Tesco has announced a fall in profits for the second year in a row after a 1.4% drop in like-for-like sales saw group trading profit dip 6%.

Many analysts had forecasted a fall of up to 10% to £3 billion however the fall was not quite as bad as they had anticipated.

Tesco has also reported a £734 million loss of value in its European business, which has been hit by the Eurozone crisis.

Sales at UK stores open over a year, excluding fuel and VAT, fell 3% in the last three months of Tesco's financial year, with the supermarket reporting strong growth of 11% in its UK online grocery sales. Meanwhile, sales at Tesco Express stores grew 1.1%.

Chief executive Phillip Clarke said: "We are transforming Tesco through a relentless focus on the most compelling offer for our customers. Our results today reflect the challenges we face in a trading environment which is changing more rapidly than ever before. We are determined to lead the industry in this period of change."

Regarding his future at Tesco, Mr Clarke said "I intend to be here to see this job through. We are in the middle of a very big change and I intend to see it through and lead my team.

"I will focus on what I have got to do. Many people want to talk about business leaders, but I know what I have got to do."