WOOLWORTHS chairman Gerald Corbett has forecast a recovery at the high street retailers in the coming year after seeing profits tumble.

The company made a £46.4m loss in the year to February 2, compared with a profit of £54.3m in the previous year.

A drive to clear excess stocks, and low sales over the Christmas trading period hit the business in its first months back on the stock market.

But the former Railtrack chief said the chain was now stabilised, with debts brought down and the recruitment of a stronger management team.

Sales in the first weeks of the new financial year were ahead 6.2 per cent on a like-for-like basis, although that was mostly down to the earlier Easter.

Mr Corbett said: "We have made a reasonable start to this financial year and are confident of delivering a recovery in profitability."

Woolworths was floated in the City by former parent Kingfisher, in August.

Mr Corbett said the priority for the business had been to reduce a stock mountain, reduce borrowings and improve cashflow across its shops.

Stock levels have come down by £110m, but the effort knocked the group's margin and profits tumbled, despite a marginal rise in sales.

Total group sales rose 2.9 per cent to £2.60bn, but pre-tax profits fell 67 per cent to £25.7m before one-off costs.

Taking into account the cost of the demerger and the write-down of leftover goods, Woolworths made a bottom-line loss of £46.4m.

Mr Corbett said the performance reflected the cost of the actions taken to steady the business and build for the future.

He said higher sales were expected at the core Woolworths chain, based on more exclusive product ranges and better product availability.

The group is also considering "refreshing" the Woolworths brand to attract more customers.

Mr Corbett will take a back seat from May when chief executive Trevor Bish-Jones takes over the reins.

Shareholders will receive a total dividend of 1.2p.