Woolworths boss Gerald Corbett has forecast a recovery at the high street giant in the coming year after seeing profits tumble.

The company made a loss of £46.4m 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 also ahead 6.2 per cent on a like-for-like basis, although this was mostly down to the earlier Easter.

Mr Corbett said: "The foundations for improving the operational performance of the business have now been laid.

"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 since been to reduce a huge stock mountain, reduce its 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.

While total group sales rose 2.9 per cent to £2.60bn, pre-tax profits dived 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 added higher sales were now 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 said: "The board is confident of another year of good cash generation and recovery in profitability from which we can move to phase three of our plan the return to growth."

Mr Corbett will take a back seat from May as the reigns are handed over to chief executive Trevor Bish-Jones, who joined from Dixons.

Shareholders will receive a total dividend of 1.2p.