the UK.
"We have also faced external challenges which have affected our performance, notably in Europe and Korea.
"Our focus now is on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns."
