Tesco's UK profits fall for first time in two decades Shoppers have told Tesco its supermarkets feel cold and industrial compared to rivals. Photograph: Alex Segre/Alamy Tesco will pump £1bn into a complete makeover of its domestic stores chain this year after UK profits declined for the first time in more than 20 years. "We fully recognise that we need to raise our game in the UK," said Tesco's chief executive, Philip Clarke, after the country's biggest retailer reported a 1% fall in UK profits to £2.5bn. The large UK business has been the cash cow that has enabled Tesco to expand overseas and Clarke admitted the retailer had taken "a little bit too much away from the shopper." That culminated in a shock profit warning in January when shoppers voted with their feet over the key Christmas period. To win their custom back Tesco Clarke promised more staff on the shop floor as well as "better" products, prices and promotions. Building a better Tesco in UK was his "first priority," he added. The focus on stemming falling sales in the UK means that for the group as a whole capital expenditure will be cut from £3.8bn to £3.3bn in the coming year. The focus will be on refurbishing its existing outlets, which shoppers say feel cold and industrial compared to rivals. A first tranche of 430 supermarkets will get a makeover, with Tesco promising the new look stores will have a "warmer" atmosphere. Fixing the problems in existing stores will result in a dramatic fall in shop openings, with new space growth set to fall by nearly 40% this year. Tesco also said its US business would break even later than previously anticipated. The retailer, which has chains in 12 international markets, reported an overall increase in profits, up 1.3% to £3.8bn on sales of £72bn in the year to 25 February.