Tesco Plc, the U.K.’s largest retailer, said annual profit rose 1.3 percent as the grocer pledged to invest 1 billion pounds ($1.6 billion) to improve U.K. stores after shoppers spurned a price cut campaign.

So-called trading profit increased 1.3 percent to 3.76 billion pounds in the 52 weeks ended Feb. 25, the Cheshunt, England-based retailer said in a statement today. That’s in line with the 3.77 billion-pound median estimate of seven analysts compiled by Bloomberg and follows Tesco’s January forecast that profit would be at the low end of the range.

Chief Executive Officer Philip Clarke assumed control of the company’s domestic unit this year after Richard Brasher stepped down. Sales growth is trailing competitors such as J Sainsbury Plc, leading Tesco to ramp up investment in stores, product quality and staffing. A decline in same-store revenue worsened in the final quarter, the retailer said today.

“We remain confident of making modest progress this year despite the substantial planned revenue investment in the U.K. business,” the company said in the statement.

Tesco rose 2.3 percent to 328.3 pence in London trading yesterday. The stock has fallen 19 percent this year, the worst performer in the U.K. benchmark FTSE 100 Index.

Sales at U.K. stores open at least a year fell 1.6 percent, excluding fuel and value-added tax, in the fourth quarter, worse the previous quarter’s 0.9 percent drop. The median estimate of four analysts was for a decline of 1.7 percent.

Source: Bloomberg